The Magazine for Asian Investors
Another volatile week in the gold market comes to an end with gold bulls fighting back on Friday before gold went into the weekend at $1,784.15 per ounce. The feeling remains that the gold price moves with every news that focuses on the U.S. economy.
However, it remains doubtful that news about the U.S. economy will be the main driver for gold movements, especially since the fundamentals have changed little. Real interest rates remain negative and the debt mountain continues to grow. Admittedly, short-term traders take any news to make short-term profits. But for veterans in the goldfield, the main cause of volatility remains rather the big Banks.
Now, major banks have a history of gold price manipulation and regularly pay penalties in this regard. Just recently JP Morgan accepted to pay $60 million in fines for manipulating the precious metals market.
Despite the regular interventions in the gold market, gold remains the only safe investment for gold bulls. Certainly, there are good reasons for this, such as the history of gold, which has been used by people as an object of value for 5000 years. Gold is also called sound money because it has all the characteristics to be called money. The biggest factor that differentiates it from fiat currencies is that it is a store of value.
Those who want to participate in the gold market but do not want to store physical gold at home can make investments with leverage, namely with shares of gold producers. The shares remained volatile this week, but still at a very low price level. A large part of the shares are still cheap to have which is why the shares have made it onto many shopping lists of experienced investors. “Buy when there is blood in the streets” is a popular expression to buy stocks when they are cheap. Especially since gold producers are generating a lot of cash flow with the current gold price. Getting profitable companies at a discount price sounds like a great potential for long-term profits. How did the gold producer stocks perform this week?
Gold Mining Stock Performance
Sibanye Stillwater Limited (NYSE: SBSW): Sibanye Stillwater Limited has operations in South Africa, North and South America. The company, headquartered in Johannesburg South Africa, produces gold as well as other precious metals and industrial metals such as copper.1
AngloGold Ashanti Limited (NYSE: AU): AngloGold Ashanti is the 3rd largest gold producer globally with headquarters in Johannesburg, South Africa. The company produced 3.047 million ounces of gold in 2020.2
Gold Fields Limited (NYSE: GFI): Gold Fields Limited is a South African company based in Johannesburg. The company has nine mines in operation. They are located in Australia, Peru, South Africa, West Africa (including the Asanko joint venture), and Chile’s project.3
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