Eoin Treacy's view -
The 6th Edition of our Big Golden Book, covering a suite of 25 ASX listed gold producers and developers, with 7 stocks under MS coverage (AQG, EVN, MML, NCM, PRU, RRL, RSG) and broad detail on another 18 mid small cap gold miners, provides a sector snapshot in which to identify relative strengths and weaknesses amongst the ASX gold space. Our 6th Edition arrives at a time of relatively buoyant AUD gold price - a key beneficiary of the weakened Aussie dollar.
Australian gold miners are up ~15% YTD, as represented by the S&P ASX All Ords Gold Index, significantly outperforming US$ spot gold (down ~9% YTD), the ASX 300 Resources Index (-26% YTD), the ASX Small Resources Index (-20% YTD) and the ASX All Ordinaries (-2% YTD). Currency has been a key driver, pushing AUD Spot gold ~2% higher against the backdrop of a falling USD gold price (down ~9% YTD).
A link to the full report is posted in the Subscriber's Area.
At The Chart Seminar in Sydney in 2010 a delegate asked what all the fuss was about in the gold market because prices had not moved for more than a year when redenominated to Australian Dollars. I was reminded of that today because prices today are no different from where they were in 2010 and are about 23% of the 2011 peak which represents significant outperformance relative to the US Dollar quoted price.
As the above report highlights, Australian gold miners have benefitted from the relative weakness of the currency. This also speaks to the broader point that gold is a monetary metal and tends to hold its value better than fiat alternatives in a depreciating currency environment. As a result it outperformed spectacularly while the US Dollar was in a decade long downtrend and is likely to remain a relatively sound store of value for other countries when their respective currencies fall.
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