ASX gold stocks are getting hammered

Are falling share prices a bet on a lower gold price?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ ASX All Ords Gold Index — made up of gold miners, explorers and gold developers — is down over 18 per cent in the last six months, despite the gold price falling by only less than 5 per cent, from around US$1,750 per ounce in October 2011, to around US$1,663 currently.

Over the same period the S&P/ASX Industrials Index has risen over 10 per cent.

The gold price has fallen back as Europe and the US muddle through their issues, with the world's top economies appearing to have pulled back from the brink of GFC Mark II.

The ASX's largest listed gold miner, Newcrest Mining Limited (ASX: NCM) has seen its share price fall 23 per cent in the last six months, and over 37 per cent in the last year, from a high of $42 to now be trading around $26.30.

Six-monthly performance of the top ten gold miners


Six month % change

Market Cap Current price Current PE
Newcrest Mining Limited (ASX: NCM)

Down 23%




Regis Resources Limited (ASX: RRL)

Up 37%




Evolution Mining  (ASX: EVN)





Perseus Mining Limited (ASX: PRU)

Down 20%




Resolute Mining Limited (ASX: RSG)

Down 4%




Medusa Mining Limited (ASX: MML)

Down 16%




Kingsgate Consolidated (ASX: KCN)

Down 21%




St. Barbara Limited (ASX: SBM)





CGA Mining Ltd (ASX: CGX)

Down 8%




Silver Lake Resources Limited (ASX: SLR)

Down 1%




Source: Google Finance

Regis Resources is the only stock up out of the top ten, with the company expected to triple gold production from 2012/2013, from 100,000 ounces to over 300,000 ounces. The company reported its first net profit in 2011 of $36m, with analysts predicting revenues to hit over $550m in financial year 2013, and earnings per share to rise from 14 cents in 2011, to over 60 cents in 2013. With cash costs expected to fall below $500 per ounce, the company is fairly well protected from a significant fall in the gold price. All of that good news appears to have been priced in, with the stock trading on a P/E ratio of over 30.

The price of gold is not the only factor that can affect the price of gold miner's shares. Gold supply and demand, weather events, management decisions, accidents, diesel costs, taxes and political decisions are among the many influences on share prices.

Several of the companies above may have been afflicted by some of these factors as well as the slide in the gold price.

Foolish takeaway

For the gold bulls out there, the steep price declines of some of the gold stocks above, relative to the price of gold, may offer a chance to get back in.

For the gold bears, this article provides some evidence of the risks in investing in gold stocks, and to steer clear of gold mining stocks and focus instead on industrial stocks.

The ASX is already on the move in 2012, and Goldman Sachs experts recently said they reckon S&P/ASX 200 could top 5,000 next year. Read This Before The Coming Market Rally is a must-read for investors who don't want to miss out on the party. Click here now to request your free copy, before it's too late

More reading

Motley Fool contributor Mike King owns shares in Kingsgate Consolidated. Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »