Much like they were in 2014, commodity analysts are overwhelmingly bearish on the outlook for gold prices in 2015.
However the beaten down share prices of gold mining companies does offer long-term investors an opportunity to add diversification to their portfolios at historically low prices. So to help you sort the gold from the ore, here's what you need to know about ASX gold stocks in 2015:
The big 4 gold companies
Heading into 2015, four of the largest and most liquid ASX listed gold miners to watch are:
|
Company Name |
Market Cap (Jan 2015) |
| Newcrest Mining Limited (ASX: NCM) | $8.4 billion |
| Northern Star Resources Limited (ASX: NST) | $887 million |
| Regis Resources Limited (ASX: RRL) | $969 million |
| OceanaGold Corporation (ASX: OGC) | $633 million |
Buy the lowest cost producer
Low cost gold miners stand the best chance of riding out volatile gold prices and producing decent returns for investors. And when it comes to driving down costs, size matters.
The biggest producers like Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Limited (ASX: NST) are most often the lowest cost producers due to their economies of scale. For the most recent September quarter, Newcrest Mining had All-In Sustaining Costs (AISC) per ounce of $864, while Northern Star had costs of $1,043 – putting both companies among the lowest cost ASX gold producers.
Big gold reserves should allow the low-cost trend to continue for both companies heading into 2015, although Northern Star has advised it is targeting all-in sustaining costs of $1,050 to $1,100 per ounce over the coming year.
Know where the risks lie
The volatile gold price is the biggest risks faced by all gold miners and in 2015 many analysts expect the price to remain at or below current levels (US$1,184), driven by continued strength in the U.S. dollar and low levels of inflation resulting from falling oil prices which will suppress demand from investors.
Although the gold price is outside the control of individual companies some gold miners, like Silver Lake Resources Limited (ASX: SLR), do have hedging in place to peg the price and offer some protection against further falls.
At a company level, it is important to check debt levels before buying. Even low levels of debt can quickly disable a strong company if the price of gold falls below the cost to produce it so be sure that even low-cost producers keep debt in check.
