Gold stocks are going nuts again

ASX-listed gold miners are going nuts again in early trading after gold rallied as much as 2.3% overnight.

The spot gold price soared to US$1,346 an ounce overnight, the highest price in two weeks with investors convinced the US Federal Reserve is unlikely to raise interest rates anytime soon – despite suggestions of a cut in September.

Some analysts see the Fed’s policy statement as a reluctance to raise interest rates too quickly – meaning the attractiveness of gold remains in a world where trillions of dollars of bonds are paying (receiving?) negative interest rates. At least holding gold doesn’t cost the investor much.

Company Gain Market Cap ($m)
Millennium Minerals Ltd. (ASX: MOY) 12.8% $200.5
Resolute Mining Limited (ASX: RSG) 8.3% $1,029.3
Northern Star Resources Ltd (ASX: NST) 6.4% $3,008.7
St Barbara Ltd (ASX: SBM) 4.6% $1,475.4
Medusa Mining Limited (ASX: MML) 7.1% $147.9
OceanaGold Corporation (ASX: OGC) 6.0% $2,915.0
Ramelius Resources Limited (ASX: RMS) 6.5% $273.3
Regis Resources Limited (ASX: RRL) 4.0% $1,939.5
Saracen Mineral Holdings Limited (ASX: SAR) 5.5% $1,338.9
Beadell Resources Ltd (ASX: BDR) 5.7% $490.6
Perseus Mining Limited (ASX: PRU) 4.2% $632.8

Source: Google Finance

Many Australian gold miners are also due to report their full year results and at current gold prices are making a mint. That’s thanks to the Australian dollar trading at around US 75.2 cents – which puts the A$ gold price at around A$1,790 an ounce. With all-in sustaining costs of between A$1,000 to A$1,100 an ounce, their margins are huge.

Foolish takeaway

Debt is being paid down and several gold producers are even paying dividends. But investors might need to be careful of those reinvesting most of the proceeds in highly speculative ventures or exploration. Stick to those paying even modest dividends is likely a better strategy.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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