Why a rising gold price could send all these gold miners higher

People invest in gold for a number of reasons including as a safe haven asset in times of uncertainty and as a hedge for inflation.

Although I have never personally been interested in investing in the precious metal, I can understand why some investors choose to do so.

As a result, I thought it would be interesting to see how the most popular ASX gold miners compare to one another.

Since gold miners have no control over the price they receive for their gold, I have decided to compare them based on the one variable they can influence – operating costs.

Here is what I have found:

Company Market Cap Most recent AISC* (US$) Forecast Annual Production Guidance 10-Year Avg Shareholder Return
Newcrest Mining Limited (ASX: NCM)
$18.4 billion $770/ounce 2,475,000 ounces 1.7%
Evolution Mining Ltd (ASX: EVN)
$4.2 billion $637/ounce 830,000 ounces 11.0%
Northern Star Resources Ltd (ASX: NST)
$2.9 billion $770/ounce 500,000 ounces 50.4%
OceanaGold Corporation (ASX: OGC)
$2.7 billion $708/ounce 405,000 ounces 18.2%
Regis Resources Limited (ASX: RRL)
$1.7 billion $713/ounce 315,000 ounces 14.6%
St Barbara Ltd (ASX: SBM)
$1.4 billion $646/ounce 370,000 ounces -1.4%
Resolute Mining Limited (ASX: RSG)
$850 million $827/ounce 325,000 ounces -0.4%
Saracen Mineral Holdings Limited (ASX: SAR)
$830 million $1132/ ounce 300,000 ounces 9.6%

Source: CommSec

*AISC = All-in Sustaining Costs

With the current spot gold price trading around US$1,280/ounce, it is pretty clear that most of the major ASX gold producers are enjoying extremely strong operating margins right now.

However, Evolution Mining and St Barbara appear to be the two best placed gold miners to withstand a potential downturn in gold prices as they currently enjoy the largest operating margins.

On the flipside, Saracen Minerals and Resolute Mining can be expected to be the biggest winners if the gold price tracks higher from here as they will enjoy the biggest percentage margin gains from the miners listed above.

Foolish takeaway

It is nearly impossible to predict where the gold price is going to next, but investors who want to invest in the sector should consider the lowest cost producers as their first option. These miners will have the ability to withstand prolonged periods of low prices and will also have the financial strength to pick up distressed assets at bargain prices.

Does Warren Buffett invest in gold shares? Find out by reading The 1 Thing Every Investor Should Know About Buffett's Portfolio

You've probably heard a lot about billionaire investor Warren Buffett. After all, a herd of analysts and journalists has tracked his every move - for decades. Yet here's something you may not know...

Simply click here to learn more.

Motley Fool contributor Christopher Georges has no position in any stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.