St Barbara Ltd shares just hit a multi-year high

Although it has given back some of its gains now, at one stage the St Barbara Ltd (ASX: SBM) share price climbed to a multi-year high of $4.35 on Monday.

This brought the gold mining company’s 12-month return to an impressive 56%.

Why are St Barbara’s shares on a tear?

A rising gold price is the quick answer. It has appreciated in value significantly over the last 12 months. Not because of increased demand and not particularly due to geopolitical risk, but rather because of the weakness of the U.S. dollar.

Over the last 12 months the U.S. dollar index has fallen 10.5% largely on the back of President Trump’s protectionist policies. As the U.S dollar has weakened, the gold price has risen by a similar margin to US$1,333 an ounce today.

This bodes well for St Barbara. It expects to achieve an all-in sustaining cost of A$1,130 and A$1,230 per ounce, meaning it is generating a lot of profit on each ounce of gold pulled out of the ground.

The shares of fellow gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) are also on the up today and closing in on new highs of their own.

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Motley Fool contributor Motley Fool Staff 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 Scott Phillips.

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