Some gold miners not yet cashing in on record metal price

THE gold price has gained a fifth since the start of the year but the companies that mine that metal are not getting recognition, said Bloomberg News.

Central bank buying in China and emerging markets was one of the reasons the dollar gold price had notched up record after record this year but the VanEck Gold Miners ETF unchanged from its level at the start of 2023. The S&P/TSX Gold Index was slightly down during the same period, the newswire said.

“In the last 15 months, gold and gold equities have just disconnected,” Equinox Gold Corp. Chairman Ross Beaty told Kitco News, describing the situation as “bordering on ridiculous”. The performance of the biggest players hasn’t helped, said Bloomberg News.

Newmont, the largest gold miner, warned output this year will be less than anticipated, while Barrick Gold recently reported production at multidecade lows. Both companies are keen to gain more exposure to copper, which would bolster their roles in the energy transition but dilute their gold premium, said the newswire.

“The resource-focused funds have now, for the last few years, found new commodities to invest in,” said Raj Ray, director of metals and mining research at BMO Capital Markets. The gold industry is “not competitive enough compared to some of the other sectors”.

Other gold shares have benefited enormously, however. Harmony Gold registered a five year high after rand depreciation against the dollar bolstered revenues. At more than R1.3m per kilogram, South African gold producers have never received more for their gold than today.

Anglogold Ashanti, which divested from South Africa in 2022, has risen almost 20% this year. Ray told Bloomberg News he sees others advancing too should prices hold. “It gives that additional margin for them to say, ‘We have better free cash flow, which provides for potentially better capital returns and also additional margin to do more exploration and at least maintain production.'”