Gold Shares To Buy
Gold has been one of the hottest commodities of late, benefiting from a number of fundamental factors that have pushed the precious metal to record highs.
After reaching a high of US$1033 an ounce in March 2008 gold fell away, trading all the way down below US$700 an ounce by October of the same year.
Since then bullion has recovered strongly, breaking through the previous high of US$1033 in early October and recently punching through US$1100.
As mentioned earlier, the catalyst for the gains has been an almost perfect storm of fundamental drivers that have collectively driven the price of gold higher.
Weakness in the US dollar is one of those factors, with the slumping greenback increasing bullion’s appeal as an alternative investment.
Stronger crude prices have also pushed the precious metal higher, with gold viewed as an inflation hedge against higher prices. Generally speaking, if oil prices are rising, so to are gold prices.
Finally, gold has traditionally been seen as a store of value which makes it particularly important during tough economic conditions like those we have seen over the past few years.
With the surge in gold prices, many people have been asking the question ‘which gold shares to buy?’
Fortunately, Australia has a number of world class gold mining companies, as well as junior miners, which can provide exposure to the movements in the price of gold.
Below we provide a summary of some the top gold shares to buy.
Newcrest Mining (NCM).
Newcrest is the granddaddy of the Australian gold mining space. The company is a leading international gold company and one of the world’s lowest cost gold producers.
NCM is Australia’s largest independent domestic gold producer and a global top 10 gold mining company.
The company’s core assets include the 100% owned, world-class Cadia copper-gold mineral complex in New South Wales and the Telfer Mine in Western Australia.
Outside of these core assets, Newcrest has been building its production capacity and exploration potential through joint venture projects in Indonesia, Cracow in Queensland and Harmony in Papua New Guinea.
Lihir Gold (LGL)
Lihir Gold Limited is a leading global gold company with operations in Papua New Guinea, Australia, and West Africa.
LGL operates one of the largest gold mine and processing facilities in the world, north-east of Port Moresby in Papua New Guinea.
In June 2008 the company finalised a merger with Perth-based gold producer Equigold. The move gave Lihir operations in Queensland and West Africa.
Across all of its operations LGL has approximately 25 million ounces in reserves. In 2008 the company produced 882,000 ounces of gold.
Sino Gold (SGX)
Sino Gold is a Sydney based company focused on gold exploration and mining in China.
The company’s flagship operation is the Jinfeng Gold Mine which has resources containing 5 million ounces and ore reserves containing a further 3.2 million ounces.
The Jinfeng mine is the second largest gold mine in China, producing gold at an annualized rate of 180,000 ounce p.a.
In 2009 the company commenced commercial gold production at the White Mountain Gold Mine. Planned production at White Mountain is 65,000 ounces per annum, over a more than 10-year mine life.
As well as current projects, SGX has active exploration and acquisition programs in China – the world’s largest gold producing country.
Kingsgate Consolidated (KCN)
The core asset of Kingsgate Consolidated is the 90% owned Chatree gold-silver mine in Thailand.
Chatree has proved to be a very low cost operation, producing solid profit results for the company.
In 2005, Chatree’s output was approximately 127,000 ounces at a total production cost of US$262 per ounce of gold. This per ounce production cost made Chatree one of the lowest cost operation in the world.
As well as these major players in the gold mining space, there are also a multitude of junior miners and speculative players, often exploration companies, which could have great upside if they make further discoveries and/or increase production.
These companies include Citigold (CTO), Mundo Minerals (MUN), Avoca Resources (AVO), Medusa Mining (MML), and Centamin Egypt (CNT).
Given that these companies are more speculative they carry with them more risk. If you are interested in buying their stock, as always, you should do your research first.