What do you think of the future of the Gold Miners eg. HAR Gold One Int etc.

Disambiguation: NewGold is actually a Platinum ETF. 

But point taken nonetheless... 

Gold Miners are for Trading and NOT investing. They have not yet recovered from the 2009 crash and what makes you think they will recover now?

If you want to invest in gold, then rather go for the ETF as in NewGold. No strikes, fatalities or layoffs.

Hi guys,

 

I would just like to get your input on the gold mining sector as a whole and specifically

the 2 companies Harmony GMC and Gold One Int.

 

I bought some shares in them a couple of months ago (Harmony @ R 48.00 and Gold One @ R2.02) , which I thought

was a steal at the time but Harmony just kept dropping...

Gold One has stabalised at around the R2 mark but do you think there is any hope for Harmony?

 

Any comments will be much appreciated.

 

Thanks in advance.

The biggest problem with Gold One is the value of shares held locally - only about 10%.

On the positive side the Chinese own about 80%  and are not scared to pump big money into the operation.

On the very positive side is Modder is producing gold at $600 per ounce so big profit margins there.

I am holding Gold One for the long term and have no plans to sell for the next 5 years.

The key is to not watch this one daily or even weekly because you will get frustrated, sell and buy something else.

Buy it and forget about it.

Overall I am sitting on a load of gold shares which I will leave for the future.

I will definitely not be adding to them but will definitely buy more plats.

For me, the big advantage in buying plat over gold is that SA is the worlds largest producer of plat so supply and demand forces are more in play.

Still amazes me how gold and plat move together even though they have completely different market appeals?

Hi All,

Thanks for all the replies!!

It is very much appreciated.

purely local gold miners are likely to struggle against international counterparts mainly as a result of our higher costs of production and labour. So the only thing in my mind that can level the playing field is if govt decides at some point to help salvage the industry in terms of subsidizing miners... through fixing lower electricity costs or otherwise. then theres always the card of the bigger boys buying out local scrap where the assets of local scrap are worth more than the market cap themselves.  

I think you need to decide what you want in when investing in the gold sector.

For you to back gold companies, you need to have a view on a few key factors, 

1) the Gold price

2) production levels and yield

3) dividend and investment policy of the miner

4) leverage of the miner

Now, if you want exposure to point 1), then i'd suggest you buy a tracker. 

But if you want the added leverage, and believe that production levels and yields have been inadequately factored in by the market, then by all means buy a gold miner. 

I believe SA Gold miners are going to struggle at these prices, and SA doesn't produce nearly enough of Gold for that to be a supply factor for prices. Hence I wouldn't want to be a price taker, with labour issues and falling productions and yields.

But then again, investing is also a price game, so given this context, do the maths and see if the price are to your liking.

some of the questions we should be asking are:

How much of the negativity (low gold price/high labour and electricity costs/labour unrest/etc) is priced in at current levels of around R31 for Harmony, R43 for Goldfields? 

When and how profitable can these miners be over the short/medium/long term?

What is the short/medium/long term forecast for gold in terms of price/demand and supply? 

Will gold collapse with QE unwinding?

Will inflation return to global economy given the flood of recent money?

Is gold price inflationary?

How long will gold miners keep operating at losses?Will they start shutting down? Will their shutting down have an impact on gold production/supply/demand?

Will indians stop using gold as dowry? 

etc...

etc...

personally, i feel if i buy at around here of under R40, i can only loose R40. but if i'm in Naspers i can loose the whole R40 in a day!!!

Dear Syrus

I have followed the gold shares for years initially spurred on by clive roffey(roffey review mnet channel 412)

Everything clive says is  gold gold gold.HE is 95% wrong

As far as i am concerned old mines with a large workforce like harmony are a total no no.Compounded the gold price is

unnaturally shrunk by american bankers.

Gold will bounce .It surely cannot stay below 1200 dollars.When it bumps up profit will be huge .but when?

Harmony is bad news

Hi guys,

I would just like to get your input on the gold mining sector as a whole and specifically

the 2 companies Harmony GMC and Gold One Int.

I bought some shares in them a couple of months ago (Harmony @ R 48.00 and Gold One @ R2.02) , which I thought

was a steal at the time but Harmony just kept dropping...

Gold One has stabalised at around the R2 mark but do you think there is any hope for Harmony?

Any comments will be much appreciated.

Thanks in advance.