Gold, and gold stocks, fever

By popular demand, a glance at the world's hottest 100 gold stocks, now worth an aggregate $283bn, and merrily leading the recovery in global stock markets.

JOHANNESBURG - 

More than ten of the world's 100 "hottest" listed gold stocks traded within 1% of, or at, 12-month high prices on Friday, supported by a falling dollar that assisted the boost of commodity prices across the board. The theme was further lifted by gradually more positive sentiment in markets generally. 

The 100 gold stocks mentioned were trading 14% below high stock prices, on average, measured on a weighted basis. This can be compared, in the broadest sense, to the benchmark all shares MSCI world equities dollar index, which was trading nearly 40% below its highs on Friday. There was also something of a sense of fever out there, with gold bullion apparently targeting a break through the $1 000 an ounce barrier.

Where the MSCI world equities dollar  index has risen by, also, 40% from its lows, seen just months ago, the 100 hottest gold stocks have risen, on average, by 147%, from low stock prices generally seen in the closing months of 2008. 

The 100 gold stocks selected, applying a minimum market value (capitalisation) of $20m, include smaller stocks that have risen by more than 1 000% from lows, such as Australian Solomons  (busy re-establishing operations at the Gold Ridge Project, located on Guadalcanal in the Solomon Islands), and even a couple that have gained more than 2 000%, in the shape of La Mancha Resources (with two African gold mines and one in Australia), and even some that have risen by more than 2 000%, such as Norseman Gold (an Australian gold digger listed in London, where the speculative appetitive for high flying resources stocks has become acute over the past couple of months). 

From a price performance viewpoint, AngloGold Ashanti ranks as the leading global Tier I gold stock. As discussed in a Mineweb article earlier this week, Paulson & Co Inc., which famously scored gains of $3.7bn betting against (mainly US) banks in 2007 and 2008 bought a $1.28bn chunk of AngloGold Ashanti following a final exit sale by Anglo American, AngloGold Ashanti's erstwhile parent. 

Paulson & Co also currently hold around 10% of the SPDR Gold Shares ETF, equal to more than 100 tonnes of physical gold bullion. Paulson & Co. also holds (at latest count), 2.6% of Gold Fields, 4.4% of Kinross, both global Tier I gold diggers, and 11.2% of budding producer Centamin Egypt. The gold stocks invested in by Paulson & Co. all rank among the best performing in the world, as would the SPDR Gold Shares ETF, although it does not as such classify as an operating gold company, a miner, as such. 

The 100 hottest gold stocks selected include entities with hybrid interests, such as Seabridge (copper) and First Uranium, and, of course, silver superman, London-listed Mexican miner, Fresnillo and gold royalty companies Franco-Nevada and Royal Gold, which, like gold ETFs, do not classify as miners as such. 

Most global Tier I gold stocks are represented in the top price performing 100; AngloGold Ashanti, Gold Fields, and Kinross, as mentioned, and also Newmont, Newcrest,  Lihir, Goldcorp, Zijin, Harmony, and Barrick, the world's biggest gold miner, by value and production. Those missing the Tier I cut: Yamana, Polyus, and primary copper miner, with significant gold and also molybdenum byproducts, in the form of Freeport-McMoRan. 

It is, however, far from a one way street for the pricing performance of stocks generally classified under the gold heading. Names trading 60% or more below 12-month high prices include Imperial Metals, New Gold, Kazakh Gold, Taseko, Rusoro Mining, Resolute, Jinshan, Highland, High River, and, of course, Crystallex.

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