Johannesburg - Harmony Gold led the rally among gold stocks on the JSE yesterday as bullion reached a two-year high amid a major sell-off in which investors sought a haven from the tumult in financial markets.
While the rand slid against the US dollar yesterday, Harmony Gold rose 9.83 percent to close at R64.57 a share yesterday. Harmony, which surged the most, has grown 314 percent in the year to date.
Competitor Sibanye Gold climbed 5.74 percent higher to close at R57.84 a share, Gold Fields was 5.12 percent higher to R81.26 a share, while AngloGold Ashanti was 6.82 percent higher at R303.07 yesterday.
Raking in money
The gold price rose for a sixth day reaching $1 371.39 (R20 140.50) an ounce yesterday and the gold mining index advanced 6.54 percent.
Peter Major, a mining analyst at Cadiz Corporate Solutions, said the companies were raking in the money, which could be used to settle debt.
“Gold companies are making tons of money, but it won’t last. Before they know it the labour unions, government and Eskom will be on their rear. Let (gold companies) enjoy it while it lasts,” he said. “(Companies) can pay off some debt, pay dividends to shareholders and invest in capital expenditure.”
Gold companies have benefited the most from an upswing in commodity prices since the beginning of the year with Bloomberg reporting yesterday that UBS Group believed gold would climb to $1 400 in the short term. UBS, saw prices averaging $1 340 an ounce in the second half of this year.
Bull run
“Gold has likely entered the early stages of the next bull run,” Joni Teves, a UBS analyst in London, wrote in a report yesterday. “This trend should now deepen, attracting more participants and encouraging those who have been hesitant.”
Jana van Deventer, an analyst at ETM Analytics in Johannesburg, said: “The theme at this point in time seems to be an overwhelmingly risk-off one.”
Foreign investors seeking higher yields have continued to pile into South African bonds and stocks, helping to cushion the rand. They were net buyers of R1.8 billion of South African debt on Tuesday, in the longest streak since 2011.
Data from the JSE said stocks were experiencing the longest buying trend since 2002.
* With additional reporting by Bloomberg
BUSINESS REPORT