South African miners are rallying again, set for best month ever
2 min readA gauge of returns on South African precious-metal mining stocks is on track for its biggest monthly jump in at least two decades as gold and platinum prices recover from a steep slump.
The FTSE/JSE Precious Metals and Mining Total Return Index has gained about 38% so far this month, the most on record going back to 2006 and pulling the gauge into positive territory for the year. Shares of bullion producers AngloGold Ashanti Plc, Pan African Resources Plc and Gold Fields led the advance, soaring more than 40% month-to-date.
August’s rise already outstrips any single month’s gain during last year’s record-breaking rally, which saw the index surge more than 200% as gold prices scaled record highs. Before this month’s rebound, the precious-metals index was down 20% for the year.
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Read: Harmony Gold profit doubles on soaring prices despite hedge loss
Gold is up nearly 15% this month, given fresh impetus by the US Treasury’s unexpected intervention in the bond market last week. Efforts to control the cost of the US debt pile have revived interest in the so-called debasement trade that helped power bullion’s 65% rally last year, when investors bought the metal as a hedge to protect themselves from runaway budget deficits and a weaker dollar.
Read: Gold Fields rides gold rally to stronger earnings
“Africa-based producers have been particular beneficiaries given their relatively low-cost operations and higher margins, which has helped drive notable outperformance versus global peers,” said Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management.
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The strong performance of miners has helped lift the broader benchmark for South African stocks by 4.6% this month, on track for its best performance since February. Eight of the 10 best-performing stocks in August are precious-metals miners.
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