Precious metals update - Gold

What's causing the gold price weakness? Morgans Senior Analyst James Wilson explains and reveals his top picks in the gold space:

Key points

  • Gold prices have weakened due to a number of factors: potential QE easing, central bank possible sales, weak macro, ETF outflows
  • Upside support will come from: Central bank opportunistic buying, seasonal demand, no end to QE, ETF inflows
  • Historical gold PE's currently disconnected from long term average of 1.3x p/NPV - NCM currently trading at 0.72x p/NPV
  • All-in cash costs will be critical for the producers moving forward: RRL (~$700) and BDR (~$600) have the lowest all-in costs for producers >120koz production
  • The market is yet to reward gold companies for their hedged gold production. We anticipate these companies will perform better than those exposed entirely to spot - Beadell Resources (BDR) has 40% of production hedged for three years at US$1600. Regis Resources (RRL) has 195koz production hedged at between $1450 and $1540/oz. Both have low industry costs and strong margins

More information

Clients can login and view our latest Gold Sector research report, alternatively call your Morgans adviser for more information.

If you are not a Morgans client and would like to speak to one of our advisers to find out how we can assist, call 1800 777 946 or contact your nearest office.

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