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Gold Prices: Finding “free” South African miners

Posted March 13, 2008

"With gold and platinum prices breaching record levels every other day now, especially in terms of the struggling South African currency, you would think that investing in South African miners would prove to be a winning formula. Yet many of the South African gold shares have all but sat out the bull market in gold so far." — Ed Bugos

by Ed Bugos

Baltimore – (TFN):  The South African gold and platinum deposits are among the vastest and richest in the world. 

Even after a persistent drop in annual production since the 1970s that has driven output down to an 85-year low, the country is still the second largest gold producer in the world. With gold and platinum prices breaching record levels every other day now, especially in terms of the struggling South African currency, you would think that investing in South African miners would prove to be a winning formula.

Yet many of the South African gold shares have all but sat out the bull market in gold so far.

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Gold Prices: Small miners still cheap

Smaller producers are trading near their worst levels since 2000. Harmony Gold Mining is up only 100% since 2001. Same with Anglogold, which has been diluting their South African investments by investing overseas. Gold Fields is up a little better (200%) since 2001.

These gains pale in comparison to the HUI (AMEX Gold Bugs Index), which is up some 600%; let alone some of the leaders of the gold mining group, such as Goldcorp or Agnico Eagle, which are up 800 and 1,300%, respectively, since 2001, or even compared to the gold price, which has more than tripled, and hence, outperformed all of the South African producers. Read on to learn which African gold miner is practically free, right now.

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