Please ensure Javascript is enabled for purposes of website accessibility

3 Gold Shares Rising Strongly

By Roland Head - Apr 2, 2013 at 8:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Randgold Resources, Chaarat Gold, and Primero Mining all outperformed the price of gold last week.

LONDON -- The price of gold traded in a narrow range last week, with gold for June delivery falling just 0.8% to end the week at $1,597 per ounce. In U.S. trading on Monday, gold rose to $1,599 per ounce.

Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $63 billion SPDR Gold Trust (GLD -2.12%), slipped 0.6% to close at $154.67 yesterday, while London-listed Gold Bullion Securities (LSE: GBS) fell 0.8% to $153.88 last week. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 4.1%, while the value of SPDR Gold Trust shares has fallen by 4.5%.

Gold's big movers
Many investors prefer to invest in gold-mining stocks rather than gold itself, as gold miners are able to use their operational gearing to outperform the price of gold. Let's take a look at three gold stocks that outperformed the yellow metal last week.

Randgold Resources (LSE: RRS) rose 3.7% to 5,695 pence last week after announcing that its attributable mineral reserve ounces rose by 80,320 to 16.36 million last year despite record production of 794,844 ounces of gold. Randgold's reserves were calculated using a gold price of $1,000 per ounce to determine their commercial viability. This is substantially below the current gold price of $1,600 per ounce, suggesting that the FTSE 100 miner could continue to mine profitably at much lower gold prices. The grade of Randgold Resources' reserves also improved slightly, rising from 3.84 grams per tonne to 3.87 grams per tonne.

Chaarat Gold (LSE: CGH) rose 4.1% to 23.75 pence last week, consolidating a 19% gain so far this year. Last week's firmer gold price helped boost sentiment for smaller gold-miners, while Chaarat investors may also have been reacting to the previous week's news that production at Chaarat's Tulkubash project in the Kyrgyz Republic remains on course to start in the second half of 2013 but will now use a cheaper heap-leach method, rather than the planned carbon-in-leach method. Chaarat also said gold resources at Tulkubash had increased to 5.76 million ounces as a result of last year's drilling program.

Primero Mining (PPP) has climbed 18.1% to $6.73 over the last month. The company reported a 31% increase in its gold reserves for its San Dimas mine last month, taking its probable gold mineral reserves to 660,300 ounces and lifting its indicated gold resources to 779,600 ounces. The increases were driven by the discovery of two new high-grade veins in the Sinaloa Graben exploration area and have enabled Primero to increase production to 2,500 tonnes of ore per day.

Shares versus commodities
Shares in commodity companies have outperformed their underlying commodities many times over the last 10 years thanks to their ability to magnify their gains through successful development of new resources. This free report from the Fool, "10 Steps To Making A Million From The Market," contains some excellent tips on identifying and investing in potential multibagger shares, including resource shares like gold miners. I strongly recommend that you click here and download it now, as it will only be available for a limited time.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Primero Mining Corp. Stock Quote
Primero Mining Corp.
SPDR Gold Trust Stock Quote
SPDR Gold Trust
$164.75 (-2.12%) $-3.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.