LONDON -- Gold has fallen steadily this year from its March high of $1,781 and this week saw further weakness. The markets' disappointment at a lack of immediate action by the European Central Bank made itself felt on the price of gold, which abandoned the gains made in the first part of the week and retreated to below last Friday's closing figure of $1,601. At the time of writing, gold is trading at around $1,595/oz, firmly in the center of its recent range.
Of course, the only practical way for most private investors to hold gold is through an ETF, and the $63billion SPDR Gold Trust ETF
Are gold miners undervalued?
An alternative approach to investing directly in gold is to hold shares in gold miners, which many investors believe are undervalued at present. The only gold miner in the FTSE 100 is Randgold Resources
Since then, the situation has stabilized and Randgold's production has not been affected, but its share price has yet to fully recover, despite its Q1 results revealing a quarterly profit 126% higher than Q1 2011. What's more, Randgold is currently in the process of starting up production at a large new mine in the Democratic Republic of Congo. The new mine will be its sixth in Africa and should be producing gold by the end of next year.
Despite its profits, Randgold currently looks quite expensive, with a P/E of 21. A cheaper alternative is Egyptian-focused miner Centamin
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Further investment opportunities
Roland does not own any shares mentioned in this article. The Motley Fool has a disclosure policy.
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