Is it gold, or gold shares?

PICKINGS: JSE PERFORMANCE SHOWS SA'S WANING IMPORTANCE AS A GLOBAL PRODUCER

- Ciaran Ryan

Gold has been a rather miserable performer for much of the last five years, but all that changed a year ago. It is up 44% since February 2024 and this week traded at $2 945/oz, with $3 000/oz now in sight. That's a massive psychological barrier, spoken about for years, about to be breached.

But the real action was in gold shares which provide geared exposure to the gold price.

The gold pickings on the JSE have thinned out in recent years, which signifies South Africa's waning importance as a global producer.

AngloGold Ashanti is up 73% over the last 12 months, substantially better than a pure gold investment.

Its results for financial 2024 demonstrate the enormous leverage the company has to the gold price - gross profit over the year more than doubled to $2.1 billion (about R39 billion), with profit before tax spiking to $1.7 billion from $63 million the prior year.

DRDGold is up 51% over the last year, somewhat better than gold's 44%. The company reported interim results for the six months to December 2024, awarding investors with a 50% higher dividend over the previous period. A 26% gain in the received gold price made the world of difference, translating into a 65% spike to about R1 billion in headline earnings.