Update: Resolute Mining/Centamin
Sometimes this column really does think that gold miners are more trouble than they are potentially worth.
Our view on gold is still being borne out, as the precious metal trades at around $1,900 an ounce, drawing support from ever more frantic calls for fiscal stimulus (and hence higher government budget deficits) from the Federal Reserve, the European Central Bank and now that traditional bastion of financial probity, the International Monetary Fund.
Yet our own mining picks remain a source of frustration and this column would understand if investors were to dodge the vagaries of picking individual miners and seek broad-brush exposure to a basket of stocks through exchange-traded funds such as VanEck Vectors Gold Miners and VanEck Junior Gold Miners.
Centamin has encountered the latest in a string of operational setbacks at its Sukari open pit mine in Egypt. Staff safety is quite rightly being put first but this means output will undershoot expectations. The shares have plunged on the news, wiping out a chunk (but not all) of our paper profit.
We shall just have to sit and suffer, and wait for expansive fiscal spending plans from whoever wins next month’s American presidential election (and no doubt from a good few more political leaders worldwide) to remind investors of gold’s safe haven status at a time when paper money is being sprayed around like confetti.
The same strategy must apply to Resolute Mining, whose shares tumbled after the military coup in August in Mali, home to the firm’s Syama mine, where management has also faced industrial unrest. Although further strike action has been averted, time and output have been lost, even if daily operations have not been affected by local politics.
As a result, John Welborn, the chief executive, has trimmed forecast gold production for the year to a range of 400,000-430,000 ounces (from 430,000) with an “all-in sustaining cost” of $980-$1,080 an ounce, rather than the $980 previously forecast.
Both miners still have the potential to shine despite the near-term problems.
Questor says: hold
Ticker: RSG, CEY
Share price at close: 55.6p, 164.4p
Russ Mould is investment director at AJ Bell, the stockbroker
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.