Gold miners draw Australian investors looking at international stocks

Gold miners including Barrick and Newmont attract wave of Australian share investors’ cash
‘Retail investors looking for exposure to gold without investing in the underlying commodity because of volatility’
ASX gold stocks guide: Everything you need to know

Australian retail investors have been loading up on international mining shares this year, with gold miners a popular choice, and to a lesser extent copper and nickel companies.

Data provided by broking platform eToro shows the top-traded mining stock for Australian investors is Warren Buffett’s favourite gold producer, Barrick Gold.

“Many retail investors are looking for exposure to gold without investing in the underlying commodity directly because of how volatile it is,” eToro market analyst Josh Gilbert said.

“One way of doing this is to invest in the gold mining companies themselves.”

The number of Australians with trading positions in Barrick Gold has increased 1,220 per cent this year to date, and the stock is streets ahead of the second most popular mining share, Newmont Mining, also a gold company.

Huge inflow into gold stocks, ETFs this year

“We have seen huge investment into gold over the last few months. For example, SPDR Gold Trust (GLD), the largest gold ETF, has taken $20bn in net new assets for 2020 in August,” Gilbert said in response to Stockhead’s questions.

Trading positions in Barrick Gold rose 399 per cent in Q3 compared with the previous quarter, and the number of people holding the stock has jumped 2,580 per cent since the start of 2020.

Warren Buffett’s US investment company, Berkshire Hathaway, created a stir among investors when its SEC filing in August revealed it had bought 20.92 million shares in Canadian miner Barrick.

“Whenever Warren Buffett invests into anything, retail investors across the world stand up and take notes — this is particularly true when Warren Buffett buys gold,” Gilbert said.

“With a lot of uncertainty around the economic recovery in the US, many saw this as a sign that Buffett was worried about the global economic outlook.”

The holding in Barrick was all the more extraordinary as Buffett has long stated his lack of enthusiasm for gold as an investment, partly because it pays no income, unlike shares.

“For years Buffett has famously not seen the investment case for gold, claiming ‘it has no utility’,” Gilbert said.

China gold-copper miner operates Northparkes mine

Third on the list of top mining stocks for Australian customers of eToro is Shanghai- and Hong Kong-listed miner China Molybdenum, which happens to own 80 per cent of the Northparkes copper-gold mine in NSW, Australia.

“Names such as China Moly have mines based directly here in Australia, so it’s a name people know,” Gilbert said.

“Although the company’s main facilities operate in China and South America, it has a large market capitalisation compared to many small capped mining stocks.”

BHP and Rio Tinto magnets for investor’s cash

The Big Australian, aka BHP (ASX:BHP), is fourth on the eToro list of top traded miners and is famous for its Olympic Dam copper-gold-uranium super mine in South Australia, and its Nickel West business in WA.

“BHP has recently just agreed a deal in Western Australia to acquire a nickel project, which enhances their mining capabilities and has been a top pick amongst Australian investors in 2020,” Gilbert said.

BHP appears twice in the top 20 list because of its dual-listing on the ASX and London Stock Exchange, as does Rio Tinto (ASX:RIO) for the same reason.

BHP is again starting to partner with junior exploration companies such as Encounter Resources (ASX:ENR).

Freeport-McMoRan, the operator of Indonesia’s giant Grasberg copper-gold mine, is the fifth most traded stock for Australian investors on eToro.

Two Russia-based mining companies, London-listed gold producer Polymetal International and Norilsk Nickel, along with multi-national Anglo American, Rio Tinto and Switzerland-based Glencore round out the top 10 mining shares.

Mining Stock	Growth in amount of stockholders in 2020
Barrick Gold	1220%
Newmont Mining Corp	799%
China Molybdenum Co Ltd	457%
BHP Group Ltd ADR	450%
Freeport-McMoRan Inc	413%
Polymetal International PLC	400%
Anglo American	310%
MMC Norilsk Nickel OJSC	295%
Glencore Plc	288%
Rio Tinto PLC ADR	251%
Alcoa	188%
Boliden AB	150%
KAZ Minerals PLC	122%
BHP Billiton	119%
Zijin Mining	116%
Fresnillo	103%
Centamin PLC	79%
Norsk Hydro	73%
Rio Tinto	61%
Antofagasta	60%
Petra Diamonds Ltd	-42%

Table of top 20 mining shares favoured by Australian share investors. Source: eToro

Australian investors seeking exposure to EV metals stocks

Australian investors that have taken the step of investing in mining stocks have partly done so because of the media’s narrative about electric vehicles (EVs) and society’s move to new forms of energy.

“We are definitely seeing an increase in demand for people wanting to gain exposure to metals involved in the electric car phenomenon as it is a hot topic at the moment,” Gilbert said.

“The raw material demand for lithium and nickel is increasing and trends show these numbers will grow massively moving into 2024.

“Having said that, names such as Tesla weigh heavily on the price of lithium and are looking to join the supply chain to ensure costs stay low.”

Tesla has been the most popular US stock traded among Australian investors on eToro.

“We’re also seeing this trend for electric vehicle investment among retail investors reflect in the stock market as many of our clients have bought Tesla shares this year,” Gilbert said.

Other notable mining stocks favoured by Australian investors this year are Mexican silver producer Fresnillo, Arabia-focused gold company Centamin, Swedish miner Boliden and Kazakhstan copper company Kaz Minerals.

Chile-based copper miner Antofagasta and Norwegian aluminium firm Norsk Hydro are also in the top 20.

Petra Diamonds, a London-listed African producer is last on the list of miners favoured by Australian investors, possibly because of its lacklustre share performance this year.