Our biggest producers are swimming in green as gold breaches $US1600/oz

Pic: John W Banagan / Stone via Getty Images

Today, Iran fired missiles at Iraqi army bases housing US troops — retaliation for a US drone strike that killed a leading Iranian military general last Friday.

This tension between the US and Iran is causing volatility for global markets this week.

That volatility means that investors are turning to safe haven investments, like gold.

READ: Gold Digger — A weekly recap of the news driving ASX small cap gold stocks

Today, gold prices hit eight-year highs of $US1606/oz – or an incredible $2335/oz in Australian dollar terms.

That represents big profit margins for most producers, who (on average) report all in sustaining costs (AISC) of between $1000/oz and $1400/oz.

AISC is good measure to appraise the profitability of a project because it includes everything, from mining, refining and transport, through to administration and exploration.

And it’s clear our miners are benefitting with all but one — Northern Star (ASX:NST) – in positive territory today. Just check out this chart:

CODE	NAME	PRICE [Wednesday intraday]	DAILY % CHANGE	MARKET CAP
NCM	Newcrest Mining	$31.82	3.45%	$24.55 billion
EVN	Evolution Mining	$3.96	3.39%	$6.08 billion
NST	Northern Star Resources	$11.88	-0.17%	$8.79 billion
RRL	Regis Resources	$4.49	3.94%	$2.28 billion
SAR	Saracen	$3.68	4.55%	$4.05 billion
SBM	St Barbara	$2.91	3.56%	$2.02 billion
RSG	Resolute Mining	$1.29	4.88%	$1.16 billion
GOR	Gold Road Resources	$1.41	4.06%	$1.23 billion
DCN	Dacian Gold	$1.70	3.03%	$388 million
RMS	Ramelius Resources	$1.40	3.89%	$922 million
SLR	Silver Lake Resources	$1.41	4.83%	$1.23 billion
OGC	OceanaGold	$3.01	6.36%	$1.87 billion
PRU	Perseus Mining	$1.14	2.69%	$1.34 billion
RED	Red 5	$0.36	7.46%	$454 million
WGX	WestGold Resources	$2.37	2.16%	$949 million

Gavin Wendt, senior resources analyst and founding director of MineLife, says gold has begun 2020 with considerable momentum following an 18 per cent gain in 2019.

“What’s even more significant for our domestic producers is that the A$ gold price is up about 30 per cent over the past 12 months, crashing through the $2300 per ounce mark in today’s trading,” he told Stockhead.

“With interest rates rises in the US unlikely during the first half of this year, the ongoing US-China trade imbroglio and escalating Middle East tensions, gold really is a no-brainer.

“The next major milestone for gold will be its all-time high just above $US1900 per ounce. Meanwhile, a modest outlook for the A$ means domestic gold prices are set to go even higher, which is fantastic news for domestic producers.”

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