Our biggest producers are swimming in green as gold breaches $US1600/oz
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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.
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 $1400/oz.
AISC is good measure to appraise the profitability of a project because it includes everything, from mining, refining and transport, through to administration and exploration.
And it’s clear our miners are benefitting with all but one — Northern Star (ASX:NST) – in positive territory today. Just check out this chart:
Gavin Wendt, senior resources analyst and founding director of MineLife, says gold has begun 2020 with considerable momentum following an 18 per cent gain in 2019.
“What’s even more significant for our domestic producers is that the A$ 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.”