dinsdag 7 oktober 2014

Which gold miner to choose based on AISC

As a follow up of my previous post on the AISC of several prominent silver miners, I took a look at the AISC of the most important gold miners.

As many precious metals investors know, the price of gold (NYSEARCA:GLD) was smashed to 2010 lows of $1185/ounce (see chart from Kitco below).

Gold premiums have been moving up particularly at the Shanghai Exchange while premiums were at 0% throughout the first part of 2014. At the same time we see that someone is raiding the GLD ETF again, just like in 2013. I suspect China is doing this again as SGE withdrawals are at records again.
We see heavy physical demand appearing for gold, so there is light at the end of the tunnel. But nevertheless, investors should mitigate the risks in their gold miners portfolio and we can do that by looking at the costs. In June, 2013, the World Gold Council, an industry group, produced a detailed standard for what miners should include in all-in sustaining costs, or AISC. We will use that metric. If gold prices keep slumping below the all-in sustaining costs of gold production, the company won't be able to make a profit. That's why I summarized a table of the most recent AISC numbers of several notable gold mining companies and compared it to the 2013 numbers.

To read the analysis, go here.

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