ASX Gold Counters Lag Gold Price Gains

A divergence between the gold price and the performance of some ASX gold stocks is pronounced. Record gold spot prices have not necessarily translated into gains for ASX gold counters but there are grounds for optimism.

ASX Gold Stocks

Silver Lake Resources (ASX: SLR) almost doubled since October last year but the share price is flat at $1.05 for the year.

Bellevue Gold (ASX: BGL) doubled to $1.85 and still up 25% in 2024.

Red 5 (ASX: RED) rose 105% in 2023 and has held most of the gains.

Evolution Mining (ASX: EVN) has not moved much at all with the stock price giving up a 30% gain made in 2024 to be flat at $3.00.

Focus on interest rates

With lower US real yields and a weaker US dollar a real possibility in 2024-25, the gold price is likely to remain ebullient.

Increasing Western investment demand due to a rising need to hedge portfolios this year, could once again become a dominant and positive driver of gold prices.

Industry cost inflation has been a drag on perceptions of gold producer profit margins.

If inflationary pressures have subsided, the stock prices of gold miners could have a leg-up in 2024-25. This would then jump-start the prospects of small cap gold explorers.

ASX Gold ETFs

An Exchange Traded Fund (ETFs) that provides an exposure to gold is another alternative to consider.

It’s a tale of two cities as those holding physical gold fared better than ETFs with gold companies in their portfolio.

Physical Gold ETFs in Australia include:

VanEck Gold Bullion ETF (ASX: NUGG)

NUGG has climbed 16% since the start of 2023.

Perth Mint Gold ETF (ASX: PMGOLD)

PMGOLD climbed 15% to its current price of $31.00.

Gold ETFs that own shares in gold mining companies:

Betashares Global Gold Miners ETF (ASX: MNRS)

MNRS was up 20% but has now given up those gains for a 15% fall to $4.49.

VanEck Gold Miners ETF (ASX: GDX)

GDX also climbed in but is now slightly lower at $41.00 in February 2024.

There you have it. If you’re a “goldie” there are grounds for the hypothesis that macro factors could close the gap between the raging Australian dollar gold price and the flat performance of many ASX gold counters may close in 2024-25.

If that premise is delayed, gold plays will remain volatile.

 

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