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GOLD
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny metal and the most malleable and ductile metal known.
Gold's performance has eclipsed that of gold mining stocks this year, but gold equities now are likely to take the upper hand as the flow of cheap U.S. cash slows and miners boast juicy margins and good growth prospects.
Gold's status as a quasi-currency and safe haven has helped pushed the price of the metal up about 20 percent since the start of the year to above $1,520 an ounce, making it one of the top performing asset classes of 2011.
That compares with an 8 percent drop in the ARCA Gold Bugs index, which includes shares in some of the world's largest gold miners.
The U.S. Federal Reserve's $600 billion bond-buying program, which has kept down interest rates and the dollar; the disaster in Japan and the violence in the Middle East, which have shaken investor confidence; and evidence of sluggish U.S. growth and concerns about China have all boosted gold but dented global stocks. And gold shares have not been immune.
Now that the Fed's easing program has come to an end, Japan is recovering and China has managed to stave off some of the biggest fears about price pressures, there is some doubt that gold can keep up that strong performance.
Gold stocks, meanwhile, are supported by a gold price near record highs and may benefit from improving sentiment for equities markets. They also appear relatively cheap at the price.
Catherine Raw, who helps manage BlackRock's $4.7 billion Gold & General Fund, said the rise in the gold price has outpaced cost inflation in the industry, meaning that gold miners are likely to see their margins and their profits increase this year.
"I, as an investor, would say that in the end, given that believe the world isn't going to collapse, while there maybe a good few months of volatility left, if you're prepared to be patient, then I would see now as a very good buying opportunity," she said.
"The fundamentals of gold companies have improved, and yet their shares have fallen, and you've seen valuations now much more comparable to the rest of the mining sector. So you're not having to pay a ridiculous premium as you would have done say five or six years ago, and yet margins are growing significantly, in a way that they weren't five or six years ago," Raw added.
VALUE SHINES
Shares in Barrick Gold, the world's largest gold miner, trade at nearly 14 times anticipated earnings, while second-largest Newmont and third-largest AngloGold Ashanti trade at roughly 12 times expected earnings.
This compares with base metal producer BHP Billiton, which trades at nearly 17 times expected earnings, or Anglo American, which trades at 40 times earnings.
HSBC Global Asset Management, which recently unloaded most of its holdings of physical gold in favor of gold shares, said gold equities are two-thirds shares and one-third gold price......(by amanda Cooper)
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Gold's performance has eclipsed that of gold mining stocks this year, but gold equities now are likely to take the upper hand as the flow of cheap U.S. cash slows and miners boast juicy margins and good growth prospects.
Gold's status as a quasi-currency and safe haven has helped pushed the price of the metal up about 20 percent since the start of the year to above $1,520 an ounce, making it one of the top performing asset classes of 2011.
That compares with an 8 percent drop in the ARCA Gold Bugs index, which includes shares in some of the world's largest gold miners.
The U.S. Federal Reserve's $600 billion bond-buying program, which has kept down interest rates and the dollar; the disaster in Japan and the violence in the Middle East, which have shaken investor confidence; and evidence of sluggish U.S. growth and concerns about China have all boosted gold but dented global stocks. And gold shares have not been immune.
Now that the Fed's easing program has come to an end, Japan is recovering and China has managed to stave off some of the biggest fears about price pressures, there is some doubt that gold can keep up that strong performance.
Gold stocks, meanwhile, are supported by a gold price near record highs and may benefit from improving sentiment for equities markets. They also appear relatively cheap at the price.
Catherine Raw, who helps manage BlackRock's $4.7 billion Gold & General Fund, said the rise in the gold price has outpaced cost inflation in the industry, meaning that gold miners are likely to see their margins and their profits increase this year.
"I, as an investor, would say that in the end, given that believe the world isn't going to collapse, while there maybe a good few months of volatility left, if you're prepared to be patient, then I would see now as a very good buying opportunity," she said.
"The fundamentals of gold companies have improved, and yet their shares have fallen, and you've seen valuations now much more comparable to the rest of the mining sector. So you're not having to pay a ridiculous premium as you would have done say five or six years ago, and yet margins are growing significantly, in a way that they weren't five or six years ago," Raw added.
VALUE SHINES
Shares in Barrick Gold, the world's largest gold miner, trade at nearly 14 times anticipated earnings, while second-largest Newmont and third-largest AngloGold Ashanti trade at roughly 12 times expected earnings.
This compares with base metal producer BHP Billiton, which trades at nearly 17 times expected earnings, or Anglo American, which trades at 40 times earnings.
HSBC Global Asset Management, which recently unloaded most of its holdings of physical gold in favor of gold shares, said gold equities are two-thirds shares and one-third gold price......(by amanda Cooper)
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