According to experts, large gold mining companies have finally waited for their shining moments. Prices for the yellow metal have recently soared. Notably, they are still holding their positions. Gold has once again become the market leader, analysts say.
Due to the rise in the prices of gold, the iShares MSCI Global Gold Miners ETF stock price, which best reflects the situation in the sector, increased to its highest level in three years. Since the end of May 2019, the shares have achieved an impressive growth of 28 percent.
The high popularity of precious metals among global investors is regarded by experts as one of the reasons for such growth. Gold is a direct investment that is highly dependent on the monetary policy of leading regulators, demand for precious metals, and central banks' asset management policies. At the same time, major mining companies depend on their own operational and management risks, as well as political ones. Acacia Mining is one of the gold mining enterprises which has faced such difficulties. In 2010, it separated from Barrick Gold, the largest gold miner. Its facilities are mainly located in Tanzania, East Africa. However, due to the disputes with the country's government, Acacia Mining failed to organize exports of gold from its enterprises.
Trying to solve this problem, Barrick Gold proposed to buy out the Acacia Mining shares and even tried to reach an agreement with the Tanzanian government. Unfortunately, all the attempts were unsuccessful. Later, Acacia management accused its parent company of creating difficulties in negotiations and trying to buy the assets of Acacia Mining at a knockdown price. As a result, Acacia Mining stock price rose by only 3 percent per year, while its recent hike was 3.3 percent.
Despite the challenging geopolitical conditions, shares of another company, Harmony Gold Mining, operating in South Africa, went up by 25 percent. According to experts, this was due primarily to sound management policy. Likewise, despite past incidents with minority shareholders, the shares of the Russian companies, namely Petropavlovsk and Polymetal, were up by 56 percent and 19 percent, respectively. Their rates were strengthened after hostile comments coming out of the US towards Russia.
Experts believe that despite the active increase in prices for gold, large miners should be ready for an unexpected turn. The situation may change at any time, analysts warn. Gold is still considered a safe-haven asset, rather than the shares of the mining companies that produce it.
