Wary SA Miners Eye Record Rand Gold Price

Business Day, Robert Laing

South African gold miners celebrated a record high selling price of R336742/kg on Friday.

If gold sustains its run in local currency, South African gold miners could show an 8% or better gain in average selling prices when they report their June quarter figures.

So far JSE-listed gold mining companies that have reported figures for the March quarter have shown average selling prices of slightly better than R312000/kg—only about 3% more than they received a year earlier.

The rand gold price hit its peak on Friday despite the international price falling back under $1500/oz at the weekend. The rand price was boosted by a strengthening dollar, taking the exchange rate to over R7/$ yesterday.

Gold's previous peak in local currency terms was in 2009 when an exchange rate of worse than R10/$1 translated an international gold price of $994/oz into R321357/kg.

When gold hit its international peak of $1565,60/oz on April 29, an exchange rate of R6,56/$ limited the local price to R325746/kg, or 3,4% below Friday's high.

The local gold price cracked the R330000/kg barrier for the first time on Thursday and jumped another 1,85% on Friday, riding the rand's 1,78% dive against the dollar from R6,89 to R7,01.

Krugerrands and JSE-listed gold exchange traded fund New Gold followed bullion to record highs on Friday. Krugerrands set a record of R10600 for a one-ounce gold coin and New Gold closed at R102,70 on Friday.

While Friday's record rand gold price sent the JSE's gold mining index up 1,86% to close at 2579 points, miners' share prices have not followed the metal's prices to record highs. The JSE gold mining index has yet to regain its 2002 peak of 3504 points.