Gold still glit­ters Min­ing shares, which have been un­der the cosh for some time, have re­bounded to the de­light of many die-hard in­vestors. We look at a gold share that prom­ises some ex­cite­ment.

Finweek English Edition - - MARKETPLACE - Ed­i­to­rial@fin­week.co.za

that com­mod­ity shares still en­joy the sup­port of mar­ket play­ers is borne out by the ta­ble of the strong­est shares on the JSE. With the ex­cep­tion of Blue­tel, the top 10 on the lat­est list are all min­ing shares.

It is note­wor­thy that the three gold shares at the top of the list are sup­ported by a gold price that’s had a shift in gears. For the first time since Jan­uary 1913 the 200day ex­po­nen­tial mov­ing av­er­age (EMA) of the dol­lar gold price has made a sharp up­ward move, which means that there is steady and firm buy­ing pres­sure. The price has in­creased by just over 20% since reach­ing its low in De­cem­ber be­fore a bit of a pull­back oc­curred. The 200-day EMA will be tested as a sup­port level at around $1 160-$1 170 an ounce. Should buy­ers en­ter then, or ear­lier, at say $1 200, then it will be con­fir­ma­tion that gold has en­tered a bull phase that could last for quite some time.

At the mo­ment there is much spec­u­la­tion as to the mes­sage that the strength­en­ing of the gold price could hold. There is spec­u­la­tion that per­haps it is sug­gest­ing that some or other cri­sis is on its way. Be that as it may, there is re­newed in­ter­est in gold and in our gold shares, with es­pe­cially Sibanye among the lat­ter, where in­ter­est­ing things are hap­pen­ing.

The com­pany’s CEO, the able and ad­ven­tur­ous Neal Frone­man, makes no bones about it that he wants to de­velop a va­ri­ety of in­come streams for the group. He al­ready has a firm foot in the door with plat­inum through Sibanye’s pro­posed takeover of Am­plats’s mines in Rusten­burg and those of Aquar­ius Plat­inum.

In min­ing cir­cles it is said that one of his next targets will prob­a­bly be Brian Gil­bert­son’s Pallinghurst.

Pallinghurst Group’s share price has been go­ing nowhere since 2009, and Gil­bert­son has made it known that not only is he un­happy in this re­gard, but he can­not fathom why the mar­ket has rated Pallinghurst so poorly. It has in­ter­ests in min­ing ven­tures, in­clud­ing gem­stones, as well as the lux­ury jewellery brand Fabergé.

Coal, which cur­rently finds it­self in a de­press­ing bear mar­ket, is also be­ing looked at. Given the state of the mar­ket, Frone­man may be able to ac­quire as­sets at bar­gain prices.

This means that Sibanye could cause con­sid­er­able ex­cite­ment over the next year or two, which will hope­fully be sup­ported by a firm gold price.

Among the weak­est shares, Aveng still has the du­bi­ous hon­our of be­ing sec­ond on the list, while other ma­jor com­pa­nies such as PPC, MTN and Sun In­ter­na­tional are clearly not find­ing favour.

Quite a num­ber of shares are show­ing in­ter­est­ing pos­si­bil­i­ties af­ter they have bro­ken out. Kap In­dus­trial Hold­ings was no­table when it rose from 611c to 675c at the end of last month. Corona­tion, one of the big­gest dis­ap­point­ments of 2015, is also start­ing to show new life. At the time of writ­ing it’s 62% up on its low in Jan­uary this year.

PSG, which of­ten dom­i­nated last year’s list of the strong­est shares and then dropped by more than 40% from its 2015 high, has also im­proved markedly – with about 33% since reach­ing its low in Jan­uary. Even Sa­sol, which is im­pacted by the moods of the oil mar­ket, looks in­ter­est­ing. At the mo­ment it’s test­ing its 200-day EMA. Should it bounce back from this sup­port level, it could be an in­di­ca­tion that it is be­ing ac­cu­mu­lated by pa­tient cap­i­tal.

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