Saturday, January 20th, 2018

Australian Gold Stocks: Mining Companies & Junior Miners

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Gold is one of the main commodity exports of Australia. In fact, gold ranks number four [1] behind coal, iron ore and crude petroleum as a primary export. The main markets for Australian gold are India, Thailand, UK, Korea and Singapore. As a major commodity, this sets the scene for gold exploration in Australia. Australian gold companies are active in prospecting and production and the major player’s trade actively on the Australian Stock Exchange. Gold stocks in Australia can be divided up into major players and junior miners. The major players have established production facilities and are active in further gold prospecting. The junior Australian gold stocks are often speculative in nature and primarily focus on prospecting.

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The All Ordinaries Gold Index is the Australian benchmark gold Index. It is comprised of the major Australian gold mining companies. In terms of market capitalization, the top five Australian gold mining stocks are: Newmont Mining Limited, Newcrest Mining Limited, AngloGold Ashanti Limited, Sino Gold Mining Ltd and Centamin Egypt Ltd. The ratio of gold composition for ASX companies above the $10 million threshold is made up of 30% producers, 20% developers and 50% explorers. This is for companies with a market capitalization above $10 million and who operate predominantly in gold mining related activities. [2]

There are many speculative gold stocks in Australia who are focused on prospecting and developing activities. In fact, 70% of Australian gold mining stocks are considered junior explorers. New floats for gold prospecting companies tend to rise considerably in line with rises in the gold price. Likewise, when the price of gold goes down there is less profit potential for new discoveries and the rate of new floats tends to diminish. Overseas investors and traders who are interested in the Australian gold sector can investigate the opportunity offered by this sector further. With the current pressure on the US dollar and inflation expectations, this bodes favorably for Australian gold stocks. Since the US dollar and gold are inversely correlated, when the US dollar declines, gold tends to go up which is theoretically good for Australian gold mining stocks.

How can you find out more about Australian Gold Stocks?

The Gold Index symbol is XGD. If you want to learn more about its constituents you can go to the Standard and Poor’s website [3] and review the index components. An index can change according to the market capitalization of companies so this is the best approach. Once you know the symbols you can further review company information by entering the symbol code into the ASX website or by reviewing the company information on fiancé portal sites such as Yahoo Finance.

References:

[1] Parliament of Australia: Parliamentary Library

[2] Goldnerds – The Australian Gold Sector in brief

[3] Standard and Poors – Index Composition

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