Gold: hold or fold?

Good Morning Voornaam,

Monday means a brand-spanking-new Ghost Wrap episode. In just 8 minutes, you can get the latest on Afrimat, AngloGold, Harmony Gold, Growthpoint, Mr Price, FirstRand, Standard Bank and Steinhoff. Brought to you by Mazars, this is the most efficient way to get up to date on local market news. Listen to it here>>>

To supplement your learning about local company news, give your general investment understanding a boost by listening to the latest episode of Magic Markets. We only need 20 minutes of your time to discuss topics like equity vs. debt funding (and hybrids i n the middle), the costs and risks of each type of funding and the benefits of having debt on the balance sheet. Listen to Magic Markets Episode 130: Capital Structure 101 at this link>>>

And remember, if you haven't discovered your investment personality yet with Satrix, you should take this online quiz to help you figure out what type of investor you are. I really can't recommend this enough, as understanding your psychology is half the battle won in the markets.

I think gold miners are just for trading

If there's on e conclusion I've reached in the past couple of years, it's that nobody actually understands the drivers of the gold price. It simply hasn't responded in the way that anyone expected to war or inflation, which means that mining groups have been dealing with plenty of cost inflation and not much price inflation to counter it. In my view, this makes them more suitable for trading rather than investing.

The latest AngloGold quarterly update shows how severe the squeeze on margins can be. With a largely flat dollar price year-on-year, a jump in costs of between 14% and 28% (depending where you look) means that profits nosedived. The net result was made even worse by a significant level of borrowings on the balance sheet.

Other updates covered in Ghost Bites this morning include Afrimat announcing the payment terms for the Glenover deal, Investec getting one step closer to the Rathbones deal and Steinhoff releasing possibly its last ever financial report as a listed company. Along with full details on the AngloGold numbers, you can get all of this with just one click in Ghost Bites>>>

The rand enters a new week with trepidation

Our local currency had a soft end to last week, with strength in the dollar driving a decline in the value of the rand and other emerging market currencies. For the first time this month, the rand had a weekly loss. Consolidation of the rand was anticipated, especially given the hawkish stance of central banks at the momen t and related concerns about global economic growth.

TreasuryONE notes that this week will see mostly secondary-level data releases in the US, although Durable Goods Orders and the final Q1 GDP print will both get attention. Locally, Producer Price Index (PPI) figures will be published, though these are not expected to significantly impact the market. And in the UK, the final growth rate for the first quarter is also expected.

With that, I wish you a highly productive Monday!

PS: if you want to learn more about preparing a business for sale, listen to my discussion with business advisor Mark Davidson on the latest episode of the bizv al podcast.

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