Australia once again is proving the lucky country with the surge in the gold price boosting the profitability of locally listed gold miners, according to Tim Carleton, chief investment officer at Auscap Asset Management.
“The real winners from a gold price trading above US$4,000 an ounce should be the gold companies,” said Carleton. “The current gold price should result in extraordinary profitability for Australian gold miners, with a very healthy return on capital and strong cash generation.”
According to Carleton, gold appears to be in its third boom since the dismantling of the Bretton Woods system in 1971. “Should it continue, Australian investors, and Australia more broadly, should be a significant beneficiary. So far, the move in the gold price has been extraordinary. The yellow metal has gained US$1,000 (32 per cent) in less than two months to 17 October and US$2,500 (141 per cent) in the past two years. Since the end of 2015, the gold price has gained over 318 per cent to its recent peak of US$4,381.”
