It may be the Chinese year of the sheep, but for investors 2015 could also become the year of ASX-listed gold miners.
Despite a relatively flat gold price, big Aussie gold miners including Newcrest Mining Limited (ASX: NCM) and EVOLUTION FPO (ASX: EVN) have been quietly crushing the market so far this year.
Compared to a 4% rise in the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) shares in Evolution have exploded 82%, while Newcrest Mining and Northern Star Resources Ltd (ASX: NST) have shot up 31% and 45% respectively.
In fact, as it stands today, the price of gold is at almost the exact same price it was in the first week of January this year. So what is driving these dazzling rises?
Strong gold production and lower costs have been the key drivers behind the rise for Evolution and Newcrest Mining.
In a recent interview with Bloomberg, Evolution executive chairman Jake Klein noted that the fall in other commodities, including oil and iron ore, was great for gold miners. Falling oil has led to lower diesel prices, while the slumping iron ore price has increased the availability of labour for gold miners.
Coupled with the weaker Aussie dollar the result is rocketing margins for the two gold miners, even with a flat gold price.
Northern Star meanwhile continues to operate on a low cost base and has reported that it has raked in a huge $131 million in free cash flow over the first three quarters of 2015. The company has no debt so it is likely investors are anticipating a generous dividend when it announces its full year result later this year.
All three miners are benefiting from an increase in optimism around the price of gold. The commodity has shown greater stability in price so far this year and there is growing hope that inflation will begin to rise and push demand for gold higher.
