It's been a good day for investors in many of Australia's blue chip shares. But not so for the gold miners.
While the Australia and New Zealand Banking Group (ASX: ANZ) share price has jumped 0.5%, and the BHP Billiton Limited (ASX: BHP) share price is up 0.8%, a number of the gold miners have been poleaxed. Check out some of these share price movements for the day:
- The Beadell Resources Ltd (ASX: BDR) share price has fallen 9.4%
- The Evolution Mining Ltd (ASX: EVN) share price has fallen 5.8%
- The St Barbara Ltd (ASX: SBM) share price has been slammed 11.2%
- The Silver Lake Resources Limited. (ASX: SLR) share price is down 9.5%
- And the Newcrest Mining Limited (ASX: NCM) share price has shed 3.6%.
That's not all. Independence Group NL (ASX: IGO), Northern Star Resources Ltd (ASX: NST) and Regis Resources Limited (ASX: RRL) share prices are all sitting deep in the red as well.
These heavy declines appear to have stemmed from a relatively small decline in the spot price of gold. It peaked at around US$1,263 an ounce earlier but has since slipped back to US$1,253. It was by no means a big fall, but perhaps enough to spook investors all the same.
The gold price has helped some of the gold miners to deliver substantial shareholder returns so far in 2017, with a weaker US dollar helping to push its price higher.
But given how far it has rallied this year, and the potential for it to fall if the US dollar begins to strengthen again (or if the US Federal Reserve continues to hike interest rates), investors are right to be cautious.
If a US$10 decline in the price of gold can cause the kind of havoc as experienced by shares of the gold miners today, investors should ask themselves whether they would be comfortable holding onto the shares if gold were to fall, say, 5% or 10%.
If you think you'd lose sleep at night stressing about that, the stocks mentioned above mightn't be for you…
