PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

South Africa has traditionally been a gold-producing country and gold shares used to make a large proportion of the JSE, but today, the gold industry has shrunk substantially and gold shares are no longer the force that they used to be. Gold is a commodity, the price of which is set in London and on international markets. An investment in gold shares is thus a play of the future price of bullion. Marginal gold shares have a cost of extraction which is very close to the current gold price - which makes them very sensitive. Heavy-weights have a cost of extraction which is comfortably below the current gold price and so they are not as much impacted by the daily and weekly fluctuations in the gold price. The strength of the rand can also be a major factor with gold shares as they receive their income in rands - so you should focus on the rand price of gold rather than the US dollar price.

Edit Glossary Term