Three Gold Shares Rising Strongly: Patagonia Gold plc (PGD), Kirkland Lake Gold Inc. (KGI), and Timmins Gold Corp. (TMM)

LONDON — After a steady start last week, gold reversed its earlier gains on Friday and slumped below $1,400 once more. Gold for immediate delivery ended the week 0.8% lower, at $1,383 per ounce.

Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $51 billion SPDR Gold Trust (ETF) (NYSEMKT:GLD) , ended last week 1.1% lower at $132.28, while London-listed Gold Bullion Securities Limited (LON:GBS) slipped 1.4% to end the week at $132.92.So far this year, shareholders of Gold Bullion Securities Limited (LON:GBS) have seen the value of their holdings fall by 15%, while the value of SPDR Gold Trust (ETF) (NYSEMKT:GLD) Trust shares has fallen by 18.3%.

Gold’s big movers
Several miners made gains last week, outperforming the price of gold. Although these companies did not issue major updates last week, their above-average performances suggest investors believe the shares have dropped too heavily following recent gold-price falls: Patagonia Gold plc (LON:PGD) climbed 3.6% to 11.1 pence last week. The firm, whose operations are focused on Argentina, didn’t release any major news, but Van Eck Global, the company behind the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) and the Latin America Small Cap ETF, increased its holding in Patagonia Gold plc (LON:PGD) to more than 5%, a move that suggests private investors may be selectively adding money back into small-cap resource funds.

Elsewhere, Timmins Gold Corp. (TSE:TMM) rose 3.2% to $2.59 last week and is up by 11.6% over last month, despite the price of gold having fallen by nearly 5% during the same period.

Timmins Gold Corp. (TSE:TMM) reported record first-quarter revenues of $45.9 million in May, and its first-quarter profit of $19.3 million was 48% higher than the same period in 2012, which demonstrated how some gold miners can still offer good potential growth and profitability despite lower gold prices.

Meanwhile, Kirkland Lake Gold Inc. (TSE:KGI) has climbed 68% to 340 pence over the last month. Kirkland Lake Gold Inc. (TSE:KGI)’s share price is now 12% higher than it was when the price of gold slumped in mid-April, but gold remains down by 17% since then. Such a strong performance indicates investors are confident about Kirkland Lake Gold Inc. (TSE:KGI)’s low-cost, cash-generative business model and believe the firm can continue to grow profitably at lower gold prices.

Shares vs. commodities
Shares in commodity companies have outperformed their underlying commodities many times during the last ten years, thanks to their ability to magnify their gains through successful development of new resources.


The article 3 Gold Shares Rising Strongly: Patagonia Gold, Kirkland Lake Gold, and Timmins Gold originally appeared on is written by Roland Head.

Roland Head has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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