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Gold at all-time highs in AUD attractive to offshore investors

The gold price is most commonly quoted in US dollars and recently it has traded over US$1,600 per ounce.

Alkane Resources Ltd - Gold at all-time highs in AUD attractive to offshore investors
The weak Australian dollar makes our gold companies more valuable to offshore investors

Since June 2018, the gold price has been moving steadily upwards from around US$1,300 per ounce to breaking through US$1,600 per ounce last week.

Aside from owning gold for portfolio diversification reasons, investors and traders may also own gold as a hedge against inflation, recessions and geopolitical uncertainty.

Last week, for example, gold broke through US$1,600 as tensions heightened between the US and Iran.

The above daily chart illustrated the momentum gold has had over the past eight months.

By looking at the monthly chart below, gold is yet to reach its post-GFC highs of US$1,900 per ounce.

The ASX is home to a number of major global gold producers, emerging gold producers, developers of gold projects and gold exploration companies.

These Australian gold companies mostly transact in local currency, the Australian dollar, making the relationship between the AUD and the USD very relevant.

Our currency has been falling for the past few years making Australian assets cheaper to offshore investors.

Gold is a good example of how our assets become cheaper to offshore investors.

Due to the weak AUD, the gold price in terms of AUD is hitting all-time highs as shown in the chart below.

Gold is trading at around US$1,562 per ounce, which is the equivalent of A$2,264 per ounce.

With gold hitting yet another all-time high last week at around A$2,350 per ounce, Australian gold companies become more enticing to offshore investors.

Gold producers: GOR, PRU, RSG, PNR, ALK

Gold Road Resources Ltd (ASX:GOR) successfully developed and commenced production during 2019 at its flagship Gruyere gold mine in Western Australia.

The mine, which is held in a 50:50 joint venture with Gold Fields (JSE:GFI), is expected to average 300,000 ounces per annum at an all-in sustaining cash cost (AISC) of A$1,025 per ounce for 12 years.

Perseus Mining Ltd (ASX:PRU) produced 271,824 ounces at US$960 per ounce in FY19 from its 90% owned Edikan Gold Mine in Ghana and 86% owned Sissingué Gold Mine in Côte d’Ivoire.

Development of the fully funded Yaouré gold mine in Côte d’Ivoire, Perseus’s third operation, will be a focus in the 2020 financial year and drive production towards 500,000 ounces per annum by FY22.

Resolute Mining Limited (ASX:RSG) produced 384,731 ounces in calendar year 2019 from its Syama Gold Mine in Mali, Mako Gold Mine in Senegal, Bibiani Gold Mine in Ghana and Ravenswood Gold Mine in Queensland.

Notably, Syama is expected to become the world’s first fully automated mine, targeting life-of-mine annual production of 300,000 ounces per annum at an AISC of less than US$750 per ounce.

Pantoro Ltd (ASX:PNR) successfully developed the Nicolsons Gold Mine in Western Australia producing around 50,000 ounces per annum for the past two years.

The company has recently acquired 50% of the Norseman Gold Project with plans to develop its 4.4 million ounce resource grading 3.9 g/t gold.

Alkane Resources Ltd (ASX:ALK) aims to produce 30,000-35,000 ounces in FY20 from its Tomingley Gold Operations in New South Wales.

With $74 million in liquid assets and no debt at the end of the September 2019 quarter, the company is well funded to expand the resource base through exploration at the Tomingley Project.

Quick facts: Alkane Resources Ltd

Price: 0.65 AUD

Market: ASX
Market Cap: $377.02 m

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