Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Over $20 billion in global gold deals were completed or pending last year, the highest value since 2011 according to Bloomberg, as the world’s largest miners of the precious metal continue to pull their portfolios to pieces as a way to weather low prices and an ongoing downturn.
Far from winding down, this trend is set to pick up, say analysts, especially after the latest announcements by top miners such as Barrick Gold (TSX:ABX) and Newcrest (ASX:NCM) — the No.1 gold miner on the ASX— to put mines up for sale.
Northern Star Resources (ASX:NST) is a good example of how good it is to fish in troubled waters. Since 2013, when it began acquiring $166 million worth of mines from Barrick and Newmont (NYSE:NEM), the Australian gold producer has increased its market value more than threefold, to US$940 million.
“It’s a pretty simple strategy,” Bill Beament, chief executive officer of the company told Bloomberg. “That sweet spot in the middle is companies our size. We are the Goldilocks gold producer.”
It’s precisely Down Under where experts predict the next round of mergers and acquisitions will take place. Australian gold mines, analysts argue, have largely become more profitable during the past year on the back of the falling local dollar and a trend for miners to axe costs.
One of Australia’s more acquisitive bullion miners, Evolution Mining, predicts big companies will continue to divest mines in the region. The company missed out on the Western Australian goldmines that Barrick and Newmont Mining sold last summer, but hasn’t given up.
Jake Klein, the firm’s managing director, told The Sydney Morning Herald Wednesday that his company was still keen to make acquisitions if good deals could be found.
The yellow metal was fetching $1,209.30 an ounce on Friday at 9:20 am ET, having dropped 7% in the past four weeks.
Image: The Grey Nomads| Flickr Commons.
