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May 27 2012 11:21
There's a price war raging between South Africa's cellphone networks after Cell C lowered the rates of its prepaid calls by more than 34%.
May 27 2012 13:09
The oversupply of golf estates has claimed another victim.
May 28 2012 07:53
The City of Cape Town has spent R175m running the Myciti bus service since the Soccer World Cup compared to an income of R35m, a report says.
IF WE USE the idea of roadworthy for cars we could probably warn that South Africa's gold shares are no longer "investment-worthy". If you're in SA and really want to be part of the fashion for gold, it would be much better to buy gold itself. Years ago the Krugerrand was the easiest way. Absa's paper - or "NewGold," listed on the JSE under the code GLD - is the best option for anyone who really wants gold.
The graph shows that the price of GLD - which is real gold Absa holds in safekeeping for you - did much better over the past two years than SA's gold producers, mainly the three big guns: AngloGold Ashanti, Gold Fields and Harmony. The financial results of all three are usually so full of excuses that investors who are disappointed so often may start wondering whether the mines' business is producing gold or dreaming up excuses.
The impending sharp increase in the cost of electricity could also put the gold producers' profit margins under pressure during the next three decades, and even a substantial increase in the gold price might not be enough for them to sustain their profitability.
Keep away from South African gold. Rather buy Absa's GLD. Every GLD represents one-hundredth of an ounce of gold and are therefore easily affordable at R83,50 apiece. Krugerrands are becoming expensive at R8 350 each. Absa has issued lots of GLDs already - R14bn worth of them at current prices. The total market value of Satrix 40 is only just over R6bn. That shows clearly GLD is now the favourite route for gold bulls. Please don't try to go against the current favourite: follow the majority rather than trying to choose between the three big gold producers yourself.
If you already have legal money overseas - especially in sterling or US dollar deposits - it might be a good idea to look at Barrick, Newmont or even Goldcorp. Over the past year the share prices of all three rose by around 125% in US dollars. Admittedly, the share prices of both AngloGold (185%) and Gold Fields (145%) did better than the US ones over the past year, but too many excuses and the impending increase in the price of electricity may justify a switch to one of the US counters.
(See Technical Analysis on p30.)
