The coronavirus gold rush: London’s top precious metals miners soar

The coronavirus gold rush: Value of London’s biggest precious metals miners soars by £11bn so far this year

More than £11billion has been added to the value of London’s biggest precious metals miners so far this year as gold and silver prices have soared.

Shares in FTSE 350-listed companies specialising in the metals have risen by 94 per cent on average.

Gold groups Polymetal, Petropavlovsk and Centamin, and joint silver and gold miners Fresnillo and Hochschild Mining, have all cashed in on the boom in prices driven by the coronavirus crisis, as investors have sought safe havens from tumultuous stock markets.

Shares in FTSE 350-listed companies specialising in the metals have risen by 96 per cent on average

Last week gold prices shot to record highs and broke through the $2,000 an ounce mark for the first time ever.

The yellow metal has rallied by more than a third since the start of 2020 – and bullish analysts believe it could keep climbing to as high as $3,500 within the next couple of years.

Gold is seen as a safe way for an investor to store value during times of economic uncertainty.

Prices have spiked recently as virus cases have kept rising and governments have unveiled multi-billion dollar stimulus plans and lowered interest rates.

This means that usually safe and reliable investments – such as government bonds – could yield almost no return.

Silver prices have also surged by more than 30 per cent so far this year.

And analysts believe it will do well once the world economy begins to rebound, as this will drive demand for silver, which has lots of industrial uses.

Experts at Citigroup have also said that if Joe Biden wins the US presidential election then silver prices, which are currently at around $26.55, could boom if he delivers his sweeping green infrastructure plan.

Precious metal mining companies of all sizes have been boosted by the rise in prices, which makes anything they produce more valuable and can add a hefty amount to profits. But other factors have also helped put a rocket under shares. 

Shares in FTSE 350-listed companies specialising in the metals have risen by 94 per cent on average

Shares in FTSE 350-listed companies specialising in the metals have risen by 94 per cent on average

FTSE 100-listed Fresnillo, which has seven mines all in Mexico, recently reported it mined 3 per cent more silver than it had expected to between April and June, which Jefferies analysts described as a ‘truly standout performance’ bearing in mind that across the country there had been shutdowns at mines because of the coronavirus. 

Fresnillo is so far the year’s best-performing blue-chip stock – with its market value more-than doubling from £4.7billion at the start of the year to £9.5billion now.

Russian gold miner Polymetal is the third-best performing Footsie-listed group, and has soared by 69 per cent, also to £9.5billion.

It too saw gold production outperform last year – by about 2 per cent – during the second quarter.

On the mid-cap index, Egypt-focused Centamin has added more than £1billion to its market value, rising by 73 per cent to £2.5billion. 

Latin America-focused Hochschild has risen by two-thirds, to £1.5billion, and got a lift recently when it said it would stick to its full-year target despite being hit by Covid-closures that disrupted work at its mines in Peru and Argentina.

And Russian gold miner Petropavlovsk has skyrocketed 162 per cent to £1.1billion. 

It produced 39 per cent more gold during the first half of 2020 as years of investing in a highly specialised gold processing plant paid off.

But it has been gripped by a bitter row between management and shareholders – and yesterday former boss Pavel Maslovskiy and founder Peter Hambro were among the directors ousted in a crunch vote brought forward by an activist investor, Everest.