Guojin Securities: The current market value of gold stocks does not reflect many expectations of rising gold prices, and there is plenty of room to “make up for the rise”
The China Gold Association released data on April 26. In the first quarter of 2024, China's domestic raw gold production was 85.959 tons, an increase of 1.16% over the previous year.
Against the backdrop of a strong rise in gold prices, gold mining companies have strengthened their will to carry out geological exploration and infrastructure technology improvements. Gold production has continued to grow. Gold consumption is 308.905 tons, up 5.94% year on year.
Among them, gold jewelry consumption was 183.922 tons, a year-on-year decrease of 3.00%; the year-on-year consumption of gold bars and coins was 106.323 tons, an increase of 26.77%; and industrial and other gold consumption was 18.660 tons, an increase of 3.09% over the previous year.
High gold prices have suppressed the consumption of gold jewelry, but have boosted the consumption of gold bars and coins with relatively low premiums.
Factors such as rising inflation and declining grade will cause gold AISC costs and mine incentive prices to gradually rise. From the perspective of cost support, the long-term momentum of gold prices will increase.
Furthermore, the central bank's continued purchase of gold may provide long-term upward momentum for gold prices.
Guojin Securities released a research report saying that in 2024, the growth rate of the cost of gold stocks will slow down. It is expected that in 2024, when gold prices rise and cost control is relatively stable, gold stocks will perform well, and the current market value of gold stocks does not reflect many expectations of rising gold prices, and there is plenty of room to “make up”. It is expected that gold stocks will usher in the main upward trend.
Companies related to the gold sector:
Zijin Mining (02899), Zhaojin Mining (01818), Shandong Gold (01787), China Gold International (02099)