Gold shares may rise after the Swiss central bank set a minimum exchange rate for its currency, a rival to gold as an investor haven, Collins Stewart Plc said.
“The move effectively pegs the Swiss Franc against the euro and now removes one of gold’s competitors as a safe haven asset,” Collins Stewart said in a note today. “This further strengthens the buying case for gold and in particular gold equities that have underperformed the commodity in the last year,” it said, citing African Barrick Gold Plc and Centamin Egypt Ltd. (CEY) as the cheapest among U.K.-based gold miners.
The franc surged to records as investors sought protection against a worsening debt crisis in Europe. The Swiss National Bank set an exchange rate of 1.20 to the euro, snapping four days of gains for the franc and pushing the currency down as much as 9.9 percent to the weakest level since July.
Gold shares have failed to match gains in bullion prices.
The benchmark Philadelphia Gold & Silver Index of companies including Barrick Gold Corp. and Newmont Mining Corp. has slid 1.7 percent this year compared with a 33 percent jump in gold. The metal reached a record $1,921.15 an ounce today.
To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net.
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
