A total return index measures what an investor actually earned, dividends and all, rather than just where the share prices finished. South Africa's gold and platinum miners have just put about 38% on theirs in a single month, the most in data going back to 2006.
That is a gauge, not a company, and what moves it is the metal underneath. Gold rose nearly 15% in August. The push came from the US Treasury, which stepped into the bond market unexpectedly while trying to hold down the cost of servicing American government debt. Investors read that as a reason to own metal rather than currency, the trade that carried bullion up 65% last year, and they bought.
Why it lands harder in South Africa
A mine's costs do not move much when the gold price does. Wages, diesel and electricity are broadly what they were last month, so most of a higher metal price arrives as profit, and the lower a producer's costs to begin with, the bigger that share is. African producers sit at the low-cost end, which is why they outran their global peers this month. AngloGold Ashanti, Pan African Resources and Gold Fields each put on more than 40%.
The pull was strong enough to move the whole market. Eight of the ten best-performing South African shares in August were precious-metals miners, and the broader benchmark rose 4.6% on their backs, heading for its best month since February.
It has already turned up in a set of accounts
Share prices are opinions until a company reports. Harmony Gold published audited results for the year to June on Thursday, and the average gold price it received over that year was up 35%. Group revenue came in at R99.2 billion.
Friday's closing prices said much the same across the sector. Valterra Platinum rose 5.98%, Impala Platinum 3.52%, Northam Platinum Holdings 2.65% and Sibanye Stillwater 2.47%.
The size of it, kept honest
August beat any single month of last year's rally, which is the comparison worth having, because that rally carried the index up more than 200% as gold hit record after record. One month has also flipped the year: the sector had been down about 20% before August, and it is now in front.
It has not taken the miners back to where they were. The price version of the index, a different series from the total return one and a lower number by construction, closed on Friday at 151,536, against a 52-week high of 193,670.
