Insights

Struggling ASX gold shares just got upgraded by a top broker

ASX gold shares have been lagging the market and their quarterly updates have been an overall disappointment – but now’s precisely the time to be buying these shares.
The post Struggling ASX gold shares just got upgraded by a top broker appeared first on The Motley Fool Australia. –

ASX gold shares buy investment represented by carton of golden eggs

ASX gold shares have been lagging the market and their quarterly updates have been an overall disappointment – but now’s precisely the time to be buying these shares.

That’s the view of JPMorgan even though the broker found the latest quarterly production reports “underwhelming”.

The broker isn’t the only one that’s been unimpressed. The market has largely cast aside our major ASX gold producers.

ASX gold shares have lost their shine

The Newcrest Mining Ltd (ASX: NCM) share price gained only 6% over the past year, while the Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price fell 3% and 11%, respectively.

In contrast, the  S&P/ASX 200 Index (Index:^AXJO) surged 34% over the same period and is closing in on its record high.

You can blame the falling gold price for the underperformance of the sector. Some of the ASX gold miners were even a little creative in their quarterlies to help paint a better picture, even though that didn’t seem to help much.

Lacklustre quarterly updates

“There were few downgrades to FY21 guidance, but risk remains to the downside, with some hoping for up to 35% of annual production in the final quarter to get them to the low end of guidance,” said JPMorgan

“Costs are under even more pressure, even after shifting as much capex as possible out of AISC and into ‘growth’ capex.”

The broker believes a lot of the cost pressures were self-inflicted due to lower production. Mining a scale game and the less your produce, the worst your margins.

The outlook on the cost front isn’t getting better either. You only need to look at the skills shortage in Western Australia to see that.

Turnaround for ASX gold shares in sight

But there is light at the end of the tunnel for the ASX gold sector. JPMorgan believes gold’s retreat from its record of over US$2,000 an ounce to around US$1,700 an ounce could be on a turning point.

“Gold prices appear to have bottomed in the short term, and we have upgraded our near-term prices by $50, to $1,750/oz, thereby increasing earnings by 1-7%,” said JPMorgan.

“We believe the sector continues to present good value on an NPV [net present value] basis.”

That’s encouraging given that JPMorgan’s forecasts are below consensus. What this shows is that there could be too much bad news baked into embattled ASX gold shares.

ASX gold shares to buy today

JPMorgan upgraded its recommendation on the Regis Resources Limited (ASX: RRL) share price to “overweight” from “neutral” with a 12-month price target of $3.20 a share.

Its key picks in the sector include the Newcrest share price, Northern Star share price, SSR Mining Inc CDI (ASX: SSR) share price and Gold Road Resources Ltd (ASX: GOR) share price.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited, Newcrest Mining Limited, and Regis Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Struggling ASX gold shares just got upgraded by a top broker appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!