Why the Ramelius (ASX:RMS) share price is at a new all-time high

Here’s why the Ramelius Resources limited (ASX: RMS) share price just hit a new all-time high today. What’s next for this ASX gold miner?
The post Why the Ramelius (ASX:RMS) share price is at a new all-time high appeared first on Motley Fool Australia. –

gold mining shares

The Ramelius Resources Limited (ASX: RMS) share price has today hit a new all-time high. At market open this morning, the Ramelius share price opened at $2.37 and immediately shot higher, hitting the new high watermark of $2.50 just after midday. The shares have cooled somewhat since, but are still sitting at $2.44 at the time of writing. Ramelius continues to deliver for its shareholders. This is a company that was just 19 cents a share 5 years ago, and $1.20 just 1 year ago.

So what is behind this latest move upwards for this ASX gold miner?

Why the Ramelius share price is shooting up today

Along with other ASX gold miners, Ramelius has been in a nice tailwind all year. At the start of 2020, gold was priced at US$1,519 an ounce. Today, the gold price is US$1,965, up nearly 30% year to date. Back in July, gold broke its 9-year record high of US$1,921 an ounce and has climbed higher ever since, topping out at over US$2,061 in early August.  It seems a pandemic, uncertain economic times and massive share market volatility are a perfect cocktail for a safe haven asset. Who knew!

As a gold miner, Ramelius is leveraged to the price of gold, which means if gold rises, the Ramelius share price will likely rise by a multiple of the gold appreciation. That explains why Ramelius shares have been charging higher all year and are up 93% year to date.

Investors not bothered by insider selling

Investors also don’t seem to mind that the company’s managing director Mark Zeptner, as well as non-executive director Michael Bohm, have been offloading shares recently. According to an ASX filing on 11 September, Mr Zeptner has recently offloaded 1.75 million shares, with Mr Baum unloading 237,500 shares as well. Apparently, Mr Zeptner’s sale was for the purpose of meeting ‘tax obligations’.

But earlier this month, we also got some news that would have boosted Ramelius’ appeal to investors even more.

Enter the ASX 200

It was announced on 4 September that Ramelius will officially join the S&P/ASX 200 Index (ASX: XJO) from 1 October. The ASX 200 is the ASX’s most popular and widely quoted index and is also the foundation for most ASX-tracking index exchange-traded funds (ETFs). ASX 200 index funds such as the iShares Core S&P/ASX 200 ETF (ASX: IOZ) blindly follow the ASX 200, so if Ramelius is included in the index, ETFs like IOZ will buy Ramelius shares to reflect this in their holdings.

This means that on 1 October, there is likely to be an influx of buying pressure on the Ramelius share price. Investors know this and will probably buy into Ramelius before this happens today.

That, in my opinion, is why Ramelius is at a new all-time high today.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Ramelius (ASX:RMS) share price is at a new all-time high appeared first on Motley Fool Australia.

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