Whoops. Highland Gold Mining (HGM) had another annus horribilis in 2006, falling from £2.45 to £1.59. Gold miners are five-times leveraged to the metal price, so almost all have been lacklustre or worse since gold fell back from its 24-year high of $730 an ounce in May.
My bet is that the gold bull is just pausing in a long multi-year rally linked to credit inflation and US dollar troubles. The next phase should see gold producers leaping ahead again, so long as they have not sold production forward through hedging contracts. A rising tide will lift Highland Gold with the others but I prefer Mwana Africa, an Africa-run gold, nickel, and diamond company trading on Aim at 38p with a value of £92m, a tiny fraction of its potential worth. Its key operations are in Zimbabwe, deterring all but the bravest investors despite first-half profits of £10.5m.
President Robert Mugabe is 82, and ailing. Zimbabwe may soon be a normal country again. The shares of Mwana Africa are strapped to a catapult.
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