Foreigners aren’t buying into SA’s gold rally

By Robert Brand and Adelaide Changole

Not even a record rally can entice foreign investors to South African gold stocks.

With gold prices soaring on the heels of monetary stimulus, shares in producers of the metal are back in favor around the world. But investors are fretting about supply disruptions at South Africa’s mines as a result of soaring Covid-19 infections, according to Benguela Global Fund Managers Ltd.

Non-residents sold a net 2.1 billion rand ($128 million) of the country’s gold shares since the beginning of last week through Tuesday, even as a Johannesburg index of gold miners climbed more than 6% to the highest on record. That’s more than half of the total outflows from the equity market in that period, more than any other sector, according to JSE Ltd. data.

Virus infections in Africa’s most-industrialized economy climbed above 370,000 this week, making it the fifth-worst affected country globally. Gold mines, already among the world’s highest-cost producers, are struggling to boost output after a lockdown that temporarily closed down operations.