The gold price moved up strongly during the quarter, reaching an all-time high of $1 896/oz, before it too succumbed to pressures on the market, falling back to just over $1 600/oz, still up almost 10% for the quarter. With the rand weakening by 20%, margins for the third and fourth quarters look like being substantially better than those seen earlier this year. The Gold Index was easily the best performing sector for the third quarter, up 19.5% versus the general market's performance of -5.8%.

On the share front, Durban Deep (+33.3%) and Gold Fields (+31.7%) were the best performers, with heavyweight AngloGold up a "mere" 21.1% during the quarter. The other shares were comfortably up, with the exception of Great Basin Gold, which was marginally down for the quarter. Of the other precious metal companies, the platinum shares fell in a range from 9.5% down (Impala) to 25.7% down (Northam). Prices for the PGM metal complex substantially underperformed the gold price, and the platinum index fell by 9.7% for the quarter.

The gold price was range bound during the month, trading between $1 500/oz and $1 550/oz, finishing towards the bottom of the range. The rand continued to demonstrate strength, thus pushing the rand price down by 2.5%. As would be expected, gold shares reacted negatively to this and the index finished down 9.5% for the month of June. Of interest, the gold price finished the quarter slightly above the equivalent price for a platinum group metal (PGM).

On the share front, most of the shares were down by more than 5%. The smaller shares decoupled to a large extent, with both Great Basin Gold and Gold One substantially outperforming the major gold producers. As usual, corporate activity seemed to be the main driver of this. Of the other precious metal counters, Lonmin fell by almost 13%, dragging the Platinum Index down to -4.2% for the month

The first quarter of the year was characterised by unrest in the Middle East and North Africa (MENA). This drove the oil price up by over 20%, and consequently gold was bid higher as investors bought the yellow metal either as a safe haven or an inflation hedge. The bullion actually recovered from a low of $1 320/oz in January 2011 to end the quarter at $1 435/oz. In rand terms, however, the movement was less dramatic, but it put on 5% to close the quarter at R314 000/kg. Against such a backdrop, gold shares outperformed the FTSE/JSE All Share Index (ALSI) and FTSE/JSE Platinum Index by almost 2% and 15%, respectively. With the fear that a high oil price may damage the nascent global recovery, platinum group metals (PGMs) did not fare favourably.

On the share front, Harmony (HAR) was the standout with a performance of 20% during the quarter. The counter was lit up by the market's interest in the company's Wafi-Golpu project prior to an investor's visit to it. There was also a market report which highlighted that the project is so attractive that it makes HAR a potential target for mergers and acquisitions (M&A). The fund took the price appreciation as a way to take some profits on a holding that it has had for a long time. On the platinum side, Impala Platinum (IMP) and Aquarius Platinum (AQP) were impacted by the gazetting of Zimbabwe's Indigenisation law, whereby mining companies are obliged to give up 51% of their holdings in any Zimbabwe project to local partners and/or government. While there is some acknowledgement that there is an element of politicking in these events, the risk levels for IMP and AQP have risen.

The quarter to 31 December 2010 was all about palladium. The poorer cousin to gold increased by 39% during the period, to end at a 10-year record of US$797/oz. As it were, trade data for palladium shipments from Russia to Switzerland for the month of October showed that volumes were rather miniscule compared to historical figures for the same month, strengthening the market belief that Russian stockpiles are substantially diminished. Meanwhile, other precious metals rose by 5% to 8%, with the exception of silver, which was up by 40% during the quarter ending December 2010. Silver is considered the poor man's gold and therefore is a cheaper way to play the precious metals market. The prominent market feature to impact precious metals was the scare over Europe and the ability of some of the Eurozone members to meet their debt obligations. When this fear was at its highest, the dollar gained versus most currencies and commodities. Overall, the dollar gained 3% against the euro during the period in review. Nevertheless, the rand still managed to appreciate by around 5% against the dollar during the fourth quarter, ending the year at R6.60/US dollar.

On the company front, AngloGold Ashanti [ANG] was prominent due to its move to extinguish its hedge book through a rather controversial capital raising exercise that left out many South African institutions. Be that as it may, the move was commendable as it improves the cash flow generation capability of the company. The FTSE/JSE Gold Index ended the quarter up 6.1%, most of which came from Gold Fields [GFI] rising 14% during the period.