One area of the market which has been on fire in 2020 has been the gold sector.
Since the start of the year the S&P/ASX All Ordinaries Gold index (ASX: XGD) has climbed an impressive 27%.
This strong gain has of course been driven by the appreciating gold price due to a number of factors. These include increased demand for safe haven assets, market volatility, ultra-low interest rates, and a weakening U.S. dollar.
The price of the precious metal has been in such strong form that earlier this month it broke through the US$2,000 an ounce mark to reach a record high.
But it’s not only the gold miners that have been profiting from the rise in the gold price. Australian retail investors have been flocking into the sector and look to have made a killing.
What are retail investors buying?
Gold miners Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR) appear to have been particularly popular with retail investors.
According to Northern Star’s annual report, there are 9,552 Northern Star shareholders that have a holding of 1 to 1,000 shares. This represents 52.45% of its shareholders and compares to 6,056 shareholders a year earlier.
Based on the current Northern Star share price, this means over half of the gold miner’s shareholders have holdings of less than $14,000.
It is a similar story for Saracen Mineral. Its FY 2020 annual report shows that 5,955 or 37.2% of its shareholders own 1 to 1,000 shares. With the current Saracen share price at $5.37, this means over one-third of its shareholders have holdings of $5,370 or lower. This is also up strongly year on year.
And if you extend this out to shareholders with 1,001 to 5,000 shares, this increases by a further 5,786 shareholders. Combined, that’s 11,741 shareholders or 73.4% of its total register with shareholdings worth under $26,850. Clearly, interest in Saracen has been strong with retail shareholders based on these figures.
But how have they fared?
It’s fair to say that these investors have done very well by investing in the gold sector.
The Northern Star share price is up 25% year to date and the Saracen share price has zoomed a massive 61% higher in 2020.
And we’re only in August.
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More reading
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Motley Fool contributor James Mickleboro 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 Retail investors are flocking to buy ASX gold stocks Saracen Mineral and Northern Star Resources, and they look to have made a killing appeared first on Motley Fool Australia.
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