NewGold Issuer Limited said first quarter profit surged 37.40 percent even as the price of gold plunged to the lowest in five years sending a signal that the United States economy is in growth trajectory.
Profit was $8.67 million in 2015, compared with $6.31 million the previous year, the South Africa Company said on the website of the exchange.
Sales increased 22.63 percent to $13.33 million as the company continues to provide investors with the opportunities of investing in the gold bullion market without the necessity of taking physical delivery of gold.
While NewGold Issuer has recorded impressive results that beat analysts’ expectations, commodities markets are in its bear phase as gold dip the most in five years.
Gold for immediate delivery retreated 2 percent to $1,112.04 an ounce at 11:23 a.m. in London.
Big fans of gold have recorded reduced reserve as China, the world’s largest consumer of bullion, reported gold reserves on Friday that were smaller than expected.
Economists attribute the immediate reason for gold’s woes to the strong dollar. Gold is priced in dollars, so if the American currency goes up, investors mark down the yellow metal accordingly.
The rising dollar the backdrop of a U.S’s rejuvenating economy which may witness a rise in the interest rate by the Fed Reserve, is a bad news for gold.
Mining stocks also retreated. AngloGold Ashanti Ltd. declined 5.2 percent. Sibanye Gold Ltd., the biggest producer in South Africa, sank 6.2 percent. The nation’s index of gold-mining stocks fell to the lowest since April 2001.
Platinum for immediate delivery dropped 1.6 percent to $978.76 an ounce, set for the lowest close since 2009. Silver slid 0.6 percent to $14.80 an ounce. Palladium retreated 1.3 percent to $607.17 an ounce.
NewGold Isssuer’s operating profit was up 34.43 to $11.72 million in 2015 as against $8.59 million in 2014. Net margin, a measure of profitability and efficiency moved to 65.05 percent in 2015 compared with 58.05 percent the previous year.
The company’s total assets rose by 9.26 percent to $2.75 billion in 2015 as against $3.03 billion the previous year.
NewGold Issuer is utilizing the company’s assets in generating higher profit as return on assets jumped to 0.31 percent in 2015 from 0.208 percent the last year.
BALA AUGIE
