South African Gold Stocks Have Biggest 2-Day Gain in 7 Years

By Janice Kew

Sept. 18 (Bloomberg) -- South African gold stocks headed for their biggest two-day gain in more than seven years after prices of the precious metal soared as investors sought a safe haven from credit turmoil.

The seven-member FTSE/JSE Africa Gold Mining Index climbed 6.6 percent to 1,868.23 as of 12:35 p.m. in Johannesburg, a gain of 17 percent in the past two days, the biggest two-day advance since Feb. 27, 2001.

Gold for immediate delivery extended its biggest jump in 26 years, gaining as much as 3.4 percent to $892.93 an ounce after jumping 11 percent yesterday in the wake of the U.S. government's takeover of American International Group Inc.

About $3.6 trillion of market value has been erased from global stocks this week as financial market turmoil intensified with the bankruptcy of Lehman Brothers Holdings Inc.

``It's scary how fast the gold price has risen,'' David Shapiro, a market analyst at Sasfin Bank Ltd. said in a phone interview in Johannesburg. ``It shows how much panic is in the market.''

AngloGold Ashanti Ltd., the world's third-biggest gold producer, gained 3.9 percent, to 211 rand, extending yesterday's 8.1 percent rise. Gold Fields Ltd., South Africa's second-largest gold producer, rallied 7.9 percent, to 74.18 rand. DRDGold Ltd., South Africa's fourth-biggest, jumped 9.5 percent, to 4.25 rand.

Barrick Gold Corp., the world's largest gold producer, jumped 13 percent in New York yesterday and Newmont Mining Corp., the second biggest, rose 9.4 percent.

``I've never seen such panic buying of bullion before,'' Shapiro said. ``But if things worsen in financial market there will be a point where even the gold price will drop.''

To contact the reporters on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net.