Japanese Housewives Henpeck Gold Miners

A Japanese housewife and a South African gold miner might seem like an unlikely couple, but market observers say the two may be more closely linked than either would realize.

A Bank of Japan board member has recently credited "Japanese housewives" with stabilizing foreign-exchange markets by betting against foreign institutional investors in the currency markets. Now these housewives -- which basically describes the phenomenon of Japanese retail investors betting on currencies -- are setting their sights on South Africa's burgeoning economy and 9.5% interest rates.

But the knock-on effect of the hike in the value of the rand is being sorely felt in the earnings of South African gold miners such as Gold Fields(GFI), Harmony Gold Mining(HMY) and AngloGold Ashanti(AU). With a stronger rand, the miners' exports are becoming less competitive. And the evidence is in the companies' recent results.

Gold Fields' net income decreased by nearly 50% in the first quarter this year, falling to $51.6 million from $104 million in the previous quarter. Harmony Gold Mining fared similarly, with net income down 45% to $35 million in the first quarter.

It wasn't so long ago that the miners were faced with similar problems. In 2003, when platinum reached a 23-year high, the appreciating rand against the dollar meant that South African producers saw effective declines of 9% on the year as exports became uncompetitive.