Last Updated : 16 September 2010 at 17:20 IST
Gold stocks ride bull wave
- Precious, base metals may trade mixed as upbeat US GDP bolsters Fed QE taper
Spot gold prices fell around 0.7 percent today taking cues from mixed global market sentiments. Also, decline in SPDR Gold holdings by 4 tonnes yesterday acted as negative factor.
- read more
Tanzania, East Africa’s largest cotton producer, is expected to produce 235825 tons of cott..
By Col. Ajay
As per financial astrology, transit OD Sun in Saturn house is ..
With the prices continuously rising, gold is the favourite location for all investors. They also hunt for gold mining companies’ stocks also to make some quick bucks.
But an article appeared in The Wall Street Journal has cautioned the investors to be careful in picking their stocks.
Analysts recommended Kingsgate Consolidated, which is producing at the rate of 130,000oz from its Chatree mine in Thailand, as reliable.
Then there’s CGA Mining, which owns Masbate, The Philippines’ biggest gold project about 350km from Manila.
CGA duly reported the archipelago’s lofty ascent in the Fraser Institute’s updated annual survey, which ranks nations and states according to their desirability for miners.
Masbate, which poured its first gold in May last year, has probable reserves of 3.03 million oz and is pitched at being a 200,000oz operator (having produced 150,000oz in 2009-10).
In other news, Southern Cross Equities won’t be fazed about incurring a 6.6 million shortfall of Chalice Gold shares, the result of underwriting its rights raising to develop the 840,000oz Koka project in Eritrea.
Amid all this lustrous intrigue, analysts rated Toronto and CGA as a speculative buy, as is the case with Chalice and Dampier.
However, gold miners were the big losers on the JSE on Wednesday. The favoured Tier I gold counter, Newmont, continues to hold sway over the global gold subsector group. This is a position Newmont has held for much of this year. It is followed in the Tier I sector, in terms of stock price performance, by Newcrest (busy with a merger with fellow Australia-based global Tier I name Lihir), Barrick (the world's No 1 gold stock by value and production), and two South Africa based names, AngloGold Ashanti, and Gold Fields.
Looking at gold and gold-related stocks, the biggest, in terms of market value, stands as US-quoted SPDR Gold Shares ETF, the world’s biggest gold bullion exchange traded fund. This has a current market value of $52.3bn, compared to Barrick’s $45.1bn. The ETF holds physical bullion on behalf of investors, and does not operate as a mining company, thus removing the many risks that may or may not be associated with digging the stuff out of the ground. The ETF does not accrue, or pay, any form of income, unlike a gold stock, which may pay dividends and/or interest on debt instruments.
Looking at the most in-demand Tier II stocks, Red Back makes a strong appearance, under offer as it is from Tier I gold stock Kinross, which, from a pricing viewpoint, ranks as the bottom performing in its peer group, with the exception of China’s Zijin.
Goldcorp this week announced a take out bid for Andean; investors may perceive, as is also the apparent case with Kinross, that the bids are overpriced. Such a notion has done but little, however, to dampen appetite for Newcrest. The three bids mentioned involve differing components of paper (fresh equity) and cash. These do not appear correlated, as such, with relative stock price performance.
The majority of Tier II gold stocks are well in demand; the only real exception is Yamana, possibly a delayed reaction to the firm's somewhat unconventional style of reporting its production and costs.
- India Crude Oil remains bullish, Copper may trade positive bias
- World Coking Coal supply may remain stable in Dec 13: TSI
- Beat Gold bears with Long position in Gold ETF options
- US Crude Oil rises further on stockpiles drop, Gold falls after short covering rally
- The conflicting economic and religious views on Speculation and Money
- India Crude Oil gets support from fall in stockpiles, Copper sideways