GOLD STOCKS NEWS – Gold stocks opened lower but quickly rebounded into positive territory on Wednesday. The gold stocks sector has continued to advance in June, with the S&P/TSX Global Gold Index – comprised of gold miners listed in Canada – rising 5.35% versus a 0.5% return for the S&P 500 Index. Gold stocks have outperformed the broader market year to date by a considerable margin as well, with the S&P/TSX Global Gold Index up 12.8% while the S&P 500 Index has fallen 1.8%. Despite this outperformance, however, gold stocks have not been able to avoid the recent volatility afflicting the broader market ahead of the G20 summit which convenes later this week in Toronto, Canada.
Although the gold price has undoubtedly been the major factor in the performance of gold stocks over the past year, a number of gold shares have distinguished themselves through exploration success and operational improvements. The ability to discover mineable ore which can be profitably extracted even at much lower gold prices – and the competence to manage the political, labor, and input-cost risks that come with gold production – command richer premiums from investors in gold stocks.
One such example among gold stocks with an improving fundamental profile is San Gold (SGR.TSXV). The gold explorer and producer has drawn favorable comparisons to Goldcorp (GG) in its consistent success in discovering high-grade gold veins. Earlier this month San Gold reported that surface exploration drilling has significantly expanded the vertical dimensions of the company’s 007 zone at the Canada-based company’s Rice Lake Mine property.
The drill results confirmed the existence of a continuous, high grade deposit from surface extending to a depth of 450 meters. Although San Gold is still in the ramp-up phase of production, it has nearly tripled its audited gold resource ounces since acquiring the Rice Lake property in 2004. As a result of its significant progress, shares of San Gold have climbed to a new all-time high of C$5.00 and are currently up 22.7% in 2010 – making SGV.TSXV one of the top performing gold stocks in Canada this year.
In recent years several small- and mid-cap gold stocks such as San Gold have also continued to outperform large-cap gold stocks. However, shares of a few of the world’s largest gold miners have picked up the pace in 2010. The prime example of this is Newmont Mining (NEM), the only gold stock included in the S&P 500 Index and the second largest gold producer in the world.
Coming into 2010, Newmont’s stock was at levels seen during most of 2006 and 2007 – when the price of gold was less than half of its current price. However, shares of NEM have climbed 23.6% to $59.52 this year as the company has generated record earnings and cash flow amid a gold price that has remained above $1,000 per ounce for over eight months. While Newmont’s stock has yet to surpass its all-time high of $62.72, several analysts have 12-month price targets above $70 per share.
