GOLD STOCKS NEWS – Gold stocks turned substantially higher alongside the yellow metal on Tuesday, with the Market Vectors Gold Miners ETF (GDX) advancing $1.85, or 3.3%, to $57.88 per share in mid-day trading. The GDX traded down to $54.94 this morning alongside the broader equity markets, but the gold stocks ETF subsequently rebounded as gold futures surged from $1,655 to over $1,700 per ounce. Gold stocks in Canada posted strong gains as well, with the S&P/TSX Global Gold Index up 3.1% at 397.12.
The rally in gold stocks and the yellow metal came despite two key factors that have kept a lid on the gold sector in recent weeks: a broad-based sell-off in equities and strength in the U.S. dollar. Today’s action has been more reminiscent of how the sector performed in August, when gold stocks finally began to outperform the price of gold on the upside. While one day does not make a trend, today’s developments are an encouraging sign for a sector that has faced considerable selling pressure since the middle of September.
Several large-cap gold stocks and GDX components were in the news this morning after receiving positive commentary from Wall Street analysts, as follows:
Agnico-Eagle Mines (AEM.TSX, NYSE: AEM) was upgraded by Macquarie to Neutral from Underperform and its C$59.00 price target was maintained. In the firm’s report, analyst Tony Lesiak noted that “AEM’s share price has fallen over 23% since the 19 October announcement that mining operations at Goldex would be suspended indefinitely. The share price decline far exceeds our undiscounted valuation for Goldex…We are raising our rating to Neutral from Underperform to reflect our belief that at current share price levels Agnico-Eagle shares should no longer be sold.”
Eldorado Gold (ELD.TSX, NYSE: EGO) was upgraded by Macquarie to Neutral from Underperform as well, and the firm raised its price target to C$18.50 from C$18.00. Lesiak raised his rating after a site visit to several of Eldorado’s key assets in Turkey and China. “Overall, the site visits confirmed the expansion potential of Efemcukuru and Kisladag in Turkey and White Mountain in China,” he contended. “The visit to Jinfeng also allayed some concerns with respect to the forecast ramp-up of underground production.”
Newmont Mining (NEM) was initiated at TD Securities with a Buy rating and $85.00 price target. TD analyst Greg Barnes wrote in the firm’s report that “By clearly identifying a production growth profile through 2017 and introducing a gold-linked dividend policy, Newmont has made a clear break from a past characterized by flat production and declining reserves. Following the announcement of its gold-linked dividend policy and its new production growth strategy in April, the company has outperformed its senior gold producer peers. We expect this outperformance to continue, as investors embrace the company’s industry-leading dividend yield, disciplined M&A strategy and organic growth platform.”
Each of the aforementioned gold stocks moved substantially higher alongside the GDX in mid-day trading. AEM climbed $0.82, or 1.8%, to $45.51 per share. EGO advanced $0.69, or 4.0%, to $18.17 per share. NEM rallied $1.42, or 2.2%, to $65.24 per share.
Claude Demonstrates Growth Potential of Amisk Gold Project
The Canadian-based gold producer reported that 18 holes in total and 5,500 meters have been drilled to date in 2011, with assays returned for 14 of the holes. The program tested from surface to in excess of 250 meters depth and was designed to expand the limits of the Amisk Gold Deposit as well as infill within the northern and eastern portion of the deposit. Full Claude Resources Press Release.
