GOLD STOCKS NEWS – Gold stocks opened lower Monday as the Market Vectors Gold Miners ETF (GDX) slid $0.68, or 1.1%, to $61.63 per share. The sell-off in gold stocks and the GDX was driven by modest weakness in COMEX gold futures, which fell $8.50, or 0.5%, to $1,779.60 per ounce. The U.S. dollar advanced 0.7% against a basket of foreign currencies, which also helped to pressure gold stocks. In Canada, the S&P/TSX Global Gold Index – the nation’s leading gold stocks composite – dropped 0.7% alongside the GDX.
Among large-cap gold stocks, notable decliners on Monday included GDX components Agnico-Eagle Mines (AEM), AngloGold Ashanti (AU), and Kinross Gold (KGC). In morning trading, shares of AEM were lower by 1.1% at $46.60, AU by 3.0% at $47.39, and KGC by 2.0% at $13.98.
In recent weeks the gold stocks sector has rebounded alongside the broader equity markets and the price of gold. The GDX is coming off of three consecutive weeks of gains, and has climbed 22.2% from its 52-week low of $50.42 – reached just five weeks ago on October 4th.
Despite the recent strength in gold stocks, the GDX remains near unchanged on a year-to-date basis. This compares quite unfavorably to the yellow metal, which has surged 25.1% in 2011. The underperformance of gold stocks relative to the price of gold has left two of the world’s largest investors in gold stocks with disappointing returns this year in their respective funds.
Eric Sprott – head of Sprott Asset Management – had posted a negative 12.6% year-to-date return in the Sprott Hedge Fund as of September 30, 2011, according to The Globe and Mail. John Hathaway – who runs the Tocqueville Gold Fund – reported a three-month average return of negative 8.49% as of September 30th.
However, in spite of their recent struggles, the longer-term track records of Hathaway and Sprott remain quite stellar. Hathaway and Sprott generated three-year average annual returns of 32.24% and 12.3%, respectively, as of September 30th – compared to a 3.0% loss for the S&P 500.
On several occasions this year, each fund manager has reiterated his bullish stance on the gold stocks sector. Sprott’s CEO, Peter Grosskopf, recently commented that the firm is “confident in its physical metals position and believe the current market environment presents unique opportunities to invest in precious metals-related equities, many of which are trading at historically wide spreads to bullion prices.”
Hathaway stated in a King World News interview last month that “With gold in a re-surging mode and quarterly earnings about to be reported, I think suddenly investors will think, ‘Maybe $1,700 gold is the norm? Maybe these companies are too cheap?’”
Colossus Reports New Discovery at Serra Pelada
- 736 soil geochemical samples over 0.1 parts per million (ppm), 163 over 0.5 ppm and 73 over 1.0 ppm, peaking at 21.9 ppm.
- These samples have outlined a large area, in excess of 50 hectares, in the Elefante and Young Garimpo sections of Area B and in Area C of gold-platinum-palladium surface anomalies.
- Initial auger drilling of these anomalies has intersected high grades in each of these areas including 124.78 grams per tonne (g/t) gold, 6.52 g/t platinum and 7.67 g/t palladium over 1.5 meters in Elefante.
