GOLD STOCKS NEWS – Gold stocks tumbled Tuesday as the Market Vectors Gold Miners ETF (GDX) fell $1.73, or 2.9%, to $57.10 per share in morning trading. Weakness in gold stocks and the GDX was driven by a sell-off in COMEX gold futures, which declined $22.90, or 1.3%, to $1,702.30 per ounce.
Gold stocks faced steep losses alongside the broader equity markets, as Greece’s call for a referendum on its bailout package fueled widespread liquidation on Wall Street. The S&P/TSX Global Gold Index, Canada’s leading basket of gold stocks, slid 0.9% to 396.07 this morning.
With today’s move lower in gold stocks, the GDX extended its year-to-date loss to 7.4%. The gold stocks ETF has substantially lagged the yellow metal, which remains higher by 19.7% in 2011. Despite gold being in the 11th year of its bull market, many gold stocks have failed to provide investors with the gold price leverage exhibited in previous gold bull markets.
As a result of the ongoing underperformance of gold stocks relative to the yellow metal, other precious metals have generated increased attention. Platinum, which offers a hedge against ongoing currency debasement and benefits from economic growth in emerging markets through its industrial uses, has been the topic of bullish commentary by several market strategists and investors this year.
BNP Paribas strategist Anne-Laure Tremblay wrote in a recent note to clients that “Platinum autocatalyst demand continues to be supported by strength in the commercial vehicle sector, notably in Europe and the US. In addition, platinum’s positive correlation with gold and firm Chinese jewellery demand are also supportive.”
In a Bloomberg interview last month, hedge fund manager Tony Hall – whose Duet Commodities Fund was up 33% year-to-date at the time – commented that “Platinum looks like great value in the precious metals complex. Platinum is a store of value, a precious metal and an industrial metal. If the economy picks up we’re going to see bigger demand in catalytic converters.”
While there are numerous publicly-traded gold stocks, only a small set of public companies focused on the production of platinum exist. One emerging company in this sector is Platinum Group Metals (PTM.TSX, PLG: AMEX), which began to garner substantial attention after legendary investor George Soros acquired a sizeable position. Platinum Group Metals owns a 74% interest in the Western Bushveld Joint Venture (WBJV) in South Africa, which is located next to a belt that comprises 70% of the world’s current platinum production.
This morning the Company announced two key additions to its senior management team. Platinum Group Metals appointed Mr. Mlibo Mgudlwa as Vice-President of Platinum Group Metals (RSA) (Pty) Ltd. and Mr. Kris Begic as Vice-President of Corporate Development of Platinum Group Metals Ltd.
Mr. Mgudlwa spent 12 years in the legal field, followed by his role as CEO of Africa Wide Investment Holdings. He is also a non-executive director of Wesizwe, Platinum Group Metals’ 26% partner in the WBJV Project 1 Platinum mine in construction.
Mr. Begic served as Platinum Group Metals’ Manager of Corporate Development since 2008 and has played a critical role in the Company’s growth since that time. He has over fifteen years of experience in the mining industry and capital markets and has been involved with the raising of over $250 million for various exploration and development projects globally.
Commenting on the appointments, R. Michael Jones – President and CEO of Platinum Group Metals – stated that “The appointments of Mlibo and Kris to Vice Presidents of our operating and parent companies respectively is a result of their dedication and value add over many years and their growing roles as we expand our business.”
In morning trading on Tuesday, notable decliners in the gold stocks sector included GDX components Yamana Gold (AUY), Gold Fields (GFI), and Newmont Mining (NEM). AUY, GFI, and NEM were three of the worst performing names today in the gold stocks sector, with losses of 2.3%, 2.2%, and 2.7%, respectively.
Platinum Group Metals Makes Key Management Appointments
- Mr. Mgudlwa has experience in corporate governance, contracting, litigation and general business management.
- He is a non-executive director of Wesizwe, Platinum Group Metals’ 26% partner in the WBJV Project 1 Platinum mine in construction.
- Mr. Begic has served as the Manager of Corporate Development for Platinum Group since 2008 and has been intimately involved in the growth of the company since that time.
- He has over fifteen years of experience in the mining industry and capital markets and has been involved with the raising of over $250 million for various exploration and development projects globally.
