Gold and silver shares moved substantially lower Monday amid a broad-based sell-off on Wall Street. The Philadelphia Gold & Silver Index (XAU), a composite of the world’s largest precious metals companies, plunged 3.6% to 193.41 in morning trading.
Several of the benchmark U.S. equity indices posted steep losses as well, with the Dow Jones Industrial Average (DJIA) down by 161.96 points, or 1.3%, at 12,022.30 and the S&P 500 off by 20.20 points, or 1.6%, at 1,234.99 as of 11:10am ET.
Strength in the U.S. dollar also helped to pressure the gold and silver sectors, as the greenback advanced 0.9% against a basket of foreign currencies. The euro fared particularly poorly against the dollar, as it slid 1.3% to 1.3213 amid escalating sovereign debt worries in Europe.
Within the gold sector, Goldcorp was in the news on Monday after TD Securities reiterated its Buy rating and $68.00 price target on the Canadian-based gold producer. Although TD analyst Greg Barnes lowered his 2012 production estimate for Goldcorp to 2.6 million ounces from 2.9 million, he wrote that “We continue to believe that Goldcorp has one of the best production growth profiles among the senior North American gold producers through 2013 and ranks second behind Yamana (AUY-N, YRI-T) through 2013, and Eldorado (ELD-T, EGO-N) through 2015.”
Barnes went on to say that when computing its target price, “We use higher-than-average multiples for Goldcorp to reflect its better-than-average growth profile, low-cost production, and low political risk compared with its peers.” Despite the positive commentary, however, GG dropped $2.17, or 4.3%, to $48.15 per share this morning.
Other notable gold producers in negative territory included Agnico-Eagle Mines (AEM) and Kinross Gold (KGC), which fell by 4.1% and 5.4%, respectively.
Among silver companies, Silver Wheaton (SLW) tumbled 5.2% to $31.64 per share and Silver Standard Resources (SSRI) retreated 5.7% to $14.29 per share.
Fortuna Silver Reports “Best Quarter Yet”
The Company noted that it expects to report sustained low cost quarterly silver production growth over the upcoming 18 months as it expands its San Jose mine in Mexico from 1,000 tonnes per day (tpd) to the design capacity of 1,500tpd. Fortuna also reported that it continues to seek organic growth opportunities beyond existing reserves and resources; to that end, the Company presently has eight drill rigs turning on its 70,000 hectare properties in Peru and Mexico. Full Fortuna Silver Press Release
- Operating income of $14.89 million, compared to $1.03 million in Q3 2010
- Cash position (including short term investments) and working capital as at September 30, 2011 were $62.73 million and $70.22 million respectively
- Silver production of 660,749 ounces up from 474,489 ounces in 2010; silver accounted for 70% of revenue
- Cash cost per silver ounce, net of by product credits, of $1.45
