GOLD STOCKS NEWS – Gold stocks held firm Wednesday as the Market Vectors Gold Miners ETF (GDX) rose 0.4% to $53.37 per share in morning trading. The modest advance in gold stocks and the GDX was fueled by strength in the broader equity markets, as the S&P 500 Index climbed 0.7% to 1,302.14. Gold stocks also remained in positive territory despite a decline in the price of gold, as COMEX gold futures dipped $6.80, or 0.4%, to $1,648.80 per ounce. In Canada, gold stocks moved higher alongside the GDX, with the S&P/TSX Global Gold Index rising 0.3% to 372.72.
Thus far in 2012, gold stocks have begun to rebound following several months of significant weakness. The GDX is currently higher by 3.8% on a year-to-date basis after tumbling 16.6% in 2011. The latest investor to weigh in on the sector was John Hathaway, who runs the $2.6 billion Tocqueville Gold Fund. In a recent letter to investors discussing the gold stocks sector, Hathaway wrote that “The difficult correction of the last four months has shaken out all but the strongest holders, a perfect set up for advances to new all-time highs in the coming year.”
“Valuations, as reflected by the discount of the shares to the metal prices, and other important indicators, are historically low,” Hathaway contended. “While the merits of gold bullion are many, it yields nothing and generates no internal growth. Gold mining equities provide both and in addition represent deep in the money long term call options on possible future appreciation in the gold price.”
Hathaway later advocated for gold mining companies to distribute a greater share of their cash flow to shareholders, in the form of dividends. “Even if the gold price does not rise in 2012 as we would expect, the companies should continue to report strong earnings and cash flow,” he wrote. “There will be pressure from investors, including Tocqueville, to increase dividend payouts. Those companies that respond accordingly will in our opinion generate the best market performance.”
Based on Tocqueville’s most recent disclosure, the Fund’s top holdings among gold stocks included Goldcorp (GG), Newmont Mining (NEM), and Osisko Mining (OSK.TSX). In Wednesday morning trading, shares of GG rose by 0.8% to $45.34, while NEM fell 0.9% to $60.37 and OSK.TSX slid 0.6% to $11.41 per share.
Other notable gold stocks moving higher included GDX components Agnico-Eagle Mines (AEM), Kinross Gold (KGC), and Randgold Resources (GOLD) – which advanced by 0.6%, 2.7%, and 1.7%, respectively.
Colossus Minerals Launches 2012 Exploration Program
- 15,000 meters of surface drilling on the Central Mineralized Zone (CMZ) and GT Zone
- 15,000 meters of underground drilling on the CMZ and GT Zones
- 5,000 meters to be drilled on new targets within the Serra Pelada property boundary
- 2,000 meters to be drilled on the newly acquired Cutia property
