GOLD STOCKS NEWS – Gold stocks turned lower Thursday afternoon alongside precious metals, with the Market Vectors Gold Miners ETF (GDX) falling from an intra-day high of $45.28 to trade down by $0.54, or 1.2%, at $43.90 per share.  The negative reversal in gold stocks and the GDX was driven by COMEX gold futures, which retreated from $1,577 per ounce this morning to $1,555 later in the day.

Broad-based weakness in the equity markets and a move higher in the U.S. dollar also helped to pressure the gold stocks sector.  The S&P/TSX Global Gold Index, Canada’s leading gold stocks composite, slid 0.7% to 303.49 in conjunction with the GDX.

Today’s retreat in gold stocks stood in stark contrast to yesterday’s surge higher, which saw the GDX rebound over 7% on an intra-day basis.  With this afternoon’s sell-off in gold stocks, the GDX extended its decline in May to 5.4% and to 14.6% on a year-to-date basis.

Gold stocks in the news on Thursday included Newmont Mining (NEM), after TD Securities analyst Greg Barnes lowered his price target to $65.00 from $73.00 per share.  Barnes did maintain his Hold rating, however.

In his report, the TD analyst wrote that “Newmont revised its 2017 growth target to reflect the potential that its Peruvian projects may not move forward. Newmont has adjusted its 2017 growth target to a range of 6 – 7 Mozs of attributable gold production (from 7 Mozs previously) to reflect the potential loss of 1 Mozs of production growth that was expected from the Conga, Cerro Quilish, and Yanacocha expansion projects in Peru. If the Peruvian projects do not move forward, Newmont expects its future capex requirements would be reduced by ~$2 billion.”

Shares of NEM initially shrugged off the target price reduction to rise to $49.84 this morning, but later reversed to the downside alongside the GDX.  In afternoon trading, NEM was lower by $0.66, or 1.4%, at $47.91 per share.

Alternatively, New Gold (NGD.TSX, AMEX: NGD) was the recipient of positive commentary from the analyst community today.  National Bank Financial analyst Greg Parsons upgraded NGD.TSX to Outperform from Sector Perform, but maintained his C$13.25 price target.

“With a projected return of 50% and growing relevance of NGD’s investment positives, we contend that the move to an Outperform rating is justified,” Barnes contended. “Juxtaposed to its peers, NGD’s production growth via New Afton is near term, fully funded, low opex intensity and ensconces NGD’s favourable geopolitical risk profile. With the potential for a dividend on the horizon and carried on El Morro capex, we see these features helping to underpin NGD shares vis-à-vis the peers, many of whom are more exposed to industry cost pressures.”

Shares of NGD.TSX climbed to C$9.29 this morning in concert with other gold stocks, but turned lower by C$0.03 at C$8.82 in afternoon trading.

Other notable gold stocks in the red later in the day included GDX components Barrick Gold (ABX), AngloGold Ashanti (AU), and Goldcorp (GG).  ABX dropped by 1.6% to $38.97, AU by 1.9% to $35.86, and GG by 1.9% to $36.79 per share.

While the broader equity markets remained firmly in negative territory this afternoon, gold and silver shares staged a particularly impressive comeback.

The Philadelphia Gold & Silver Index (XAU) – comprised of the world’s largest precious metals companies – fell to as low as 146.66 this morning amid widespread liquidation in financial markets.  However, the XAU turned sharply higher as precious metals rebounded despite ongoing strength in the U.S. dollar.  This afternoon the XAU traded up by 3.6% at 156.24, representing a 6.5% intra-day reversal.

For a sector that has significantly underperformed virtually all asset classes thus far in 2012, today’s rebound was a particularly encouraging sign.  Furthermore, since reaching a multi-year low of 140.94 on May 16, the XAU has bounced back by 10.9%.  However, as an indication of the sector’s weakness this year, the XAU remains down by 13.5% on a year-to-date basis.

Barrick Gold (ABX), the world’s largest gold mining company, climbed from $36.89 this morning to trade up by 4.6% at $39.35 per share this afternoon.  Newmont Mining (NEM), the only gold stock included in the S&P 500 Index, surged from an intra-day low of $45.96 to as high as $48.58, representing a 2.9% gain from yesterday’s closing level.

Among silver stocks, Pan American Silver (PAAS) jumped from $15.80 to $17.06 – for a 4.5% advance – while Silver Standard Resources (SSRI) rose from $10.33 to trade higher by 4.2% at $11.40 per share.

As for the metals themselves, COMEX gold futures plunged to as low as $1,532.80 per ounce earlier today but later recovered its entire decline from this morning to trade at $1,560.80 per ounce.  Silver futures followed a similar trajectory, dropping to $27.08 this morning but bouncing back to $27.77 later in the day.

Cyclical commodities fared much worse than precious metals on Wednesday.  Crude oil futures settled below $90 per barrel for the first time since October of last year, while copper slid 2.9% to $3.39 per pound – its lowest level since January 8th.

GOLD STOCKS NEWS – Gold stocks surged higher on Monday as the Market Vectors Gold Miners ETF (GDX) climbed $1.50, or 3.6%, to $43.12 per share in afternoon trading.  The rally in gold stocks and the GDX coincided with strength in the broader equity markets, and in spite of tepid movement in the price of gold.  The S&P 500 Index rose 1.5% to 1,314.79 while COMEX gold futures settled lower by $3.20, or 0.3%, at $1,588.70 per ounce.

In Canada, the S&P/TSX Global Gold Index remained at 286.70, as the financial markets were closed in observance of Victoria Day.

Gold stocks have been on a wild ride in recent weeks, as the GDX fell last Wednesday to $39.08 – its lowest level since August 31, 2009.  At that point, the GDX was lower by 24.0% on a year-to-date basis as the sector has come under significant selling pressure thus far in 2012.

However, gold stocks subsequently turned sharply higher.  With today’s advance, the GDX has now jumped 10.3% and is on pace for its first four-day winning streak since October 25-28 of last year.  Furthermore, today’s strength was particularly encouraging because it occurred without the benefit of a rising gold price, which it has substantially underperformed in recent years.

Over the weekend, Alan Abelson discussed the gold stocks sector in his Up and Down Wall Street column in Barron’s. There, Abelson noted that long-time gold bull Fred Hickey – author of the widely-read High-Tech Strategist and a member of the Barron’s Roundtable – reiterated his positive stance on several large-cap gold stocks.

“He (Hickey) notes that the metal has enjoyed a 12-year bull market with periodic corrections only to stage a spirited rebound once the selling ceased,” Abelson wrote. “And just such a correction, he feels, aptly describes gold’s recent laggardly action. He confesses he shaved his positions during gold’s run-up earlier this year to $1,800 an ounce (it subsequently peaked at $1,900 and change on a brief buying blowout). Now, he’s going long gold again, encouraged by the fact that speculative money has exited pretty much en masse.”

“Among his biggest gold stock holdings are Goldcorp (GG), Yamana Gold (AUY) and Agnico-Eagle Mines (AEM), along with smaller positions in Newmont Mining (NEM) and Barrick Gold (ABX),” Abelson continued. “And he has plenty of buying power left, he avers, if he decides to bulk up his mining stakes. And it sure sounds like he already has.

” ‘The gold miners,’ he declares, ‘are cheaper today versus the price of gold than at any time in this 12-year bull market. No one wants to own them.’ And Fred asserts, that’s precisely ‘when I like to buy them’.”

In Monday afternoon trading, shares of GG climbed by 1.8% to $35.41, AUY by 3.7% to $14.19, AEM by 3.0% to $37.26, NEM by 3.6% to $47.21, and ABX by 2.6% to $38.09.

Demand for gold in China climbed to a new record high during the first quarter of 2012, according to the World Gold Council (WGC).

In its latest quarterly Gold Demands Trends report, the WGC noted that Chinese gold demand increased 10% to 255.2 tonnes.  India, which last year had the largest demand for gold, saw its level decline by 29% to 207.6 tonnes in the quarter.

In the report, the WGC stated that in China, “Further growth is expected (in China): investors remain wary of high inflation rates; and property market restrictions continue to drive demand for gold among investors seeking access to real assets.”

As for India, the WGC reported that “Weakness and volatility in the rupee resulted in elevated local prices while consumers struggled to digest a rise in import taxes on gold and the introduction of an excise duty on gold jewellery which prompted jewelers country-wide to strike.”  However, the Indian government later decided to withdraw the excise duty at the end of the first quarter.

As the price of gold advanced 6.7% to $1,669 per ounce in the first quarter of 2012, several large-scale institutional investors added to their positions in the SPDR Gold Trust (GLD).

According to their latest 13-F filings, Soros Fund Management, PIMCO, and the Teacher Retirement System of Texas raised their GLD holdings between January and March of this year.

The largest increase on a per share basis came from the firm founded by legendary investor George Soros, which increased its GLD holdings by 274% to 319,550 shares.

Eton Park Capital, the firm run by Eric Mindich, bought 739,117 shares of the GLD in the first quarter after not having a position prior to 2012.

In addition, Paulson & Co. – the hedge fund run by billionaire John Paulson and the largest shareholder in the GLD – maintained its stake at 17.3 million shares.

A Reuters report on the data suggested that “Analysts read the first quarter filing by Paulson as a sign that the hedge fund manager, a well-known gold bull, has not lost his faith in the precious metal as a long hedge against inflation.”

While the price of gold has not performed particularly well since reaching its $1,923 all-time high in September 2011, this has not deterred Chinese citizens from accumulating the yellow metal.

The Census and Statistics Department of the Hong Kong government reported that during the first quarter of 2012, imports of gold from Hong Kong to China were 135,529 kilograms (135.53 metric tons) – a 587% increase over the 19,729 kilograms imported from January through March of 2011 – according to Bloomberg.

The story went on to say that “Demand has climbed in the world’s second-largest economy as rising incomes and curbs on property speculation boosted purchases. China may become the biggest user annually this year, according to a forecast from the producer-funded World Gold Council. Last year, total Indian demand including for jewelry and investment was 933.4 tons to China’s 769.8 tons.”

Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd, commented that “We’re looking at another solid year for Chinese demand based on these early numbers.  While it’s largely related to price, negative real interest rates should keep demand strong.”

Liang Ruian, a director at Pinpoint Investment Consulting Ltd. in Beijing, stated that “Summer is usually the low season for gold consumption.  If we can see growth even in the low season, it represents the resilient nature of China’s gold consumption.”

Weakness in gold and silver shares continued on Monday, as the Philadelphia Gold & Silver Index (XAU) retreated alongside precious metals.  Escalating sovereign debt concerns in Europe fueled safe-haven buying in the U.S. dollar, which in turn provided a headwind for the precious metals sector.

COMEX gold futures – per the June contract – settled lower by $6.10, or 0.4%, at $1,639.10 per ounce.  Silver futures fared worse, with the July COMEX contract closing down by $0.31, or 1.0%, at $30.12 per ounce.  The U.S. Dollar Index (DXY) was off its best levels of the day but remained higher by 0.2% at 79.618.

The XAU – which has hit a series of multi-year lows in recent weeks – fell as much as 2.1% to 153.50 this morning.  In doing so, the Index dropped to its worst level since February 25, 2010 and extended its year-to-date loss to 15.0%. Furthermore, the gold/XAU ratio rose to another multi-year high of 10.7 – its largest level since October 2008.

This afternoon, however, the XAU pared its losses to trade down by 0.4% at 156.13.

Gold miners in the news on Monday included Eldorado Gold (ELD.TSX, NYSE: EGO), which was reiterated with a Buy rating and C$27.00 price target by GMP Securities.  Following Eldorado’s first quarter earnings report, analyst George Topping characterized the results as a “slow start but mines remain on track.”

The GMP analyst went on to say that “We focus on the ounces placed on the pad (114k oz) at Kisladag vs. ounces produced. Viewing the operation in this regard leaves us feeling comfortable with the Company catching up this year. This was mirrored by the positive analyst sentiment on the subsequent conference call Friday morning. In fact, Eldorado had outperformed its peers by ±1% through mid-afternoon trading on Friday – demonstrating, in our view, that other analysts are also looking beyond the headline miss.”

Shares of ELD.TSX nonetheless slid 3.0% to C$12.75 in afternoon trading.

Among silver mining companies, Coeur d’Alene Mines (CDE) was maintained at Neutral with a $31.00 price target by J.P. Morgan analyst John Bridges.  In his report, Bridges contended that “Coeur’s silver production was better than our hopes, but cash costs were higher. SG&A costs were improved (lower), though primarily on reduced lower stock based compensation.”

CDE tumbled as well on Monday, by 3.6% to $19.09 per share.

Other notable decliners this afternoon included  Goldcorp (GG) and Silver Wheaton (SLW) – which fell by 1.1% to $36.17 and by 3.0% to $27.46 per share.

Weakness in gold shares continued on Thursday as the Market Vectors Gold Miners ETF (GDX) fell $1.57, or 3.5%, to $44.09 per share in mid-day trading.  In doing so, the GDX reached yet another new multi-year low, a level last seen on March 30, 2010.

The sector was pressured by a sell-off in COMEX gold futures, which sunk $18.80, or 1.1%, to $1,635.20 per ounce.  The yellow metal retreated as the U.S. dollar held firm against a basket of foreign currencies after weekly U.S. jobless claims came in below expectations.

Notable gold stocks in the news on Thursday included GDX component Randgold Resources (GOLD), which reported first quarter adjusted earnings per share (EPS) of $1.01.  That figure missed the $1.11 analyst consensus estimate, which helped send shares of GOLD lower by 4.0% to $82.89 in mid-day trading.

Scotia Capital analyst Tanya Jakusconek noted that Randgold’s production figures were also disappointing.  “Equity gold production was 141 koz at total cash costs of ~$750/oz vs. our forecast of 150 koz at total cash costs of $711/oz,” she wrote in a note to clients.  However, despite the disappointing results, Jakusconek maintained her Sector Perform rating and $111.00 price target on GOLD.

Royal Gold (RGLD), one of the world’s largest precious metals royalty companies, also retreated on Thursday after announcing its quarterly earnings results.  At $0.44 per share, Royal Gold’s adjusted EPS missed the $0.46 median estimate among analysts.

In spite of Royal Gold’s results, Jakusconek also maintained her Sector Perform rating and $83.00 price target on RGLD – which slipped 3.1% to $59.17 per share.

Other notable gold companies moving lower included GDX components Agnico-Eagle Mines (AEM), AngloGold Ashanti (AU), and Goldcorp (GG).  In mid-day trading, AEM dropped by 3.6% to $37.81, AU by 2.1% to $33.08, and GG by 3.7% to $36.68 per share.

The primary catalyst for the markets’ rally was a better than expected report on the U.S. manufacturing sector.  The ISM Index for April rose to 54.8, well above the 53.3 consensus estimate among economists.

Notable GDX components in the news this morning included Agncio-Eagle Mines (AEM.TSX, NYSE: AEM), which was reiterated with a Buy rating and C$47.00 price target by Dundee Securities analyst Paul Burchell following the company’s first quarter earnings results.  “The first quarter was undoubtedly a positive step for Agnico,” Burchell wrote “following what was by all accounts a pretty miserable 2011.  While we are heartened by the results, we caution that the company was clear in indicating that the second quarter is unlikely to be as strong – a scheduled, 40-day mill maintenance shut down beginning in mid-May at Kittila will result in lower production from the Finnish operation.”

The Dundee analyst added that “We estimate the company’s overall production in the second quarter could decrease to around 210,000 oz (at around US$690/oz) from the first quarter’s 254,955 oz (at US$594/oz).  Importantly, however, Agnico is maintaining its full year guidance of between 875,000 oz and 950,000 oz at a total cash cost of US$720/oz (in keeping with what we consider the company’s conservative stance for its 2012 forecast, Agnico’s cost guidance assumes byproduct base metal prices that are 10% to 15% below recent prices).”

Despite the positive commentary, AEM.TSX dipped C$0.09 to C$39.37 per share in mid-day trading.

Goldcorp (GG) was another beneficiary of a bullish analyst report, as CIBC reiterated its Sector Outperformer rating and $64.00 price target in spite of two recent disappointing developments for the Canadian-based gold producer.  “Since reporting weaker than expected Q1 results last week and the suspension of El Morro’s construction, Goldcorp has taken a beating, and its once premium multiple has now eroded,” the firm noted.

CIBC went on to say that “Although grades at Red Lake declined in the quarter, they are actually showing signs of a rebound, tracking over 20 g/t last month, Penasquito should experience improvements in operating metrics with the supplementary feed system now fully installed, El Morro only represents ~1% of NAV, and the company is still expected to post top tier growth over the next few yrs with production increasing from ~2.5mln oz to ~4.2mln oz in 2015, and almost 30% of that growth to materialize in the next 2yrs alone. As well, all this growth will come from high quality ozs and cash costs are expected to remain below the industry avg. Goldcorp is now trading in line to a slight discount to both Barrick and Newmont at ~6x P/CF and 1.1x P/NAV despite possessing a stronger growth profile.”

GG responded favorably to the CIBC report, jumping 1.1% to $38.69 per share.

Other notable advancers included GDX components IAMGOLD (IAG) and Newmont Mining (NEM), which climbed by 1.1% to $12.53 and by 1.2% to $48.21 per share, respectively.

Trelawney Mining and Exploration (TRR.TSXV) was the top performing gold stock on Friday after it agreed to be acquired for approximately C$608 million by IAMGOLD (IAG).  Shares of TRR.TSXV soared as much as 41.8% to C$3.29 this morning after the companies announced the signing of a definitive agreement whereby IAMGOLD will purchase Trelawney for C$3.30 per share in cash – which represents a 36.6% premium to its volume weighted average price of TRR.TSXV over the past 20 trading days.  The transaction is expected to close by the end of June.

Trelawney’s primary asset is the advanced exploration Cote Lake Project in Ontario, Canada.  The Company announced an updated mineral resource estimate for Cote Lake on February 24, 2012, comprised of 35 million tonnes of gold at 0.82 grams per tonne (g/t) for 0.93 million ounces of indicated resources and 204 million tonnes at 0.91 g/t gold for 5.94 million ounces of inferred resources.

From IAMGOLD’s perspective, the deal helps the mid-cap gold miner diversify its asset base into more politically-safe jurisdictions such as Canada – given that its largest operations are in the West African nation of Burkina Faso and the South American country of Suriname.

This transaction is one of the few prominent M&A deals in the gold sector that has occured this year, following a noticeable increase in 2011.  With the share prices of most gold stocks significantly underperforming the price of gold in recent months and oftentimes lower than at this time last year, many companies have been hesitant to either sell at relatively lower prices or use their stock as a currency in a potential acquisition.

Nonetheless, the IAMGOLD-Trelawney deal is an encouraging sign for a sector that has begun to rebound a bit in recent days.  Since reaching a multi-year low of $44.18 per share this past Monday, the Market Vectors Gold Miners ETF (GDX) has climbed over 5% and is on track for its second best week in the prior two months.