GOLD STOCKS NEWS - Gold stocks were mixed as the Market Vectors Gold Miners ETF (GDX) fell $0.13 to $44.86 per share in spite of the gold price rising in the face of a stronger dollar. Over the past two months, gold stocks have followed the gold price lower, as the GDX has declined 19% off its December 2009 highs.

Notwithstanding today’s divergence between gold stocks and the gold price, gold stocks have generally taken their cue from the price of gold and have generally led during uptrends and lagged during downtrends. Although the gold price remains nearly 10% below its all-time high of $1,226.50 per ounce, it finished 2009 higher for the ninth consecutive year and remains higher thus far in 2010 by 0.9%.

The ability of the gold price to hold the $1,100 level is important for gold mining producers. As evidenced by the sector’s fourth quarter earnings reports, at current gold prices, the gold stocks as a group are being valued at a discount to the S&P 500’s price to earnings multiple. Historically, gold stocks trade at premium valuation multiples, hence if current gold prices are sustainable, then the gold stocks may undergo a re-rating process over the course of 2010.

An executive at Newmont Mining (NEM) discussed his 2010 outlook on gold at a recent conference in Perth, Australia. Philip Stephenson, Newmont’s Regional Group Executive of Operations in the Asia Pacific, stated that he is “quietly confident” that in the current year gold bullion will continue to rise due to investment demand and a dearth of selling by central banks. The largest U.S.-based gold miner - and third largest component of the GDX - also announced that its Boddington gold mine in Western Australia is on pace to reach full production of one million ounces annually by year-end and is approximately 70% complete at the present time. Shares of NEM were lower by $0.37, or 0.7%, to $49.67 in mid-day trading.

Meanwhile, Kirkland Lake Gold (KGI.TSX) , an emerging gold producer based in Canada, announced financial and operating results for its fiscal third quarter of 2010, which ended January 31, 2010. While a borehole collapse in June 2009 hampered gold production from mid-July 2009 through mid- January 2010, production at the company’s Macassa Mine has begun to ramp up. Kirkland Lake Gold produced 8,221 ounces in the most recent quarter - a 110% increase relative to the second quarter of fiscal 2010. The Canadian-based gold producer also released a gold production forecast of 45,000 - 55,000 ounces in fiscal 2010, 90,000 - 100,000 ounces in fiscal 2011, and 180,000 - 200,000 ounces before fiscal 2013. Shares of KGI.TSX bucked the trend of lower gold stocks, rallying C$0.15, or 2.0%, to C$7.64.