Rally In Gold Mining Stocks A Hopeful Sign For Yellow Metal

Michael Teague |

With China on course to become the world’s largest consumer of gold this year, as well as continued uncertainty among investors about what to expect from the beginning of the end of Federal Reserve stimulus spending, the yellow metal has been showing some signs of life over the last few weeks.

On Wednesday, gold was up for the fifth time in six trading sessions, advancing about one percentage point to $1,333.60 per ounce by midday, spurred in part by a weaker dollar. The metal has dropped more than one-fifth of its value in 2013.

The SPDR Gold Shares ETF ($GLD) advanced by 0.9 percent to $129, but gold stocks jumped much higher. The largest US gold miner, Newmont Mining Corp. (NEM) was up almost 6 percent to $31.82, while Royal Gold (RGLD) gained 1.6 percent to $57.63. Canadian miners also fared well, with Goldcorp Inc. (GG) up over 4 percent to $29.50, and Barrick Gold Corporation (ABX) up over 5 percent to $18.72.

Despite the bloodletting to which gold has been subjected to over the last few months, with the world’s biggest consumer India seemingly taking measures on a daily basis to curb purchases, and with investors enthralled with equities, the biggest miners such as Newmont and Goldcorp have not only reiterated their production targets for the rest of the year, but actually now expect to surpass them.

Centamin Plc (CELTF) , the Egyptian gold mining company is also a surprising part of this trend. While turmoil has once again seized the North African nation, the company has been producing gold at record volumes.

The metal is bouncing off a June low of $1,180.50, and continues to struggle, but the gains over the past week have given cause for optimism or have at least disproven the worst of the speculation about the end of gold as an asset class.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GG Goldcorp Inc. 13.20 -0.33 -2.44 7,942,981
ABX Barrick Gold Corporation 15.45 -0.47 -2.95 15,558,354
NEM Newmont Mining Corporation 32.79 -1.08 -3.19 9,196,191
RGLD Royal Gold Inc. 67.02 -2.16 -3.12 707,948
CNND Canandaigua National Corp. 139.00 0.00 0.00 0

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