Gold stocks

By now, anyone or anything not predicting that the gold bullion price will continue rising has been hunted off the face of the planet. Never mind a decade of bull markets for the yellow metal (and a near fivefold rise in prices), GFMS this week reckoned the metal could broach USD 1,600/oz by year-end.

An all time record of USD 1,431/oz was seen less than two months ago. The strange thing, for which there is no ready explanation, is that investors (and speculators, as always) are broadly selling off listed gold stocks. The metal is currently trading just 4% below its record level, but listed gold stocks have been clobbered for more than a month.

The US-quoted SPDR Gold Shares ETF, the world's biggest gold exchange traded fund (ETF) (market value: USD 56bn), tracks the bullion price, as ever, and is just 4% off its highs.

For miners of the metal, stocks prices look painfully out of synch. Toronto-based Barrick, the world's biggest gold digger by value and output, has surrendered 15% of its NYSE-quoted market value, now at USD 47.4bn, since early December, when dollar gold bullion most recently peaked.

Just a few of the world's Tier I gold stocks have held up: Russia-based Polyus (its stock price always lags on both the way up, and on the way down), and, perhaps, Johannesburg-based Gold Fields, when measured by its rand-based quote.

Tier I gold diggers

	Stock	From	From	Value
	price	high*	low*	USD bn
Agnico-Eagle	USD 70.59	-20.0%	42.2%	11.887
Goldcorp	USD 42.07	-14.0%	28.1%	33.568
Polyus	USD 61.09	-1.6%	50.8%	11.645
Harmony	ZAR 77.70	-12.3%	14.8%	4.863
Lihir	Now at Newcrest
AngloGold Ashanti	USD 44.37	-16.1%	30.1%	16.914
Zijin	CNY 7.51	-30.8%	99.7%	11.993
Barrick	USD 47.44	-14.9%	41.0%	47.346
Newcrest	AUD 38.29	-12.4%	28.8%	29.091
Gold Fields	ZAR 114.90	-9.5%	38.3%	12.055
Kinross	USD 17.28	-15.5%	16.4%	19.576
Newmont	USD 56.81	-13.3%	32.7%	28.011
Buenaventura	USD 43.06	-24.7%	50.6%	11.837
Freeport-McMoRan	USD 118.07	-3.8%	110.1%	55.597
[[SPDR Gold Shares ETF]]	USD 134.05	-3.9%	31.1%	55.859
Tier I averages/total		-13.5%	41.7%	294.384
Weighted averages		-13.4%	45.3%
Global tier II gold stocks	Stock	From	From	Value
	price	high*	low*	USD bn
Zhongjin	CNY 35.86	-27.8%	45.2%	7.735
Iamgold	USD 17.87	-11.8%	37.5%	6.662
High River	CAD 1.16	-22.7%	103.5%	0.982
Eldorado	USD 17.73	-12.4%	55.7%	9.717
Yamana	USD 11.95	-9.0%	30.6%	8.858
Centerra	CAD 17.77	-24.7%	82.1%	4.220
Randgold Resources	USD 80.87	-24.0%	24.6%	7.360
Shandong Gold	CNY 45.91	-32.3%	47.2%	9.903
Petropavlovsk	GBP 10.76	-21.5%	29.0%	3.203
Hecla Mining**	USD 9.75	-15.7%	128.3%	2.500
Golden Star	USD 3.94	-34.4%	52.1%	1.026
Franco-Nevada	CAD 31.19	-12.9%	22.9%	3.597
Fresnillo**	GBP 15.89	-10.1%	145.6%	18.056
JSC Polymetal**	USD 17.81	-20.8%	100.1%	7.113
Red Back
New Gold	CAD 8.86	-14.0%	116.1%	3.504
Tier II averages/total		-20.7%	58.9%	95.416
Weighted averages		-18.9%	61.2%

* 12-month ** Mainly silver Source: market data; table crunched by Barry Sergeant

At the global Tier II gold level, the sell offs have been heavier; as much as 34% in the case of US-quoted Golden Star, which has interests in West Africa. Long-time London favourite Randgold Resources, which focuses on Africa, has surrendered 24% of its Nasdaq-quoted value, to levels previously seen as far back as May 2010.

Further down the scale, among gold developers, the losses have been even deeper. Canada-quoted Greystar, which holds a big deposit in Colombia, has shed nearly half its value over the past year. However, before investors, and especially speculators, fall into deep fits of deep depression, there are 100 listed gold stocks around the world (with a minimum market value of USD 20m) that have lost only 12%, or less, of their value.

A good number are positively flying: Australia-quoted Kingrose Mining can be counted among the leaders, but it also has interests in silver and zinc. Canada-quoted Continental Minerals is also in good demand, but its key interests, located in China, are in copper-gold. Then again, there are also "pure gold" focuses which are flying, such as Australia-listed Gryphon Minerals, which focuses on West Africa.

If cash is being taken off the gold stocks table, where is it going? There is a discernible trend of continued switching into copper stocks. Freeport-McMoRan ranks as a Tier I global gold stock, but is typically classified as a copper stock, given its status as the world's biggest publicly traded copper miner, and No 1 in production after Chile's Codelco.

Measured against global Tier I gold stocks, Freeport-McMoRan's stock price has experienced but little selling pressure. Copper has rallied from around USD 3.00/lb in mid-2010 to recent all time records of USD 4.50/lb. At these prices, copper miners are spewing cash; few bona fide miners of the metal are unable to make cash profits at USD 1.50/lb. Prevailing prices represent a bonanza.

Much of the story is summed up by Freeport-McMoRan's market value of USD 56bn eclipsing the USD 47bn held by Barrick. Beyond the attraction of copper stocks, cash continues to be pushed into the listed stocks of big diversified miners, most of which produce copper. For now, it seems that investors and speculators are somewhat complacent about listed gold stocks; they may need some kind of catalyst to once again redirect their attention.

Selected "hot" gold stocks

With a minimum market value of USD 20m

	Stock	From	From	Value
	price	high*	low*	USD bn
Kingrose Mining	AUD 1.55	0.0%	175.9%	0.386
Horizonte Minerals	GBP 0.20	0.0%	154.8%	0.077
Continental Minerals	CAD 2.61	-0.4%	64.2%	0.406
Mansfield Minerals	CAD 3.15	-1.6%	250.0%	0.155
Polyus	USD 61.09	-1.6%	50.8%	11.645
Beadell	AUD 0.87	-1.7%	517.9%	0.534
Ascot Mining	GBP 0.50	-2.0%	280.8%	0.042
Gryphon Minerals	AUD 1.89	-2.3%	423.6%	0.547
Stratex	GBP 0.10	-2.4%	233.3%	0.045
Medusa	AUD 7.52	-2.5%	193.3%	1.405
Pediment Gold	CAD 2.94	-2.6%	191.1%	0.150
Western Copper	CAD 3.27	-2.7%	303.7%	0.301
Nobel Mineral	AUD 0.71	-2.7%	222.7%	0.265
Citadel Resource	AUD 0.53	-2.8%	125.5%	1.273
Chesapeake Gold	CAD 13.85	-2.8%	98.4%	0.534
Resolute Mining	AUD 1.47	-3.0%	104.2%	0.679
Coral Gold	CAD 0.97	-3.0%	252.7%	0.030
PanAust	AUD 0.88	-3.3%	120.0%	2.582
Capital Gold	CAD 5.00	-3.7%	63.9%	0.309
Freeport-McMoRan	USD 118.07	-3.8%	110.1%	55.597

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