Hedge funds slash bullish wagers on gold over Trump election win
The precious metal has fallen about 8% from a record high on Oct. 31, with losses accelerating after Trump’s election victory last week.
After hitting five month highs last week, gold was pushed lower again on Tuesday as investors rotate out of safe haven assets and into riskier equities with the tech-laden Nasdaq market in New York hitting record highs.
Gold for delivery in June, the most active contract on the Comex market in New York, slumped to a low of $1,262.80 an ounce in early afternoon trade, a percentage point lower than Monday’s close and a two-week low.
The sell-off in gold stocks was more severe led by Barrick Gold Corp (NYSE:ABX, TSE:ABX) which was hammered down 11.2% after reporting first quarter earnings that came in below expectations. Barrick is now worth $19.5 billion in New York, trading at levels last seen in January.
Barrick, the world’s largest gold miner in terms of output, slashed its guidance for the year due to ongoing problems at its Veladero mine in Argentina. Barricks’ full-year gold production is now expected to be 5.3–5.6 million ounces, down from its previous range of 5.6–5.9 million ounces.
Barrick expects normal operations at Veladero to resume in June pending government approval and the lifting of judicial restrictions imposed by the South American nation after a cyanide solution spill at the property
The company also sold a 50% stake in Veladero for $960 million to China’s Shandong Gold and the transaction constitutes roughly two-thirds of its lowered output guidance. Barrick expects normal operations at Veladero to resume in June pending government approval and the lifting of judicial restrictions imposed by the South American nation after a cyanide solution spill at the property.
Losses at Newmont Mining Corp (NYSE:NEM) were more modest with the counter losing 2.7% for a market capitalization of $17.2 billion. Denver-based Newmont announced yesterday that it grew production by 9% in the first quarter to 1.23 million ounces.
Newmont approved the Subika Underground and Ahafo mill expansion projects in Ghana during the first quarter, which is expected to improve volumes beginning in 2018. Newmont is retaining its guidance for this year at between 4.9m – 5.4 million and the company upped its longer term output forecast to 4.7m – 5.2m.
It’s been a busy Q1 for Newmont, the company also announced agreement to secure rights to develop a prospective new gold district in the Yukon with Goldstrike Resources. The company said it is on track for commercial production at the Tanami Expansion Project in Australia mid-2017.
The world’s third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) slid 1.4% in Tuesday. The company’s ADRs are worth $4.6 billion in New York and is just holding onto double digit gains so far in 2107. Johannesburg-based Anglogold reported an 8% decrease in annual production to 3.6m ounces in 2016.
Earlier in April the company indicated it may revive its Obuasi mine in Ghana on care and maintenance since the end of 2014. AngloGold lifted a force majeure on Obuasi in February after the removal of thousands of illegal miners by Ghanian security forces. Obuasi is the world’s 17th largest gold deposit with resources of more than 27m ounces and reserves grading an eye-popping 7 grams gold per tonne.
Goldcorp (NYSE:GG TSE:G) shares dropped more than 3% shaving the value of the Vancouver-based company to just under $12 billion in New York. World number four producer Goldcorp recorded a steep drop in production last year of 17% or nearly 600,000 ounces and will release its first quarter results tomorrow.
The world’s number five gold producer with 2.8m ounces last year, Kinross Gold (NYSE:KGC, TSX:K) was one of the hardest hit on Tuesday losing 6.8%. Toronto-based Kinross is now worth $4.2 billion on the NYSE after a 25% decline over the past year.
4 Comments
Reasonable Person
I never understood the obsession with this urine colored metal. It’s shiny but beyond that, why do we destroy so much of the planet for it. So many lives, so many rivers, etc. Seems odd to me. I don’t have to wear a wedding ring to know I’m loved or married. People need to move beyond such things.
kk
It’s unlikely I’m going to change your opinion, but since you claim to be a reasonable person, maybe you’ll keep an open mind. But here’s why I like gold.
1) Gold is a stable / chemically inert element – it doesn’t react with things, won’t rust, won’t dissolve, won’t decompose, and it’s easy to store. You can bury it in your backyard, come back 20 years later, and it’ll still be there in the exact same condition that you left it (try doing this with paper money).
2) It’s very malleable and an excellent conductor, which gives rise to industrial applications. It’s in your electronics. It’s orbiting around earth (NASA uses gold foil all the time). It’s used in healthcare too. It won’t poison your body. That’s why some people still have gold teeth.
3) It has intrinsic value. It has had value since ancient times. It was (and arguable still is) a currency. It’s a currency that has lasted longer than any other currency in existence. Countries change all the time – currencies used around the world today are totally different than those used a hundred years ago. Go to your local shop and buy something, offer them a Finnish markka, and they’ll laugh at you (or think you’re scamming them). Offer them gold, and they’ll take it. Everyone knows what gold is. People in a thousand years from now will know what gold is (and will have zero idea of old, outdated currencies). Do you think in a thousand years, the Mexican dollar will still be relevant? Also, because there’s a limited amount of gold, it’s inflation proof (unlike money, which we can print an unlimited amount of). Yes, gold has value because we choose to give it value. But we do the exact same thing with money – the only difference being that money is temporary.
Stackinwood
Reasonable, perhaps but obviously very uninformed.
Ray M
Hi Reasonable Person. Your are one this earth’s true morons. Congratulations on being idiot of the year.