Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
Goldcorp Inc (TSE:G, NYSE: GG) on Friday fell to 11-year lows after the price of gold tumbled through the psychologically important $1,100 level and the stock gets rerated following poor results released last week.
Goldcorp was last trading $11.65 per share in New York, down 4.3% and near its lows for the day. Shortly after the open the Vancouver-based company fell to levels last seen in August 2004.
Goldcorp is the world’s most valuable gold producer and long the darling of the sector, but Friday’s decline brought its market capitalization to below $10 billion, down from a peak of $42 billion when gold reached record highs four year ago. The company is worth C$12.8 billion in Toronto where it is down 28% year to date as the depreciating loonie softens the impact of a lower gold price.
In the past Goldcorp has attracted a high premium on an ounce for ounce basis considering that it is only the number four gold miner in the world in terms of output, behind AngloGold Ashanti.
Goldcorp has been selling off for the past week – down 22% in value just since last Thursday – after releasing results that disappointed the market. The company reported a bigger than expected loss despite record gold production and reduced costs for its third quarter.
Goldcorp said it produced 922,200 ounces in the quarter ended September from ten mines, a huge jump of 42% compared to gold production of 651,700 ounces in the third quarter of 2014.
The company stuck to its 2015 forecast for production at the high end of a range between 3.3 million and 3.6 million ounces and all-in sustaining costs of $850 to $900 an ounce. Capital expenditure for the full year should come in at between $1.2 billion and $1.4 billion, also in line with previous guidance.
Data source: FT
While there was weakness across the board after the gold price dipped below $1,100 for the first time since August, Goldcorp underperformed its peers.
Barrick Gold, the world’s top gold producer worth $8.3 billion, declined 3% in New York on Friday but is up 8.5% over the past month thanks to positive financial results and progress on its restructuring process. The Toronto-based company expects production to be 6.1-6.3 million ounces in 2015.
Newmont Mining, managed to make strides into the teeth of a sharp drop in the price of gold adding 0.4% in New York affording the company a $9.3 billion market cap. The Denver-based company last week announced a 16% jump in gold production for the third quarter and maintained guidance at between 4.7 and 5.1 million ounces for 2015.
American Depository Receipts of AngloGold Ashanti, fell 6.2% in value in New York trade, but the company is still trading comfortably above multi-year lows coinciding with gold’s August dip.
