Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
The gold price fell by as much as $38 in Friday trade crashing through the $1,400 an ounce level causing renewed mayhem among gold mining stocks.
The gold price is down 17.5% this year and April’s $200 drop over the course of two trading days means the yellow metal is in official bear territory, defined as a 20% decline from a high ($1,909 intra-day in August 2011).
Counters in the sector attempted something of comeback in the latter part of May and early June, but Friday’s retreat in the gold price have seen those gains evaporate and by mid-afternoon losses exceeded 5% .
Barrick Gold Corp (TSX:ABX) lost 5.1% on Friday bringing year to date losses to 41%.
On Wednesday the global number one gold company in terms of output announced another delay to the start of production at its massive Pascua-Lama project straddling the border between Chile and Argentina.
On that day Barrick shares actually rose as investors started to believe all the bad news was now baked into the stock, but Friday’s pullback in the price of gold pulled the rug out from under it again.
Barrick is worth just under $21 billion on the TSX, nowhere near its market capitalization just two years ago of more than $54 billion.
Denver-based Newmont Mining Corp (NYSE:NEM) with a market value of $17 billion down from $30 billion last year shed 3.3%, while the world’s third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) gave up 6.5%.
AngloGold Ashanti’s ADRs listed in New York is down a staggering 46% year to date as the the Johannesburg-based company struggles with unrest in the its home country’s mining sector on top of weaker gold prices.
Fellow South African miner Gold Fields (NYSE:GFI) traded down 5.1%, wiping out strong gains on Thursday and making it the worst performer in the sector year to date. The fourth largest gold producer has more than halved in value in 2013.
Canadian gold counters Goldcorp (TSX:G) and Kinross Gold (TSX:K) – which this year overtook Goldcorp as the world fifth largest gold miner in terms of output – lost 5% and 6% respectively.
Goldcorp’s market value peaked in 2011 when it was worth $30 billion, over $5 billion more than on Friday, but the Vancouver-based company does at least today have the distinction of being the most valuable gold stock.
Australia’s Newcrest Mining’s (ASX:NCM) steep losses on the Sydney bourse only accelerated in New York – its ADRs where last down more than 14% as it prepares to write off assets by as much as $6 billion, drop expansion and slash exploration budgets.
Russian firm Polyus Gold which is partially listed in London emerged relatively unscathed and even managed to gain slightly giving it a market value of $9.3 billion.
With the exit of controlling shareholder Mikhail Prokhorov in February, rumours of a merger of Polyus and fellow Russian gold miner Polymetal have continue despite being dismissed by both parties. Should a merger happen it would create the world’s third largest gold miner in terms of reserves.
Rounding out the world’s top 10 listed gold producers Johannesburg-based Harmony Gold Mining was also hard hit, down 6.9% in New York.
Peru’s Compania de Minas Buenaventura (NYSE:BVN), which just edges out Canada’s Yamana Gold (TSX:YRI) in terms of annual gold production, but is not so reliant on the precious metal for earnings shed 1.7%.
Yamana, which produces just over 1 million ounces per year was hammered down 5.1% on the Toronto big board. Toronto-based Agnico-Eagle Mines lost near 7%.
