Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Something to cheer about
The gold price jumped more than 3% or $40 an ounce on Thursday to $1,323, enjoying its best day since April this year.
Gold’s advance came after the deal reached between US politicians essentially delayed any reduction in economic stimulus by the Federal Reserve, which hurts the dollar and boosts gold in return.
The gold price is down 21% this year, but the fall in most gold mining stocks have been much steeper.
On Thursday investors believing gold shares have been oversold were piling back into the sector affording some counters double digit gains.
In afternoon trade Barrick Gold Corp (TSX:ABX) shot up 6% adding almost $5 billion in market value since hitting 21-year lows early July.
Barrick is now worth $19.3 billion on the TSX, still down 44% so far this year despite an aggressive divestment and cost-cutting drive to please investors.
Newmont Mining Corp (NYSE:NEM) with a market value of $13.6 billion fared almost as well as the world’s number one gold producer adding 5.8%.
The Denver-based company, the number two gold producer in terms of annual output of 4.8–5.1m ounces forecast this year, last month announced that it is revamping its operations amid the fall in the price of gold, and is looking at adding copper assets to its portfolio.
The world’s third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) was one of Thursday’s best performers, gaining 11.2%. AngloGold, like its peers, have had to write down billions of dollars this year and markets have punished the counter way in excess of the gold price decline.
Even after today’s spike the value of the Johannesburg-based company’s ADRs listed in New York has been more than halved in 2013 as it struggles with unrest in the its home country’s mining sector and falling gold output.
Fellow South African miner Gold Fields (NYSE:GFI) attracted less buying, gaining 5% in New York. The world’s fourth largest gold producer has had its value slashed 63% in 2013 with investors punishing it for its contrarian purchase of high-cost mines amid the slump.
Vancouver-based Goldcorp (TSX:G) and Toronto’s Kinross Gold (TSX:K), which both expect to produce around 2.5 million ounces of gold this year, jumped 4% and 4.5%.
Goldcorp’s year to date losses of 29% are much more in line with the decline in the gold price, helping the Vancouver-based company retain the top spot as the most valuable gold stock.
Goldcorp’s market value is now back above $20 billion while Kinross is homing in on a $6 billion capitalization, still a far cry from the $11 billion it was worth in January.
Kinross, like all the majors, took multi-billion charges against the value of its operations with the firm writing down its ill-fated acquisition in Mauritania and abandoning a huge project in Ecuador.
Australia’s Newcrest Mining’s (ASX:NCM) declined 0.6% on the Sydney bourse missing out on the gold price rally in New York. The Melbourne-based company last week ousted its CEO and Chairman after its August results showed a A$5.6 billion loss.
Canada’s Yamana Gold (TSX:YRI) added 3.8%, while Agnico Eagle Mines (TSX:AEM) jumped more than 6%.
Another Canadian gold miner Eldorado Gold Corp (TSX:ELD) was the best performer on the day rocketing 11.3%. The Vancouver-based company boasts assets in Turkey, China, Greece, Brazil and Romania and is on track to produce three-quarters of a million ounces of gold this year, up 13% from 2012.
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The above article is in error when it says NEM “is looking to add copper assets to its portfolio” , because it is alluding to a recent Oct 1 interview given by its CEO Goldberg which resulted in an article which misconstrued Goldberg’s comment in that connection; some days later, Goldberg publicly stated that that article was not correctly interpreting his remarks in that connection. Moreover, the drop in Gold prices in recent months has caused NEM to make their operations far more efficient, while still maintaining the same annual Gold production at 5 million ounces per year, and Goldberg states that NEM is now well into this effort which will reduce their annual expenditures by $750 million, thereby adding approximately $1.25 per share to NEM earnings, thus allowing its Board of Directors to have a more robust Dividend Policy in the future ; the Oct 2013 Quarterly Dividend was $0.25 per share. Oct 20, 2013 at 7:15 a.m. PDT.