Commodities & Metals
Major 2016 Gold Rally Still Has 4 Gold Stocks Lagging Way Behind With Losses
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At the end of 2015, it seemed like the bull market for stocks was ready to turn seven years old, and gold’s chart and fundamentals looked like it was at risk of dropping under $1,000. Fast forward about six weeks into 2016 and you have a very different story. The Dow Jones Industrial Average is now down 8%, versus a gold rally of close to 12%.
There is a perfect storm taking place for gold. Central banks need to keep buying gold. Quantitative easing continues, with Japan and Europe both having negative interest rates. The rate hike plan from the U.S. Federal Reserve may be smaller than the talking heads were expecting, and the emerging market slow down and uncertainty is keeping investors on edge.
24/7 Wall St. saw that there have been many gold stocks among the top winning stocks so far in 2016. Some are up 50% to over 100%, while the Dow, S&P and Nasdaq are all performing horribly. Still, the rising tide of gold has not been mutually beneficial for every gold mining or exploration outfit. We have added color and relevant trading data on each. With some of these being small cap and thinly covered by analysts, the consensus analyst targets on each might not be as relevant as others.
Primero Mining Corp. (NYSE: PPP) has been crushed due to a legal claim filed by tax authorities in Mexico. It is also in pre-class action investigations by law firms. This stock is down 26% from the end of 2015 and is down about 54% from a year ago. Its market cap is $278 million and a discount to its book value, despite cost cuts and low costs (2015 consolidated total cash costs at roughly $637 an ounce and all-in sustaining costs of about $972 an ounce). Shares were trading at $1.71 on Tuesday, with a consensus analyst price target of $3.06 and a 52-week trading range of $1.54 to $4.49.
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