Kinross is making a bit of a comeback on speculation that the company may now be a takeover target. Larger Canadian gold miners Newmont Mining Corp. (NYSE: NEM) and Barrick Gold Corp. (NYSE: ABX) are included in the number of possible buyers, as are Goldcorp Inc. (NYSE: GG) and AngloGold Ashanti Ltd. (NYSE: AU). Another potential buyer is London-traded Polyus Gold International Ltd. according to a report at Bloomberg News.

Kinross acquired Canadian miner Red Back in 2010 for $7.8 billion, and the deal included the Tasiast mine in Tanzania. The Tanzanian mine is the cause of the goodwill writedown, but the simple fact is that Kinross paid way too much for Red Back. Kinross has admitted that itself.

Of the potential buyers, Polyus might be the one to take most seriously. The Russian company has said that it wants to become one of the three largest gold miners in the world. Acquiring Kinross would achieve that goal.

Kinross might also be a good acquisition for Newmont, which currently has few growth prospects according to an industry analyst cited by Bloomberg: “Newmont has no growth, whereas Kinross has plenty of growth projects.”

Kinross is now trading at around $10/share though its asset value is about double that. That’s still a $20 billion+ deal at a time when production costs are rising and the price of gold going forward is unclear.

Shares of Kinross are up about 1.5% at noon today at $10.25 in a 52-week range of $9.96-$18.25. Shares of the SPDR Gold Trust (NYSE: GLD) are up 0.27% at $161.65 in a 52-week range of $127.80-$185.85.

Paul Ausick

After taking a look at the “GLD” chart the concerns are growing.  Since its major move at the end of 2008 there had not been a single time that the SPDR Gold Trust shares had violated the key 200-day moving average.  If you look at the mining ETF via the Market Vectors Gold Miners ETF (NYSE: GDX), the gold bulls may argue that the mining sector violated the 200-day moving average on multiple occasions and still traded higher!  Some technicians may watch other metrics on the GLD for long-term trends but many will fear that this means that the monstrous run higher at a minimum cannot recover at the same pace.  Other technicians may argue that gold has peaked outright, just like Dennis Gartman has raised concern about recently.

It is at least somewhat interesting that Goldman Sachs recently lowered the ratings of AngloGold Ashanti Ltd. (NYSE: AU) as well as Randgold Resources Limited (NASDAQ: GOLD) this morning, both were downgraded to “Sell” from an already cautious “Neutral” rating. AngloGold is somehow up almost 1% at $41.52 today and Rangold is down 0.3% at $101.50.  Meanwhile, Barrick Gold Corporation (NYSE: ABX) was recently raised to “Sector Outperform” from “Sector Perform” by Scotia Capital.

What is so confusing for many gold bugs and investors alike is that the news headlines would make you think that gold has everything going for it.  Iran flexing its muscle… The Euro Zone debt crisis… The possibility that the Euro disappears or is altered… Sovereign debt credit rating downgrades… China’s central bank buying gold… Uncertainty… and more.  It is the rise of the U.S. Dollar again that is capping gold’s positive aspects.  Besides that, gold reached the point that many market participants just cannot afford to use the metal for anything now. 

If you go back to the “GLD” as the measurement for most spot gold investors today, that would be $157.36 as to where the 200-day moving average is now versus $154.90 after a 0.2% drop today.  The “GLD” chart below from stockcharts.com shows a 3-year history for our readers.

JON C. OGG

AEGON N.V. (NYSE: AEG) Cut to Neutral at Goldman Sachs.
AutoZone, Inc. (NYSE: AZO) named Momentum stock of the day at Zacks.
Barrick Gold Corporation (NYSE: ABX) named as Value stock of the day at Zacks.
FTI Consulting, Inc. (NYSE: FCN) named Bull of the Day at Zacks.
PepsiCo, Inc. (NYSE: PEP) Reiterated Buy at Gabelli & Co.
RadioShack Corporation (NYSE: RSH) named Bear of the Day at Zacks.
Raytheon Co. (NYSE: RTN) maintained Hold at Argus.
ReneSola Ltd. (NYSE: SOL) maintained Neutral but cut target to $2 at Credit Suisse.
Walgreen Co. (NYSE: WAG) Reiterated Buy at Gabelli & Co.

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JON C. OGG

Gold prices have gained about $60/ounce, about 3.6%. Silver prices are up roughly 9%. Copper prices are up by about 8.6%. Titanium prices are unchanged, steel prices have been drifting though more varieties appear to be selling at lower prices, and rare earth minerals vary widely depending on the particular mineral. Lanthanum oxides are selling for about $61/kilogram, while terbium oxide goes for $605/kilogram.

All stock data comes from Yahoo! Finance and current prices were gathered in the early afternoon today.

Of the companies we survey, all but one enjoys a higher stock price today than they did last month. The single exception is Molycorp, which is getting punished today for missing both EPS and revenue estimates. At yesterday’s closing price of $38.70, Molycorp’s share price was higher than it was a month ago.

More interesting, perhaps, were recent changes in median price targets. Only Nucor and Titanium’s price targets have remained the same in the last month. Two stocks, Newmont and Barrick, had their price targets raised and the other seven had price targets lowered.

Newmont’s target price was raised from $77 to $81. At the new target price and a current price of $70.41, Newmont’s implied gain is $10.59, or 15%. The stock put up a new 52-week high last week, and its forward P/E also rose from 10.2 to 11.47. In the past month, shares have gained more than $7, or 11%. The company’s pledge to raise dividends if gold price targets are met is another reason to look carefully at this stock.

Barrick’s target price was raised from $66.50 to $68. At the new target price and a current price of $52.61, Barrick’s implied gain is $15.39, or 29%. Shares are trading at less than 6% away from the 52-week high of $55.95. Over the past month, Barrick’s shares have gained 12%.

The largest drop in target price was settled on Molycorp, which saw its target price fall from $80- to $70. Even at that, the implied gain for the shares, based on today’s price of $34.04, is 106%. The wide gap is due not so much to any failure on Molycorp’s part but to what might be “irrational exuberance” for the stock by investors. There is also the fact that Molycorp’s mineral reserves tend to be heavy on the lower-priced rare earths and light on the higher-priced metals.

The largest percentage drop in target price was claimed by US Steel, which saw its target price fall from $40 to $34.50, nearly 14%. The company posted a new 52-week low on October 3rd. At the current price of $26.08, the implied gain is $8.42, or 32%. US Steel is widely expected to be acquired — and fairly soon — which is attracting short sellers in droves.

Freeport-McMoran’s target price fell from $55 to $53 in the past month, even though shares have added $5.05, or about 15%, in the same period. The implied gain based on the new target price and the current price of $39.83 is 33%. Freeport’s problem is that demand for copper might be stagnating or worse, given the construction slowdown in China.

Silver Wheaton’s target price fell from $51.50 to $49.50, while the share price has gained 17%. At the new target price and based on today’s price of $36.18, the implied gain here is 37%. There is plenty of headroom for Silver Wheaton’s share price to continue rising, but demand for silver will be the driver.

Alcoa’s target price dropped from $15.50 to $13 in the last month, even as the share price has risen by about 8%. At the new target price and based on the current price of $10.58, the implied gain in Alcoa stock is nearly 23%. Given that shares rose by 8% in the last month, anything’s possible, even that Alcoa may hit the lower target.

The target price for Steel Dynamics fell from $18 to $16, while share prices gained a substantial 23% in the same period. At the new target price and a current price of $13.51, the implied gain in the stock is 18%. EPS estimates for the current quarter have fallen by nearly -20% in the past month, following lowered guidance from the company.

Southern Copper’s target price fell from from $36.75 to $36.25 in the past month, even though the share price rose by 21%. At the new target and at the current price of $32.41, the implied gain for Southern Copper is nearly 12%.

Paul Ausick

The DJIA jumped above 12,000 in the opening minutes of trading this morning and had topped 12,200 by mid-afternoon. European Union leaders have agreed on a deal that would make up to $1.4 trillion as a bailout fund for troubled European banks, offer a 50% haircut to Greek debt holders, and recapitalize the continent’s banks. Apparent euphoria over the deal in Europe caused investors to miss the weak number on pending home sales. The euro rose to more than $1.42, its highest level in nearly two months, and oil prices were about $3/barrel higher this morning and had gained nearly another dollar by mid-afternoon. The day closed with a few uncertainties still remaining on the agreement announced earlier in Europe.

The unofficial closing bells put the DJIA up nearly more than 340 points to 12,209.23 (2.87%), the NASDAQ rose nearly 88 points (3.32%) to 2,738.63, and the S&P 500 rose 3.43% or more than 42 points to 1,284.54.

There were several analyst upgrades and downgrades today, including Ford Motor Co. (NYSE: F) maintained at ‘neutral’ with price target cut from $16 to $14 at Credit Suisse; Netflix Inc. (NASDAQ: NFLX) cut to ‘neutral’ at Citigroup (ahem!); Itron Inc. (NASDAQ: ITRI) started at ‘outperform’ with a $60 price target at Credit Suisse and maintained at ‘buy’ with a $50 target at Canaccord Genuity; Visa Inc. (NYSE: V) cut to ‘market perform’ at FBR; and Range Resources Corp. (NYSE: RRC) reiterated at ‘sell’ by Canaccord Genuity.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Proctor & Gamble Co. (NYSE: PG) up about 0.5%, at $65.25; Colgate Palmolive Co. (NYSE: CL) up about 1%, at $91.49; Exxon Mobil Corp. (NYSE: XOM) up 0.84%, at $81.75; Occidental Petroleum Corp. (NYSE: OXY) up nearly 11%, at $96.59; Barrick Gold Corp. (NYSE: ABX) up nearly 2.5%, at $48.98; Johnson Controls Inc. (NYSE: JCI) up 2.2%, at $33.32; Bristol Meyers Squibb Co. (NYSE: BMY) up 1.8%, at $33.10; and Altria Group Inc. (NYSE: MO) up 1.5%, at $27.69.

Several other standouts from today are as follows…

QuickLogic Corp. (NASDAQ: QUIK) is up nearly 25%, at $2.87. The company announced an agreement under which mobile phone maker Kyocera will use QuickLogic chips in new products for the Japanese market.

Kelly Services, Inc. (NASDAQ: KELYB) is up nearly 28%, at $16.75. The company is set to announce earnings on November 9th, and is glimmering in the glow of a solid earnings report today from Monster Worldwide, Inc. (NYSE: MWW).

LDK Solar Co. Inc. (NYSE: LDK) is up more than 21%, at $4.00. Germany has announced another cut to its solar power feed-in tariff at the first of the year, and that could unleash a horde of new projects to take advantage of the current higher tariff rate.

Century Aluminum Co. (NASDAQ: CENX) is up more than 19%, at $11.74. The company reported an EPS loss yesterday, even though sales were up 24%. Investors must like the revenue report more than they hate the EPS loss.

McDermott International Inc. (NYSE: MDR) is down nearly -26%, at $10.85. The engineering and construction company lowered its third-quarter profit and revenue guidance. Analysts were expecting EPS of $0.29 and McDermott is now saying EPS will be just $0.03-$0.05.

Avon Products, Inc. (NYSE: AVP) is down about -18%, at $18.87. The company missed its earnings expectations, but the worse news is that the SEC have begun a formal investigation into bribery charges against the company for actions it took in foreign markets.

Stay tuned for Friday.  We have noted the following events (all times Eastern):

• 8:30 a.m. – Consumer spending
• 8:30 a.m. – Employment cost index
• 9:55 a.m. – Reuters/University of Michigan consumer sentiment index

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Paul Ausick

AFLAC Inc. (NYSE: AFL) boosted its dividend after beating earnings estimates.  The payout went up by 10% to $0.33 EPS. The prior payout was $0.30.

Atlas Pipeline Partners LP (NYSE: APL) came in for the MLP lovers.  It jacked its quarterly distribution by 15% to $0.54 per quarter from $0.47 per quarter.

Barrick Gold Corporation (NYSE: ABX) is loving high gold prices… It turned in a 25% hike to its dividend to $0.15 per quarter.  This is still only a 1.25% dividend yield.

Holly Energy Partners, LP (NYSE: HEP) came through for the MLP faithful.  The company slightly boosted its quarterly distribution payout to $0.875 per quarter.  This may only be a penny per quarter per share but it is a continuous distribution hike with 28 straight hikes.

Lockheed Martin Corporation (NYSE: LMT) may be in the defense sector and tied to the age of austerity, but it sees enough earnings ahead to boost its payout: its dividend was jacked up by 33% to $1.00 per share for a yield of 5.2%.

Marathon Petroleum Corporation (NYSE: MPC) had a huge day with a 5.3% gain after it jacked up its dividend to $0.25 per quarter from $0.20 per quarter and even after the price jump its new dividend yield is almost 2.9%.

Newmont Mining Corporation (NYSE: NEM) came through with its higher payout due to gold prices.  The gold leader hiked its dividend by 17% to $0.35 per share, which is more than double that of a year ago.  The yield went from about 1.9% to 2.12%.  That might not sound like much, but it is almost as high as the 10-year Treasury note.

NIC Inc. (NASDAQ: EGOV) has only paid special dividends if we look back at the payout history over the last few years.  The company declared a special dividend of $0.25 for its shareholders.  Since it is special, we are not tallying up an implied yield.

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United States Steel Corp. (NYSE: X) has a median target price of $40.00 from 14 brokers. Shares are trading today at $23.52, for an implied gain of $16.48, or 41.2%. US Steel’s forward P/E is 6.46 and the company’s dividend yield is 0.90%. The stock’s 52-week trading range is $18.85-$64.03, and at today’s price that’s about 25% above its 52-week low and 63% below the 52-week high. The huge difference between US Steel’s 52-week high and its current price indicates a substantial opportunity here, if the company can get its act together. It owns its own sources of iron ore and coke, so it is relatively insulated from the higher costs faced by many other steel makers. The company should be doing better than this, but it’s a tough market out there.

Nucor Corp. (NYSE: NUE) has a median target price of $45.00 from 13 brokers. Shares traded today at $34.85, for an implied gain of $10.15, or 22.6%. Nucor’s forward P/E is 10.34 and the company’s dividend yield is 4.20%. The stock’s 52-week trading range is $29.82-$49.24, and at today’s price that’s about 17% above the 52-week low and 29% below the 52-week high. Nucor stock recently took a hit when the company lowered third-quarter EPS estimates to $0.45-$0.55 compared with analysts’ expectation of $0.64. Demand for raw materials raises costs for Nucor, at the same time that demand in the US has fallen.

Steel Dynamics Inc. (NASDAQ: STLD) has a median target price of $18.00 from 13 brokers. Shares traded today at $10.95, for an implied gain of $7.05, or 39.2%. Steel Dynamics’ forward P/E is 6.49 and the company’s dividend yield is 3.70%. The stock’s 52-week trading range is $8.78-$20.70, and at today’s price that’s about 25% above the 52-week low and 47% below the 52-week high. Like Nucor, Steel Dynamics revised EPS expectations downward last month by at least a third compared with analysts expectations.

Newmont Mining Corp. (NYSE: NEM) has a median target price of $77.00 from 16 brokers. Shares are trading today at $63.24, for an implied gain of $13.76, or 17.9%. Newmont’s forward P/E is 10.2 and the company’s dividend yield is 1.9%. The stock’s 52-week trading range is $50.05-$71.25, and at today’s price that’s about 26% above the 52-week low and 11% below the 52-week high. Newmont is the largest gold miner in the world and its dividend yield is also the highest among the miners. The company has committed to raising dividends if certain gold price targets are hit, making life even tougher for competitors.

Barrick Gold Corp. (NYSE: ABX) has a median price target of $66.50 from 20 brokers. Shares traded today at $46.93, for an implied gain of $19.57, or 29.4%. Barrick’s forward P/E is 7.67 and the company’s dividend yield is 1%. The stock’s 52-week trading range is $42.50-$55.95, and at today’s price that’s about 10% above the 52-week low and 16% below the 52-week high. Gold mining stocks have not been able to keep up with the rising price of gold mainly because the miners’ costs keep rising even as gold prices rise. Barrick is one of the lowest cost producers among the big gold mining companies, and that’s a real positive for the company.

Northern Dynasty was named in April as a top undiscovered pick by Midas Fund manager Tom Winmill, provided an investor can wait until 2016 for the investment to pay off.  That’s no less true today, even if the price has come down significantly.

The company fully expects further legal and legislative challenges, including a ballot measure in the local taxing jurisdiction that would prohibit all large-scale development and is specifically aimed at Pebble.

A pre-feasibility study for the project is expected next year, but the current estimate for the size of the resource is 350,000 tons of copper, 12,000 tons of molybdenum, and 600,000 ounces of gold. Anglo American has committed $1.5 billion to the initial stages of the project, of which about $350 million  has been spent so far.

The total development cost could go much higher though. A joint venture between Barrick Gold Corp. (NYSE: ABX) and Novagold Resources Inc. (AMEX: NG) has raised the development cost estimate for its Donlin Creek project in Alaska from $4.5 billion to $7 billion. A total of 38 million ounces of gold has already been identified at the Donlin Creek project, but that didn’t keep investor George Soros from dumping all his shares earlier this year.

Junior miners like Northern Dynasty and Novagold have no choice but to form partnerships with the big miners on projects like Donlin Creek or Pebble because they simply can’t raise enough capital on their own. Yet a gold mine like Donlin Creek could be worth the billions it will cost, and a project like Pebble, which is primarily copper, is far more subject to commodity price swings and thus more sensitive to cost increases.

Northern Dynasty shares closed last night at $6.84, up about 6% on the day, in a 52-week range of $4.87-$21.76. Novagold closed at $7.02, up about 2.6% on the day, in a 52-week range of $5.93-$16.90. Shares in both are down about -21% over the past 12 months. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) closed at $29.54 yesterday, in a 52-week range of $25.22-$44.86. The Market Vectors Gold Miners ETF (NYSE: GDX) closed at $56.27, in a 52-week range of $50.42-$66.98. Neither Northern Dynasty nor Novagold is included in either fund.

The SPDR Gold Trust (NYSE: GLD) closed at $160.49 last night, up about 0.65% on the day, in a 52-week range of $127.80-$185.85. Shares are trading up another 0.85% in the pre-market this morning.

Paul Ausick

Copper prices have dropped by more than $1/pound from around $4.50/pound at the beginning of August. CME raised the copper margin by 18% on September 24th, so this is the second rise in just over two weeks. At the same time as the last rise, CME also raised the margin requirements on gold by 21% and silver by 16%. CME’s rationale for raising margin requirements is based on what it calls a “normal review of market volatility to ensure adequate collateral coverage.”

CME’s move has probably played a part in lifting copper mining stocks Freeport-McMoran Copper & Gold (NYSE: FCX) and Southern Copper (NYSE: SCCO), as well as gold miners Newmont Mining (NYSE: NEM) and Barrick Gold (NYSE: ABX), and silver miner Silver Wheaton (NYSE: SLW).

If copper margins are rising today, can requirements on gold and silver be far behind? The margin requirement for a speculative trader to open a position on a 100-ounce gold contract is $11,475. At today’s price of around $1,648/ounce, that is just 7% of the value of the contract.

The margin requirement for a speculative 5,000-ounce silver contract is $24,875. At today’s silver price of nearly $32/ounce, the value of a contract is $160,000. That calculates to a margin requirement of about 15.5%.

The rise in margin requirements last month put a damper on prices for all three of the metals. That is not happening with copper today, as the price is up nearly 5%. The news that the European Central Bank is offering essentially unlimited additional emergency loans to eurozone banks is putting some air under all markets today, and the commodities markets are not excepted.

Still, there is a nearly certain chance that CME will lift its gold and silver margin requirements again. The margin on gold contracts seems particularly out of kilter given the 15% requirement for both silver and copper. But if today’s market reaction is any indication, margin requirement increases do not play as big a role in metals trading as might be thought.

Freeport’s shares are up about 1.5%, at $34.97, in a 52-week range of $28.85 – $61.35. Southern Copper’s shares are up nearly 2.5%, at $27.04, in a 52-week range of $22.58 – $50.35. The iPath DJ-UBS Copper Total Return Subindex ETN (NYSE: JJC) is up nearly 3%, at $41.95, in a 52-week range of $38.99 – $61.69.

Gold miner Newmont’s shares are up about 0.5%, at $63.33, in a 52-week range of $50.05 – $71.25 and Barrick’s shares are up about 1.5%, at $46.98, in a 52-week range of $42.50 – $55.95. The SPDR Gold Trust (NYSE: GLD) is up about 0.2%, at $159.74, in a 52-week range of $127.80-$185.85. The Market Vectors Gold Miners ETF (NYSE: GDX) is up about 0.7%, at $55.28, in a 52-week range of $50.42 – $66.98. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up more than 3.5%, at $29.21, in a 52-week range of $25.22 – $44.86.

Silver Wheaton shares are up about 5%, at $30.81, in a 52-week range of $25.35 – $47.60. The iShares Silver Trust (NYSE: SLV) is up more than 3.5%, at $30.75, in a 52-week range of $21.97 – $48.35. The Global X Silver Minters ETF (NYSE: SIL) is up nearly 4.5%, at $21.93, in a 52-week range of $18.74 – $31.34.

Paul Ausick

Investors should use these more for a review rather than any quick trading ideas because anything tied to gold and silver this Friday is taking it on the chin.

Zacks has a report noting that these funds “can be a source of comfort to investors when markets are heading south and the economy is passing through choppy weather.”  The aim is for higher consistent returns that outperform stocks.  These act as diversification and as protection against inflation.  Zacks has offered a list of its top 5 rated precious metals funds this morning, all of which have the Zacks #1 Rank (Strong Buy).

U.S. Global Investors Gold and Precious Metals (USERX) invests in companies whose primary operations are related to gold and other precious metals. The precious metals mutual fund has a ten year annualized return of 26.34%. The precious metals mutual fund has a minimum initial investment of $5,000 and an expense ratio of 1.80% compared to a category average of 1.40%.  After looking elsewhere, the three month return on Google was noted as +10.2% and the year-to-date return was -6.5%.  Its top holding was listed as Kinross Gold Corporation (NYSE: KGC) at almost 7.5% of the fund.

OCM Gold (OCMGX) invests in companies in the gold mining industry and may also invest in precious metals producers. The precious metals fund has a five year annualized return of 15.52%.  Google listed its 3 month return as 17.8% and a year-to-date return of almost 6%.  More than 12% of its assets were in Goldcorp, Inc. (NYSE: GG).

Fidelity Select Gold (FSAGX) invests in companies whose principal operations are related to gold, and it also invests in gold bullion and coins. Up to 25% of the fund’s assets may be invested in gold and other precious metals through a wholly-owned subsidiary. Zacks noted a return of 20.09% in the last one year period.  Google noted a return of +14.3% in the last three months and a return of +3.3% year-to-date.  The top three holdings are each 10% or more of the weighting and they are in Barrick Gold Corporation (NYSE: ABX), Goldcorp, Inc. (NYSE: GG), and Newcrest Mining Limited (NYSE: NCM).

GAMCO Gold AAA (GOLDX) invests at least 80% of its assets in companies which engage in gold-related activities, but a large portion of its assets are in foreign securities.  Zacks noted a three year annualized return of 20.68%.  Google noted a 3-month return of +17.7% and a year-to-date return of almost +4%.  The top two assets in the fund account for more than 23% of the entire fund and they are Randgold Resources, Ltd. ADR (NASDAQ: GOLD) and Newcrest Mining Limited (NYSE: NCM).

Unfortunately for the report, this is coming on a morning that gold and silver are getting hammered and are bring down anything and everything tied to them.  Here are all of Zacks #1 Rank funds.

JON C. OGG