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

The unofficial closing bells put the DJIA down more than 99 points to 11,766.79 (-0.84%), the NASDAQ fell more than 32 points (-1.28%) to 2,523.14, and the S&P 500 fell -1.18X% or more than 14 points to 1,205.32.

There were several analyst upgrades and downgrades today, including Teva Pharmaceuticals Industries Ltd. (NASDAQ: TEVA) reiterated as ‘buy’ with a $52 price target at Canaccord Genuity. Other ratings actions today include AK Steel Holding Corp. (NYSE: AKS) raised from ‘market perform’ to ‘outperform’ at Wells Fargo; AngloGold Ashanti Ltd. (NYSE: AU) cut from ‘neutral’ to ‘sell’ at Goldman Sachs; Vail Resorts Inc. (NYSE: MTN) started as ‘outperform’ at Credit Suisse; and General Growth Properties Inc. (NYSE: GGP) cut from ‘outperform’ to ‘neutral’ at Goldman Sachs.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Shiloh Industries, Inc. (NASDAQ: SHLO) is up 0.35% at $8.52; and Ennis, Inc. (NYSE: EBF) is down more than -4% at $12.89. After markets close today, Red Hat Inc. (NYSE: RHT) is scheduled to report third-quarter EPS of $0.26 on revenue of $289.6 million.

Other standouts from today include the following stocks:

Winn-Dixie Stores Inc. (NASDAQ: WINN) is up nearly 71% at $9.27. The regional grocery chain has agreed to a buyout offer worth about $560 million from Bi-Lo, another regional chain in the southeastern US. The offer of $9.50/share represents a premium of about 75% to Winn-Dixie’s Friday closing price.

Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) is up more than 17% at $2.60, after posting a new 52-week low earlier today. The dry bulk shipper has received a time charter for one of its four Capesize vessels for a period of 11-13 months.

Zynga Inc. (NASDAQ) is down more than -5% at $9.00. The social game maker held its IPO last Friday, but shares have not been able to hold the $10/share offering price. More coverage here.

JAKKS Pacific, Inc. (NASDAQ: JAKK) is down more than -19% at $14.00, after posting a new 52-week low of $13.45 earlier today. The toy and consumer products maker lowered full-year earnings and sales guidance this morning.

Bank of America Corp. (NYSE: BAC) is down nearly -4.5% at $4.97, after posting a new 52-week low of $4.93 earlier today. The bank has been hit with concerns over new capital reserve requirements and the effect that will have on profits.

Stay tuned for Tuesday. Here are other noteworthy events on the schedule (all times Eastern):

• 8:30 a.m. – November housing starts report
• 1:00 p.m. – Five-year Treasury note auction

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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

AK Steel Holding Corporation (NYSE: AKS) Raised to Outperform from Market Perform at Wells Fargo.
AngloGold Ashanti Ltd. (NYSE: AU) Cut to Sell from Neutral by Goldman Sachs.

France Telecom S.A. (NYSE: FTE) Cut to Underperform as Bear of the Day at Zacks Investment Research.
General Growth Properties Inc. (NYSE: GGP) Cut to Neutral from Outperform at Credit Suisse.
Honeywell International Inc. (NYSE: HON) Raised to Outperform as Bull of the Day at Zacks Investment Research.

Lazard Ltd. (NYSE: LAZ) Raised to Outperform from Neutral at Credit Suisse.
Pinnacle West Capital Corporation (NYSE: PNW) Cut to Neutral from Outperform at Credit Suisse.
Randgold Resources Limited (NASDAQ: GOLD) Cut to Sell from Neutral at Goldman Sachs.
Telefonica, S.A. (NYSE: TEF) Cut to Neutral from Overweight at HSBC.
Teva Pharmaceutical Industries (NASDAQ: TEVA) Reiterated Buy with $52 target at Canaccord Genuity.
Torchmark Corp. (NYSE: TMK) Raised to Neutral from Underperform at Credit Suisse.
United Natural Foods, Inc. (NASDAQ: UNFI) Raised to Buy from Hold at Canaccord Genuity.
United Rentals, Inc. (NYSE: URI) Raised to Top Pick at RBC.
Vail Resorts Inc. (NYSE: MTN) Started as Outperform at Credit Suisse.
WellCare Health Plans, Inc. (NYSE: WCG) named as value stock of the day at Zacks Investment Research.

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No money was injured while filming

Billionaire and hedge fund manager John Paulson of Paulson & Co. and of Paulson Management is a widely followed equity hedge fund manager for whale watchers.  He has made billions of dollars, but 2011 is proving to be a very tough year.  We have tracked some of the more obvious portfolio changes in the Paulson 13F filing from this evening (as of June 30):

Bank of America Corporation (NYSE: BAC) has been trimmed to about 60.4 million shares, down from about 123.6 million from March 31, 2011.  It is likely that Paulson has trimmed even more as the price tanked, unless he bought more last week during the panic.  Keep in mind that there are some additional warrants for 29 million shares expiring in 2019 and some 9.68 million warrants expiring in 2019.  Both warrant positions are smaller than the May 16 filing as well for the March 31 cut-off date.

Citigroup Inc. (NYSE: C) was also cut to 33,505,002 shares and there are warrants for another 225,000 shares.  The split adjusted shares on March 31 were 41.2 million shares.

A partial list of the standout changes we saw are as follows…

Agnico-Eagle Mines Ltd. (NYSE: AEM) is a new small position listed as 700,0000 shares as of June 30 that was worth some $44.2 million at the time.

AngloGold Ashanti Ltd. (NYSE: AU) is a lower ADR stake as the June 30 position was listed as 39,935,382 versus what was listed 41,046,974 on March 31.

Capital One Financial Corporation (NYSE: COF) is one that Paulson actually grew to 21,100,000 as of June 30 versus 18,000,000 as of March 31.

Gold Fields Ltd. (NYSE: GFI) was down slightly listed as 24,700,000 shares on June 30 versus 26,050,000 on March 31.

Grifols, S.A. (NASDAQ: GRFS) is a new position for Paulson and the ADR’s worth was $107.1 million for the 14,266,995 shares as of June 30.

J.P. Morgan Chase & Co. (NYSE: JPM) was cut to 47 million shares as of June 30 versus 50 million shares as of March 31.

Life Technologies Corporation (NASDAQ: LIFE) was listed as a new position of 7,520,000 shares as of June 30.  That stock has been pounded since June 30 when shares were above $50.00 versus $38.84 today.

NYSE Euronext Group Inc. (NYSE: NYX) was a new position of 3,000,000 shares as of June 30, implying he is ready to profit from the buyout (merger).

Ralcorp Holdings Inc. (NYSE: RAH) is a much higher position as Paulson must think the buyout merits are there… This was listed as 3,692,000 shares at June 30 versus only 400,000 back on March 31.  Nice gains have been made since.

Tenet Healthcare Corp. (NYSE: THC) is one where Paulson must think a buyout will ultimately come because he has added Tenet as a pick whereas it was not on there before.  The new position was listed as 20,000,000 shares.

Wells Fargo & Co. (NYSE: WFC) was listed as being 33,600,000 shares as of June 30, but this is a gain compared to the 20,500,000 shares as of March 31.

The big surprise is that the SPDR Gold Trust (NYSE: GLD) was kept static at 31,500,000 shares worth some $4.59 billion as of June 30.  What is interesting is that if he has stuck by the position he is up more.

Trouble is apparently no obstacle, if Paulson stuck with this position.  News Corporation (NASDAQ: NWSA) was listed as a new position with some 10.4 million common shares.

If you want to see the change in the total value of Paulson’s holdings, it is being confirmed that his value fell.  It was listed as $29.05 billion in total for the funds under the filing as of June 30, 2011.  The figure total was $34.27 billion on March 31.

JON C. OGG

A new report from ABN Amro Bank, VM Group, and Haliburton Mineral Services provides details on rising production costs in the major mining regions of the world.  The report is based on cash costs per ounce of production from 111 gold mining companies operating a total of 274 mines. Barrick Gold Corp. (NYSE: ABX) and Newmont Mining Corp. (NYSE: NEM) are among the companies mentioned specifically in the report.

Cash costs include direct mining and processing expenses, other onsite charges, third-party smelting and refining charges, and royalties and taxes net of by-product credits. In the first quarter of 2011, the average cash cost of production rose from $609/ounce to $620/ounce, a boost of 1.8%.

The other side of the coin is that rising costs have not prevented producers from posting record margins. In the first quarter, margins rose from $758/ounce to $767/ounce. In the fourth quarter of 2008, margins stood at $422/ounce. Comparing production of 100,000 ounces in the fourth quarter of 2008 and the first quarter of 2011, miners’ margins are $42 million better. For Barrick Gold, which produced 7.8 million ounces of gold in 2010, that’s a boost in margins of nearly $3.3 billion. Not a bad bounce in just two years.

A weak US dollar has contributed to a rise in global average production costs, but has kept US production costs down to an average of about $546/ounce. In South Africa, which has faced power supply shortages, labor disputes, and other issues, the average cash cost rose to $869/ounce. Some 10% of the country’s gold was produced at a cash cost above $1,200/ounce. And that number could go higher.

Wage negotiations in South Africa have begun between the miners’ union and three producers, AngloGold Ashanti Ltd. (NYSE: AU), Gold Fields Ltd. (NYSE: GFI), and Harmony Gold Mining Co. Ltd. (NYSE: HMY). The union is seeking a pay hike of more than 14%, and has already turned down a counter offer of 4%. Food and energy inflation are rising more rapidly than the official 4.2% inflation rate in South Africa and the country’s miners want the mining companies to share their climbing margins with the workers.

In the past year, Gold Fields and Harmony have posted the best share price gains, with nearly a 10% gain for Gold Fields and about a 25% gain for Harmony. Protracted negotiations or strikes could put a real dent in revenues and earnings. Harmony’s trailing P/E ratio is 55.23, while its forward P/E is just 14.19. Gold Fields’ trailing P/E is 37.49, and Thomson Reuters has no forward P/E estimate. AngloGold’s trailing P/E is a whopping 97.56, while its forward P/E is just 9.30.

Production costs, which are already high, are going to get even higher as the year progresses. In South Africa, where costs are highest, it seems likely that production costs will rise even more. A weak dollar doesn’t help because the lowers the margins on an ounce of gold and raises the cost of energy.

Barrick Gold has no operations in South Africa and its other African mines were spun off last year to a company called African Barrick Gold plc, which trades on the London exchange. Newmont, likewise, has no operations in South Africa, although it does operate two mines in Ghana.

The Market Vectors Gold Miners ETF (NYSE: GDX) holds Barrick, Newmont, AngloGold, and Gold Fields as three of its top ten investments, representing about 35% of the fund’s assets. The fund’s shares are up more than 2% in the early afternoon today, to $55.24, in a 52-week range of $46.80-$64.62. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) does not hold any of these large-company shares, and is trading up more than 3.5% today, at $35.20, in a 52-week range of $25.10-$44.86.

The SPDR Gold Trust (NYSE: GLD) is up about 0.3% today, to $151.27, in a 52-week range of $113.08-$153.61. Comex gold futures have risen to a high today of $1,559.30, within reach of the 52-week high set in early May.

Paul Ausick

Now we’ll check in with our own list of five great gold stocks. Winmill’s list included miners Eldorado Gold Corp. (NYSE: EGO), Avocent Mining plc (OTC: AVVGF), and Northern Dynasty Minerals Ltd. (AMEX: NAK). He also mentioned Rio Tinto plc (NYSE: RIO) and the SPDR Gold Trust (NYSE: GLD). We’re going to add a couple of others: Newmont Mining Corp. (NYSE: NEM), Kinross Gold Corp. (NYSE: KGC), AngloGold Ashanti Ltd. (NYSE: AU), and Peruvian miner Compania de Minas Buenaventura SA (NYSE: BVN). We’ll also look at popular ETFs iShares Gold Trust (NYSE: IAU), Market Vectors Gold Miners ETF (NYSE: GDX), and Market Vectors Junior Gold Miners ETF (NYSE: GDXJ).

Northern Dynasty Minerals Ltd. (AMEX: NAK), as Winmill noted, is not yet earning revenues, but this is one of his long-term plays, with large-scale production not scheduled to begin until 2016 or later. For those of us who don’t even buy green bananas, we’ll take a pass on this one. Friday’s closing price of $12.57 compares to a 52-week trading range of $6.00 to $21.76 and compares to a Thomson Reuters consensus analyst median price target of $38.94.

Avocet Mining plc (OTC: AVVGF) boasts a trailing P/E ratio of 25.7, and according to Winmill, the company’s focus on West Africa is not correctly valued in the market. On its home exchange in London (AVM), Avocet posts a trailing P/E of 38.64 on a market cap of around $640 million. This could be a bargain, but again, it’s likely to take some time. In London, AVM closed Monday at $45.50 in a 52-week range of $38.66-$52.86.

Rio Tinto plc (NYSE: RIO) is the largest company, by market cap, in this list. It’s valued at about $136 billion. It’s trailing P/E is 9.33 and its forward P/E is just 7.46. It owns a piece of Northern Dynasty’s biggest project and mines just about any mineral that’s worth anything to someone. But the company’s $10 billion in cash at the end of 2010 and more than $56 billion in property, plant, and equipment make it a force to be reckoned with. It’s forward dividend yield is 1.8%, not much, but the highest of any of the miners we’re looking at here. Shares closed Friday at $69.59 in a 52-week range of $39.30-$76.67, and the median price target is $94.93.

Newmont Mining Corp. (NYSE: NEM) posts a trailing P/E ratio of 12.6 and a forward P/E of 12.37. Newmont just raised its quarterly dividend to $0.20/share, which yields 1.4%. Analysts expect growth here, with a median price target of $73/share, about 20% higher than Friday’s closing price of $56.39. Newmont’s got to watch its cash costs, though, which are among the industry’s highest. Shares closed Friday at $56.39, within a 52-week range of $50.05-$65.50, and the median price target is $73.00.

Kinross Gold Corp. (NYSE: KGC) posts a trailing P/E ratio of 18.02 and a forward P/E of 16.61. It’s dividend yield is a paltry 0.6%. Kinross shares trade at a discount to other large miners, but at least one analyst believes that 2011 could close that gap as the company closes in on projects in Ecuador. Shares closed at $16.11 on Friday, within a 52-week range of $13.84-$19.90, with a median price target of $22.50.

AngloGold Ashanti Ltd. (NYSE: AU) posts a trailing P/E of 104.12 and a forward P/E of 9.72. The huge difference could be due to a very profitable first quarter and the end of Anglogold’s forward sales. The company no longer has any hedges and will sell all its production at spot rates. That will keep shares higher this year, but the effect will diminish going forward. Shares closed on Friday at $45.50, within a 52-week range of $38.55-$52.86, with a median price target of $64.40.

Compania de Minas Buenaventura SA (NYSE: BVN), like Newmont, pays a nice forward dividend yield of 1.4%. Its trailing P/E is 15.53, and its forward P/E is 11.55. The company increased its silver production in the first quarter by about a third over a year ago and BVN more than tripled its copper production. Diverse assets, like Rio, only much smaller. BVN closed at $44.34 on Friday, within a 52-week range of $34.91-$57.50, and the median price target is $53.00.

The SPDR Gold Trust (NYSE: GLD) is the largest holding in John Paulson’s hedge fund, at 13.51% of the portfolio’s value. Because the trust holds only bullion, it avoids all the dangers involved with mining. Same for the iShares Gold Trust (NYSE: IAU). SPDR Gold Trust closed at $149.70 on Friday, within a 52-week range of $113.08-$153.61. iShares Gold Trust closed at $15.01 on Friday, within a 52-week range of $11.32-$15.39.

The Market Vectors Gold Miners ETF (NYSE: GDX) and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) spread the risk around the various miners. Newmont is one of the three largest holdings in GDX, and along with Barrick Gold Corp. (NYSE: ABX) and Goldcorp Inc. (NYSE: GG), make up more than a third of GDX’s holdings. The Gold Miners ETF closed at $57.92 on Friday, within a 52-week range of $46.80-$64.62. The Junior Gold Miners ETF closed at $37.44 on Friday, within a 52-week range of $24.25-$44.86.

So, skipping the two long-term plays, the best performer over the past 12 months has been Rio Tinto (up about 50%), followed by SPDR Gold Shares (up about 25%. Buenaventura finished up about 23% and AngloGold is up nearly 10%. Newmont is up about 5%. These five look good going forward.

Paul Ausick

The Global X Pure Gold Miners ETF is a global fund and is not limited to US markets nor just to North America.  As of March 15, 2011, the Fund includes companies based in Canada, the United States, the United Kingdom, Hong Kong, Australia and Turkey.  As of March 10, 2011, the three largest components of the index were Gold Fields Ltd. (NYSE: GFI), Polyus Gold, and Kinross Gold Corporation (NYSE: KGC).  Other key holdings are AngloGold Ashanti Ltd. (NYSE: AU), Eldorado Gold Corp. (NYSE: EGO), Harmony Gold Mining Co. Ltd. (NYSE: HMY) and others.  A full list of the global holdings inside this ETF is here.

Management Fee is listed as 0.59% and the custody fee is 0.00%, for an annual fund operating expense of 0.59%.

JON C. OGG

Barrick reported fourth-quarter EPS of $0.90 on sales of $2.95 billion, compared with expectations of EPS of $0.84 on $2.74 billion in sales. Adjusted EPS equaled $0.95. Production totaled 7.77 million ounces of gold at a total cash cost of $457/ounce. For 2011, Barrick expects production of 7.6-8.0 million ounces of gold at a total cash cost of $450-$480/ounce.

Kinross posted adjusted fourth quarter EPS of $0.21 on revenue of $920.4 million. Analysts were expecting EPS of $0.15 on revenue of $924 million. Gold production totaled 2.33 million ounces for the full year at a cash cost $508/ounce. For 2011, Kinross projects production of 2.5-2.6 million ounces at an average cost of $565-$610.

AngloGold, based in South Africa, posted adjusted earnings for the fourth quarter of $294 million and for the full year of $787 million. The company was the last of the miners to close out its hedge book, and posted closeout costs for the year of $2.5 billion. The company now sells all its production at spot market prices. Total cash costs of production were $638/ounce, and the company produced 4.15 million ounces in 2010. For the full year 2011, the company expects to produce 4.55-4.75 million ounces at a total cash cost of $660-$685/ounce.

Much of the variation in cash costs for these producers results from the quality of the ore each is working with. For instance, Barrick’s Cortez Hills mine is very rich and the expected cash costs in 2011 are just $235-$265/ounce. Kinross noted an increase in proved and probable reserves at its Tasiast project in Mauritania where the average gold grade is two grams of gold for every metric ton of rock.

Along with rising cash costs, the gold miners are seeing the world’s largest gold-backed ETF, the SPDR Gold Trust (NYSE: GLD) sell off some of its bullion. In June the trust held about 1,320 metric tons, compared with about 1,224 metric tons today. The trust’s gold buying during much of 2009 and 2010 helped keep the price of gold high. If this trend continues, lower prices will put pressure on gold miners profits.

The Market Vectors Gold Miners ETF (NYSE: GDX) has actually outperformed the SPDR Gold Trust over the past 12 months, rising by about 30% compared with the Gold Trust’s rise of about 25%. The largest gains were made by the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) which rose more than 50% over the past 12 months.

For now, the gold miners are more in demand than the yellow metal they mine. That’s due to the other stuff they find when they dig for gold — stuff like copper and silver, which keep rising in price.

Paul Ausick

Soros Fund Management counted 4,721,808 SPDR Gold Trust shares with a date of December 31, 2010.  That is up from 4,697,008 shares in the quarter before.  Some may have been from call options as those were listed in the third quarter but not this quarter.  NovaGold Resources Inc. (NYSE: NG) was another large Soros holding worth for 11,213,000 shares.

Paulson & Co. has his largest bet on the SPDR Gold Trust (NYSE: GLD).  His position was counted as 31.5 million shares and that was unchanged.  This comes to $4.37 billion in the dold trust alone.  Paulson also listed the following gold shares:

AngloGold Ashanti Ltd. (NYSE: AU) as being $2.015 billion for 40,949,437 shares;
IAMGOLD Corp. (NYSE: IAG) worth $48 million for 2,700,000 shares;
Kinross Gold Corporation (NYSE: KGC) worth $369.318 million for 19,478,794 shares;
NovaGold Resources Inc. (NYSE: NG) worth $287.995 million for 20,181,818 shares;
Randgold Resources Ltd. (NASDAQ: GOLD) worth $40.753 million for 495,000 shares.

JON C. OGG