24/7 Wall St. » EGO

Five Gold Stocks Offering Great Value (MIDSX, EGO, AVVGF, NAK, RIO, GLD, NEM, KGC, AU, BVN, IAU, GDX, GDXJ)

Administrator — Tue, 31 May 2011 14:42:40 +0000

Less than two weeks ago we were given an exclusive interview with Tom Winmill of the Midas Fund (NASDAQ: MIDSX). Winmill told us he believes that gold will reach $1,700/ounce in 2011 and he also gave us some color on a few of the stocks in the Midas portfolio.

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

Filed under: Commodities, Luxury, Metals, Value Investing Tagged: AU, AVVGF, BVN, EGO, GDX, GDXJ, GLD, IAU, KGC, MIDSX, NAK, NEM, RIO

24/7 Wall St. Top 7 Analyst Calls of the Week (BRCD, EGO, HCA, LNKD, PM, QIHU, ZLC)

Administrator — Sat, 21 May 2011 12:37:23 +0000

Each morning we publish the top analyst upgrades and downgrades we have seen in Wall Street research calls that morning. After you dig through enough research reports there are always some key standout research reports calling for huge upside (or downside) or which offer significant insight above and beyond what the market currently sees.

We have gone through many analyst research reports to find ”the top analyst calls of the week.” Of all of the calls we followed we came up with seven top research features from this last week that we wanted to keep in mind going forward. Those top analyst calls calls were in shares of Brocade Communications Systems, Inc. (NASDAQ: BRCD), Eldorado Gold Corp. (NYSE: EGO), HCA Inc. (NYSE: HCA), LinkedIn Corporation (NYSE: LNKD), Philip Morris International Inc. (NYSE: PM), Qihoo 360 Technology Co. Ltd. (NYSE: QIHU), and Zale Corporation (NYSE: ZLC).

This week has mostly a bullish-call bias, but that is rarely the case as we usually have a mix of upgrades and downgrades that stood out throughout the week. We often see some great research that flags more caution than ambition. Included in each call is the price action and the implied target goals, along with color if applicable.

Brocade Communications Systems, Inc. (NASDAQ: BRCD) has failed to yield much of the upside we forecast that it could see when we called it one which could double over the next 12 to 24 months back in 2010. This week came a sector upgrade for the most part in networking out of Janney Capital Markets’ Bill Choi where Brocade went from “Hold” to “Buy” with an $8.00 price target. What was impressive about this call was that it was going into earnings and that can be a very dangerous time to recommend Brocade due to its volatile nature around earnings and guidance.

In short, it was a very gutsy call to upgrade Brocade even if it was part of a sector call. Brocade closed up 6.5% at $6.67 on Friday and the 52-week range is $4.64 to $6.88. Getting near the $11.00 per our old double is probably an opportunity that has passed Brocade by even if the stock is higher, but the $8.00 target from bill Choi of Janney Capital Markets compares to a consensus target from Thomson Reuters of $7.31. Choi cited new products that can help it beat Cisco and on the belief that much negative news is already price into the stock.

Eldorado Gold Corp. (NYSE: EGO) is one with the double-double as two different outfits touted this battered gold stock during the week. A firm in Quebec called Desjardins upgraded this one to “Buy” from “Hold” this week. The move was up over 3% combined after the call and that si how much it closed up this last week. Another portfolio fund manager named Tom Winmill at Midas Fund (a gold fund) also gave us a very positive outlook for this low-cost gold producer in our exclusive interview on Friday where he discussed $1,700 gold with Eldorado among several of his top picks mentioned. After we took a look, most analysts feel that Eldorado IS gold because there is an implied 50% upside in the whole group of analysts as is.

HCA Inc. (NYSE: HCA) was an unusual catch among Whale Watching Week where all the billionaire and large portfolio manager holdings were released. Reuters has an internal analyst group that looks for anomalies and other unusual data for ideas, although it is not always issuing Buy/Sell recommendations. The catch is in a Reuters internal analyst audio-video where it was noted after the big Whale Watching that HCA was now a position held by eight of the thirty top hedge funds now that it has come public again in an IPO. This was an unusual catch and the sub-$35 price today compares to a consensus price target of $39.61. As it came public in March, chances are that the eight of thirty may actually be more as investors might have been slow to add the position since they only had three weeks to decide whether to add this position before the quarter-end.

Filed under: Analyst Calls, The Week Tagged: BRCD, EGO, HCA, LNKD, PM, QIHU, ZLC

Midas Fund Still Sees $1,700 Gold This Year, With Stock Picks (MIDSX, GDX, SLV, GLD, EGO, AVVGF, NAK, RIO)

Administrator — Fri, 20 May 2011 16:45:51 +0000

A respected gold fund manager still sees gold going to $1,700.00 this year, with a likely year-end price around $1,600.00 per ounce. 24/7 Wall St. got a chance to interview Tom Winmill, portfolio manager of the New York City-based Midas Fund (MIDSX), as part of our portfolio manager interview series. With the name Midas, you know the focus has to be on gold. Gold is still king, and Winmill has some favorite picks and a sector outlook worth consideration.

This interview came at a very unique time. It has been impossible to not notice that many key gold stocks have sold off much more than gold. All you have to do is follow the move in the Market Vectors Gold Miners ETF (NYSE: GDX) with a loss of 15% or so in less than a month. This was after the rapid cratering of silver seen in the iShares Silver Trust (NYSE: SLV) with roughly a 30% fall in less than a month. Tom Winmill did not focus on silver in our interview, but this rapid drop after an equally rapid rise has been an influencing event in many shares tracking precious metals.

Winmill sees this latest drop as a buying opportunity for a long-term thesis in many of the key miners, explorers and producers of gold. He noted, “Equity investors are pricing in much lower gold prices and that doesn’t look to be the case. The companies involved in gold are now trading at lower valuations and I am getting more excited about gold stocks here now that margin expansion is taking place.” Winmill is looking for a peak of around $1,700.00 per ounce in the coming months and he expects that the year-end price is likely to be around $1,600.00. As far as a year average for 2011, he expects that the average daily price of gold in 2011 will be closer to 1,500.00 per ounce.

We always try to offer both sides of critical situations, so we could not ignore that the year-to-date performance of the fund has lagged the market. So far, the drop for 2011 has been about 17.5%. The difference is that Midas Fund is up more than 26% if you use a one-year performance now and that in turn implies that the return was significantly higher at the end of 2010. Rather than just buying bullion or derivations of the SPDR Gold Shares (NYSE: GLD), the Midas Fund invests in shares of the miners, explorers, and producers and we already know how much those have been hit so far this year. 24/7 Wall St. even just gave a list of the most sold-off gold stocks of any size in 2011 this week and that will explain more of the severity of the drop.

The caveat to a rise in the price of gold is a rise in the real returns of short-term interest rates, according to Winmill. The current climate of negative real returns after inflation is helping gold remain high. With more and more currency being created, the move into hard assets is likely to remain. We were also given the opportunity to discuss some key stock picks in the gold sector. We saw the top ten holdings of the Midas Fund and we wanted to know which were among his favorites based upon the current share prices today.

Winmill first noted Eldorado Gold Corp. (NYSE: EGO), even if gold prices were to retreat as he noted it is one of the lowest-cost producers and has a great management team. After looking at the current price of about $15.50, the 52-week range is $14.45 to $20.23. Thomson Reuters even has a consensus price target of about $22.73, so even the consensus analyst group is expecting a move of nearly 50% here in Eldorado shares.

Filed under: ADR, Commodities, Interview, Luxury, Mutual Funds Tagged: AVVGF, EGO, GDX, GLD, MIDSX, NAK, RIO, SLV

New Gold Miners ETF Eliminates ‘Other Metals’ (GGGG, GFI, KGC, AU, EGO, HMY)

Administrator — Wed, 16 Mar 2011 11:15:37 +0000

There is a new gold ETF on the market. Yesterday marked the launch of the Global X Pure Gold Miners ETF (NYSE: GGGG). Global X noted that its new ETF focuses globally on companies which are deemed to be pure-plays on gold mining with a vast majority of revenues coming from gold mining alone rather than gold mining plus other metals mining. The aim here is to stand out from the NYSE Arca Gold Mining Index, which Global X says actually includes several silver miners. In this new ETF some 95% of the revenues from the companies in the Solactive Index come from gold mining.

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

Filed under: ADR, Commodities, ETF, Luxury, Metals Tagged: AU, EGO, GFI, GGGG, HMY, KGC

Top Analyst Upgrades and Downgrades (AMD, AVGO, EGO, EFX, HAL, INTC, NVO, PFE, SLB, SPLS)

Administrator — Mon, 01 Nov 2010 12:11:00 +0000

These are some of this Monday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Advance Micro Devices, Inc. (NYSE: AMD) Raised to Neutral at Macquarie.
Avago Technologies Limited (NASDAQ: AVGO) Started as Neutral at JPMorgan.
Eldorado Gold Corp. (NYSE: EGO) Raised to Sector Outperform at CIBC.
Equifax, Inc. (NYSE: EFX) Raised to Buy at Stifel Nicolaus.
Halliburton Co. (NYSE: HAL) Raised to Outperform at Oppenheimer.
Intel Corporation (NASDAQ: INTC) Raised to Outperform at Macquarie.
Novo Nordisk A/S (NYSE: NVO) Cut to Neutral at Credit Suisse.
Pfizer Inc. (NYSE: PFE) Raised to Outperform at Bernstein.
Schlumberger Ltd. (NYSE: SLB) Cut to Perform at Oppenheimer.
Staples Inc. (NASDAQ: SPLS) Cut to Neutral at BofA-Merrill Lynch.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: AMD, AVGO, EFX, EGO, HAL, INTC, NVO, PFE, SLB, SPLS

Top Analyst Upgrades & Downgrades (CHS, DUK, EGO, KGC, NBG, OPEN, OXPS, POM, SMTC, TRAD, URBN)

Administrator — Tue, 24 Aug 2010 12:18:22 +0000

These are some of this Tuesday’s top analyst calls with upgrades, downgrades, and initiations seen from Wall Street research firms:

Chico’s FAS Inc. (NYSE: CHS) Started as Neutral at Janney Capital Markets (late Monday).
Duke Energy Corporation (NYSE: DUK) Cut to Hold at Citigroup.
Eldorado Gold Corp. (NYSE: EGO) Cut to Sector Perform at National Bank.
Kinross Gold Corp. (NYSE: KGC) Raised To Outperform at National Bank.
National Bank of Greece SA (NYSE: NBG) Cut to Strong Sell at S&P Equity Research.
OpenTable, Inc. (NASDAQ: OPEN) Cut to Hold at Stifel Nicolaus.
OptionsXpress Holdings, Inc. (NASDAQ: OXPS) Cut to Underperform at Macquarie.
Pepco Holdings, Inc. (NYSE: POM) Cut to Market Perform at Wells Fargo.
Semtech Corp. (NASDAQ: SMTC) Reiterated Buy and $22.50 Target at Gleacher.
TradeStation Group Inc. (NASDAQ: TRAD) Raised to Outperform at Macquarie.
Urban Outfitters Inc. (NASDAQ: URBN) Started as Buy at Janney Capital Markets (late Monday).

JON C. OGG

Filed under: Analyst Calls Tagged: CHS, DUK, EGO, KGC, NBG, OPEN, OXPS, POM, SMTC, TRAD, URBN

The Twitter-24/7 Wall St. Stock Market Report 6.28.2010 The Wisdom Of Crowds

247wallst — Mon, 28 Jun 2010 12:46:08 +0000

Twitter has, by most estimates, 100 million members, which makes it one of the largest social networks in the world. All major media companies are on Twitter and some have more than one million Twitter users. It raises the question of whether there is wisdom in crowds.

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweet are a sign of which companies the Twitter universe is interested in. These financial sites are followed by a combined 625,000 Twitter users which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites.

Among the most tweeted stocks on market aggregator Stock Twits are Eldorado Gold Corp Ltd (NYSE: EGO), Sandisk (NASDAQ: SNDK), Bucyrus International, Inc (NASDAQ: BUCY), Allied Nevada Gold Corp Allied (AMEX; ANV), and Coca-Cola Company (NYSE: KO).MarketWatch: U.S. savings rate rises in May, while personal incomes edge upward http://on.mktw.net/aIKsgP

CNN Money: Personal income rises 0.4% in May while spending increases 0.2%, government says. $$

FT: Delays feared as BP relief bore nears well: Pressure from Washington has steered the energy company into a risky p…http://bit.ly/c6H62v

Reuters Biz: Central banks warn of new crisis if exit left too latehttp://link.reuters.com/quq54m

Douglas A. McIntyre

Filed under: Research Tagged: EGO, Twitter

Top Analyst Upgrades and Downgrades (AMD, CMA, EGO, INTC, NVO, OMX, POT, PAYX, RTP, SAP, SPLS)

247wallst — Fri, 15 Jan 2010 13:48:55 +0000

These are Friday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls:

Advanced Micro Devices (NYSE: AMD) Raised to Outperform at FBR.
Comerica (NYSE: CMA) Raised to Outperform at BMO Capital.
Eldorado Gold (NYSE: EGO) Raised Target to $19.25 from $17.25 at Raymond James.
Intel Corporation (NASDAQ: INTC) Raised to Buy at ThinkEquity; Reiterated Buy and $29 Target at Broadpoint AmTech; Target Raised to $30 from $27 at Credit Suisse.
Novo Nordisk AS (NYSE: NVO) Cut to Hold at Jefferies.
OfficeMax Inc. (NYSE: OMX) Raised to Outperform at JPMorgan.
Potash Corp. (NYSE: POT) Raised Target to $150 from $125 at RBC Capital.
Paychex, Inc. (NASDAQ: PAYX) Cut to Sell at Janney Montgomery Scott.
Rio Tinto plc (NYSE: RTP) Cut To Hold at Citigroup.
SAP AG (NYSE: SAP) Cut to Equal-Weight at Morgan Stanley.
Staples, Inc. (NASDAQ: SPLS) Raised to Outperform at JPMorgan.

You are invited to join our free daily email distribution list to hear about top analyst upgrades and downgrades, IPOs and secondary offerings, ongoing day trader and options trader alerts, stock and market rumors, Buffett and guru investor news, M&A and more.

JON C. OGG

Posted in Analyst Calls, Trading Alert Tagged: AMD, CMA, EGO, INTC, NVO, OMX, PAYX, POT, RTP, SAP, SPLS

Jim Cramer’s Gold Stocks For 2010 (GLD, FCX, EGO, GDXJ)

247wallst — Fri, 08 Jan 2010 23:50:27 +0000

Jim Cramer continued on his theme stock picks for 2010 on CNBC’s MAD MONEY tonight. We have already heard Cramer’s theme picks for homeland security, technology, ADRs, and for energy shortages. Tonight Cramer’s picks were around gold in his “going for the gold” theme for 2010. Cramer said gold was up 24% last year and thinks it has not finished going higher. His picks tonight for the shiny yellow stuff are the SPDR Gold Shares (NYSE: GLD) ETF, and then in miners he likes Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) and Eldorado Gold Corp. (NYSE: EGO). Cramer even addressed the new small-cap Market Vectors Junior Gold Miners (NYSE: GDXJ) ETF for exposure. A brief explanation of each and his more general reasoning is below.

Cramer thinks gold is better than holding bonds at the current point as currencies get devalued. He thinks inflation will come and will go up if China releases its dollar-peg. The net investment in gold rose five-fold and worldwide ETF holdings are at highs. Central banks have increased gold holdings and emerging middle classes love gold in China, India, and Brazil. An explanation of gold picks follows.

On owning gold bullion, Cramer likes this actually better than investing in the mines because there are no problems in business execution in the actual shiny yellow stuff. Here Cramer likes the SPDR Gold Shares (NYSE: GLD) because it owns gold and moves in tandem with gold. He likes this better than owning the gold bars.

In miners, Cramer noted that these can get crushed for reasons that have nothing to do with the cost of gold because of mines shutting, poor execution, labor issues, and other reasons. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) is Cramer’s top stock with exposure, although Cramer said that this one is only about 20% exposed to gold. He likes that they have a large copper business and deals with China, and he noted that the company recently reinstated its dividend. Eldorado Gold Corp. (NYSE: EGO) has some of the lowest costs in the business and is up 87% since he first recommended it. He thinks it has upside still as their production costs are about $100 per ounce compared to its competitors and it has production growth (expected 96% this year) and has China.

In a speculative gold stock, he wants to avoid the individual small speculative gold stock plays. Here he likes the basket of junior miners called the Market Vectors Junior Gold Miners (NYSE: GDXJ). Cramer did not note this in his explanation, but this should be pointed out here…. this one is a recent ETF that came on late to the game late last year, and some traders have discussed the possibility of tracking issues in this ETF.

Cramer’s “Technology Tsunami” theme picks for 2010
Cramer’s “Going Global with ADRs” theme picks for 2010
Cramer’s “Energy Shortage Stocks” theme picks for 2010
Cramer’s “Homeland Security and Anti-Terrorism” theme picks for 2010

You are personally invited you to join our free daily email distribution list to hear about ongoing analyst upgrades and downgrades, day trader and options trader alerts, stock and market rumors, Buffett and guru investor news, M&A and IPOs, and more.

JON C. OGG
January 8, 2010

Posted in Commodities, Cramer, Luxury, Metals Tagged: EGO, FCX, GDXJ, GLD

Gold Stock Pressure, With Or Without Gold Prices (EGO, RGLD, IAG, GSS, GLD, GDX, ABX)

247wallst — Fri, 27 Feb 2009 14:03:42 +0000

We covered last weekend about how the $1,000.00 gold was at an inflection point and looking as though it was either poised to pop to $1,200.00 on the speculation of fear or that it was likely to fall back towards $800.00 as reality prevails as the world didn’t flatten and proceed to roll off the edge into the abyss. What is interesting is that even as gold was hitting highs, many of the miners, particularly the speculative miners, were well under highs and have seen even worse pressure this week on gold’s pullback.

When Eldorado Gold Corporation (AMEX:EGO) withdrew its planned offering of common stock on Tuesday, its shares and those of competitor miners fell sharply. Eldorado opened the day at $9.34 and closed it at $8.19, off more than 12%. Royal Gold Corporation (NASDAQ:RGLD) fell from $44.85 to $41.22, down about 8%; IAMGold dropped from $8.74 to close at $7.66, down more than 12%; and Gold Star Resources, Ltd. (NYSE:GSS) dropped from $1.40 to $1.16, off about 17%.

Two gold ETFs, SPDR Gold Shares (NYSE:GLD) and Market Vectors Gold Miners (NYSE:GDX) both fell sharply as well, but both have recovered some as of yesterday’s close. Gold Shares invests in bullion and Gold Miners invests in mining stocks. Gold Shares is down about 5% as of yesterday’s close, while Gold Miners is down about 9%.

Miners, especially the smaller ones like Eldorado and Royal Gold, will continue to struggle with liquidity as the economy remains sour. Mining ETFs like Market Vectors Gold Miners will follow along because the large gold miners like Barrick Gold Corporation (NYSE:ABX) included in the fund are also struggling to lower costs and increase production.

Gold bullion investors, like SPDR Gold Shares, will follow the economic news. Bullion fell sharply yesterday to close just above $940/ounce, down from about $945/ounce the previous day. European and Asian markets are lower today, so gold has recovered a bit to about $958/ounce. When inflation fears rise, bullion rises sharply, as it did last week, when it closed above $1,000/ounce.

Paul Ausick
February 27, 2009

Posted in Commodities, Metals, Trading Alert Tagged: ABX, EGO, GDX, GLD, GSS, IAG, RGLD