Commodities & Metals

Miners Sink as Gold Edges Toward Yearly Low

Open pit mine
Source: Thinkstock
The Comex December gold contract was down 0.6% Friday morning at around $1,220 an ounce, on a slide that began in mid-July when the price was about $1,350. The 52-week low is $1,185, less than 3% below Friday’s price.

A stronger dollar, limited inflation risk and falling demand have hit the gold market hard, and the gold miners even harder. Added to the falling price of gold are the higher costs for mining it, and that’s what plays havoc with the mining companies’ share prices.

We noted 10 days ago in a report on gold stocks covered by RBC Capital with upside potential of 40% or more that demand for gold tends to rise and fall with the spot price. The magic number appears to be $1,300 an ounce — above that and demand weakens; below that, it generates some interest among buyers. That may still be an accurate number, but it’s not doing the miners any favors.

Yamana Gold Inc. (NYSE: AUY) posted a new 52-week low on Thursday and broke to a new low again Friday at $6.82, versus a high of $11.21. About 3.5 million shares had traded thus far Friday morning, against a daily average of nearly 7 million.

ALSO READ: Coal Miner Peabody at 10-Year Low, Drags Down Other Miners

Kinross Gold Corp. (NYSE: KGC) dropped more than 2.5% to post a new 52-week low of $3.52, against a 52-week high of $5.47. More than 5 million shares had traded, compared with a daily average of around 8.8 million.

Gold and silver miner Coeur Mining Inc. (NYSE: CDE) also set a new yearly low Thursday and put up another Friday. Shares fell to $6.16 in the morning, down from $6.35 Thursday. The 52-week high is $14.13.

Barrick Gold Corp. (NYSE: ABX) was within half a dollar of its 52-week low of $15.26, trading Friday morning at $15.68, versus a 52-week high of $21.45. Nearly 6 million shares had already traded, out of a daily average of around 9 million.

Of all the miners, Newmont Mining Corp. (NYSE: NEM) was performing best Friday morning, down just 0.8% to $24.29, in a 52-week range of $20.79 to $29.52. Trading volume was lighter as well, with about 2 million of the stock’s daily average of more than 6 million having changed hands.

The trend in the gold market is down and the miners stand to take a beating until the trend reverses. Unfortunately, that could still be a ways into the future.

ALSO READ: RBC’s 4 Gold Stocks to Buy With Potential Upside of 40% or More

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