Commodities & Metals

Did Gold Mining Stocks Already Bottom?

Gold mining stocks have been facing some hard times over the past couple of years. The question to ask is whether or not, after years in decline, has the gold mining and production sector finally found its bottom?

24/7 Wall St took a look at a few major players in this industry and reviewed their recent trends. We also evaluated their performance from multiyear highs. Across the board, it sure looks like these gold giants saw their shares hit their 52-week lows on November 5 — a move which makes the RBC Capital Markets analyst team look like they owned crystal balls. The recover from that date has been impressive considering that the gold fundamentals may not have changed drastically.

Barrick Gold Corporation (NYSE: ABX) saw its shares rise 5% to $13.10 in Tuesday’s afternoon trading session. This was up 20% from its 52-week low $10.90 that it had reached in the beginning of November. However this is still far off from the 52-week high $21.45 that was posted in late February. Even this high was less than half of the multiyear high posted in April 2011 of about $55, since that point Barrick’s shares had been on the slide. The company’s stock has a consensus analyst price target of $16.04 and a 52-week trading range of $10.90 to $21.45.

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Kinross Gold Corporation (NYSE: KGC) saw its shares up 7% at $2.90 in the last two hours of trading on Tuesday. Kinross shares hit a 52-week low of $2.00 in the beginning of November which is also a multiyear low and since that time shares have recovered 45%. Shares are well below the 52-week high of $5.44 but have made a handy recovery towards it after seemingly bottoming out. Overall, shares slid about 92% down from the multiyear high of $23.91 in October 2009 to its multiyear low earlier this month. Kinross’s stock has a consensus analyst price target of $3.92 and a 52-week trading range of $2.00 to $5.44.

Silver Wheaton Corp. (NYSE: SLW) may be a blend of silver and gold, but its shares were up over 3% at $21.28 in the last two hours of Tuesday’s trading. Silver Wheaton shares hit a 52-week low and multiyear low in early November of $16.57, but its shares have recovered 28% to current prices. The multiyear high was above $47 in April 2011, from that time Silver Wheaton shares fell 65% to their multiyear low. The company’s stock has a consensus analyst price target of $27.46 and a 52-week trading range of $16.57 to $27.66.

Market Vectors Gold Miners ETF (NYSEMKT: GDX) saw its shares up over 3% to $20.11 in the last two hours of trading on Tuesday. The mining ETF’s shares hit a 52-week low of $16.45 which was also a multiyear low at the beginning of November. They have bounced over 20% since. The multiyear high of almost $67 back in September 2011 fell 75% to the multiyear low. It appears from the recovery that has happened since the low seems to be indicative that a bottom has been found. The company’s stock has a consensus analyst target price of $19.33 and a 52-week trading range of $16.45 to $28.03.

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The World Gold Council recently confirmed very subdued gold demand trends in 2014. We also discussed how to interpret potential gold and platinum price inversions, which is a trend that is still at-risk.