Gold stocks take another severe beating
The gold price slid more than $30 or 2.5% an ounce on Monday to a day low of $1,217 an ounce, levels last seen in early July.
Gold's negative momentum saw gold stocks selling off heavily on the day with the Market Vectors Gold Miners ETF (NYSEARCA:GDX), holding stock in the world's top gold miners, hitting a fresh five-year low.
While the yellow metal is down some 27% in value this year, the shares of major gold miners have been hammered down much more severely.
By the close on Monday, Barrick Gold Corp (NYSE:ABX, TSE:ABX) had lost a shade over 6% or more than $1 billion in market value with nearly 20 million shares changing hands, making the world's number one producer of the metal one of the worst performers on the day.
The Toronto-based miner is struggling with a heavy debt load and recently raised $3 billion in a stock offering that was not well received by institutions.
Barrick has also suspended work at its costly Pascua Lama project on the border between Chile and Argentina to shore up its balance sheet and cut costs.
Incoming chairman of Barrick John Thornton who is succeeding founder Peter Munk, 86, is widely expected to announce a shake-up at the company and a possible deal with Chinese investors following a board meeting that concludes this Wednesday.
Barrick which will produce more than 7 million ounces of gold in 2013 is now worth $19.3 billion on the TSX, down 52% so far this year and nowhere near its $54 billion market value a mere two years ago.
Newmont Mining Corp (NYSE:NEM) with a market value of $12 billion did not escape the carnage down 4% in regular trading. The Denver-based company will begin trading ex-dividend on Tuesday; a dividend that was cut 20% from the previous quarter at $0.02 a share.
The world's third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) added to its nearly 60% year to date losses with the Johannesburg-based company's ADRs listed in New York sliding 6.7%.
Fellow South African miner Gold Fields (NYSE:GFI) gave up a relatively modest 3.% in New York, but the world's fourth largest gold producer has had its value slashed 69% in 2013 with investors punishing it for its contrarian purchase of high-cost mines amid the slump.
Goldcorp (TSX:G) declined 3.9%. The Vancouver-based company became the world's most valuable gold stock this year with a relatively small loss in market capitalization compared to its peers.
But the dismal gold market has now caught up with the with Goldcorp expected to produce around 2.5 million ounces of gold this year with the miner's value on the Toronto big board slashed by nearly $8 billion since mid-August to $17.4 billion.
Toronto's Kinross Gold (TSX:K) lost 3.3% on the day. Investors who bought into the company three years ago are now nursing a $15 billion loss in market cap after Kinross, like all the majors, took multi-billion charges against the value of its operations.
Yamana Gold (TSX:YRI), which joined the million gold ounce club only last year, slid 4.4%. The Toronto-based company is worth $7.2 billion edging out Kinross which is set to produce some 1.3 million ounces more than Yamana this year.
Canada's second tier gold miners also suffered a loss of confidence from gold investors, giving up much of the gains of recent weeks. Agnico Eagle Mines (TSX:AEM) losses were steep at 6.7% while Eldorado Gold Corp (TSX:ELD) declined 5.8% and Iamgold (TSE:IMG) dropped 6%.