Heavy selling of gold stocks may point to further declines for bullion
The sector takes a battering on Tuesday led by 6.7% decline for Goldcorp, world's most valuable gold miner.
The gold price fell more than $20 to a near one-month low of $1,362 on Tuesday after a possible deal averting US airstrikes on Syria emerged and news that Indian gold imports fell by 70% in August hurt sentiment.
The gold price seemed to have turned a corner in August fighting back from near 3-year lows of $1,200 hit at the end of June, but it failed to decisively clear the $1,400 level and the rally has been steadily losing steam this month.
Compared to a the fairly modest decline in the price of gold, mining stocks on Tuesday seemed to pricing in further declines for the metal with a deep selloff among the sector's leaders that were enjoying a comeback of sorts towards the end of the second quarter.
In afternoon trade Barrick Gold Corp (TSX:ABX) lost 4.5% to $19.03 giving up hard-fought gains over the past month and bringing its losses over the past two weeks to more than 10%.
Barrick, the global number one gold company in terms of output, has recovered from 21-year lows of $14.22 hit early in July, but remains down 45% so far this year.
The company, which has written down the value of its assets by some $13 billion this year, peaked at a market capitalization in January 2011 of more than $54 billion.
Newmont Mining Corp (NYSE:NEM) with a market value of $14.6 billion, down from $30 billion last year, shed 3.5%. Despite being cushioned somewhat from gold's fall by its copper exposure the Denver-based company has given up 37% of its value in 2013.
Losses at the world's third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) were more modest at 1.9%.
Earlier this week Johannesburg-based AngloGold gained on the news that strikes in its home base of South Africa proved short-lived but the company's ADRs listed in New York are still down 57% year to date.
Fellow South African miner Gold Fields (NYSE:GFI) fared worse, sliding 3.6% in New York. The fourth largest gold producer has had its value slashed 60% in 2013 with investors punishing it for its purchase of three Barrick gold mines.
Gold Fields now has the dubious distinction of being the worst performer in the sector year to date.
Gold Fields acquisition in Australia will add more than 400,000 to its annual output, putting it within range of the mined ounces of Canada's Goldcorp (TSX:G) which expects to produce between 2.5 million and 2.8 million ounces in 2013.
Vancouver-based Goldcorp, the world's most valuable listed gold company, could not escape the selling, losing 6.7% to make it the worst performer in the sector on the day.
Goldcorp's market value of $23 billion is 22% lower than at the start of the year and compares with a drop in the price of gold of more than 18% in 2013.
Canadian peer Kinross Gold (TSX:K) – which this year expects to produce between 2.4 million to 2.6 million ounces – traded down by 2.3% and is now worth 42% less than at the start of the year.
Kinross, like all the majors, took multi-billion charges against the value of its operations with the Toronto firm writing down its ill-fated acquisition in Mauritania and abandoning a huge project in Ecuador.
Australia's Newcrest Mining's (ASX:NCM) fell 2.6% on the Sydney bourse, avoiding some of the carnage in New York, but shareholders of the Melbourne-based company are still nursing losses of 43% this year as writedowns and investigations by market regulators take its toll.
A punter's favourite Harmony Gold Mining (NYSE:HMY) shed 2.9% in New York. The Johannesburg-based company is 56% cheaper than at the start of the year as it reassess operations in South African and Papua New Guinea.
Yamana Gold (TSX:YRI) lost 5.4%, while Agnico Eagle Mines (TSX:AEM) gave up 4.2%. Eldorado Gold Corp (TSX:ELD) declined 6.2%, making it a particular bad day for Canadian-based gold miners.