Monster rally for gold stocks

Gotta be bullish

On Wednesday, gold made a bold move higher advancing to a near four-month high as large futures investors catch up to a turnaround in sentiment towards the metals sector.

On the Comex market in New York, gold futures with December delivery dates traded up 1.9% or $22.30 at $1,187.80 in afternoon dealings. The gold price rose steadily throughout the day in massive volumes of nearly double the usual daily average, hitting the highest since June 22.

That spurred gold investors to pile into mining stocks in huge numbers as the sector enjoys a rerating and monthly gains for some counters top 20% or 30%.

Barrick Gold Corp (NYSE:ABX, TSE:ABX) jumped 9.5% with more than 31 million shares changing hands, 10 million more than the average. The counter was the eight most actively traded stock on the New York Stock Exchange, attracting more buying interest than the likes of JP Morgan Chase and Twitter.

After falling to its its lowest since 1989 on September 23, today’s surge brings the world’s top producer of the metal’s gains from the low to an eye-watering 38% and restores its market worth to $8.7 billion in New York. The Toronto-based company has been on an aggressive cost-cutting and divestment drive and gold production is expected to fall to between 6.1m – 6.4m ounces this year.

Barrick announced in August last month that it has completed scenario planning to withstand a $900 an ounce gold price, which helps to explain why it’s made the most of gold’s upside.

The world’s most valuable gold stock, Goldcorp (TSE:G, NYSE:GG) advanced by just under 10%, lifting the company’s market capitalization $11.7 billion in New York after more than 11 million shares changed hands.

Goldcorp is up 25% from its 2015 lows and year-to-date decline for the Vancouver-based firm is a relatively modest 16% in US dollar terms thanks to the falling loonie losses on the TSX have been limited to single digits . After a record second quarter Goldcorp is forecasting a whopping 20% production increase this year at the high end of its forecast range of between 3.3m – 3.6m ounces.

Kinross shares soar ahead of results

Kinross Dvoinoye mine in Russia

World number two in terms of production Newmont Mining Corp (NYSE:NEM) surged 6%. Denver-based Newmont, the only gold company that forms part of the S&P500 index, is having a good 2015 so far and is one of a handful gold players trading in positive territory this year. While others are disposing of mines, Newmont is building its portfolio and in June acquired the Cripple Creek & Victor gold mine in Colorado for $820 million in cash from AngloGold Ashanti.

American Depository Receipts of AngloGold Ashanti (NYSE:AU), the world’s third largest gold producer in terms of output, bounced 7.8% for a market value of $3.9 billion on the NYSE. AngloGold Ashanti is up a stunning 76% since hitting a 16-year low August 5. The Johannesburg-based company is expected to produce some 4m ounces in 2015, and last month announced plans to  revive the historic Obuasi gold mine in Ghana in partnership with Randgold Resources. Obuasi latest reserve estimates indicate more than 20 million ounces of contained metal.

ADRs of fellow South African miner Gold Fields (NYSE:GFI) appreciated by 5.5% while South African peer Sibanye Gold (NYSE:SBGL) was a one of the day’s top performers soaring 9.7%. Gold Fields and Sibanye are the seventh and ninth largest gold miners worldwide in terms of ounces, but rank further down the field in terms of market value.

Gold Fields is worth $2.3 billion in New York while investors lifted Sibanye to just over $1.5 billion in market value today. Sibanye was formed in 2012 after Gold Fields unbundled its three Witwatersrand gold mine and the Johannesburg company recently announced a deal to buy Angloplat’s Rustenburg platinum mine in the northwest of the country.

Shares in Agnico Eagle Mines (TSE:AEM, NYSE:AEM) also caught fire leaping 6.8% swelling its market capitalization t0 $8.5 billion in Toronto and $6.1 billion in New York. The stock is a rare beast among major gold producer showing huge gains so far in 2015 – nearly 21% on the NYSE and a stunning 35% increase in Toronto as it makes the most of currency depreciation at its nine mines located in Canada, Finland and Mexico. Agnico’s Meadowbank mine in Canada and 50%-owned Canadian Malartic mine are ramping up production helping it to raise 2015 output guidance to 1.6 million ounces.

Barrick comments on planning for $900 gold price

Barrick’s Pascua-Lama project – stalled for now

Randgold Resources ADR’s trading on the Nasdaq (LON:RSS, NASDAQ:GOLD) jumped 4.8% higher at the close. The Africa-focused miner with a $6.3 billion valuation has made modest gains this year. Randgold has been piling on the ounces at its mines in West and Central Africa, and in its most recent quarter topped 300,000 ounces for the first time, up 7% from 2014.

Australia’s Newcrest Mining Limited (OTCMKTS:NCMGY, ASX:NCM) joined the party, jumping 7.3% for a $8 billion market cap. Sixth in the output ratings Newcrest produced 2.4 million ounces in its financial year to end June. Newcrest mines copper and gold in Australia, Indonesia, Africa and Papua New Guinea and is a joint owner with South Africa’s Harmony Gold of the giant Wafi-Golpu project in PNG.

The transformation of Toronto’s Kinross Gold (TSE:K) took another leap forward, jumping 7.3% on Wednesday. Kinross is on track to end 2015 at the higher end of its guidance for the year of 2.4 – 2.6 million ounces which means on ounce for ounce basis it’s still one of the cheapest of the major gold companies.

That helps to explain the stunning turnaround in the fortunes of the Toronto-based company since its September lows – it’s up 48% over the last month. Kinross operates mines spread across the globe including the US, Russia, west Africa and South America.

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