Gold Producers Poised Like 'Coiled Spring' to RallyBy Thomas Biesheuvel
Gold mining stocks are trading at their cheapest level in at least nine years even as the industry's profits are estimated to almost double this year and bullion trades close to its historic high.
The benchmark NYSE Arca Gold BUGS Index (HUI) that includes Barrick Gold Corp. (ABX), Newmont Mining Corp. (NEM) and AngloGold Ashanti Ltd. ended last week at 17 times earnings, the lowest since at least November 2002 and below a five-year average of 37 times.
Investors sold equities across the board as Europe's debt crisis soured the corporate profit outlook, and they're ignoring analyst projections for bullion and gold producers. The gold index's 16 members will increase combined per-share earnings 94 percent this year, according to estimates compiled by Bloomberg.
"When you look back in history, you will say this was a buying opportunity," said John Wong, a portfolio manager at CQS Group's New City Investment Managers in London and lead manager of the $200 million Golden Prospect Precious Metals Ltd., a fund holding gold and silver stocks. "It's like a coiled spring."
Gold equities have fallen 4.7 percent this year, heading for the first annual decline since 2008. Gold reached a record $1,921.15 on Sept. 6 and is set for an 11th annual gain.
"The market doesn't trust big spikes," said Jon Bergtheil, an analyst at Citigroup. "People will wait to see if gold holds above $1,600 for a while."
- 22 Signs That The Global Economic Turmoil We Have Seen So Far in 2016 Is Just The Beginning
- The American Dream Is Dead, and Now Even The Mainstream Media Is Starting to Admit It
- Washington, DC Considers Paying 'At Risk' People For Not Committing Crimes
- No Free Lunch? Swiss Tempted by Vote Granting $2,400 Monthly Stipend to Adults
- US Justice Dept Hits 80 Swiss Banks With Penalties
- Clueless in Davos
- China Warns George Soros: Don't Go to 'War' Against Our Currency
- A Run On The Banks Begins in Italy as Italian Banking Stocks Collapse
FAIR USE NOTICE
This site contains copyrighted material the use of which in some cases has not been specifically authorized by the copyright owner. Such material is made available for the purposes of news reporting, education, research, comment, and criticism, which constitutes a 'fair use' of such copyrighted material in accordance with Title 17 U.S.C. Section 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. It is our policy to respond to notices of alleged infringement that comply with the DMCA and other applicable intellectual property laws. It is our policy to remove material from public view that we believe in good faith to be copyrighted material that has been illegally copied and distributed by any of our members or users.