Seeking Alpha
Recommended for you:
Growth, value, dividend investing, portfolio strategy
Profile| Send Message|
( followers)  

Gold miners have been hit hard so far in 2012. Perhaps the most troubling fact about their performance is the bizarre and growing disconnect with the price of gold bullion. The Gold Miners ETF (GDX) is down nearly 11% for the year and could easily continue the slide. I think in the current market conditions it's especially important to look at the short interest in this sector. Investors should expect a lot more volatility from the shippers that are at the top of the list below.

Let's look at the 10 most shorted gold mining stocks, based on the number of shares currently held short divided by total shares outstanding, along with the estimated number of days to cover:

Company

Ticker

Short Interest

% of Shares

Days to

(in mil. of shares)

Outstanding

Cover

1 McEwen Mining Inc

(MUX)

22.2

14.1%

9.7

2 Seabridge Gold Inc.

(SA)

4.5

10.4%

11

3 NovaGold Resources

(NG)

23.2

9.7%

5

4 Tanzanian Royalty Corp.

(TRX)

6.5

6.5%

5.8

5. Harmony Gold Mining Corp

(HMY)

3.6

2.5%

6.7

6 AuRico Gold Inc.

(AUQ)

5.6

2.0%

2.5

7. AngloGold Ashanti

(AU)

3

1.8%

1.7

8 Agnico-Eagle Mines

(AEM)

1.9

1.1%

1

9. Rangold Resources Ltd.

(GOLD)

0.9

0.9%

1.3

10. Compania Mina Buenaventura

(BVN)

1.4

0.9%

1.3

Source: Nasdaqtrader.com

The days to cover statistic is defined as the number of shares sold short divided by average daily volume. As a reminder, short interest may be useful in judging investor sentiment for a particular stock from month to month, and as a comparison with other shorted stocks. This indicator is useful for both bears and bulls - bulls may consider a high short interest ratio a positive, since eventually there would be upward pressure on the stock's price as short sellers cover their short positions. This upward pressure can become very strong if, for instance, a company announces some positive news and forces a number of short sellers to cover at the same time.

Short Interest Trends: The most noteworthy change in short interest in the past six months is that NovaGold's number of shares held short has more than doubled, as it went from 11.4 million on 9/1/2011 to 23.2 million currently.

Source: Top 10 Most Shorted Gold Mining Stocks