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Does the surge in gold mining stocks mean the bottom is in? Gold futures finish flat after a...

Does the surge in gold mining stocks mean the bottom is in? Gold futures finish flat after a two-day climb, but the big story in recent sessions hasn't been the physical gold as much as the miners. The mining ETF (GDX +3.9%) is surging nearly 4% today, but that's after a ~20% YTD selloff. Today, miners are broadly higher: RGLD +4.5%, AEM +4.3%, ABX +3.9%, KGC +3.8%, GG +4.1%, NEM +3.3%.
Comments (20)
  • New Low Observer
    , contributor
    Comments (2043) | Send Message
     
    "Does the surge in gold mining stocks mean the bottom is in?"

     

    Not if the Dow and S&P need to tank. If the major stock indexes tank then the gains today could be eclipsed by the losses of tomorrow.
    6 Mar 2013, 03:51 PM Reply Like
  • peterlitch
    , contributor
    Comment (1) | Send Message
     
    not that I know much,but with a lot of money out there,people can buy whatever is low regardless of everything else still going up,like buying a piece of pie because it is good,as things go up people grab whatever is good on the table, market sentiment is all that's needed.The miners are making money and have sold off more than the gold...so!!
    I see a buy here,and am./see what happens.
    6 Mar 2013, 11:49 PM Reply Like
  • Matt Jonza
    , contributor
    Comments (86) | Send Message
     
    I don't know where the bottom will be... but it is definitely on the near horizon. Fundamentals for gold haven't gotten any worse.. in fact, the easing everywhere you look supports the bull case in the long term.

     

    The issue is, easing is what is causing the decline imo. Everyone is putting everything in stocks. Once people wake up and notice that the world economy has had a much worse start to 2013 than last year, gold will rebound I believe.
    6 Mar 2013, 03:56 PM Reply Like
  • Christopher F. Davis
    , contributor
    Comments (1197) | Send Message
     
    Best place in the sector for your money- (SAND), (SLW), (AUY), (GG), (ABX), (FNV). Just my opinion.
    6 Mar 2013, 03:59 PM Reply Like
  • klgmdc
    , contributor
    Comments (201) | Send Message
     
    Whatever the explanation of the day is, +5% on my silly miners is ok with me today.
    6 Mar 2013, 04:01 PM Reply Like
  • eremmell
    , contributor
    Comments (135) | Send Message
     
    These gold miners are a damn POS. I'm holding lots of ABX @ 16% loss currently, so sick of this stock. I will hold it until Pascua Lama starts producing, if I have to, to avoid a loss. Do not believe that the bottom is in, nobody likes miners. These stocks can go lower ... they have been doing that for months. It does not matter that the price of gold stays high (above $1550/oz) this year, nothing matters, these gold miners suck.
    6 Mar 2013, 04:27 PM Reply Like
  • eremmell
    , contributor
    Comments (135) | Send Message
     
    I certainly don't have a "capitulation" attitude towards gold mining stocks like ABX though. Just very very frustrated.
    6 Mar 2013, 04:29 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2043) | Send Message
     
    Greetings ERemmell,

     

    Your frustration is completely understood.

     

    In our November 2010 article titled "ConAgra: A History of Beating Precious Metals During a Commodity Bull Market" (found here: http://seekingalpha.co...), we showed how specific commodity producers had outsized gains compared to gold stocks DURING the gold bull market from 1970-1980.

     

    Not only did Conagra do better than gold stocks during the gold bull market, they went up when gold stocks crashed from 1980 to 1999. The magnitude of the total returns was astounding then as they are now.

     

    In that trite November 2010 piece we wrote, CAG, HL and NEM have had the following returns since:

     

    CAG: +60.64%
    HL: -51.54%
    NEM: -32.69%

     

    Since 1972, CAG and SYY have total returns exceeding 12,000% while the same stocks (HL, NEM) have total returns of 800% or less. You can stack these numbers up to any MAJOR gold stock in the same time frame and the outcome is the same. There are alternatives to gold stocks.

     

    However, if you must own gold stocks then a strategy is needed as outlined in our November 2011 article titled "A Strategy is Needed For Lagging Gold Stocks" (found here: http://seekingalpha.co...).

     

    Otherwise, it is garbage in garbage out.

     

    Regards.
    6 Mar 2013, 04:55 PM Reply Like
  • RHD
    , contributor
    Comments (447) | Send Message
     
    I was long ABX, standard thesis: scale economics, production, etc, for six months; PLama, mgmt execution, cost control, dumped for a minor loss. S.H. GL to you.
    6 Mar 2013, 08:43 PM Reply Like
  • almolyd
    , contributor
    Comment (1) | Send Message
     
    If you think the price of your ABX will go up when a mine starts producing, you don't know mining stocks. That would be the place to sell. Expectation moves a stock. When they begin producing, it will go down.
    7 Mar 2013, 05:00 AM Reply Like
  • chuck lewis
    , contributor
    Comments (341) | Send Message
     
    Editor, The Lewis Letter, http://bit.ly/W3uM5K
    Newmont Mining has seen its low of the year as the 4.4% dividend should hold it up from further damage. With close to 100 million ounces of gold reserves, billions of pounds of copper, price of NEM is a third of irs real asset value. Predict management will try to run stock up to avoid a vulture flying in to take it away. Even a soverign could buy it for a built in gold supply. Dividend highest in sector.
    6 Mar 2013, 05:14 PM Reply Like
  • 214
    , contributor
    Comments (14) | Send Message
     
    Sung to white x-mas...
    I'm dreaming of a gold miners bottom, just like the bottoms I've seen before.
    May the volume pick up and your fortunes reverse ...
    Though I know a small rebound is not a trend.

     

    I'll wait for the bigger trend to get establish
    6 Mar 2013, 07:33 PM Reply Like
  • Mongoose
    , contributor
    Comments (144) | Send Message
     
    I'm looking for the final capitulation, and a huge spike low. Probably $1400 or slightly lower Gold almost always turns on a spike, seldom on a rounding turn. I'm looking for this to occur in the next month or two. Meanwhile I'm keeping my powder dry. Good luck and trading.
    6 Mar 2013, 09:47 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    We are getting closer to a low in some gold mining stocks. The problem is that the continued strength of the USD is holding back increases in gold futures. If we do get a correction, then gold mining stocks, and gold ETFs, may become safe havens for a short time. There is a disconnect between gold futures and gold mining which remains unresolved. Many miners are profitable companies, but they are somewhat overlooked through the over-emphasis on gold futures markets.
    6 Mar 2013, 10:39 PM Reply Like
  • Jhonzo88
    , contributor
    Comment (1) | Send Message
     
    The smoke screen this government has spewed out about a rebounding economy is just that-unemployment is only lower because some folks have simply quit looking and are no longer are accounted for- under employment is at an all time high with most folks operating like our socialist regime-mired in debt and the printing presses keep pumping out more dollars which will soon be worthless as Obama and his give away team will fail to cut spending and entitlement programs to his loyal supporters- I remember growing up when being successful wasn't despised and penalized-can I get a free cell phone !
    7 Mar 2013, 04:30 AM Reply Like
  • Tanlaw
    , contributor
    Comment (1) | Send Message
     
    you have got to be kidding. reversals are not built in a day. a backtest is not a reversal. let's have a consolidation pattern with an upside breakout. then we have a reversal.
    7 Mar 2013, 05:31 AM Reply Like
  • Dados344
    , contributor
    Comment (1) | Send Message
     
    Gold miners are positioned for a rebound for they are by far less indebted then SPX companies on avg. they are much more profitable. and they are cheaper on P/E and EV/EBITDA. the only factor they underperform SPX is FCF, which for the sector is negative on avg. this year, I believe, they will be less dependent on gold price for they have cut CAPEX, which will make even those who are not already FCF +ive in 2013. The bottom should be close for it is a matter of time only when valeu seekers discover the phase of capitulation is over...
    7 Mar 2013, 06:02 AM Reply Like
  • Poppycock
    , contributor
    Comments (3) | Send Message
     
    Both the individual gold mining stocks and the related indexes are still extremely bearish, having recently broken their 200-day moving averages. Today's big bounce looks more like a reaction to the heavy selling and shorting of recent days, but not more than that. The correction has more time and distance to go.
    7 Mar 2013, 06:02 AM Reply Like
  • Poppycock
    , contributor
    Comments (3) | Send Message
     
    All the gold miners as well as the related indexes have extremely bearish charts that have broken down completely in recent days. Today looks like no more than a dead-cat bounce from extremely oversold short-term conditions. The correction still has more to run.
    7 Mar 2013, 06:04 AM Reply Like
  • Bechara Saliba
    , contributor
    Comment (1) | Send Message
     
    I think it's gonna go down to the wire till friday's payrolls
    7 Mar 2013, 06:10 AM Reply Like
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