AngloGold Ashanti (AU) is cut to Sell from Hold with a $12.70 price target (from $20) at Societe Generale as part of the firm's downgrade of an already bearish view on the outlook for gold and silver prices. The firm cites AU's high all-in cost base and the need to restructure, which may be difficult to achieve with South Africa's highly unionized labor force. AU -1.3% premarket.
Gold miners large (GDX -4.1%) and small (GDXJ -5.3%) alike are suffering a beat-down after jobs data from both the U.S. and Canada beat estimates; gold's gains for the week are entirely erased, and the metal "could melt even faster" if the global recovery continues. ABX -4.2%, AEM -6.7%, NEM -2.8%, GG -4.5%, AU -5.5%, EGO -5%, KGC -5.3%. SLW -2.8%, SSRI -7.3%, EXK -5.9%. GLD -2%, SLV -4.1%.
Sibayne Gold (SBGL +12.5%) soars after receiving a Goldman Sachs upgrade to Neutral, but Goldman is hardly ga-ga for South African miners, noting tough operating conditions, key unions competing for membership, and U.S. gold prices remaining relatively low. The weak rand has given the stocks a short-term boost but could create problems down the road, leaving AngloGold (AU) most vulnerable, Goldman adds.
South African gold miners enjoy another strong performance, aided by rising gold prices and fresh lows in the rand; the rand-price of gold is up almost 10% in the last two weeks. Harmony Gold (HMY +9.9%) and Sibanye Gold (SBGL +5.9%), which own primarily South African assets, are surging; shares with more international exposure also post healthy gains: GFI +4.5%, AU +6.6%.
Sibanye Gold (SBGL +5.6%) bucks weakness in South African gold miners Gold Fields (GFI -2.2%), AngloGold (AU -2.4%) and Harmony Gold (HMY -1.8%), as local money manager Allan Gray raises its stake in the miner to 10.1%. SBGL shares have slipped 51% YTD.
Gold's sharp rise today can be attributed to the dollar's drop vs. the yen; when the dollar drops, gold should rise, as their correlation during the past 24 days has hit -86%. A stock sector that's standing out is emerging market gold miners: South Africa’s Sibanye (SBGL), Harmony (HMY) and AngloGold (AU), plus Peru's Buenaventura (BVN) are stronger, even as their corresponding country ETFs (EZA; EPU) are in the red.
South Africa's rand falls to its lowest level in four years as clashes between mine owners and workers erupt again today. Government "heavy-handedness" with mining companies has created a "major negative" for investors both inside and outside mining, as it reduces companies’ abilities to set their balance sheets and control their own destinies, Greenbriar Partners says. AU -3.3%, GFI -3%, HMY -2.6%.
As precious metals prices turn around, share prices of gold (GDX +4.7%) and silver miners (SIL +3.1%) surge: ABX +5.9%, GG +4.5%, KGC +6.4%, NEM +4.7%, SLW +4%. Even South African producers turn mixed, despite the call from the country's mine workers union for big pay increases: AU -0.8%, GFI +1.5%, HMY -0.5%.
Shares of South African miners sink as the country's mine workers union calls for a 60% pay increase on gold and coal producers. The union says it is seeking an entry-level minimum monthly wage of 7K rand ($750) for surface workers and 8K rand for underground workers vs. respective current minimum wages of 4.7K and 5K rand. AU -3.7%, GFI -3.4%, HMY -1.9% premarket.
Gold miners (GDX -3.2%) take another beating as gold continues to lose its allure amid disclosures of reduced bets by hedge funds, a World Gold Council report showing gold demand at a three-year low, and a surging dollar. For the miners, it's an ugly world of lower production, higher costs and falling prices. At least nine miners hit 52-week lows: NEM -3%, GG -2.7%, AUY -4.8%, HMY -6.3%, AU -2.5%, BVN -1.1%, ANV -7.4%, NG -2.7%, GSS -5.8%.
The head of a major South African mining union threatens to bring the country's economy "to a standstill" and demands a meeting with President Zuma, ramping up the rhetoric in a long and heated conflict between labor and the government. But a strike seems averted for at least another day, as top platinum producer Amplats (AGPPY.PK) says employees reported for today's shifts as normal.
John Paulson, whose hedge fund is the single biggest owner of the SPDR Gold Trust (GLD), maintained a 21.8M-share position even as the value of its holdings fell ~$165M in the latest quarter. But all that remains of his Barrick Gold (ABX) holdings is 36K call options vs. 915K shares at the end of 2012. Other positions in miners AU, NG, AEM, IAG and ANV were unchanged or modestly changed.
More on AngloGold's (AU) Q1 results: Gold miners must prepare for a lower gold price environment below $1,500/oz. and perhaps even as low as $1,300 in the coming quarters, new CEO Srinivasan Venkatakrishnan says. Hopes to complete the sale of its Navachab mine in Namibia by year-end and plans to identify at least one other mine to sell, but no further details provided. Shares -1.7% premarket.
AngloGold Ashanti (AU) reports Q1 profit attributable to equity shareholders totaled $239M, down from $581M in the year-ago period. Production was 899K oz. vs. 859K oz. in Q4 2012 and 981K oz. a year ago. Capex totaled $512M, up from $398M. Says it will look at cutting exploration costs and consider some asset sales in the coming months. AU -1.9% premarket.
The plunge in gold prices significantly raises the stakes in talks between South Africa's gold mine operators and mine workers, set to kick off Friday when the country's mineworkers union will propose a double-digit pay raise. South African producers including Gold Fields (GFI), Harmony Gold (HMY) and AngloGold (AU) have already warned that cuts and a slowdown in exploration are on the way.