Just Like That, Gold Lost Its Luster (ABX, NEM, GG, RGLD, GLD)

Share prices for gold miners and gold bullion mostly dropped yesterday as traders thought it was a good day to take on more risk. In London this morning, gold prices have jumped back above $900/ounce after trading under that mark earlier.

The CEO of Barrick Gold Corp. (NYSE:ABX) recently said that the supply of gold will continue to drop, even as the price continues to be volatile. That’s not exactly earth-shattering news, but Barrick stock dropped almost $2/share (7%). Newmont Mining Corp. (NYSE:NEM) also fell about 7%, Goldcorp Inc. (NYSE:GG) dropped 8%, and Royal Gold Inc. lost about 4%. Even ETF bullion buyer SPDR Gold Shares (NYSE:GLD) fell by about 1%.

Interestingly, over the past 52-weeks only Royal Gold has produced positive returns. SPDR Gold Shares is down about 8% and the miners are down more than 30%. Royal Gold is up about 20%.

Good news from Fed Chairman Bernanke certainly played a role in the market’s rally, as did the declaration from Citigroup, Inc. (NYSE:C) CEO Vikram Pandit that Citigroup was profitable in the first two months of the quarter. Suddenly, the stock market seemed less risky, so traders went after stocks and sold gold.

Share prices for the miners are moving back up this morning, as expected drops in crude oil inventories combined with an estimated drop in total US demand for crude oil push crude prices down and share prices up. Gold miners are holding steady.

Paul Ausick
March 11, 2009