Gold Trends Ahead of Miner Earnings (ABX, GG, GOLD, AU, GLD)

Ben Bernanke thinks the risks of inflation may be overstated or those fearing major inflation may be misguided.  But that feeling is still not shared by many on Wall Street and also not shared by many on Main Street.  In fact, the recent return of gold prices off the $900 mark to almost $950 and the return of oil back close to $65.00 per barrel have many wondering if that higher Producer Pricing Index data from June could get a repeat either in July or in August.  Our guess is August rather than July, but there is still almost two trading weeks left in the month of July.  We have earnings coming from some majors in the next week and wanted to evaluate those trends for Barrick Gold (NYSE: ABX), Goldcorp (NYSE: GG) Randgold Resources Limited (NASDAQ: GOLD), and Anglogold Ashanti Limited (NYSE: AU).  The SPDR Gold Shares (NYSE: GLD) of course offer the most direct investment in bullion without the operational risks tied to individual companies.

One of our affiliates has recently caught a buy signal on gold with the call for it to challenge recent highs and possibly put in new highs. They have a full audio/video presentation on this showing the trends and stops.

Randgold Resources Limited (NASDAQ: GOLD) is soon to be on the earnings deck.  With shares down 0.5% at $65.12 in early trading, its 52-week range is $22.28 to $74.21.  It recently announced a combination with Moto Mines. This one has thin coverage, but the handful analysts are calling for $0.25 EPS.

Barrick Gold (NYSE: ABX) is on deck next week with earnings.  Shares this morning are down 0.7% at $35.15 in light trading, and the 52-week range is $17.27 to $49.62.  We have a large consensus group calling for roughly $0.38 EPS and $1.9 billion in revenues.

Goldcorp (NYSE: GG) is also on deck for earnings next week.  Shares are down 0.35% at $37.45 this morning, and the 52-week range is $13.84 to $46.88.  We have a consensus estimate of $0.15 EPS and almost $575 million in revenues.

All of those estimates are consensus estimates from Thomson Reuters.  Be advised, those are likely to change handily before the actual earnings dates a week out.

SPDR Gold Shares (NYSE: GLD) is down 0.3% at $92.80 in early trading, and its 52-week trading range is $66.00 to $98.99.  This offers the easiest and most direct way for Joe Public to play the price moves in gold, but it also has the largest wild card.  With the CFTC looking at curbing energy commodity speculation vehicles, what do you think could happen when they see the $33 billion market cap.  The “GLD” is larger by direct bullion holdings than all but a few of the world’s central banks.

A small example of how profitable gold can be for some of the companies mining the shiny yellow stuff, a smaller Canadian traded company called Gammon Gold said this morning that its cash costs for production come to roughly $445 to $465 per ounce.  At over $900 or anywhere near, those are some nice margins if you just look on the surface.

We’ll be paying attention to the prices of gold here as a barometer for earnings and production targets from the major miners and producers next week.

Jon C. Ogg
July 22, 2009