Gold Miners Digging Out? (ABX, AU, NEM, GDX, GLD)

Now that Barrick Gold Corp. (NYSE:ABX) has raised $4 billion or so to buy out its hedges, the company is set to enjoy an expected run-up in gold prices. In early trading today, Barrick shares were up about 1.5%, AngloGold Ashanti Ltd. (NYSE:AU) shares were up slightly, and Newmont Mining Corp. (NYSE:NEM) shares were up about 1%.

Share prices for these and other gold mining shares have been on the rise for the past few weeks. The Market Vectors Gold Miners ETF (NYSE:GDX) peaked at $48 a week ago, a new 52-week high. SPDR Gold Shares ETF (NYSE:GLD) also flirted with a new 52-week high today. Spot gold prices have been as high as $1,015/oz today, but are moving back down at just $1,001.79.

The better-than-expected US unemployment data released today raised equities a bit at market opening, but early gains have been given back already. The gold miners too, have given back most of their early gains.

In the near-term, mining stocks could continue to rise given the relatively short supply of scrap gold now available. Also, Barrick’s timing on buying back its hedges could also affect the near-term spot price of gold. Inflationary fears, real or imagined, will also hit spot prices, but for now at least, the miners look pretty solid.

Paul Ausick