Gold Continues Rising, Miners Continue Mixed at Best (KGC, AU, ABX, GG, AUY, NEM)

Commodities & Metals

Published: November 8, 2012 2:02 pm

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Investors were buying gold yesterday on the belief that newly re-elected President Obama will not be able to come up with a way to avoid having the U.S. economy fall off the fiscal cliff at the end of this year. Today, buyers are buoyed by the European Central Bank’s decision to leave its key interest rate unchanged.

Either way, with deflation a threat in the U.S. and inflation a threat in the eurozone, gold looks good. Gold ETFs added four tons of the yellow metal yesterday, according to Bloomberg, and now hold a record 2,592 tons of gold.

Gold miners, however, are sharing unequally in the gold boomlet. Kinross Gold Corp. (NYSE: KGC) reported third quarter earnings last night that generated an analyst’s upgrade today, and the stock is up 6.5% as a result. AngloGold Ashanti Ltd. (NYSE: AU) missed estimates this morning on lower production, higher cash costs, and declining prices.

Kinross replaced its CEO in August and the new strategy is to allocate capital where it will bring the most return for shareholders. That’s not always been a priority for gold miners, mainly because it’s hard to control ore quality, which has a big impact on cash costs, and impossible to control sales prices. If Kinross can make this strategy work consistently, the company will be the toast of the mining world. But one quarter does not a trend make.

Other miners that have already reported earnings, including Barrick Gold Corp. (NYSE: ABX), Goldcorp Inc. (NYSE: GG), Yamana Gold Inc. (NYSE: AUY), and Newmont Mining Corp. (NYSE: NEM) are all up about 0.5% today, but all except Yamana are either flat or down for the last month.

The SPDR Gold Shares ETF (NYSEMKT: GLD) is up 0.7% today at $167.60 in a 52-week range of $148.27 to $174.07.

December gold closed settled today at $1,726.00 an ounce, up about 7% for the day.

AngloGold is trading down about 3% at $33.92 in a 52-week range of $30.56 to $49.07.

Kinross is trading up 6.8% at $10.03 in a 52-week range of $7.11 to $14.38.

Paul Ausick

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