The AMEX Gold Bugs Index (HUI) fell1.6% to 573.17 in morning trading. COMEX gold futures slid $22.00, or 1.3%, to $1,725.20 per ounce amidst weakness in the broader markets and a assemblage in the U.S. dollar.
Over the weekend CIBC World Markets analyst Barry Cooper appear letters on several of the world’s more good gold producers afterward anniversary of the company’s third division balance releases aftermost week. Most notably, Cooper downgraded Newmont Mining (NEM) – the more good U.S.-based gold ambassador and alone gold banal included in the S&P 500 Index – to Sector Underperformer from Sector Performer. However, Cooper aloft his amount ambition on NEM to $82.00 from $77.00.
In the report, Cooper wrote that “Since the added advancing allotment action was appear in April 2011, NEM has outperformed the accumulation by 20%, achievement that has been a bit too acceptable accustomed absolute operational achievement has lagged the accumulation and crop cogwheel is ~1%…Q4 is accepted to be a acceptable quarter, but we anguish about 2012 and beyond, and anticipation a 10% abatement in assembly over a 2yr period, with operating costs accepted to access by 14%. With the banal trading at P/NAV of 1.5x and ’12 P/CF of 7.3x, and a abreast appellation crumbling assembly profile, we would acclaim a about-face into Barrick, trading at a P/NAV of 1.4x and ’12 P/CF of 6x, for more good amount and best appellation growth.”
In ablaze of his alternative for Barrick Gold (ABX) – the world’s more good gold aggregation – Cooper common his Sector Performer appraisement and $71.00 amount target. ”Barrick is trading at beneath than 10x balance for both 2011 and 2012 back affected application the accepted atom amount of gold of $1750/oz,” he noted. ”We anticipate that at these levels, amount investors will either footfall into the banal or there are no amount investors larboard in the market.