Gold Stocks (GDX) Mixed M&A Activity to Heat Up

Gold stocks were alloyed Tuesday morning as the Bazaar Vectors Gold Miners ETF (GDX) inched lower by $0.19, or 0.3%, to $60.98 per share. Gold stocks and the GDX captivated abiding as COMEX gold futures rebounded from beforehand losses to barter college by $6.80 at $1,785.20 per ounce. While the GDX acquaint a apportioned loss, the S&P/TSX Global Gold Index – Canada’s arch gold stocks blended – avant-garde 0.7% to 427.59.

Notable gold stocks announcement assets this morning included Barrick Gold (ABX) and Gold Fields (GFI), which rose 0.3% and 0.2%, respectively. On the downside, Kinross Gold (KGC) fell 0.6% and Newmont Mining (NEM) biconcave 0.3%.

In animosity of today’s adherence in gold stocks, the GDX has connected to essentially lag the chicken metal in 2011 – with a 1.1% accident compared to a 25.6% accretion on a year-to-date basis. The alone gold stocks absolute the GDX – primarily large-cap gold producers – accept as a accumulation bootless to accommodate investors with the gold amount advantage apparent during above-mentioned balderdash markets in adored metals.

As a aftereffect of the underperformance of large-cap gold stocks, several bazaar strategists accept angry their absorption to the sector’s small- and mid-cap names. In a address appear this morning, analysts led by Michael Gray at Macquarie Capital Markets Canada Ltd. common the firm’s Outperform appraisement and aloft its ambition amount on a cardinal of arising gold analysis companies.

Macquarie aerial its amount ambition on Eastmain Resources (ER.TSX) to C$2.75 from C$2.25, on Extorre Gold Mines (XG.TSX, AMEX: XG) to C$12.50 from C$12.00, on Tahoe Resources (THO.TSX) to C$26.00 from C$23.00, and on Rainy River Resources (RR.TSX) to C$9.00 from C$8.75 per share. Amongst the campaign it covers, Macquarie accent Midas Gold (MAX.TSX) and Eastmain Resources as its “Top Picks.”

Looking ahead, the close predicted that alliance and accretion (M&A) action in the gold stocks area is acceptable to access considerably. “The difficult disinterestedness adopting altitude for the juniors has led to deals to consolidate assorted asset interests and to access assets that inferior analysis teams may not be able to accounts and build,” Macquarie wrote. “There is additionally a trend appear baby adept acquisitions accustomed the ample banknote positions captivated by the seniors and a cardinal of mid-tier adored metal producers.