GOLD STOCKS NEWS – Gold stocks dipped slightly Monday as the Market Vectors Gold Miners ETF (GDX) fell $0.05 to $59.17 per share. Weakness in gold stocks and the GDX was fueled by a decline in gold bullion, which dropped $9.87 to $1,737.05 per ounce. The S&P/TSX Global Gold Index, Canada’s leading gold stocks composite, retreated 0.1% alongside the GDX.
Despite today’s move lower in gold stocks and the GDX, the macro environment remains quite favorable for the sector, according to UBS. In a recent research report, the firm wrote that “We think concerns over the state of the global economy and sovereign debt issues could result in a perfect storm for gold producers, one in which producers benefit from both higher gold prices and lower than expected inflationary cost pressures, subject to operational execution.”
“In addition, the recent pull back in oil prices over fears of a global economic slowdown is also likely to help gold producers,” UBS continued, “especially those who run large open-pit operations and those with remote locations which rely on heavy fuel oil or diesel generated power.”
With regard to investing in gold stocks, UBS contended that “It is best to use a portfolio approach…as this helps diversify operational, acquisition and geopolitical risk. The portfolio approach also allows investors to layer in attributes which match their investment objectives. Within our balanced equity basket we include Goldcorp, Newmont, Kinross, Iamgold, Osisko, Semafo, AuRico, and Guyana Goldfields.”
UBS also reiterated its Buy rating for each of the aforementioned gold stocks.
In morning trading, shares of GDX components Goldcorp (GG), Newmont Mining (NEM), and Kinross Gold (KGC) slid 0.4%, 0.3%, and 0.2%, respectively.
Other notable gold stocks moving lower included Agnico-Eagle Mines (AEM), Barrick Gold (ABX), and Randgold Resources (GOLD) – by 0.3%, 0.2%, and 0.1%, respectively.