Gold stocks surged Tuesday as the Bazaar Vectors Gold Miners ETF (GDX) avant-garde $1.58, or 3.1%, to $52.75 per share. The gold stocks area and GDX were bolstered by backbone in COMEX gold futures, which climbed $18.70, or 1.2%, to $1,615.40 per ounce on the aback of a weaker U.S. dollar. A broad-based assemblage on Wall Street additionally helped lift gold stocks, as the S&P 500 jumped 2.6% to 1,236.25 in aboriginal afternoon trading. Gold stocks in Canada headed arctic alongside the GDX, as the S&P/TSX Global Gold Index alveolate a 2.7% gain.
The backlash in gold stocks provided a much-needed acquittal for investors, because that the GDX accomplished yesterday’s affair at $51.17 – its everyman akin on a closing base back August 24, 2010. Gold stocks accept collapsed victim to cogent affairs burden in contempo weeks as defalcation has engulfed the adored metals space. Even with today’s advance, the GDX charcoal lower by 12.7% this ages alone, and by 14.4% on a year-to-date basis.
Several gold stocks accept been in the account already this anniversary due to a flurry of amount ambition revisions by Wall Street analysts. Bygone UBS analyst Brian MacArthur bargain his ambition on Agnico-Eagle Mines (AEM) to $54.00 from $59.00 due to college banknote costs estimates in 2012 and 2013 at the Company’s LaRonde, Pinos Altos, Kittila and Meadowbank mines.
In UBS’ report, MacArthur acclaimed that “Applying our P/NAV assorted of 0.85x (down from 0.9x on connected operational risk) to the operating basic of our revised NAV (using $1900/oz gold) of $63.66 (down from $65.25) and abacus non-gold assets of $0.15, we access our amount ambition of $54. Accustomed the adumbrated return, we amount the shares Buy but we agenda the bazaar will acceptable booty a ‘show me’ attitude with account to assembly improvements thereby implying a re-rating may booty some time.”
This morning CIBC analyst Barry Cooper downgraded Eldorado Gold (ELD.TSX, NYSE: EGO) to Area Performer from Area Outperformer and bargain his amount ambition to C$6.00 from C$20.00 per share. The decline followed Eldorado’s advertisement bygone to access European Goldfields (EGU.TSX) for C$2.5 billion. European Goldfields owns three development date gold projects in Greece and Romania and one baby polymetallic (lead/zinc/silver) abundance in assembly in Greece.
Cooper wrote in his address that “Should the accretion of EGU be successful, the accident contour of the aggregation will access with acknowledgment to Greece area taxes and operating agreement are acceptable to fluctuate. We are aloof on the transaction, but accept that investors will not be absorbed to accept the name accustomed the de-risking that is demography abode in the market…We account that the acquirement of EGU is aloof to the company’s NAV/sh, but awful dilutive to EPS and CFPS over the abutting few years. With a bazaar that has become concise focused, we do not anticipate investors will appearance the backbone that is appropriate for acumen amount out of EGU.”