BW Online | July 12, 2001 | Gold Fundamentals Still Strong

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JULY 12, 2001

INDUSTRY IN FOCUS � From S&P
By Leo Larkin

Gold Fundamentals Still Strong
S&P is positive on select gold mining stocks because of lower output, weak financial markets and increasing demand for the metal

Leo Larkin is an equity analyst for Standard and Poor's

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Gold futures -- and stocks of gold mining companies -- sold off after Wednesday's Bank of England auction of gold reserves. S&P believes the recent drop in the price of the metal - and of stocks of producers -- reflects lower lease rates and a sell-off in the Chicago CRB Commodities Index.

S&P thinks a break below the recent low price of $252 per ounce reached in August 1999 is unlikely, and that any such break is unsustainable since the current price is some $100/oz. below replacement cost.

Fundamentals for gold mining stocks, and the metal itself, are positive on lower output, weak financial markets and a deficit in supply versus demand.

S&P is still positive on selected gold stocks and has 4 STARS (accumulate) recommendations on Barrick Gold (ABX ) and Newmont Mining (NEM ).

S&P also has 3 STARS (hold) recommendations on Homestake Mining (HM ) and Placer Dome Inc. (PDG ).

Larkin is an equity analyst for Standard and Poor's

Any advice, analysis, or recommendations contained in articles labeled "Advice from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of Business Week Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis or recommendations that are published by Standard & Poor's. Standard & Poor's and Business Week Online are each units of The McGraw-Hill Companies, Inc.