Markets & Finance

Gold Fundamentals Still Strong


By Leo Larkin 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


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus