The rally in gold ends

A month-long surge halts with Wednesday’s rout among shares of gold mining companies.

By Jim J. Jubak Jul 24, 2013 4:38PM

Image: Gold (© Comstock Images/Jupiterimages)So much for the gold rally.


Gold itself fell Wednesday, after rallying to a one-month high. Spot gold dropped 2.5% to $1315 an ounce.


Gold mining stocks, which have themselves rallied strongly for almost a month, fell even harder. Goldcorp (GG), for example, was down 5.9% as of 2:45 p.m. New York time. This plunge comes after the stock rallied 33.4% from a June 26 low at $22.35 to $29.81 at the close on Tuesday.


I think you can mark down the drop in the price of gold on Wednesday to profit-taking -- after a strong move on a combination of a jump in the U.S. dollar and reports showing that new home sales increased in June to a five-year high.


The plunge in the shares of gold mining stocks is a result of those factors, and something more. Thursday marks the start of a week of earnings reports from gold mining companies -- and those reports are expected to include big write-downs for cancelled or delayed mining projects, and on lower prices for the value of the gold in mining company reserves.


Goldcorp kicks off the parade Thursday morning before the open of the New York markets. Barrick Gold (ABX) ends the big bulge in earnings reports from the sector the following Thursday, on August 1.


Besides today’s rout in shares of Goldcorp, the sector includes a 5.31% drop in Yamana Gold (AUY), a 5.68% fall in Newmont Mining (NEM), a 5.91% tumble in Barrick Gold, and a 5.29% decline in Kinross Gold (KGC).


Yamana Gold and Goldcorp are members of my Jubak’s Picks portfolio.

 

From this perspective, the late June lows in this sector look like attractive prices for buying gold mining stocks -- should the stocks revisit that territory. I wouldn’t be a buyer, however, until earnings reports tell us how big the write-downs will be and whether or not we can expect more write-downs next quarter. (The best bad news would be to see 'kitchen sink quarters' from some miners -- in which they write down everything including the kitchen sink.)


Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Yamana Gold as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio.


MSN Money on Twitter and Facebook

Like us on Facebook: MSN Money and Top Stocks

Follow us on Twitter: @msn_money and @topstocksmsn

9Comments
Jul 24, 2013 9:46PM
avatar
Since when does one down day end a rally, Jim?
Jul 25, 2013 11:00AM
avatar

Oh No! Mr. Jim............

 

Not a word about the ongoing MANIPULATION.

 

My Jim is a 50/50 spin artist?

 

July 25,2013 - Deutsche Bank is officially on suicide watch. DB will be the next ‘Lehman’ moment that triggers new collapse.

 

excerpt -  Judging from the ongoing defense from prosecution and cooperation (flipped) with Interpol and distraction of resources, the most likely bank to die next is Deutsche Bank. They are caught with accounting fraud and outright financial fraud over collateral shell games, pertaining to USTreasury Bonds, other sovereign bonds in Southern Europe, and OTC derivatives linked to FOREX currency contracts. D-Bank is a dead man walking.

(end of excerpt)

 

And what about,

 

excerpt - Today, we had the 13th consecutive day for negative GOFO rates with the 3 months rate at -04%. The 6 month GOFO rate lowers to only a positive .04%.  The 13 consecutive negative GOFO is unprecedented.

(end)

 

or,

 

excerpt - The registered  vaults at the GLD will eventually become a crime scene as real physical gold  departs for eastern shores leaving behind paper obligations to the remaining shareholders.   There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks).

(end)

 

We simply have to laugh at the misleading information or 50/50 of half truths as that in which seems to evade the puppet MAIN is coming in heavy. How will they stop it?

 

The Decoy409 POST or Msn Refugee Board 2

Jul 25, 2013 10:08AM
avatar
They don't print money anymore, it is electronically transferred  now. They do print guns!
Jul 24, 2013 9:15PM
avatar
What happened to all the metal heads out there? No comeback?
Jul 26, 2013 9:58AM
avatar
Yes Allen there are some who think the rally is not over... I've noticed from the quanity of comments in response to Jim's Gold articles, that there is just not interest out there, and I mean just about ZERO interest. Look at his post about Goldcorp. Zero comments, when he has a readership allegedly in the 10s of thousands?? Hmm. Well, Jubak is still stubbornly sticking with his gold-miner thesis even as gold miners have underperformed everything for 5 years!  
Jul 24, 2013 6:37PM
avatar
You will not  find a more stubborn bull than a gold bull. When the sht hits the fan (like the summer of 2008) the only thing going up in value is bear fund ETF's and the mighty dollar. Gold plunged right along with the DOW. The gold junkies got what they wished for except a rise in the price of gold. It will be no different the next time down.
Jul 25, 2013 6:43AM
avatar

Jim

 

Just wait! Obozo and Helicopter Ben are still printing money.

Jul 24, 2013 5:32PM
avatar
As the world economy improves the value of gold tarnishes.  Look out boys the metal is falling fast.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
268
268 rated 2
439
439 rated 3
709
709 rated 4
641
641 rated 5
609
609 rated 6
640
640 rated 7
516
516 rated 8
272
272 rated 9
152
152 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION10
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.