Gold-mining stocks jump on European moves

The dollar was down against the euro on news from the European Central Bank. And that pushed the price of commodities up.

By Jim J. Jubak Sep 6, 2012 6:50PM
Image: Gold Bars (Stockbyte/SuperStock)And the big winner from Thursday morning’s news that the European Central Bank was prepared to buy Spanish and Italian government bonds?

The SPDR Gold Shares ETF (GLD) rose less than 1% Thursday to close at $164.89.

But shares of gold miners, where revenues and profits are leveraged to the price of gold, were up even more. Goldcorp (GG) was up 3.1%; Yamana Gold (AUY) was up 2%; Newcrest Mining (NCMGY) was up 4.4%; and Newmont Mining (NEM) was up 2.6%. The biggest mover that I've been able to find among gold majors is Randgold Resources (GOLD), up 6.2%.

Not hard to understand why. With ECB President Mario Draghi’s plan taking the risk out of Europe -- and the euro -- the U.S. dollar was down Thursday against the euro. (Or the euro is up against the dollar, if you prefer, to $1.2634.) Traders didn’t feel the same need Thursday to seek the safe haven of U.S. dollar-denominated assets. (The 10-year Treasury, for example, was down in price and the yield is up to 1.677% Friday.)

With the dollar down, the price of commodities traded in dollars is up. That includes gold (up $10.90 an ounce to $1704.90) and oil (West Texas Intermediate is up 1.12% to $96.43.) Only copper is bucking the trend.

With commodity prices up, the price of commodity stocks has climbed as well. For example, Freeport McMoRan Copper & Gold (FCX) rose 3.1% Thursday, and Brazilian iron ore giant Vale (VALE) was up 4.4%.


At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. 
The fund did own shares of Freeport McMoRan Copper & Gold, Goldcorp, Randgold, Newcrest Mining, and Yamana Gold as of the end of March. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 
4Comments
Sep 6, 2012 7:01PM
avatar
I believe that this trend is just getting started.  With the fed going to ease, this is easy money.
Sep 7, 2012 9:57AM
avatar
FreeportMcMoRan has been on fire the last few days.  I'm sure Jubak is loving it, being one of his "Jubak's Picks".
Sep 7, 2012 9:04PM
avatar

and just wait until you see what happens Friday!  i predict a follow-up pop upwards of another 2% or more.

 

lol ... personal fav is bgeix ...

 

let the 2012-2013 gold rush begin!

Sep 7, 2012 11:03AM
avatar
I believe that former report still stands, the one in which gold has not reached its inflation-adjusted zenith of 2400 to 2500 USD.  This is still the potential goal.  Silver may even trend higher, percentage wise. 
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.

133
133 rated 1
286
286 rated 2
441
441 rated 3
737
737 rated 4
614
614 rated 5
606
606 rated 6
621
621 rated 7
441
441 rated 8
317
317 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
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.