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. 
Sep 6, 2012 7:01PM
I believe that this trend is just getting started.  With the fed going to ease, this is easy money.
Sep 7, 2012 9:57AM
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 11:03AM
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. 
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