Ongoing damage for gold, platinum and silver miners
The past month has witnessed heavy of selling of listed gold, platinum and silver miners.
Author: Barry Sergeant
Posted: Thursday , 23 Apr 2009
JOHANNESBURG -
mineweb.com
Listed gold, platinum, and also primary silver miners, developers and explorers have been heavily sold off across the global resources sector over the past month. The selling, some of the heaviest seen in these subsectors since January, but not as decisive as seen in October 2008, has at the same time seen significant global portfolio investment flows into specialist base metals, and also coal, miners.
There has also been strong evidence of bargain hunting of selected diamond stocks, one of the world's most damaged equities subsectors. There have been modest positive flows into specialist uranium and aluminium miners.
Daily noise aside, over the past month, the price performance of gold and also silver ETFs (exchange traded funds) has also been negative. Over the period, gold bullion traded as high as USD 967/oz, compared to current trades around USD 900/oz. The metal is currently around 31% higher than its 12-month lows. Platinum has bounced by a huge 58% from recent lows to current levels around USD 1,176/oz, while silver has bounced by 47% to current levels around USD 12.42/oz, and palladium by 44% to USD 232/oz.
The heaviest selling of listed gold stocks over the past month, in percentage terms, has been recorded in the global Tier I sector, which includes the likes of Barrick, Goldcorp, Yamana, and Kinross. Among this league, somewhat less selling pressure has been evident for Lihir, AngloGold Ashanti, Newcrest, Gold Fields, and Newmont.
Net selling of platinum stocks over the past month has been dominated by the No 1 name in the game, Anglo Platinum, which currently ranks as the worst performing stock among the world's Top 100 miners, measured by market value.
In a note to clients this week, analysts at RBC Capital Markets remarked that "based on current average consensus forecasts, the South African gold sector is rated at a forward P/E (price-to-earnings ratio) of some 12 times. This is very low (close to the usual bottom of 10 times) and seems to imply a market looking for a further decline in the gold price or expecting significant under-delivery on current management promises. This contrasts very sharply with the PGM (platinum group metal) sector where forward P/Es are well above 20 times on average and where most of the major players are in fact expected to make losses".
Of the world's four biggest PGM miners, three have operations in South Africa, in the form of Anglo Platinum, Impala Platinum, and Lonmin; Norilsk is based in Siberia and ranks as a primary nickel digger.
While investment flows into specialist base metals, coal and diamond stocks over the past month shows net positives, the buying has been highly selective, and also influenced by the strong positive run in many Chinese mining stocks, and certain Russian stocks.
See link above for table |
