Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (44576)	10/6/2009 6:03:01 PM
From: LoneClone	Read Replies (1) \| Respond to of 196029

UPDATE 1-Gold stocks surge 5 pct as bullion rises to record Tue Oct 6, 2009 4:59pm EDT reuters.com * Gold hits record above $1,040/oz * S&P/TSX global gold index rises 5.3 pct * Analysts say gold stocks fairly valued (Adds comments, updates shares to close; in U.S. dollars unless noted) By Cameron French TORONTO, Oct 6 (Reuters) - Gold stocks rose more than 5 percent on Tuesday and options activity in the issues soared, as the price of the metal climbed to a record high above $1,040 an ounce and sparked predictions of further gains. Top gold miners Barrick Gold Corp (ABX.TO) and Newmont Mining (NEM.N) rose 4 percent and 7 percent respectively, while small players such as Eldorado Gold (ELD.TO), up 10 percent, fared even better. The S&P/TSX global gold index .SPTTGD, which tracks mid- to large-sized gold miners in several markets, rose 5.3 percent, as analysts predicted the metal's breach of its previous record suggested a continued run. "We blew through a few technical levels around $1,030 (an ounce)," said Haytham Hodaly, a Vancouver-based analyst at Salman Partners. "We're thinking it could go closer to $1,100." Traditionally a safe haven in times of turmoil, gold largely avoided the precipitous plunge of other resource prices last year, although it has struggled to regain the high of $1,030.80 it hit in March 2008. Gold bulls see runaway inflation and U.S. dollar weakness sparking a stampede into the metal, and while signs of inflation have yet to materialize, the metal benefited from a weakening greenback on Tuesday. Gold stocks, meanwhile, have rebounded from the market selloff that left no sector unscathed in late 2008. Miners have raised billions in equity financings this year -- most notably Barrick -- and the TSX gold index hit a 14-month high in late September. STOCKS LAG THE METAL However, gold equities have not kept up with the run of the metal, and are still about 10 percent below their record levels -- as measured by the TSX gold index -- hit in March 2008. Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier in Toronto, said the stocks have suffered from the emergence of other investment vehicles centered on gold, as well as concerns about the lasting power of the recent rally. "I think there's still a bit of doubt that that $1,000 mark is going to hold," he said. South Africa's AngloGold Ashanti (ANGJ.J) gained 8.7 percent on the New York Stock Exchange, while Goldcorp (G.TO) finished the session up 4.8 percent in Toronto. Top movers in Toronto were Aurizon Mines (ARZ.TO) and Semafo Inc (SMF.TO),up 12.9 percent and 10.4 percent. Salman's Hodaly said that, at current valuations, shares of gold producers should move roughly in line with the metal. Analyst Tony Lesiak of Genuity Capital Markets agreed, saying stocks were neither particularly overpriced nor underpriced at current gold levels. "They're not extreme. They're well within the range that they've traded in off the forward curve for the last few years," Lesiak said. Options activity was strong in several names, with Yamana Gold (YRI.TO), Gold Fields (GFIJ.J) and Harmony Gold (HARJ.J) showing particularly strong call activity. An equity call option lets an investor buy the company's shares at a fixed price within a specified time period. In Yamana, one investor appeared to be betting on at least a further 10 percent gain, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group. Shares of Toronto-based Yamana gained 7.6 percent on Tuesday. ($1=$1.06 Canadian) (Additional reporting by Doris Frankel in Chicago; editing by Rob Wilson)