Are Gold Stocks a Buy? GFI, AUNEM, FCX, ABX, AUY, GG, KGC

By Roger Baettig | September 28 2012 2:58 PM

Gold miners lag behind physical Gold

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GFI, AUNEM, FCX, ABX, AUY, GG, KGC

The price of Gold has risen by about 200 an oz since the end of June and marked about 50% that gain since 1 September.

The precious Yellow metal is on its way to posting its best Quarterly gainer of the year as economic stimulus programs from the US Federal Reserve and other central banks have spurred buyers.

Gold prices are up 14% on Year and 11% so far this Q.

Gold miners have not fared as well, of the big mining companies, only Yamana Gold Inc. (NYSE:AUY) has been able to top the commodity price gain, rising 30% since the first of the year.

Barrick Gold Corp. (NYSE:ABX) is down more than 8% on the year to date, Newmont Mining Corp. (NYSE: NEM) is down about 7%, and Kinross Gold Corp. (NYSE:KGC) is down about 10%. Freeport McMoran Copper & Gold Inc. (NYSE: FCX) is + 7% for the year to date and Goldcorp Inc. (NYSE: GG) is + more than 3.5%.

The miners are faced with rising labor costs and lower grades of ore, both of which have combined to raise operating costs. To make matters worse, labor unrest has hit many mining companies hard.

Gold Fields Inc. (NYSE: GFI) and AngloGold Ashanti (NYSE:AU) have both had to deal with labor strikes at South African mines. Newmont, which said today it would cut jobs at its largest Indonesian mine, could be the next target for worker strikes.

The miners’ issues probably will not have any immediate impact on the price of Gold, but if costs continue to rise the mining companies may be forced to curtail production at marginal mines which may send share their prices lower, and Gold higher.

Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.