Gold's choke point?

11 August 2008 @ 11:35 am EDT

Another week, and another day when yet another forecast is issued predicting that gold bullion will again move about USD 1,000 an ounce. This time it's from Credit Suisse, and this time, the framework points to the end of the third quarter of 2008. Gold's record was set early in March this year when the price briefly traded above USD1,030 an ounce.

Unashamed investors are becoming increasingly wary of optimistic forecasts for gold and, for that matter, for any kind of commodity. In just a few months, the apparent multi year commodity supercycle - as dubbed in some quarters - has fizzled out and investors have voted with their feet, many indeed galloping rather than walking.

Goldcorp, the high flying Vancouver-based Tier I global gold digger, has surrendered USD 15.5bn worth of its market capitalisation in just less than a month, as its stock price was hammered down 41% from record highs. Measured on a weighted basis, a sampling of more than 150 gold stocks listed around the world translates to losses of around USD 200bn in market value.

At the top, these gold stocks had a market value of  some USD 442bn, but have now declined to an aggregate value of USD 240bn. Investors who were piling into listed gold stocks up to about a month ago - and staying invested - would now be sitting with fairly nasty losses. However, investors in gold stocks over the past year or so have sustained smaller losses than names connected with nickel, zinc and lead, where underlying dollar metal commodity prices have halved.

Where dollar gold bullion is now 17% off its highs, at around USD 854 an ounce, silver bullion is off 28%. Profit taking in listed silver stocks has been brutal for the past few months, far outpacing the percentage losses in listed gold stock prices. Tier I listed platinum stocks, represented by just three names, have lost the least; fundamentals for this metal remain the most favourable, given the uncontroversial constraints on southern African soil, which produces around three quarters of the world's platinum group metals.

With scant - but so far convincing - evidence that crude oil prices reached a choke point in mid-July, after years of causing nosebleeds, this may be time to carefully consider the point when other commodities blow off. Over the past 18 months, there have been successive blow offs for wheat, nickel, rice, zinc, lead, cobalt, corn, soybeans, and others.

Benchmark crude oil futures prices have fallen by around 20% in the past month; natural gas is now trading 39% off its highs. A key indicator for where gold may be too expensive emerged on Monday, with news that gold bullion imports by India, the world's biggest country consumer of the precious metal, plunged 48% in July 2008 compared to July 2007.

Harmesh Arora, vice president of the Bombay Bullion Association, was quoted by Reuters to the effect that 30 tons of gold were imported in July, compared to 68 tons in July 2007. India's gold imports touched 79 tons in August 2007, the highest of the year. Arora noted that demand for gold increased last week after prices fell below 12,000 rupees (USD 285) per 10 grams, spurring retail interest that usually does not normally pick up until mid-August.

Just as a single swallow doesn't make a summer, neither does a single month's figures from the world's No 1 gold consumer prove a choke point case against dollar gold bullion prices. But with gold trading down around USD 850, the bulls need to make out a more convincing case on why Indian consumers will just continue to buy the yellow metal, regardless of its price. In July, a month when gold bullion traded up and very nearly brushed USD 1,000 an ounce, those consumers showed decisive and fierce resistance.

Global tier I gold stocks

 

 

 

 

Stock

From

From

Value

 

 

price

high*

low*

USD bn

 

Goldcorp

USD 30.90

-41.3%

47.1%

22.02

 

Polyus

USD 37.50

-53.1%

0.0%

7.15

 

Harmony

USD 8.26

-43.3%

0.1%

3.33

 

Lihir

AUD 2.27

-49.0%

1.3%

4.41

 

AngloGold Ashanti

USD 28.50

-42.0%

0.3%

9.99

 

Zijin

CNY 5.43

-75.3%

-39.7%

8.18

 

Barrick

USD 34.53

-36.9%

19.5%

30.10

 

Newcrest

AUD 24.25

-40.1%

13.1%

9.77

 

Gold Fields

USD 9.06

-53.8%

0.7%

5.92

 

Kinross

USD 15.39

-43.8%

55.9%

9.47

 

Newmont

USD 43.35

-24.7%

14.0%

19.04

 

Buenaventura

USD 21.65

-49.5%

39.2%

5.95

 

Freeport-McMoRan

USD 83.76

-34.2%

24.9%

32.16

 

SPDR Gold Trust ETF

USD 83.97

-16.4%

32.3%

18.05

 

Tier I averages/total

 

-43.1%

14.9%

185.54

 

Weighted averages

 

-41.8%

16.4%

 

 

 

 

 

 

 

 

TIER II

Stock

From

From

Value

 

 

price

high*

low*

USD bn

 

Zhongjin

CNY 36.94

-76.9%

0.1%

1.90

 

Iamgold

USD 5.60

-46.3%

0.4%

1.66

 

Simmer & Jack

ZAR 3.87

-40.9%

17.3%

0.53

 

Yamana

USD 10.10

-49.3%

20.2%

7.06

 

High River

CAD 1.21

-65.4%

0.0%

0.40

 

Eldorado

USD 7.19

-23.0%

121.2%

2.48

 

Agnico-Eagle

USD 46.45

-44.3%

35.7%

6.68

 

Centerra

CAD 4.30

-73.3%

36.1%

0.99

 

Randgold Resources

USD 42.08

-25.2%

102.0%

3.21

 

Shandong

CNY 40.76

-65.9%

1.1%

2.07

 

Peter Hambro

GBP 8.57

-49.2%

0.8%

1.33

 

Hecla Mining

USD 6.82

-48.1%

4.9%

0.87

 

Golden Star

CAD 1.75

-60.0%

0.6%

0.44

 

Franco-Nevada

CAD 18.75

-24.9%

37.6%

2.00

 

Fresnillo

GBP 3.70

-35.7%

2.8%

5.09

 

JSC Polymetal

USD 6.90

-29.9%

53.3%

2.17

 

Red Back

CAD 6.51

-29.6%

44.7%

1.31

 

New Gold

CAD 5.10

-47.7%

27.2%

1.15

 

Northgate

CAD 1.96

-43.8%

-0.5%

0.53

 

Tier II averages/total

 

-46.3%

26.6%

41.88

 

Weighted averages

 

-48.1%

25.2%

 

 

 

 

 

 

 

 

TIER III

Stock

From

From

Value

 

 

price

high*

low*

USD bn

 

Western Goldfields

CAD 2.10

-49.2%

21.4%

0.31

 

Great Basin

CAD 2.97

-22.5%

50.0%

0.67

 

Sino Gold

AUD 4.76

-46.3%

21.4%

1.23

 

Alamos

CAD 6.14

-26.9%

27.4%

0.62

 

Highland

GBP 1.43

-43.3%

91.9%

0.89

 

PanAust

AUD 0.69

-44.8%

48.4%

0.88

 

Kingsgate

AUD 5.10

-19.0%

52.7%

0.42

 

Int'l Mining

CAD 4.70

-29.3%

5.4%

0.48

 

Allied Gold

AUD 0.30

-70.9%

3.4%

0.10

 

First Uranium

CAD 5.90

-50.8%

11.1%

0.82

 

Novagold

CAD 7.00

-65.5%

18.6%

0.78

 

Pan African

GBP 0.04

-62.2%

6.9%

0.08

 

Citigold

AUD 0.18

-65.0%

16.7%

0.11

 

Jaguar

CAD 7.62

-47.3%

42.2%

0.52

 

Pamodzi Gold

ZAR 3.00

-83.8%

0.0%

0.04

 

Oceanagold

AUD 0.59

-84.6%

0.9%

0.08

 

DRDGold

ZAR 4.12

-59.8%

17.7%

0.20

 

Central African

GBP 0.04

-92.0%

6.7%

0.01

 

Resolute

AUD 1.43

-43.9%

23.6%

0.36

 

Integra Mining

AUD 0.20

-72.5%

44.4%

0.07

 

Royal Gold

USD 32.38

-16.8%

23.7%

1.10

 

Chenzhou

CNY 9.82

-83.0%

10.0%

0.77

 

Aurizon

CAD 4.06

-25.2%

45.0%

0.64

 

Kazakh Gold

USD 16.48

-44.7%

2.1%

0.89

 

Gammon Gold

CAD 9.62

-20.0%

65.9%

1.22

 

Crew Gold

CAD 0.95

-52.5%

9.2%

0.52

 

Lingbao

HKD 2.22

-74.5%

0.9%

0.08

 

Zhaojin

HKD 6.35

-71.7%

11.4%

0.36

 

Rusoro Mining

CAD 1.04

-61.8%

15.6%

0.44

 

Minefinders

CAD 8.59

-38.9%

5.9%

0.46

 

Andina Minerals

CAD 2.90

-47.3%

36.8%

0.25

 

Crystallex

CAD 0.82

-76.6%

46.4%

0.26

 

Tier III averages/total

 

-52.9%

24.5%

15.67

 

Weighted averages

 

-52.6%

26.8%

 

 

 

 

 

 

 

 

DEVELOPERS

Stock

From

From

Value

 

 

price

high*

low*

USD bn

 

Anatolia

CAD 1.91

-71.1%

11.7%

0.17

 

Andean

CAD 1.29

-42.4%

84.3%

0.46

 

Norton Gold

AUD 0.22

-68.1%

19.4%

0.07

 

European Gold

CAD 3.52

-51.1%

24.4%

0.67

 

Banro

CAD 4.00

-69.2%

8.1%

0.17

 

Greystar

CAD 2.50

-70.4%

12.1%

0.12

 

Medusa

AUD 1.01

-34.4%

7.4%

0.13

 

Osisko

CAD 3.99

-44.9%

11.1%

0.69

 

Central Rand

ZAR 10.00

-51.3%

4.8%

0.32

 

Tamaya

AUD 0.04

-89.0%

46.2%

0.04

 

Gabriel

CAD 2.42

-44.0%

90.6%

0.66

 

Mintails

AUD 0.20

-73.8%

0.0%

0.12

 

Moto Goldmines

CAD 3.03

-50.2%

31.7%

0.28

 

Detour Gold

CAD 17.11

-32.6%

234.8%

0.82

 

Centamin Egypt

CAD 0.93

-41.9%

6.9%

0.87

 

Seabridge

CAD 17.10

-56.2%

2.1%

0.68

 

Gold Reserve

CAD 1.38

-77.0%

8.7%

0.08

 

Aurelian

CAD 5.76

-43.7%

88.9%

0.93

 

Avoca Resources

AUD 1.68

-42.3%

33.3%

0.40

 

St Barbara

AUD 0.25

-75.0%

36.1%

0.28

 

Jinshan

CAD 1.64

-49.1%

13.1%

0.28

 

Metals Exploration

GBP 0.17

-60.7%

30.8%

0.04

 

Mercator Gold

GBP 0.21

-78.4%

1.2%

0.02

 

Archipelago

GBP 0.22

-39.0%

7.5%

0.08

 

China Goldmines

GBP 0.83

-50.7%

5.1%

0.08

 

Cluff Gold

GBP 0.51

-55.1%

0.5%

0.08

 

Apex Minerals

AUD 0.45

-68.4%

21.6%

0.16

 

Gold Eagle

CAD 11.58

-8.1%

182.4%

1.32

 

B2GOLD

CAD 0.70

-72.5%

16.7%

0.12

 

Beadell

AUD 0.17

-66.0%

0.0%

0.01

 

Kimber

CAD 1.27

-35.9%

104.8%

0.08

 

Aflease Gold

ZAR 2.00

-46.2%

8.1%

0.14

 

Wits Gold

ZAR 89.00

-50.6%

11.4%

0.32

 

Uruguay Minerals

CAD 1.90

-48.6%

0.0%

0.10

 

Minera IRL

GBP 0.58

-23.7%

241.2%

0.07

 

Mineral Deposits

AUD 0.67

-56.5%

12.6%

0.29

 

NWM Mining

CAD 0.15

-44.2%

20.8%

0.01

 

Bralorne Gold

CAD 0.95

-34.0%

3.3%

0.02

 

Buffalo Gold

CAD 0.18

-85.2%

5.9%

0.02

 

Cassidy Gold

CAD 0.23

-59.8%

18.4%

0.02

 

Colombia Goldfields

CAD 0.46

-79.6%

9.5%

0.05

 

Coral Gold

CAD 0.61

-59.1%

35.6%

0.02

 

Entrée Gold

CAD 1.80

-46.3%

35.3%

0.18

 

Exeter Resources

CAD 3.50

-40.9%

70.7%

0.19

 

Gitennes

CAD 0.18

-62.5%

20.0%

0.01

 

Golden Goose

CAD 0.37

-61.1%

5.7%

0.02

 

Grandview Gold

CAD 0.22

-84.3%

12.8%

0.01

 

Kirkland Lake

CAD 7.11

-51.4%

3.0%

0.42

 

MacMillan Gold

CAD 0.53

-51.8%

107.8%

0.04

 

Molycor Gold

CAD 0.12

-55.8%

15.0%

0.01

 

Moneta Porcupine

CAD 0.15

-46.4%

66.7%

0.02

 

Nautilus Minerals

CAD 1.68

-62.6%

13.5%

0.26

 

Navasota Resources

CAD 0.63

-26.7%

293.8%

0.04

 

PC Gold

CAD 0.95

-24.0%

11.8%

0.03

 

Queensland Minerals

CAD 0.22

-66.2%

15.8%

0.01

 

Rainy River

CAD 2.19

-63.2%

0.0%

0.13

 

Reunion Gold

CAD 0.36

-77.5%

28.6%

0.02

 

Searchgold Resources

CAD 0.09

-73.4%

12.5%

0.01

 

Skyline Gold

CAD 0.12

-61.7%

43.8%

0.01

 

Staccato Gold

CAD 0.13

-65.8%

44.4%

0.01

 

Sunridge Gold

CAD 0.57

-73.5%

5.6%

0.04

 

UC Resources

CAD 0.17

-78.0%

10.0%

0.02

 

Yukon-Nevada

CAD 0.46

-75.1%

2.2%

0.09

 

Tanami Gold

AUD 0.05

-68.0%

23.1%

0.05

 

Tasman Goldfields

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