Gold miners set to join the rally
AU, HUI, ABX, NEM
Gold mining stocks are trading at their lowest mark in 9 yrs even as the industry's profits are estimated to almost double this year and Bullion trades close to its historic high.
The benchmark NYSE Arca Gold BUGS Index (HUI) that includes Barrick Gold Corp. (NYSE:ABX), Newmont Mining Corp. (NYSE:NEM) and AngloGold Ashanti Ltd. (NYSE:AU) ended last week at 17 times earnings, the lowest since at least November 2002 and below a 5 yr average of 37 times earnings.
Beginning in late July Investors sold equities across the board as the noise about Europe's debt crisis blasted the air waves, and they are still ignoring analyst projections for Bullion producers.
The Gold index's 16 members will increase combined per-share earnings 94% this year, according to estimates.
I believe when we look back we will say this period was a buying opportunity, the spring is wound tight IMO.
Gold averaged about 1,700 oz in Q-3, 39% more than a year earlier, and is forecast to average 1,860 next year, according to the median estimate of 18 analysts.
Gold gained 0.4% to 1721.68 at 1:30 p.m. Hong Kong time.
There is a serious disconnect between Gold's price and the mining companies. Gold miners' earnings per share and per-share cash flow reached the highest levels in at least 9 yrs during the Q-3, according to data compiled.
When earnings are reported, the market will be astonished about how much cash is flowing in. to these companies and what their balance sheets look like, we will see the response at that time. Stay tuned...
Paul A. Ebeling, Jnr
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.