GOLD PRICE NEWS – The gold price climbed $16.51, or 1.0%, to $1,678.76 per ounce Wednesday afternoon amid a broad-based rally on Wall Street. Strength in the price of goldwas fueled by a decline in the U.S. dollar against a basket of foreign currencies. The SPDR Gold Trust (GLD), a proxy for the gold price, rose $1.43, or 0.9%, to $163.53 per share.
Commenting on the gold price, RBC Capital Markets senior vice president George Gero wrote in a note to clients that “We believed a higher trading range [was] imminent after $1,675 as better momentum, higher volume, higher moving averages and higher open interest came into play.”
Gold stocks moved higher alongside the gold price, with the Market Vectors Gold Miners ETF (GDX) adding $0.86, or 1.5%, to $57.77 per share. Since reaching a 52-week low of $50.42 last week, the GDX has surged 14.6%. The rally in gold stocks and the GDX coincided with a rebound in the price of gold, which since hitting $1,531.90 has climbed 9.6%.
Despite the recent outperformance of the GDX relative to the gold price, the gold stocks ETF continues to lag the yellow metal by a wide margin in 2011. On a year-to-date basis, the GDX remains lower by 6.3%, compared to an 18.1% gain for the spot price of gold.
With many large-cap gold stocks included in the GDX underperforming the yellow metal, some investors are looking at the possibility of investing in small- and mid-cap gold stocks. In previous gold bull markets, several of the sector’s smaller companies have provided enhanced gold price leverage due to their growth potential. One small-cap name looking to capitalize on gold’s bull market and deliver leverage to the price of gold – as well as generate organic growth – is West Kirkland Mining (WKM.TSXV). This emerging North American gold company controls numerous, prospective mineral rights positions in the Kirkland Lake area of Ontario, Canada and in North Eastern Nevada.
West Kirkland Mining recently reported the discovery of a new gold zone on its mineral claims located between the towns of Kirkland Lake and Matachewan along the Cadillac-Larder Lake Deformation Zone in Canada. The Company announced that the new discovery is correlated in three dimensions with an initial strike length of 100 meters and depth extent in excess of 200 meters in four drill holes. One highlight from the discovery included the intersection of 16.15 grams per tonne of gold over 5.0 kilometers in hole KC 1163.
Michael G. Allen, West Kirkland’s Vice President of Exploration, commented that “In the Kirkland Lake and Timmins camps, near surface zones such as the one announced today are the indicators we search for to lead us to mineralization along strike and to depth. This new discovery gives us an excellent target to follow up on in three dimensions.”
Due in large part to its progress over the past year, West Kirkland Mining has garnered the attention of several large institutional investors that now hold positions in the Company. These include The K2 Principal Fund, RBC Asset Management, and Front Street Investment Management.
Notable gold stocks posting gains in concert with the gold price on Wednesday included Barrick Gold (ABX), Goldcorp (GG), and Randgold Resources (GOLD). Shares of ABX, GG, and GOLD climbed 1.6%, 1.3%, and 1.4%, respectively.
