Gold and silver shares moved substantially lower Monday amid a
broad-based sell-off on Wall Street. The Philadelphia Gold & Silver
Index (XAU), a composite of the world’s largest precious metals
companies, plunged 3.6% to 193.41 in morning trading.
Several of the benchmark U.S. equity indices posted steep losses as
well, with the Dow Jones Industrial Average (DJIA) down by 161.96
points, or 1.3%, at 12,022.30 and the S&P 500 off by 20.20 points,
or 1.6%, at 1,234.99 as of 11:10am ET.
Strength in the U.S. dollar also helped to pressure the gold and
silver sectors, as the greenback advanced 0.9% against a basket of
foreign currencies. The euro fared particularly poorly against the
dollar, as it slid 1.3% to 1.3213 amid escalating sovereign debt worries
in Europe.
Within the gold sector, Goldcorp was in the news on Monday after TD
Securities reiterated its Buy rating and $68.00 price target on the
Canadian-based gold producer. Although TD analyst Greg Barnes lowered
his 2012 production estimate for Goldcorp to 2.6 million ounces from 2.9
million, he wrote that “We continue to believe that Goldcorp has one of
the best production growth profiles among the senior North American
gold producers through 2013 and ranks second behind Yamana (AUY-N,
YRI-T) through 2013, and Eldorado (ELD-T, EGO-N) through 2015.”
Barnes went on to say that when computing its target price, “We use
higher-than-average multiples for Goldcorp to reflect its
better-than-average growth profile, low-cost production, and low
political risk compared with its peers.” Despite the positive
commentary, however, GG dropped $2.17, or 4.3%, to $48.15 per share this
morning.
Other notable gold producers in negative territory included
Agnico-Eagle Mines (AEM) and Kinross Gold (KGC), which fell by 4.1% and
5.4%, respectively.
Among silver companies, Silver Wheaton (SLW) tumbled 5.2% to $31.64
per share and Silver Standard Resources (SSRI) retreated 5.7% to $14.29
per share. – Gold Alert