GOLD STOCKS NEWS – Gold stocks tumbled Thursday morning, with the
Market Vectors Gold Miners ETF (GDX) falling $ 1.36, or 2.3%, to $
57.60 per share. Gold stocks and the GDX opened sharply lower as gold
futures dropped $ 26.40 to $ 1,718.40 per ounce following comments
from Mario Draghi, President of the European Central Bank (ECB).
At his press conference following the ECB’s monthly monetary policy
meeting, Draghi backed away from a prior statement that the central bank
may initiate a more aggressive bond-buying program to stem the tide of
the sovereign debt crisis. The S&P/TSX Global Gold Index, Canada’s
principal composite of gold stocks, headed south by 1.5% alongside the
GDX amid Draghi’s comments.
With today’s sell-off in gold stocks, the GDX extended its monthly
and year-to-date losses to 4.1% and 6.0%, respectively. Gold stocks
have continued to significantly underperform the price of gold in 2011,
which despite today’s slide remains higher by 20.9% this year.
Many large-cap gold stocks – which comprise the vast majority of the
GDX – have failed to provide investors with the gold price leverage seen
during previous bull markets in gold. Two prominent examples are
Barrick Gold (ABX) and Kinross Gold (KGC), which have fallen 4.5% and
27.6%, respectively. Even Newmont Mining (NEM) – one of the GDX’s best
performing gold stocks this year with a 10.0% gain – has substantially
lagged the yellow metal.
In contrast to many large-cap gold producers, many small- and mid-cap
gold stocks have in prior gold bull markets delivered enhanced gold
price leverage due to their superior growth potential. One emerging
gold company that is seeking to offer leverage to gold, as well as
upside through organic growth, is West Kirkland Mining (WKM.TSXV) – a
North American gold company with considerable mineral rights positions
in the Kirkland Lake area of Ontario, Canada and in North Eastern
Nevada.
This morning, West Kirkland reported assay results at its TUG
property in the Long Canyon Trend of Nevada. The Company noted that
mineralization has expanded beyond the area of the historic resource to
the north. The gold mineralization also extends beyond the typical host
horizon of the TUG deposit and into structures adjacent and below the
historic deposit host.
Highlights of West Kirkland’s results included the intersection of
2.89 grams per tonne (g/t) of gold and 112 g/t of silver over 6.09
meters at core hole WT11-007. This hole confirms the system is open for
further expansion. The Company also announced that Northeast
structures parallel to the Long Canyon Trend at the north end of the TUG
deposit, beyond hole WT11-007, will be the focus of drilling in January
2012.
With the progress it has made over the past year, West Kirkland has
generated attention from several institutional investors seeking gold
price leverage from small-cap gold stocks. Several firms have acquired
considerable positions in WKM.TSXV – including The K2 Principal Fund,
Front Street Investment Management, and RBC Asset Management.
In Thursday morning trading, notable gold stocks moving lower
included GDX components Agnico-Eagle Mines (AEM), Goldcorp (GG), and
IAMGOLD (IAG). AEM retreated by 2.6% to $ 42.52 per share, GG by 2.1%
to $ 50.86 per share, and IAG by 3.1% to $ 18.88 per share.
