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GOLD ANALYSIS

STALE BULLS

Global gold stocks crushed and in tatters

Listed gold stocks have now lost nearly 60%, or a combined USD 256bn, of peak values, leaving a global resources sub-sector at sixes and sevens.

Author: Barry Sergeant
Posted: Wednesday , 10 Sep 2008

JOHANNESBURG -

Globally listed gold mining stocks have now lost nearly 60% of their value, on a weighted average basis, equal to a loss of about USD 256bn in market value, or capitalisation. Each of the 13 stocks that may be considered members of the global senior and elite Tier I gold digger grouping traded at 12-month lows, and some worse, overnight Tuesday. Global highflyer Goldcorp is now trading 52% off its peak price, while Barrick, the world's biggest gold miner, has retrenched by 51% in price.

Harmony, one of three South Africa based members of the Tier I group, fell by a dramatic 14% on the NYSE on Tuesday. There were bigger falls among smaller names; Centerra ploughed down by 17%, while Alamos slid 18%, and Great Basin Gold crashed down by 23%. Among gold developers, or juniors, Gabriel lost a stunning 26% of its value in a single trading session, as did Kirkland Lake. Navasota Resources and Yukon-Nevada shed 23% each, while Dragon Mining lost a full 33% of its market value in Australia this morning, a fraction short of the percentage of value surrendered last night in Canada by PMI Gold.

The background is fairly uncontroversial: a dollar that has been firming since 15 July, less than two months ago, translating to commodities being more expensive in other currencies, mixed in with accumulating evidence of a slowing global economy, thus leaving the price trend outlook for raw materials in the doldrums, at best.

Where listed gold stocks have lost, on a weighed average basis, 57% of peak market value, the dollar gold price has corrected by 25% from its peak in early March this year, at the height of the Bear Stearns crisis on Wall Street. Before and after that, any number of professed experts on gold have been calling for the price of the yellow metal to continue rising, citing several well-known factors, not least good seasonal demand for gold from India and South East Asia in August and September, along with various views on the dollar, crude oil, geopolitical risk, and inflation, which all somehow mix into being individually and collectively good for gold prices.

Well, investors in listed gold stocks have clearly had enough. More recently, amid signs of weakness in the dollar gold bullion price, reports have been filing in from India, the world's single biggest market for physical gold, and the Middle East, another important market, that demand is, in a nutshell, very strong indeed.

More to the point, perhaps, is that recent days have indicated a possible breakdown in the inverse relationship between dollar gold bullion prices, and the dollar index, the trade-weighted value of the dollar. Where the dollar has shown signs of weakness, gold has tended to stay soft, indicating that its least path of resistance may well be to the south. If gold falls regardless of the direction of the dollar, hell could break loose.

Forecasting gold price trends is simply impossible, but those who glibly predicted an ever-rising trend are beginning to irritate investors who have collectively lost tens of billions of dollars on listed gold stocks in a matter of months. Mark Hulbert, founder of Hulbert Financial Digest, which has traced the advice of more than 160 financial newsletters since 1980, yesterday wrote about the views of various bullish - naturally - commentators on gold.

Hulbert wrote that such views were at least "in part keeping the Hulbert Gold Newsletter Sentiment Index (HGNSI) at abnormally high levels. That index reflects the average recommended gold-market exposure among a subset of gold-timing newsletters tracked by the Hulbert Financial Digest".

"In recent weeks I have written several columns wondering what it would take for the editor of the average gold-timing newsletter to give up believing that gold was in a bull market. And it would appear that we still don't know.

"That's because the HGNSI didn't budge at all on Tuesday, despite bullion's fall, remaining at 27.9%. To put that level in perspective, it is higher than where it stood in early August, when bullion was trading above USD 900 per ounce". Overnight on Tuesday, gold nearly touched USD 760 an ounce, before recovering somewhat. Hulbert accused the "gold bug" fraternity of using arguments that "sometimes involve disingenuous logic", captured in the attitude of "Heads I win, tails you lose".

*Global tier I gold stocks*
	Stock		From		From		Value
	price		high*		low*		USD bn
Goldcorp	USD 25.20		-52.1%		0.0%		17.962
Polyus	USD 30.00		-62.5%		0.0%		5.719
Harmony	USD 6.39		-56.1%		0.2%		2.577
Lihir	AUD 1.75		-60.7%		0.6%		3.086
AngloGold Ashanti	USD 21.20		-56.8%		0.7%		7.433
Zijin	CNY 4.01		-81.8%		0.2%		6.042
Barrick	USD 26.60		-51.4%		0.0%		23.191
Newcrest	AUD 20.02		-50.6%		3.0%		7.314
Gold Fields	USD 7.16		-63.5%		0.0%		4.677
Kinross	USD 11.90		-56.6%		0.3%		7.320
Newmont	USD 36.73		-36.2%		0.2%		16.133
Buenaventura	USD 16.44		-61.7%		0.8%		4.519
Freeport-McMoRan	USD 65.16		-48.8%		0.4%		25.019
SPDR Gold Trust ETF	USD 76.49		-23.8%		11.3%		16.025
Tier I averages/total			-54.5%		1.3%		147.016
Weighted averages			-53.5%		1.5%

*TIER II*	Stock		From		From		Value
	price		high*		low*		USD bn
Zhongjin	CNY 24.12		-84.9%		3.0%		1.240
Iamgold	USD 4.85		-53.5%		1.0%		1.434
Simmer & Jack	ZAR 3.85		-41.2%		16.7%		0.510
Yamana	USD 7.48		-62.5%		0.5%		5.232
High River	CAD 0.50		-85.7%		8.7%		0.165
Eldorado	USD 5.52		-40.9%		7.6%		1.908
Agnico-Eagle	USD 44.83		-46.3%		1.9%		6.447
Centerra	CAD 3.25		-79.8%		1.2%		0.752
Randgold Resources	USD 32.47		-42.3%		18.1%		2.480
Shandong	CNY 27.87		-76.7%		3.8%		1.418
Peter Hambro	GBP 6.83		-59.5%		6.6%		0.975
Hecla Mining	USD 4.46		-66.1%		0.7%		0.569
Golden Star	CAD 1.23		-71.9%		6.0%		0.310
Franco-Nevada	CAD 17.35		-30.5%		27.3%		1.861
Fresnillo	GBP 3.59		-37.6%		5.5%		4.527
JSC Polymetal	USD 4.70		-52.3%		0.0%		1.481
Red Back	CAD 5.17		-44.1%		4.7%		1.043
New Gold	CAD 3.64		-62.7%		1.1%		0.826
Northgate	CAD 1.22		-65.0%		0.0%		0.333
Tier II averages/total			-58.1%		6.0%		33.509
Weighted averages			-58.0%		5.1%

*TIER III*	Stock		From		From		Value
	price		high*		low*		USD bn
Western Goldfields	CAD 1.21		-70.7%		0.0%		0.177
Great Basin	CAD 1.60		-58.2%		0.0%		0.368
Sino Gold	AUD 3.30		-62.8%		0.3%		0.775
Alamos	CAD 4.48		-46.7%		2.8%		0.457
Highland	GBP 0.75		-70.2%		1.4%		0.429
PanAust	AUD 0.66		-47.6%		9.2%		0.759
Kingsgate	AUD 4.29		-31.9%		28.4%		0.321
Int'l Mining	CAD 4.56		-31.4%		9.6%		0.468
Allied Gold	AUD 0.27		-73.8%		8.0%		0.089
First Uranium	CAD 3.79		-68.4%		4.4%		0.531
Novagold	CAD 4.95		-75.6%		0.2%		0.557
Pan African	GBP 0.04		-61.0%		10.3%		0.077
Citigold	AUD 0.18		-64.0%		20.0%		0.098
Jaguar	CAD 5.07		-64.9%		2.6%		0.347
Pamodzi Gold	ZAR 1.26		-93.2%		14.5%		0.015
Oceanagold	AUD 0.54		-85.8%		10.2%		0.070
DRDGold	ZAR 3.50		-65.9%		2.9%		0.164
Central African	GBP 0.03		-91.9%		0.0%		0.010
Resolute	AUD 1.23		-52.0%		2.1%		0.277
Integra Mining	AUD 0.16		-77.5%		0.0%		0.050
Royal Gold	USD 27.54		-29.2%		3.8%		0.934
Chenzhou	CNY 7.90		-86.3%		4.1%		0.618
Aurizon	CAD 2.02		-62.8%		0.0%		0.320
Kazakh Gold	USD 11.00		-63.1%		4.0%		0.596
Gammon Gold	CAD 6.81		-43.3%		17.4%		0.872
Crew Gold	CAD 0.34		-83.0%		0.0%		0.187
Lingbao	HKD 1.80		-79.3%		2.3%		0.069
Zhaojin	HKD 3.70		-83.5%		0.3%		0.207
Rusoro Mining	CAD 0.83		-69.5%		27.7%		0.351
Minefinders	CAD 5.92		-57.9%		0.3%		0.315
Andina Minerals	CAD 1.60		-70.9%		7.4%		0.136
Crystallex	CAD 1.02		-69.7%		82.1%		0.321
Tier III averages/total			-65.4%		8.6%		10.969
Weighted averages			-66.1%		7.0%

*DEVELOPERS*	Stock		From		From		Value
	price		high*		low*		USD bn
Anatolia	CAD 1.64		-75.2%		5.1%		0.146
Andean	CAD 1.08		-52.0%		14.4%		0.347
Norton Gold	AUD 0.18		-73.3%		24.1%		0.050
European Gold	CAD 2.82		-60.8%		4.8%		0.541
Banro	CAD 2.05		-84.2%		95.2%		0.089
Greystar	CAD 1.45		-82.8%		16.0%		0.071
Medusa	AUD 0.91		-40.9%		7.1%		0.106
Osisko	CAD 2.20		-69.6%		18.3%		0.381
Central Rand	ZAR 9.30		-54.7%		2.2%		0.286
Tamaya	AUD 0.02		-93.6%		0.0%		0.023
Gabriel	CAD 1.25		-65.8%		0.0%		0.341
Mintails	AUD 0.18		-75.8%		12.5%		0.101
Moto Goldmines	CAD 2.09		-65.7%		1.0%		0.196
Detour Gold	CAD 9.37		-63.1%		42.0%		0.449
Centamin Egypt	CAD 0.93		-41.9%		13.4%		0.874
Seabridge	CAD 13.80		-64.6%		6.2%		0.551
Gold Reserve	CAD 1.36		-77.3%		7.1%		0.083
Aurelian	CAD 4.37		-57.3%		43.3%		0.711
Avoca Resources	AUD 1.69		-42.1%		10.9%		0.402
St Barbara	AUD 0.20		-79.6%		11.1%		0.209
Jinshan	CAD 1.05		-67.4%		5.0%		0.184
Metals Exploration	GBP 0.14		-68.0%		5.8%		0.027
Mercator Gold	GBP 0.13		-86.2%		8.2%		0.014
Archipelago	GBP 0.24		-33.3%		17.5%		0.083
China Goldmines	GBP 0.77		-54.3%		0.0%		0.065
Cluff Gold	GBP 0.34		-69.8%		0.0%		0.058
Apex Minerals	AUD 0.34		-76.5%		4.7%		0.105
Gold Eagle	CAD 10.55		-16.3%		90.1%		1.203
B2GOLD	CAD 0.57		-77.6%		11.8%		0.099
Beadell	AUD 0.11		-78.0%		54.9%		0.008
Kimber	CAD 0.73		-63.1%		17.7%		0.045
Aflease Gold	ZAR 1.88		-49.5%		9.3%		0.123
Wits Gold	ZAR 83.95		-53.4%		1.1%		0.292
Uruguay Minerals	CAD 1.25		-66.2%		19.0%		0.065
Minera IRL	GBP 0.56		-26.3%		229.4%		0.061
Mineral Deposits	AUD 0.50		-67.9%		10.0%		0.193
Allied Nevada	CAD 4.72		-46.4%		12.4%		0.289
Bralorne Gold	CAD 0.75		-47.9%		25.0%		0.013
Buffalo Gold	CAD 0.11		-89.9%		4.8%		0.013
Cassidy Gold	CAD 0.16		-71.4%		0.0%		0.014
Colombia Goldfields	CAD 0.30		-80.5%		13.5%		0.029
Coral Gold	CAD 0.37		-75.2%		0.0%		0.010
Entrée Gold	CAD 1.78		-46.9%		33.8%		0.179
Exeter Resources	CAD 2.17		-63.3%		0.0%		0.116
Gitennes	CAD 0.14		-70.8%		33.3%		0.007
Golden Goose	CAD 0.27		-71.6%		0.0%		0.013
Grandview Gold	CAD 0.15		-89.3%		20.0%		0.006
Kirkland Lake	CAD 4.75		-67.5%		0.0%		0.283
MacMillan Gold	CAD 0.44		-60.5%		45.0%		0.029
Molycor Gold	CAD 0.08		-69.2%		14.3%		0.006
Moneta Porcupine	CAD 0.11		-60.7%		15.8%		0.012
Nautilus Minerals	CAD 1.40		-68.8%		6.1%		0.220
Navasota Resources	CAD 0.50		-41.9%		212.5%		0.030
PC Gold	CAD 0.55		-56.0%		0.0%		0.015
Queensland Minerals	CAD 0.14		-78.5%		0.0%		0.006
Rainy River	CAD 1.86		-68.7%		3.3%		0.115
Reunion Gold	CAD 0.35		-78.1%		25.0%		0.018
Searchgold Resources	CAD 0.06		-83.7%		10.0%		0.008
Skyline Gold	CAD 0.07		-76.7%		0.0%		0.005
Staccato Gold	CAD 0.11		-72.4%		16.7%		0.011
Sunridge Gold	CAD 0.36		-83.3%		12.5%		0.024
UC Resources	CAD 0.13		-83.3%		19.0%		0.014
Yukon-Nevada	CAD 0.17		-90.8%		47.8%		0.034
Tanami Gold	AUD 0.03		-83.3%		8.7%		0.024
Tasman Goldfields	AUD 0.10		-66.1%		43.9%		0.005
Focus Minerals	AUD 0.03		-80.0%		20.8%		0.029
Goldminex	AUD 1.53		-15.0%		104.0%		0.083
Leyshon Resources	AUD 0.36		-50.7%		1.4%		0.062
Regis Resources	AUD 0.17		-84.5%		54.5%		0.033
Goldstar Resources	AUD 0.10		-81.5%		17.6%		0.012
Gryphon Minerals	AUD 0.16		-80.0%		3.2%		0.015
Barra Resources	AUD 0.10		-80.8%		5.6%		0.017
Conquest Mining	AUD 0.23		-72.9%		0.0%		0.050
Hill End Gold	AUD 0.16		-70.2%		6.9%		0.035
Dioro Exploration	AUD 0.36		-86.5%		12.5%		0.020
Shield Mining	AUD 0.10		-75.6%		25.0%		0.004
Dragon Mining	AUD 0.04		-73.3%		0.0%		0.024
Zedex Minerals	AUD 0.12		-76.0%		20.0%		0.020
Red 5	AUD 0.04		-77.6%		0.0%		0.020
Adamus Resources	AUD 0.33		-62.5%		17.9%		0.038
Medusa Mining	AUD 0.91		-40.9%		7.1%		0.106
Hampton Hill	AUD 0.29		-50.0%		84.7%		0.030
Navigator Resources	AUD 0.22		-80.1%		10.0%		0.024
Keegan Resources	CAD 1.55		-73.5%		6.2%		0.047
Oromin	CAD 1.13		-72.8%		0.0%		0.079
Bear Creek Mining	CAD 2.06		-78.0%		0.0%		0.122
Austral Gold	AUD 0.17		-50.0%		21.4%		0.023
Atlantic Gold	AUD 0.14		-40.4%		33.3%		0.024
Lake Shore Gold	CAD 1.00		-55.8%		6.4%		0.187
Linear Gold	CAD 1.00		-69.7%		0.0%		0.030
Metallic Venture	CAD 0.62		-76.9%		10.7%		0.034
Mundoro	CAD 0.38		-71.2%		7.1%		0.015
Stratagold	CAD 0.05		-90.7%		25.0%		0.009
Tyhee	CAD 0.21		-75.0%		57.7%		0.037
Queenstown	CAD 1.52		-60.3%		0.7%		0.086
Miranda	CAD 0.40		-71.6%		0.0%		0.019
Mariana	GBP 0.05		-58.7%		5.6%		0.003
Tribune Resources	AUD 1.30		-41.1%		17.7%		0.053
Atna Resources	CAD 0.48		-75.3%		3.2%		0.043
Condor Resources	CAD 0.33		-81.1%		8.2%		0.008
Australian Solomons	CAD 0.26		-80.0%		18.2%		0.019
Brazauro	CAD 0.32		-65.0%		3.3%		0.029
NWM Mining	CAD 0.10		-61.5%		11.1%		0.010
Geoinformatics	CAD 0.03		-92.8%		0.0%		0.004
Hawthorne Gold	CAD 0.47		-80.5%		0.0%		0.015
Inter-Citic	CAD 0.53		-78.8%		0.0%		0.047
Int'l Tower Hill	CAD 1.35		-49.8%		13.4%		0.063
Midway Gold	CAD 0.88		-81.2%		2.3%		0.048
PMI Gold	CAD 0.17		-50.0%		73.7%		0.014
Verena	CAD 0.21		-59.6%		50.0%		0.022
Vior	CAD 0.08		-70.0%		25.0%		0.006
Developer averages/total			-66.7%		19.9%		11.852
Weighted averages			-63.3%		18.1%

Overall averages/total		-63.7%		14.7%		187.321
Overall weighted averages		-57.4%		2.6%
* 12-month
Source: market data; tables compiled by Barry Sergeant