Sell bullion, buy gold stocks

The pricing of listed gold stocks is at an all time low vs. the dollar price of gold bullion.

Author: Barry Sergeant

Posted:  Wednesday ,08 Oct 2008

JOHANNESBURG - 

Hedge funds and speculators, in particular, have left lots of
wreckage across all lanes of the global resources highway, but as in
the case of any pile up that can be seen from outer space, there are
gems hidden all around and within the carnage. One of the finest ideas
that made landfall on Tuesday, following one of the worst days in
global credit, equity, commodity and currency markets history, was that
the pricing of listed gold stocks is at an all time low vs. the dollar
price of gold bullion.

Some specialist traders believe that first, gold bullion is poised
for a sharp correction back to physical demand support at USD 800 an
ounce from current levels around USD 775 an ounce, and that, second,
listed gold equities will rally in line with a broad based equity rally.

 

PRECIOUS METALS	USD/oz	From high*	From low*
Gold	875.50	-15.2%	20.4%
Platinum	998.15	-56.6%	7.5%
Palladium	200.75	-66.3%	3.7%
Silver	11.44	-46.4%	11.4%
* 12-month

 

Earlier on Tuesday, with gold bullion at USD 882 an ounce, and the
Philadelphia Gold and Silver (XAU) trading at 105, a ratio of 8.4:1 was
produced, an all-time extreme level, translating directly into the
message: "gold stocks cheap, gold bullion expensive". The world's 13
listed gold stocks that comprise the global Tier I grouping are
currently trading at a weighted average of 53% below peak prices, hit
just months ago.

The average explorer and developer, or junior, gold stock is trading
a massive 71% below price peaks, also seen just months ago. Some Tier I
names have suffered aggravated price losses due to regional issues:
Polyus, down on extreme turmoil in Russian equity markets; Zijin down
on the bursting of a general equities bubble in Chinese markets;
AngloGold Ashanti and Gold Fields, down on various South Africa
related, and Freeport-McMoRan, down on its exposure to copper, which it
ranks as its primary output. On the flip side of regional issues,
Australian dollar gold prices on Tuesday made 25-year records at AUD
1,210 an ounce.

This puts a positive light on Newcrest, currently one of the world's
top performing gold stocks, not least on the back of its Australian
dollar cost base, good sovereign risk, and growth story.
- Barrick, the world's biggest gold stock in terms of ounces mined, and also most
heavily capitalised, is also trading well, on its liquidity, balance
sheet strength, low sovereign risk, and relatively low base metal
revenue contribution.
-  Newmont is also trading well; it is the only
gold stock in the S+P 500, and offers the additional attractions of a
dollar cost base and unhedged gold production.

In more general terms, specialist traders believe that gold bullion
should be sold as the global credit markets thaw proceeds, and that
gold equities should be bought. It is fairly widely anticipated,
however, that gold bullion will head up to new highs in 2009,
surpassing its record dollar levels seen in March this year.

Global tier I gold stocks
	Stock	From	From	Value
	price	high*	low*	USD bn
Goldcorp	USD 26.31	-50.0%	16.1%	19.171
Polyus	USD 23.00	-71.3%	43.8%	4.384
Harmony	USD 8.44	-42.0%	32.3%	3.404
Lihir	AUD 2.35	-47.2%	38.6%	3.710
AngloGold Ashanti	USD 17.81	-63.7%	13.1%	6.245
Zijin	CNY 4.28	-80.5%	13.8%	6.448
Barrick	USD 31.33	-42.8%	20.4%	27.328
Newcrest	AUD 24.25	-40.1%	30.4%	7.930
Gold Fields	USD 7.48	-61.8%	18.7%	4.886
Kinross	USD 13.90	-49.3%	21.2%	9.847
Newmont	USD 34.66	-39.8%	7.4%	15.224
Buenaventura	USD 20.34	-52.6%	28.2%	5.591
Freeport-McMoRan	USD 42.98	-66.2%	15.1%	16.502
SPDR Gold Trust ETF	USD 86.71	-13.7%	20.5%	21.071
Tier I averages/total		-51.5%	22.8%	151.742
Weighted averages		-52.6%	19.1%
TIER II	Stock	From	From	Value
	price	high*	low*	USD bn
Zhongjin	CNY 32.00	-78.2%	40.4%	1.644
Iamgold	USD 4.53	-56.6%	7.8%	1.339
Simmer & Jack	ZAR 2.45	-62.6%	8.9%	0.294
Yamana	USD 6.67	-66.5%	13.4%	4.666
High River	CAD 0.47	-86.6%	38.2%	0.131
Eldorado	USD 5.27	-43.6%	9.8%	1.929
Agnico-Eagle	USD 46.75	-44.0%	18.0%	6.723
Centerra	CAD 2.89	-82.0%	25.1%	0.566
Randgold Resources	USD 35.91	-36.2%	16.1%	2.744
Shandong	CNY 37.00	-69.0%	40.2%	1.882
Peter Hambro	GBP 4.49	-73.4%	14.0%	0.640
Hecla Mining	USD 3.74	-71.6%	22.2%	0.477
Golden Star	USD 1.23	-71.9%	7.9%	0.263
Franco-Nevada	CAD 17.62	-29.4%	29.3%	1.600
Fresnillo	GBP 2.34	-59.3%	14.3%	2.955
JSC Polymetal	USD 3.10	-68.5%	0.0%	0.977
Red Back	CAD 4.95	-46.5%	73.1%	0.845
New Gold	CAD 3.65	-62.6%	6.7%	0.701
Northgate	CAD 1.08	-69.1%	3.8%	0.250
Tier II averages/total		-62.0%	20.5%	30.626
Weighted averages		-60.3%	18.3%
TIER III	Stock	From	From	Value
	price	high*	low*	USD bn
Western Goldfields	CAD 1.32	-68.0%	20.0%	0.163
Great Basin	CAD 1.59	-58.5%	16.1%	0.310
Sino Gold	AUD 4.57	-48.5%	54.9%	0.961
Alamos	CAD 5.63	-33.0%	29.1%	0.488
Highland	GBP 0.39	-84.5%	59.2%	0.223
PanAust	AUD 0.44	-64.8%	0.0%	0.457
Kingsgate	AUD 4.05	-35.7%	21.3%	0.272
Int'l Mining	CAD 3.30	-50.4%	26.0%	0.287
Allied Gold	AUD 0.27	-73.8%	10.2%	0.080
First Uranium	CAD 2.10	-82.5%	23.5%	0.249
Novagold	CAD 5.34	-73.7%	20.0%	0.509
Pan African	GBP 0.03	-67.1%	17.4%	0.065
Citigold	AUD 0.24	-53.0%	56.7%	0.125
Jaguar	CAD 4.89	-66.2%	7.0%	0.283
Pamodzi Gold	ZAR 0.99	-94.2%	10.0%	0.010
Oceanagold	AUD 0.35	-90.3%	1.4%	0.041
DRDGold	ZAR 3.65	-64.4%	8.3%	0.155
Central African	GBP 0.02	-94.6%	0.0%	0.007
Resolute	AUD 1.05	-59.0%	0.0%	0.212
Integra Mining	AUD 0.15	-79.6%	7.4%	0.040
Royal Gold	USD 35.74	-9.5%	34.7%	1.213
Chenzhou	CNY 8.52	-84.2%	13.4%	0.667
Aurizon	CAD 2.24	-58.7%	10.9%	0.300
Kazakh Gold	USD 4.70	-84.2%	0.0%	0.225
Gammon Gold	CAD 6.59	-43.9%	13.6%	0.714
Crew Gold	CAD 0.20	-90.0%	11.1%	0.094
Lingbao	HKD 1.78	-76.2%	28.1%	0.068
Zhaojin	HKD 4.18	-81.4%	38.9%	0.235
Rusoro Mining	CAD 0.41	-84.1%	0.0%	0.147
Minefinders	CAD 7.18	-48.9%	27.8%	0.324
Andina Minerals	CAD 1.10	-80.0%	22.2%	0.079
Crystallex	CAD 0.61	-81.9%	8.9%	0.163
Tier III averages/total		-67.6%	18.7%	9.165
Weighted averages		-68.1%	21.7%
DEVELOPERS	Stock	From	From	Value
	price	high*	low*	USD bn
Anatolia	CAD 1.80	-72.7%	40.6%	0.135
Andean	CAD 0.72	-67.9%	0.0%	0.209
Norton Gold	AUD 0.16	-76.3%	28.0%	0.040
European Gold	CAD 2.06	-71.4%	7.3%	0.334
Banro	CAD 1.84	-85.8%	75.2%	0.087
Greystar	CAD 0.80	-90.5%	-5.9%	0.033
Medusa	AUD 0.80	-48.1%	0.6%	0.084
Osisko	CAD 2.95	-59.3%	58.6%	0.432
Central Rand	ZAR 7.50	-63.5%	33.9%	0.209
Tamaya	AUD 0.01	-95.9%	0.0%	0.013
Gabriel	CAD 1.35	-56.7%	12.5%	0.312
Mintails	AUD 0.15	-79.9%	3.4%	0.075
Moto Goldmines	CAD 1.15	-81.1%	2.7%	0.091
Detour Gold	CAD 7.64	-69.9%	1.9%	0.310
Centamin Egypt	CAD 0.47	-70.6%	6.8%	0.374
Seabridge	CAD 16.01	-58.9%	24.3%	0.541
Gold Reserve	CAD 1.00	-83.3%	6.4%	0.051
Goldplat	CAD 0.10	-48.1%	26.2%	0.020
Avoca Resources	AUD 1.89	-35.1%	29.9%	0.381
St Barbara	AUD 0.26	-74.0%	41.7%	0.239
Jinshan	CAD 0.49	-84.8%	8.9%	0.073
Metals Exploration	GBP 0.08	-80.8%	0.0%	0.016
Mercator Gold	GBP 0.05	-94.9%	0.0%	0.006
Archipelago	GBP 0.13	-64.5%	0.0%	0.044
China Goldmines	GBP 0.56	-66.9%	0.0%	0.047
Cluff Gold	GBP 0.25	-78.2%	4.3%	0.042
Apex Minerals	AUD 0.41	-71.2%	86.4%	0.115
Semafo	CAD 1.00	-41.9%	37.0%	0.193
B2GOLD	CAD 0.50	-80.6%	10.0%	0.073
Beadell	AUD 0.08	-84.2%	29.5%	0.005
Kimber Resources	CAD 0.90	-54.5%	45.2%	0.051
Aflease Gold	ZAR 1.59	-57.3%	6.0%	0.094
Wits Gold	ZAR 40.00	-77.8%	4605.9%	0.126
Uruguay Minerals	CAD 0.95	-74.3%	18.8%	0.042
Minera IRL	GBP 0.53	-30.6%	151.2%	0.057
Mineral Deposits	AUD 0.50	-67.5%	11.1%	0.174
Allied Nevada	CAD 4.50	-48.9%	10.3%	0.233
Bralorne Gold	CAD 0.90	-37.5%	50.0%	0.013
Buffalo Gold	CAD 0.07	-93.6%	27.3%	0.007
Cassidy Gold	CAD 0.10	-82.1%	5.3%	0.007
Colombia Goldfields	CAD 0.16	-89.0%	3.2%	0.013
Coral Gold	CAD 0.28	-81.2%	0.0%	0.006
Entrée Gold	CAD 1.19	-64.5%	29.3%	0.101
Exeter Resources	CAD 2.07	-65.0%	18.3%	0.094
Gitennes	CAD 0.07	-85.4%	16.7%	0.003
Golden Goose	CAD 0.16	-83.2%	0.0%	0.007
Grandview Gold	CAD 0.14	-86.2%	35.0%	0.004
Kirkland Lake	CAD 5.14	-64.8%	26.9%	0.259
MacMillan Gold	CAD 0.22	-80.0%	10.0%	0.012
Molycor Gold	CAD 0.06	-78.0%	37.5%	0.003
Moneta Porcupine	CAD 0.08	-73.2%	25.0%	0.007
Nautilus Minerals	CAD 1.41	-68.6%	11.0%	0.187
Navasota Resources	CAD 0.33	-61.6%	106.3%	0.017
PC Gold	CAD 0.70	-44.0%	75.0%	0.016
Queensland Minerals	CAD 0.10	-84.6%	0.0%	0.004
Rainy River	CAD 1.46	-75.5%	12.3%	0.076
Reunion Gold	CAD 0.10	-93.8%	25.0%	0.004
Searchgold Resources	CAD 0.04	-89.1%	16.7%	0.004
Skyline Gold	CAD 0.07	-76.7%	16.7%	0.005
Staccato Gold	CAD 0.10	-73.2%	26.7%	0.009
Sunridge Gold	CAD 0.20	-90.7%	81.8%	0.011
UC Resources	CAD 0.08	-87.1%	23.1%	0.008
Yukon-Nevada	CAD 0.09	-95.1%	12.5%	0.015
Tanami Gold	AUD 0.01	-88.9%	28.6%	0.023
Tasman Goldfields	AUD 0.07	-76.8%	30.0%	0.003
Focus Minerals	AUD 0.03	-80.8%	4.2%	0.022
Goldminex	AUD 1.45	-19.4%	93.3%	0.070
Leyshon Resources	AUD 0.22	-68.8%	0.0%	0.035
Regis Resources	AUD 0.07	-93.6%	11.1%	0.012
Goldstar Resources	AUD 0.06	-88.0%	0.0%	0.007
Gryphon Minerals	AUD 0.14	-83.1%	8.0%	0.011
Barra Resources	AUD 0.08	-84.7%	0.0%	0.012
Conquest Mining	AUD 0.22	-74.7%	13.2%	0.042
Hill End Gold	AUD 0.14	-73.1%	12.0%	0.031
Dioro Exploration	AUD 0.54	-79.7%	80.0%	0.026
Shield Mining	AUD 0.09	-79.3%	6.3%	0.003
Dragon Mining	AUD 0.06	-61.3%	93.3%	0.031
Zedex Minerals	AUD 0.09	-77.5%	0.0%	0.018
Red 5	AUD 0.05	-73.5%	21.6%	0.021
Adamus Resources	AUD 0.28	-68.2%	0.0%	0.029
Medusa Mining	AUD 0.80	-48.1%	0.6%	0.084
Hampton Hill	AUD 0.26	-55.2%	65.6%	0.024
Navigator Resources	AUD 0.20	-81.8%	14.3%	0.019
Keegan Resources	CAD 1.31	-77.6%	14.9%	0.034
Oromin	CAD 0.82	-80.2%	0.0%	0.048
Bear Creek Mining	CAD 1.35	-85.6%	8.0%	0.068
Austral Gold	AUD 0.20	-41.2%	42.9%	0.024
Atlantic Gold	AUD 0.10	-59.4%	5.6%	0.014
Lake Shore Gold	CAD 0.92	-59.3%	7.0%	0.146
Linear Gold	CAD 0.85	-74.2%	13.3%	0.021
Metallic Venture	CAD 0.30	-88.8%	0.0%	0.014
Mundoro	CAD 0.33	-74.6%	46.7%	0.012
Stratagold	CAD 0.03	-94.4%	20.0%	0.005
Tyhee	CAD 0.17	-79.3%	41.7%	0.026
Queenstown	CAD 1.25	-67.4%	13.6%	0.060
Miranda	CAD 0.28	-79.3%	3.7%	0.011
Mariana	GBP 0.04	-68.5%	0.0%	0.003
Tribune Resources	AUD 1.25	-43.2%	38.9%	0.045
Atna Resources	CAD 0.40	-79.4%	5.3%	0.030
Condor Resources	CAD 0.18	-89.7%	0.0%	0.004
Australian Solomons	CAD 0.21	-80.0%	5.0%	0.013
Brazauro	CAD 0.30	-66.7%	36.4%	0.023
NWM Mining	CAD 0.06	-75.5%	50.0%	0.005
Geoinformatics	CAD 0.02	-95.2%	0.0%	0.003
Hawthorne Gold	CAD 0.36	-85.1%	9.1%	0.010
Inter-Citic	CAD 0.39	-84.6%	28.3%	0.029
Int'l Tower Hill	CAD 1.91	-22.0%	60.5%	0.076
Midway Gold	CAD 0.67	-85.7%	1.5%	0.031
PMI Gold	CAD 0.11	-66.7%	37.5%	0.008
Verena	CAD 0.10	-78.5%	25.0%	0.009
Vior	CAD 0.07	-72.0%	16.7%	0.005
Developer averages/total		-72.0%	63.6%	7.563
Weighted averages		-70.5%	22.1%
Overall averages/total		-67.7%	47.0%	178.026
Overall weighted averages		-58.4%	19.1%
* 12-month
Source: market data; tables compiled by Barry Sergeant