Gold Stocks Rally as Gold Prices Rebound on Hopes of Aggressive Stimulus Measures
NEW YORK, 07/04/12 - Gold stocks rallied sharply Tuesday as gold prices rose to two-week highs on hopes that global central banks would take action to help spur economic growth. On Tuesday both the Market Vectors Junior Gold Miners ETF (GDXJ) and the Market Vectors Gold Miners ETF (GDX) increased 5.07 percent and 3.78 percent, respectively. Five Star Equities examines the outlook for companies in the Gold Industry and provides equity research on Gold Fields Ltd. (NYSE: GFI) and Yamana Gold Inc. (NYSE: AUY) (TSX: YRI).
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Analysts at Commerzbank in a recent note to clients stated that European Central Banks is expected to cut interest rates later this week to help ease the region's debt crisis, while China is expected to reduce their banks' minimum reserve-requirement ratios analysts.
Further easing from the Federal Reserve may be a possibility after U.S. manufacturing in June shrank for the first time in almost three years. "Over the last few weeks U.S. numbers have worsened a lot and this has brought about the probability of QE3 -- which is probably the most important reason for the market to believe in gold," said Eugen Weinberg a Commerzbank analyst.
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Gold Fields is one of the world's largest unhedged producers of gold with attributable annualised production of 3.5 million gold equivalent ounces from eight operating mines in Australia, Ghana, Peru and South Africa. The company recently reported that their entire KDC mine has been shut down after a fire broke out.
Yamana Gold recently reported that they have acquired Extorre Gold Mines Ltd for roughly $395 million. Extorre is a mining company with exploration and development stage precious metals projects, the most advanced of which is its Cerro Moro project, a high grade, gold and silver deposit with approximately 1.36 million ounces of gold equivalent indicated mineral resources and 1.05 million ounces of gold equivalent inferred mineral resources, located in the province of Santa Cruz in Argentina.
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