YOUR MONEY-Scary days panning for gold stocks
By Chris Taylor
NEW YORK, July 31 (Reuters) - The scary movie "The Conjuring" may be a winner at the box office this summer, but on Wall Street the real horror show is the gold mining sector.
And the numbers have been as grisly as any low-budget slasher flick.
The Market Vectors Gold Miners ETF stands below $27, producing a year-to-date slump of more than 40 percent. Major producers like Barrick Gold Corp and Newmont Mining Corp sputter near 52-week lows, and the sector's average price-earnings ratio - a common measure of valuing stocks - is about 75 percent below its 10-year average, according to London-based ETF Securities.
After one of the strongest bull runs in stock market history, with the Dow Jones Industrial Average up roughly 150 percent from its March 2009 lows, apparently cheap valuations in gold stocks are hard to come by these days.
The sustained punishment in the stocks is not without reason. The falling price of gold - it stands near $1,315 an ounce, down from a high of over $1,900 in August 2011 - has made the industry's economics very tough indeed.
But some analysts wonder whether we have seen the worst and better days might be ahead for beleaguered gold miners. Hedge fund manager David Einhorn of Greenlight Capital, for example, said this week he is buying gold mining stocks.
"The numbers are so bad that they're good," says Carter Worth, chief market technician for New York-based boutique investment adviser Oppenheimer & Co. "There was euphoria at the high, when gold was $1,900 an ounce, and now there is total despair." Continued...