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Fox News: When will gold miners "get respect?"
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Mining Companies / Stocks
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TOPIC: Fox News: When will gold miners "get respect?"
Fox News: When will gold miners "get respect?" 1 Year, 9 Months ago Karma: 266
I was so surprised to see this sentiment expressed at this location that I simply had to share it with readers who come to this section, even if it is a little dated now...

Will Gold Miners Finally Get Some Respect?

It has been a long and hard road for gold miners. Despite another record performance for gold last year, miner stocks lagged the physical precious metal. Gold prices finished 2011 at $1,566.80 per ounce, representing a 9.3 percent annual increase. However, the Market Vectors Gold Miners Index fell 16.3 percent, and the Junior Gold Miners Index plummeted 38 percent. Although miners have underperformed bullion, recent earnings may finally cause a shift in sentiment and share prices.

Late Wednesday, Yamana Gold reported fourth quarter earnings of 25 cents per share, beating estimates of 24 cents. Revenues of $569 million missed estimates of $601.5 million, but still increased 6 percent from the fourth quarter of 2010. “We have sought to position Yamana as a predictable, reliable, low cost gold producer with significant resources and production growth. Our focus has been on generation of cash flow and free cash flow,” said Peter Marrone, chief executive officer. Some analysts continue to doubt the longevity of record high gold prices, but companies such as Yamana continue to capitalize. The company finished 2011 with $550 million in cash and cash equivalents, representing a $220 million increase from 2010. Year-to-date, shares of the Canadian based miner have surged 21 percent.

Don’t Miss: Do Central Banks Care More About the Dow or Gold?

Earlier this month, Goldcorp also reported impressive fourth quarter results. Adjusted net earnings came in at $531 million, compared to $431 million a year earlier. For the full year, the company earned $1.8 billion, which represents an increase of 80 percent from 2010. “Our record performance is the result of strength throughout the mine portfolio,” Goldcorp CEO Chuck Jeannes said in a statement. The company finished 2011 with cash and cash equivalents of $1.5 billion, compared to only $556 million at the end of 2010. After sliding almost 4 percent in 2011, shares of Goldcorp have increased 10 percent year-to-date.

Although some well-known investors such as Warren Buffett continue to downplay gold’s role in the global financial system, other investors are embracing the safe-haven. In the fourth quarter, David Einhorn of hedge fund Greenlight Capital highlighted the underperformance of miners. He said, “Throughout the course of this year, a substantial disconnect has developed between the price of gold and the mining companies. With gold at today’s price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk adjusted returns even if gold does not advance further. Of course, since we believe gold will continue to rise, we expect gold stocks to do even better.” As of December 2011, Einhorn holds 7.2 million shares of GDX and 1.9 million shares of GDXJ...
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