The Exchange

As Gold Halts Decline, Selloff in Miners Pauses

The Exchange

Precious metals miners were rebounding a bit Tuesday as gold and silver halted their decline, though the extent of the recovery wasn't matching the full force of the plunge in the prior session.

Gold futures were a horror show over the past two trading days, registering a drop the extent of which some traders had never seen. However, in recent action, gold was up $31.70, or 2.3%, to $1,392.80 an ounce. Silver was adding 39 cents, or 1.7%, to $23.75 an ounce a day removed from its own grim outing.

Worth noting here is that a Wall Street firm that last week said it was time to sell gold -- Goldman Sachs (GS) -- reiterated its continuing pessimism even in the wake of the severe pullback. According to a report in The Wall Street Journal, the firm is "maintaining our short."

View photo

.
Gold, Year to Date Chart: Courtesy FactSet

Only a day ago, shares of the miners were among the worst stocks in the equities market, with several hitting the lowest levels they'd seen in a year or more. However, most were in positive territory or at least stabilizing in the follow-up.

Large miner Barrick Gold (ABX), one of the biggest decliners Monday, was down again, though this time by only 12 cents to $19.66. Freeport-McMoRan (FCX) was tacking on 17 cents to $29.44, and Newmont Mining (NEM) was better by 40 cents at $34.32.

AngloGold Ashanti (AU) rose 1.2% to $18.52, while Goldcorp (GG) was up 1.1% at $27.94. Kinross Gold (KGC) rose 1.1% to $5.50, and Randgold Resources (GOLD) advanced 2.3% to $70.64.

[RELATED: Arizona Becomes Second State to Approve Gold and Silver as Legal Tender]

The SPDR Gold Shares (GLD) started the week with the steepest drop it's ever had in one day, falling 8.8% to $131.31. It was reclaiming some of that lost ground lately, rising 1.7% to $133.57. The iShares Silver Trust (SLV) was even better, up 3.3% at $22.83 in the wake of its 12.6% slide last time out.

Gold started the year around $1,676 an ounce, but coming into the day it had lost some 18% in 2013. Massive, panic-driven selling by big investors, easing worries about inflation, technical factors and other theories were at work when looking for a cause or causes behind the rapid drop, though gold maintains plenty of defenders who still believe its likely direction is up.

The action of course was affecting professional portfolios as well as the accounts of individual investors. Paulson & Co., the hedge fund run by John Paulson, has a significant interest in gold and miners, chief among those its 21.8 million shares of the SPDR Gold Trust, according to the most recent filing data available on FactSet. With the price of gold plummeting Friday and Monday, Paulson's GLD position would have been down $430 million. Around $63 million of that has been recovered with the exchange-traded fund's return to the green.

The firm also owns 28.2 million shares of AngloGold Ashanti and 9 million shares of Freeport-McMoRan. Those positions lost $59.8 million and $23.9 million, respectively, in the prior trading day, and regained $8.5 million and $2.1 million with the upticks Tuesday.

Greenlight Capital, the firm managed by David Einhorn, has 6 million shares of the Market Vectors Gold Miners ETF (GDX) and 1.97 million shares of Barrick Gold among its holdings. Einhorn would have lost $19.2 million Monday on the GDX, getting back $1.9 million this session. With Barrick, the two-day loss this week is more than $6 million.

George Soros' Soros Fund Management held 1.4 million shares of Freeport-McMoRan as of Dec. 31, along with 1.5 million shares of the GDX and 2 million shares of the Market Vectors Junior Gold Miners ETF (GDXJ). As would be expected, he was down on all three Monday but was getting a bit back in the current trading day.

Rates

View Comments (18)