Though Agnico has done well over the last few weeks, it is still an under-performer compared to many of its peers. It has appreciated by around 28% from the lows, while many other gold mining stocks are up more than 40-50%. Gold has done quite a rebound over the last two months, and it seems that it has the momentum to go higher. On the other hand, the speed of the rise makes a case for a correction, which may be healthy for sustaining the uptrend. The good part is that gold has crossed psychological hurdles, which may provide support in case of a fall. The outlook is now that of cautious optimism, and the utter gloom has dissipated. Not to say that nothing bad can happen, but the sentiments are much better than how they were in June. Even Pershing Gold (PGLC), a development stage company, recently obtained more than $20 million in equity funding which indicates that people have faith in the long term outlook for the sector. Agnico has lower cost of production compared to the industry average of $1200 per ounce. Further, reduction in capital expenditure will help the company in reducing the all-in costs even further over the next few quarters. The high dividend yield is also another reason to own the stock. However, the debt had increased sequentially in Q2'13, and the cash had also reduced. Though the leverage is better than some peers, there is surely room for improvement on this front. In a stock specific market, cost and leverage may be important metrics to understand the relative risk profile of the companies. Agnico can to do better on both these fronts. Gold prices remain the key to long term sustainability of any rally. If the sentiments remain upbeat, then there will be more stock specific action.
Yes INVESTORA2z... to your post and primarily that 'gold prices remain the key to long term ...rally'. No doubt.
This hovering around $29.00 today will most likely not be bottom. The SYRIA 'thing' ...imho... will go to the United Nations and prolong any strike ( personally I dont think there will be a strike)...and GOLD will continue to drop the next couple of weeks...along with any of the mining stocks. If I am correct... then AEM will fall to 28.00 or maybe even 27.50ish...hold steady and that be my new entry level. Good Luck.