Precious Metals Take a Nasty Fall as We Ring in the New Year

(Continued from Prior Part)

The current rout in precious metal prices has extended to the mining sector. The fall in gold and silver of 10.6% and 12.1%, respectively, has made the mining sector anemic, as seen in the Market Vectors Gold Miners ETF (GDX). GDX fell a whopping 25.7% in 2015. Most of the mining companies that are components of GDX fell hard in 2015. The Market Vectors Junior Gold Miners ETF (GDXJ) also took a steep fall of 19.9% in 2015.

Let’s concentrate now on the performance of South African mining companies in 2015.

Major South African mining companies such as Sibanye Gold (SBGL), Gold Fields (GFI), and AngloGold Ashanti (AU) have fallen 20%, 391%, and 192%, respectively, so far in 2015. The fall was most likely due to the sharp fall in the prices of precious metals that these companies mine.

All three companies are trading at a significant discount from their next 12-month target price. The coming year may bring a ray of hope for these miners. Even though these three stocks are trading above their 20-day moving averages, a possible rebound in prices could be expected as 2016 sets in.

Sibanye Gold and Gold Fields are trading at a premium of 9.3% and 1.5%, respectively, from their 100-day moving averages. AngloGold Ashanti is trading at a discount of 7.7% from its 100-day moving average. This could suggest that AngloGold may have a faster rebound in prices compared to the other two companies. GDX and GDXJ are trading at a discount of 4.7% and 4.8%, respectively, from their 100-day moving averages.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Precious Metals Take a Nasty Fall as We Ring in the New Year
• Part 2 - Silver Swings Up and Down after the Fed Meeting
• Part 3 - Stronger Dollar, Weaker Gold and Oil