What was once considered the safest of safe havens has been under attack of late, and certainly not because the world has grown less volatile (case in point, the deadly events in Boston this week). Gold prices fell Monday of this week, seemingly without a parachute, resuming a downward trend that affected markets in every facet of financial life, in just about every geographical region.
Gold prices hit a record high in 2011 as investors sought protection against economic turmoil and market uncertainty, but the metal has lost much of its allure since then as stock markets rallied and risks to global growth receded.
The price fell below $1,400 U.S. an ounce in mid-April, or about 18% lower than in its first trading session of 2013.
Not that the prognosticators have helped; Goldman Sachs cut its 2013 forecasts to $1,545 U.S. an ounce from $1,610 and its 2014 forecasts to $1,350 from $1,490 U.S. In February, Goldman slashed its 2013 forecast to $1,550 U.S. Goldman made a further move on Tuesday, in the wake of the huge gold slump, to cut its short-term gold call to $1,400 U.S., adding it likes natural gas better as a safe haven.
One of the heavy hitters in the gold industry has felt the brunt of that decline. Toronto-based Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) fell from its once comfortable perch as Canada’s biggest gold miner, its shares docking about 30% since April 5 -- more than 10% of their value Monday alone -- having seen one of the most harshest selloffs in the precious metals sector as the price of bullion started to collapse.
Part of the decline in recent days was pegged to the mining giant suspending work on its huge Pascua-Lama gold and silver project in Chile.
Wednesday of last week, the gold giant announced that the company is suspending construction work on the Chilean side of the Pascua-Lama project while working to address environmental and other regulatory requirements to the satisfaction of Chilean authorities.
That decision arose from a court order related to allegations of pollution of groundwater and rivers in a desert area.
Meantime, according to company literature, "activities deemed necessary for environmental protection will continue as authorized."
The company has circled Wednesday, April 24 as the day for its next financial report, revealing first-quarter results, before the markets open that day, which should have the resource-heavy TSX on edge for days afterwards.
On Thursday, Barrick shares lost more ground, albeit just one Canadian cent, to $18.16 on Bay Street, just a sliver above its 52-week intraday low of $17.98, set the day before. It’s a fair hike from the halcyon days of last June, when the stock peaked for the last 12 months at $44.75 Canadian. On Wall Street, Barrick actually gained ground, picking up five cents to $17.70 U.S., just before the close. The stock is moving in a 52-week range in U.S. dollars of $17.51 to $43.30.
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