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Gold losing its glow?

Yesterday, gold futures dropped to their lowest price since the end of June, pulling gold producers down with them.

Today, Newcrest Mining Limited (ASX: NCM) joins a host of its smaller competitors panning for some relief after its share price downturn. Having recently announced that funding had been delayed for key projects, investors have again begun selling short Australia’s biggest gold producer. Despite shares having fallen over 3.5%, if this was your only exposure to gold stocks you could afford to be mildly happy.

Troy Resources Limited (ASX: TRY)(TOR:TRY), who last week confirmed a takeover bid of Azimuth Resources Limited (ASX: AZH)(TOR: AZH), has again been dealt a blow to its share price — down 6.25% today and a massive 33% since Wednesday last week.

With a portfolio of gold operating, development and exploration assets, OceanGold Corporation Limited (ASX: OGC) is in hot water and investors have realised it, selling the company down 8.00% today. Gryphon Minerals Limited (ASX: GRY) and Beadell Resources Limited (ASX: BDR), who are also involved in gold exploration and development, are also down 8.63% and 9.58% respectively.

Golden sale

After an operational update of its Murchison gold project in WA, Silver Lake Resources Limited (ASX: SLR) is down 11.22%. The project has a current resource of 20.5m tonnes at 2.9 g/t au for 1.9m ounces of gold. However, investors are still clearly worried about the future of gold producers. Since October there has been a golden sale of Silver Lake’s share price with shareholders selling it down from a high of $3.95 to its current price of $1.735, representing a loss of over 56%.

Foolish takeaway

Compared to shares, many believe gold is a safe haven, particularly in times of uncertainty. However in 2010, Warren Buffett spoke to CNN Money’s Ben Stein and had this to say about what he thinks is more important:

“You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all—not some – all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which would produce more value?”

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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