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Slammed: Northern Star Resources Ltd strikes out

Falling price for gold

Attention Northern Star Resources Ltd (ASX: NST) shareholders! Look away now…

Northern Star Resources Share Price

Source: Google Finance

Source: Google Finance

By midday today, shares in the $2.2 billion gold mining company had fallen more than 8%. While no company specific news has been released by the company, two analysts have lowered their expectations for the business.

According to Dow Jones Newswires, Citi analysts cut their price target 2.1% to $4.70 while Macquarie analysts downgraded the company to ‘neutral’ from ‘outperform’.

Another reason behind today’s share price fall, which appears more widespread across the gold sector, is the recent fall in the gold price.

Stronger sharemarkets in the wake of the Donald Trump presidency appear to have subdued investors’ fears, which is usually a catalyst for higher gold prices. EVOLUTION FPO (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) shares are down 7% and 5%, respectively, at the time of writing.

Foolish Takeaway

Two days ago Northern Star released a promising quarterly report, which reinforced its quality as a gold producer. Unfortunately, gold mining businesses are highly volatile and traded heavily by people with a short-term focus.

If I were going to buy any gold business I would choose either Northern Star or Newcrest, but I prefer to invest in less volatile companies with just as much — if not more — growth potential.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @OwenRask.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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