The gold miners continue to sink lower: Time to sell?

The market may be storming higher today after yesterday’s decline, but not all areas of the market are in positive territory.

Australia’s leading gold miners have tumbled lower amid concerns that rising rates in the United States could lead to a strong U.S. dollar, widening bond yields, and a weaker gold price.

At the time of writing the S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) is down 2%, compared to a 1.2% gain by the All Ordinaries. This has stretched its week-to-date decline to almost 5.5%

Here is a summary of what is going on in the industry at lunch:

  • The Evolution Mining Ltd (ASX: EVN) share price is down 4.5% to $2.70.
  • The Newcrest Mining Limited (ASX: NCM) share price is lower by 2.5% to $21.83.
  • The Northern Star Resources Ltd (ASX: NST) share price has tumbled 1.5% to $5.70.
  • The Perseus Mining Limited (ASX: PRU) share price is lower by 2.5% to 40.5 cents.
  • The Resolute Mining Limited (ASX: RSG) share price is down to $1.04.
  • The Regis Resources Limited (ASX: RRL) share price is down over 1% to $3.97.
  • The Saracen Mineral Holdings Limited (ASX: SAR) share price has fallen 1% to $1.41.
  • The St Barbara Ltd (ASX: SBM) share price has tumbled 3% to $3.59.

What’s next for the gold miners?

Whilst there may be some gold miners amongst the group that are now trading on fair multiples even for a lower gold price, I suspect that the majority of them could still fall further from here if rates rise quickly in the United States.

This is especially the case for Newcrest Mining, in my opinion. Even though its shares are 14% lower than their 52-week high, they still change hands at 32x trailing earnings. Which is in-line with some of the fastest growing tech shares on the local share market.

It may well be the highest quality gold miner that Australia has to offer, but I don’t for a second believe it is worthy of such a premium over the market-average. Especially if the gold price starts to fall. I think this could make it a good time to consider selling Newcrest shares if you own them.

Instead of investing in Newcrest or the other gold miners, I would suggest investors put their money into these potential market-beaters.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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