The Globe and Mail reports in its Saturday edition the long-term gold price is making the charts of gold companies resemble a barfing camel. The Globe's David Milstead writes the "vomiting camel" may be a new pattern in technical analysis. It looks like two humps, a neck-like downward trend, and then a sharp drop that resembles a rapid regurgitation.
It was not so long ago sell-side analysts were "stress-testing" their models of miners' earnings and balance sheets by plugging in a low of $1,200-an-ounce gold. Now, with the metal failing to hold that level (it closed Friday at $1,169.80), the analysts are using $1,100 and $1,000 in their models.
Below $1,100 per ounce, "equity value erodes," RBC analyst Stephen Walker says, rather kindly.
Gutsy -- or crazy -- enough to double down, or even get into gold stocks for the first time?
While the biggest, Barrick Gold also has the most debt. Most analysts have a "hold" or "sell" on Barrick, which gets credit for its low-cost performance, but analysts' focus remains on its debt. Analyst Jorge Beristain at Deutsche Bank says he is "increasingly concerned" about Barrick's ability to get its balance sheet to a position of strength given gold's price trend.
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