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Monday, July 26, 2010

NovaGold (AMEX:NG), IAMGOLD (NYSE:IAG), Ivanhoe (NYSE:IVN) Down As Gold Prices Fall

NovaGold Resources (AMEX:NG), IAMGOLD Corporation (NYSE:IAG) and Ivanhoe Mines Ltd. (NYSE:IVN) all fell Monday, as gold tested the $1,180 an ounce mark, ending at $1,183.10 an ounce on the Comex division of the New York Mercantile Exchange.

With most economics seeming to be going against gold's grain, the relatively slow decline in price reveals the uncertainty of the market, and even though there is some risk appetite out there, it's not necessarily robust, for obvious global economic reasons.

Although investors were hailing the strong earnings and better-than-expected housing numbers, it isn't convincing, as there is nothing that is really surprising anyone, as the numbers for last quarter were expected to improve over their recessionary numbers from the year before, making everything look good this time around.

The current quarter is different, and we should see some weak numbers next time, although we're in the midst of this reporting season, so many investors aren't discounting that yet as it pertains to gold and equities.

Speaking of gold miners reporting for this quarter, the majority of them will be very strong, based on the strong gold prices last quarter, just like other commodity prices as well.

One thing I think will happen, and it could be any time, is gold prices are looking for an excuse to run, and investors are looking sideways at them, ready to plow money in them as soon as the negative news continues, which it will.

For now though, until investors realize the extraordinary threat the sovereign debt crisis in the European Union really is, and the joke that was the bank stress tests (which were a public relations ploy, not a true test), gold will continue to experience downward pressure, although probably at the incremental moves we've been seeing recently.

Gold miners like NovaGold Resources, IAMGOLD Corporation and Ivanhoe Mines Ltd. will perform in a similar fashion, although some, like Ivanhoe Mines, should do better than many of their peers.

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