To enlarge, click and click again.
Having traded at the $80.00 level one of our favourite gold producers, Agnico-Eagle has been sold down to an unbelievable $21.70 today. If we back up a few months this stock price would have appeared to be a gift in terms of a buying opportunity. However times have changed rapidly and the global sell off in the equities market has hit gold stocks very hard even though gold itself remains at $723.20 as we write and is holding up better than a lot of other commodities.
Our strategy had been to acquire gold producers throughout the summer in anticipation of an end of year rally, which we partly completed. We do still have some ‘opportunity cash’ on the side lines but when and where to deploy it has become the most difficult of questions. It is very tempting to buy Agnico-Eagle right now and sit on it regardless of the whole de-leveraging process that has gripped the planet. The P/E ratio has come down to 27.16 which is something that we have not seen for a long time, granted there are other gold producers with lower P/E ratios but we have always regarded Agnico-Eagle as a top stock in terms of quality.
On BNN today John Ing, president and gold analyst, Maison Placements Canada, was reasonably upbeat about gold saying that this weakness is a purchase opportunity. If you can spare 6 minutes it is worth a watch just click here. He gives his own take on the current situation and expects gold stocks to be the first to recover once this ‘credit crunch’ works itself out. He also mentions Agnico-Eagle as being very attractive at these levels.
We were encouraged by John’s words, however we think it is prudent to wait and watch for signs of a turn around before we make any more acquisitions.
The chart above paints a sad picture for anyone holding this stock but a mouth-watering opportunity for those that don’t!
Maybe once the election is over things will settle down a little as the air of uncertainty about the presidency will have been removed, just a thought!
Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.
Got a comment – then fire it in.
To stay updated on our market commentary regarding gold, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter. Just click here.