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« Your Money Back If Gold Doesn’t Trade Above $1500 in 2011 | Main | How High Will Gold Go in 2011? »

Agnico-Eagle Mines Limited: Range Trading

AEM Chart 07 Jan 2011.JPG

We kick off with a quick look at the chart and as we can see it is not a pretty picture as Agnico-Eagle Mines Limited (AEM) is trading at the same price as it was in April 2008 despite golds advance. Having been one of our favourite gold producing stocks for some time we are disappointed to see it languishing at $69.76. Back in April 2008 Agnico was trading in the $70-$80 range and gold was trading sub $1000.00/oz and here we are with gold prices at $1367.50 as we write and Agnico cant manage $70!

Sp lets recap, Its Board of Directors has recently approved the payment of a quarterly cash dividend for 2011 of $0.16 per common share ($0.64 per year).  The first of these dividends will be paid on March 15, 2011 to shareholders of record as of March 1, 2011.  Agnico-Eagle has now declared a cash dividend to its shareholders for 29 consecutive years – Taken from a news release on 15th December 2010

Sean Boyd, Vice Chairman and CEO commented as follows:

"We are pleased to announce a 256% increase to our longstanding dividend.  As we continue to  grow our gold output and increase cash flows over the next several years, our goal is to further increase our dividend yield, "Furthermore, we expect our operations to generate sufficient cash flows to fund our internal mine expansions, the development of the new Meliadine mine project and investments in other growth and exploration initiatives,"

So it would appear that things are going really well at Agnico-Eagle as they are indeed going well with a number of other gold producers who are also not reflecting their success via their stock price. It could be just a question of timing and a number of commentators are calling for a dramatic rise in stock prices based on the simple fact that they are now generating fabulous profits.

However, this is not 1980 and there are other vehicles available these days that investors can use in order to participate in this precious metals bull market such as the Exchange Traded Funds etc. We have raised this question in the past through articles such as “Are Gold Stocks worth the effort: update 30th August 2010” we wont repeat the argument again but we do remain somewhat irritated by the lack action in the mining sector.

The HUI Index (The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index represents a portfolio of 14 major gold mining companies. The Index is designed to give investors significant exposure to near term movements in gold prices - by including companies that do not hedge their gold production beyond 1 1/2 years.) which currently stands at 531 is being touted to go much higher. Well we certainly hope that it does, however, the trek north needs to start in earnest and soon.

We will continue to hold our gold and silver producing stocks, including Agnico-Eagle, in the hope that they will gain the recognition that they deserve. But we are also aware that the past may not necessarily be repeated in terms of returns from the mining industry.

Agnico-Eagle is a Canadian-based gold producer with operations in Canada, Finland and Mexico, and exploration and development activities in Canada, Finland, Mexico and the U.S. Our LaRonde mine is Canada’s largest operating gold mine in terms of reserves. Agnico-Eagle has full exposure to higher gold prices consistent with its policy of no-forward gold sales. It has paid a cash dividend for 28 consecutive years.

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.

Agnico-Eagle has a market capitalization of $11.70 billion, a 52 week trading range of $49.64 - $88.20, a rather high P/E ratio of 39.21 on volume of 2-3 million shares traded per day.

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and we have 3 open positions which have reached their targets or thereabouts and will be closed shortly, taking back into a 100% cash position. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

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