Fresh bloodletting among gold mining stocks – by Frik Els ( – July 27, 2015)

Hedge funds bet record 340 tonnes the gold price will continue to fall as bears rip into majors – Barrick falls to 1989 level, Goldcorp at 11-year low

Renewed fears about Chinese equity markets after the worst points loss in Shanghai for eight years gave the gold price a lift on Monday.

But the metal continues to trade close to five-year lows after settling at $1,093, up only $7.40 from Friday’s close. An earlier move above the psychologically important $1,100 level turned out to be brief. A return to its recent dip below $1,180 would represent a 50% retracement of the metals 12-year bull run.

The gold market has turned overwhelmingly bearish with so-called managed money investors such as hedge funds going short – placing bets that the gold price will decline – to the tune of 12.1m ounces or 340 tonnes, a new record high.

According to the Commodity Futures Trading Commission’s Commitment of Traders data for the week to July 21, large speculators now hold a net short position for the first time since at least 2006, when the data was first being tracked.

A positive gold price could not stop the bleeding among gold mining stocks with renewed selling pushing the sector to fresh-multiyear and sometimes multi-decade lows.

The sell-off was led by Barrick Gold Corp (NYSE:ABX, TSE:ABX), the world’s top producer of the metal, which tumbled 5.1% to the lowest in USD terms since November 1990. More than 33m shares changed hands, double the usual daily volume for the share.

Barrick’s market value has nearly halved just over the last three months and is now worth $8.5 billion in New York. That compares to a $64 billion capitalization when gold was at $1,900 in 2011. Barrick’s gold production is expected to fall to between 6.2m – 6.5m ounces as it disposes of underperforming assets to tackle its crippling debt-load of more than $13 billion.

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