Gold, Silver Shares Dip but Outperform Precious Metals

Shares of most gold and silver mining companies inched lower on Monday amid weakness in the broader equity markets and a sell-off in precious metals.

The Philadelphia Gold & Silver Index (XAU) – which is on a six-week winning streak – dipped 0.5% to 191.03 in afternoon trading.  However, the decline was less than both gold and silver futures – which in electronic trading fell by 0.8% to $1,757.90 per ounce and by 2.1% to $33.95 per ounce, respectively.

As for the broader markets, the S&P 500 Index – which last Friday reached a four and a half year high of 1,474.51 – moved lower by 0.5% to 1,458.82.

Notable gold producers in the red today included Goldcorp (GG) and Agnico-Eagle Mines (AEM) – which slid by 0.5% to $45.99 and by 0.6% to $51.06 per share.  Shares of AEM retreated despite positive commentary from UBS analyst Brian MacArthur, who raised his price target to $56.00 from $54.00 but maintained his Neutral rating.

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MacArthur based his target increase in large part on Agnico-Eagle’s improved production outlook, particularly at its Pinos Altos mine in Mexico.

The UBS analyst also noted that “AEM recently approved the US$158M La India project in Sonora, Mexico (~70kms from their Pinos Altos Mine) which is scheduled to reach commercial production in H2/2014. AEM expects the mine to produce ~90kozs of gold per year at a total cash cost of US$500/oz. We note that exploration continues at the nearby Tarachi deposit which could create an additional source of production.”

Among silver stocks, Coeur d’Alene Mines (CDE) dropped by 0.5% to $28.38 while Silver Wheaton (SLW) slipped 1.6% to $38.70 per share.