Alcoa Inc (AA), Barrick Gold Corporation (USA) (ABX) & More: Stock Loses Luster Along With Gold

Following a week that saw the Dow Jones Industrial Average (Dow Jones Indices:.DJI) gain 275 points despite horrendous economic data, the index closed out Friday unchanged from the day before. The biggest loser on the day, however, was aluminum producer Alcoa Inc (NYSE:AA)‘s  stock, which pulled back 1.2%, putting it within striking distance of its 52-week lows again.

Although I’ve been (incorrectly) calling a top for a while now, perhaps it was the lack of consumer confidence as measured by the University of Michigan’s survey that finally did in the index’s inexorable climb. The survey plunged to 72.3 from 78.6, the lowest level in nine months, and said to be the biggest miss to expectations in the survey’s history. Of course, retail sales for March also fell, adding to the drumbeat of negativity we’ve seen, which is why the stock market’s continued rise is so incongruous. Apparently the Federal Reserve’s pumping of tens of billions of dollars into the economy, along with Japan’s recent opening of the floodgates, is all that’s necessary to artificially levitate the markets.

Alcoa Inc (NYSE:AA)

I maintain it’s all going to end badly, and sooner rather than later. In the meantime, commodities are getting crushed, and gold has officially reached bear-market territory, but Alcoa Inc (NYSE:AA)’s own earnings — and not just macroeconomic issues — have played a role in its performance since they were released. It may have beaten estimates for profits, but revenues came in weak and guidance seemed a head-scratcher, leading analysts to question whether the aluminum producer wasn’t wearing rose-colored glasses.

Commodities crushed
Since Alcoa’s unofficial kickoff to the earnings seasons, its stock is down 2%. Yet year to date it’s off 5%, a wide divergence from the overall performance of the Dow, which is up 13%, and that’s just a torrid pace that can’t be maintained.

As I mentioned before, though, gold is now in bear territory, having fallen 21% from its peak. It fell more than $63 an ounce on Friday, or more than 4%, to close trading at just over $1,500 an ounce (intraday it was as low as $1,480 an ounce). That’s a level it hasn’t seen since July 2011, as traders seek better returns elsewhere.

The consequence, however, is that precious-metals miners and streamers are being taken down, too. The world’s largest gold miner, Barrick Gold Corporation (USA) (NYSE:ABX) tumbled 9% yesterday, but it has the added problem of having its huge Pascua-Lama project in Chile being placed on hold as it looks at delays measured in months (at least) before it’s able to start up again.

The worst performer in the sector was NovaGold Resources Inc. (USA) (NYSEMKT:NG), which fell 13% yesterday as it scrambles to make sense of its Donlin Gold project in Alaska, the biggest known undeveloped gold deposit anywhere. The joint venture with Barrick Gold Corporation (USA) (NYSE:ABX) has essentially been in limbo since NovaGold Resources Inc. (USA) (NYSEMKT:NG)’s partner said last year it no longer made economic sense to pursue it.

About the only positive thing the miner can hang its hat on is despite the rising costs associated with the project and the falling price of gold is that Barrick Gold Corporation (USA) (NYSE:ABX)’s woes at Pascua-Lama might encourage them to return. It’s a slim hope to be sure, and that’s probably why the stock tumbled so hard. NovaGold Resources Inc. (USA) (NYSEMKT:NG) is running out of places to turn to.

Still a glittering opportunity?
While virtually every name in the precious metal fell yesterday in line with gold’s percentage drop, or worse, gold streamer Sandstorm Gold really took it on the chin, falling more than 8% despite reporting a few days earlier a sharp jump in proven and probable reserves at its Aurizona Gold Mine in Brazil. It represents one of the streamer’s best opportunities for the future, as it has the opportunity to buy 17% of the gold produced for the life of mine at $400 an ounce on an inflation-adjusted basis.

Like the miners it partners with, Sandstorm enjoyed a huge run-up in its stock price, only to have it come crashing down around it as gold prices tumbled. Shares are down 46% from their 52-week high and have lost more than 30% year to date. Because it’s a streamer, though, and not a miner, it incurs less risk than they do, even as it’s highly dependent on its partners to come through and fulfill their agreements. If they run into regulatory or other problems as Barrick Gold Corporation (USA) (NYSE:ABX) has, Sandstorm will feel the effects just as much.

Regardless, it seems Sandstorm should still be able to ride out the storm in gold, and the dramatic decline in its stock may prove an attractive entry point for investors.

The article Aloca’s Stock Loses Luster Along With Gold originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey owns shares of Alcoa. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!