Gold Investing News

By Dave Brown - Exclusive to Gold Investing News

With most of Wall Street getting hammered this week by the consequences of the Freddie Mac and Fannie Mae episode, the continuing subprime mortgage legacy and Texas being pounded by Hurricane Ike, the epicenter for the gold industry was Denver, Colorado.

Politicians gave way to industrialists and capitalists of the precious metal, as the Queen City of the Plains transitioned itself from being the host of the 2008 Democratic National Congress to becoming the host of the 2008 Denver Gold Forum. As hundreds of gold mining executives, portfolio managers, institutional investors, analysts and media were onsite at the Denver Hyatt Regency, most of the developments worth following for gold investors this week had their genesis in the hotel premises.

The spot price of gold rose in Friday’s trading session to close the week at US$765.50 per troy ounce as the U.S. dollar declined against the euro. This current valuation is up to 2.6 per cent over the previous day’s trading session. A number of analysts have come out with bullish comments on the relative attractiveness of current valuations including a report from Deutsche Bank that said, “Precious metals may be the first of the five broad commodity markets that might stabilize from the extreme correction that has occurred in the second half. This reflects the possibility that dollar strength will start to fade as we enter into the fourth quarter.”

Company news

Vancouver-based junior exploration and mining company Desert Gold Ventures Inc. (TSXV: DAU) received a “buy” recommendation from the team of analysts at Fundamental Research Corp on Thursday. The company is committed to the exploration and development of the Goldbanks project, located in the historically producing mercury belt on the southern extent of the Getchell (gold) Trend in Nevada. The analysts believe that the value of the company is dependent on the success of drilling, expansion, and the determination of favorable resource estimates, which to date have an inferred oxide and sulfide resource of 556,700 ounces of gold with 90 per cent occurring as oxide mineralization. Shares of the company fell to a 52-week low on Friday of CA$0.52, as the market did not appear to respond positively to the analysts’ recommendation. The team had stated a price target for Desert Gold Ventures Inc. of $1.10 which would imply a 110 percent discount to current valuations.

The mining and minerals team at Wellington West Capital Markets reiterated a “buy” rating on Kirkland Lake Gold Inc. (TSX: KGI) on Thursday. The report is the product of a material change in the management structure of the company, due to the appointment of Mark Tessier as Vice President of Operations. The report asserts that key leadership personnel with an industry track record can often result in higher quality applicants and attracting experienced underground miners. Additional support for the company included the belief that excess capacity was not being utilized at the mine, and that higher throughputs with less dilution should improve profitability and share price over time.

The market responded very positively to these developments as the stock price closed at CA$6.00 which represents a 25.0 per cent increase to the share price. The team at Wellington West Capital Markets has set a price target at CA$10.00, implying a 66.7 per cent premium to the current share price.