Gold Investing News

By Dave Brown - Exclusive to Gold Investing News

For investors, the beginning of September saw negative news flow coming in, largely by way of physical storms originating in the Atlantic Ocean, leaving behind a wake of destruction in the Gulf Region.

This week, however, saw a different type of storm originating closer to Atlantic Avenue, unleashing other forms of destruction on Wall Street. Demand for asylum from the financial tempest remained ravenous throughout the week as the instability spread to the money markets, while Treasury yields reached historic lows. Ending the tumultuous and rather historic week on Wall Street, the spot price of gold closed Fridayat US$872.90 per troy ounce, with many investors and observers still left with unanswered questions surrounding the solvency of some of the largest global financial institutions in the world.

Charles Nedoss, senior Accounts Manager and metals analyst with Peak Trading Group said, “There is nowhere else to park your money, so they are parking their funds in gold”. Long-term support for the metal was offered by the Australian commodities team at Goldman Sachs, which issued a thematic research commentary on Thursday, indicating that price risk for gold had moved strongly positive. The report highlighted the team’s preference for gold equity exposure to low cost production from companies with strong financials and a history of delivering operationally as more important than growth in the near term.

Long time Chairman and Chief Strategist of Harris Investment Management in Chicago and Chairman of Jones Heward Investments Don Coxe seemed to have his ‘finger on the pulse’ of events this week as his monthly publication, earlier this month, had advocated a tremendously accurate and timely portfolio strategy, “when the financials do roll over, gold and gold mining stocks should move swiftly back into favor. Inflation remains above central bank target levels in the U.S. and in many other countries across the world. Any return to pronounced weakness among the bank stocks will be strongly bullish for gold.”

Company news

On Thursday, Aura Minerals Inc. (TSX: ORA) announced drill hole results from its wholly owned Aranzazu Property in Zacatecas State, Mexico. These results include two additional zones on either end of the known extent of the current resource and the discovery of a new zone called the “BW Extension” which is proximal to the high-grade BW zone that Aura Minerals is currently developing as part of the 2009 mine plan. Patrick Downey, President and CEO of Aura Minerals, was bullish on the news, stating that the results, “continue to confirm our belief that the Property will be a large high-grade multi-metal underground operation”.

Analysts at Griffiths McBurney maintained a “buy” recommendation for Aura Minerals Inc., with a 12-month price target of CA$1.85 per share implying a 69.7 per cent premium to current valuations. The investment thesis focused on uncertainty with the additional drill results which remain to be reported as part of the NI 43-101 resource estimate offseting any changes to grade assumptions and tonnage. The analysts also indicate that the property currently represents just under 10 per cent of the implied net asset value for Aura, which tempers the impact for the overall valuation and estimate results which are expected before the end of the year. The stock finished the week very strongly, trading at CA$1.09, representing a 9 per cent increase from the previous day’s trading session.

Aura Minerals Inc. is a Vancouver based company focused on the acquisition, exploration, development, and operation of mining properties in Brazil and Mexico, with a market capitalization of CA$631 ml.