Precious Metals Shares Retreat, XAU Falls 0.9%

Gold and silver shares headed south on Thursday in conjunction with a sell-off in precious metals and a U.S. dollar rally.  The Philadelphia Gold & Silver Index (XAU) dropped 0.9% to 162.20 in afternoon trading, while gold and silver futures closed lower at the COMEX by 0.8% at $1,609.40 per ounce and by 2.2% at $27.65 per ounce, respectively.

Notable gold and silver producers moving lower included Randgold Resources (GOLD) and Silver Standard Resources (SSRI).  GOLD fell by 1.3% to $92.50 per share while SSRI slipped 2.3% to $11.74 per share.

One gold stock in the black on Thursday, however, was Allied Nevada Gold (ANV), which rose 0.4% to $29.84 per share.  GMP Securities analyst Craig West resumed coverage of ANV with a Buy rating and $57.50 price target following a period of research restriction related to Allied Nevada’s recent $400 million debt financing.

West wrote in his report that “We believe completion of the debt financing represents an important de-risking event for the company.  With an impressive growth profile, bottom quartile cash costs poised to fall further, a positive operating track record, and world class asset, we remain positive on the outlook for Allied Nevada.  We continue to believe that the company trades at a meaningful discount to peers on P/NAV and forward P/CF basis though see very good re-rating potential over a 1-2 year time horizon as expansion of Hycroft advances and risk continues to decline (permitting advancement, capital costs locked in, demonstrated growth).”

Pan American Silver (PAAS) made headlines after GMP’s West lowered his price target to $23.00 from $37.50 per share.  West did maintain his Hold rating, however.  Shares of PAAS fell 2.9% to $16.31 this afternoon.

The price target reduction came after “Pan American commented on the draft mining legislation proposed by the government of Chubut province of Argentina,” according to West.  “The long-awaited announcement of a law that could allow the development of the Company’s Navidad project proved disappointing, as the proposed royalties and government participation levels would render this key project uneconomic.”