Gold Stocks (GDX) Steady, Outlook for Platinum Improving

GOLD STOCKS NEWS – Gold stocks held firm amid a widespread equity sell-off on Friday as the Market Vectors Gold Miners ETF (GDX) inched higher by $0.11 to $41.70 per share.  The stability in gold stocks and the GDX came as COMEX gold futures rose $2.60 to $1,583.00 per ounce in mid-day trading.  Gold stocks in Canada also remained in positive territory, as the S&P/TSX Global Gold Index advanced 0.3% to 282.30.

Gold stocks substantially outperformed the broader equity markets, as the S&P 500 Index fell 0.8% to 1,364.92.  The weakness was driven by renewed sovereign debt concerns in Europe after the ten-year Spanish bond yield climbed back above 7% and Spain’s benchmark equity index – the IBEX – tumbled to a five-week low.

However, despite today’s fractional rise in gold stocks, the GDX has continued to languish in recent weeks.  Thus far in July, the gold stocks ETF is down by 6.9%, and by 18.9% on a year-to-date basis.  This compares quite unfavorably to the price of gold, which is lower by just 1.0% in July and up by 1.1% in 2012.

With gold stocks continuing to lag the yellow metal, investors have continued to seek out other areas of the commodities complex.  One metal that was recently the subject of bullish commentary was platinum, after London-based firm Sharps Pixley issued a positive forecast on it.

In its report, the precious metals firm wrote that “Since 1970 platinum typically commands a 30% premium over gold – currently platinum is trading at a significant discount reflecting weak global industrial output and modest investor interest – meanwhile the supply pipe line remains thin and with speculator interest on the lows, a short covering rally is a distinct possibility.”

Sharps Pixley went on to say that “We see the possibility of significant platinum price gains on South African production shortfalls, on improving investor sentiment and on re-building of physical platinum stocks amongst industrial clients – in advance of a recovery on the economy in late 2012. Unfashionable though it is to say so, we see scope for brighter economic prospects during late H2 2012 and we see platinum and palladium as some of the strongest performing commodities for the year.”

While there are many gold stocks traded across the globe, there exist only a small number of publicly-traded platinum companies.  One company that has been in the news of late, however, is Platinum Group Metals (PTM.TSX, AMEX: PLG), which has made substantial progress this year at its suite of projects in South Africa.  This morning, Platinum Group Metals announced exploration results from drilling conducted on property included in its Sable Joint Venture. The Sable property was acquired by Permit Applications as part of Platinum Group’s successful new business initiative.  Sable is located at the eastern end of the Western Limb of the Bushveld Complex, at the urban edge of Pretoria in South Africa.

The emerging platinum company reported that 6,400 meters (m) of diamond drilling has been completed at Sable, and that a mineralized layer “New Reef” has been intersected at 129m with a thickness of 4.25m and a grade of 1.96 g/tonne 3E comprised of platinum, palladium and gold.  In addition, Platinum Group Metals noted that the UG2 Reef has also been intersected on Klipfontein at 1,945m with a thickness of 2.05m with an average grade of 2.64g/tonne 3E.

Last month, Platinum Group Metals announced that it is proceeding with plans to finance and complete the WBJV Project 1 Platinum Mine and expand its Waterberg discovery – both in South Africa – in-line with previous guidance.

In early afternoon trading on Friday, notable gold stocks in the black included GDX components Agnico-Eagle Mines (AEM) and Royal Gold (RGLD).  AEM advanced by 1.3% to $37.78 and RGLD by 2.8% to $74.47 per share.

Platinum Group Metals noted that all exploration work thus far on the Sable JV has been funded by Sable Platinum Holdings (Pty) Ltd, and completed by Platinum Group Metals geologists and field crews.  Sable has completed approximately Rand 9.57 million (C$1.19 million) of a Rand 42 million (C$5.2 million) obligation for 51%.