Sell Kinross Gold (KGC) in my long-term Jubak Picks 50 portfolio
My ideal gold mining investment would be a company that was expanding gold production and that was keeping costs low.
Kinross Gold (KGC) only fits half that description, which is why I sold it out of my Jubak Picks 50 long-term portfolio http://jubakpicks.com/jubak-picks-50/ on Friday, January 13. See my post http://jubakpicks.com/2012/01/13/10-stocks-for-10-years-2012-edition-my-annual-update-of-my-long-term-jubak-picks-50-portfolio/on January 13 for all the changes to the portfolio. (Today, January 17, shares of Kinross Gold fell 18.8% after the company announced that it would record a goodwill writedown on its Tasiast mine in Africa. Kinross acquired the mine as part of a 2010 acquisition of Red Back Mining. As of September 2011 the project had a book value of $7.1 billion of which $4.6 billion was goodwill.)
For the third quarter Kinross gold reported production of 648,000 gold-equivalent ounces, a 13% increase from the third quarter of 2010. That’s exactly what you’d like to see at a time of rising gold prices.
But production costs soared. Read more
Sell Kinross Gold (KGC)
A rising tide lifts all ships, true. But not all to the same extent.
The huge rally in gold to new historic highs day after day has largely left Kinross Gold (KGC) behind. True, the stock is up 9% as of the close on November 11 from its recent low at $18. But in that same period shares of Goldcorp (GG), a Jubak’s Pick on November 5, is up 22%. (For my buy on Goldcorp see my post http://jubakpicks.com/2009/11/05/buy-goldcorp-gg-2/ )
Unfortunately, I don’t think the problems at Kinross Gold that have led to this under performance are easily fixed. So I’m going to take the gain from the rising tide, sell Kinross at an overall loss with this column, and look for a ship that’s better able to float with the tide.
What’s the problem at Kinross Gold? Read more
