NEW YORK (AP) â¿¿ Mining companies may be faced with difficult decisions about operations if gold prices retreat suddenly from recent highs, said a Standard & Poor's analyst Tuesday.
Lower gold prices could lead miners to curb new projects, close down expensive operations or cut dividend payments to investors, said Standard & Poor's Rating Services credit analyst Elad Jelasko.
The price of gold has risen nearly 11 percent this year, ending Tuesday at $1,734.90 per ounce on the New York Mercantile Exchange. The price of gold has climbed because some investors worry about inflation resulting from moves by the Federal Reserve to stimulate the economy. They consider investing in gold protection against rising prices.
The increase in gold prices has helped protect miners from rising costs for their own materials and higher investments in mines.But that could reverse course suddenly, as gold prices tend to be volatile, Jelasko said. If gold prices drop suddenly, large gold miners could "cope" for a year to 18 months, Jelasko said, as they have enough access to credit and low debt levels. But sustained low prices would lead to tough decisions for miners, including delaying mine projects. Shares of major gold miners edged up Tuesday. â¿¿ Barrick Gold Corp. rose 8 cent to close at $39.46. Shares have dropped 13 percent this year. â¿¿ Freeport-McMoRan Copper & Gold Inc. added 33 cents to $39.93, and is up 8.5 percent this year. â¿¿ Newmont Mining Corp. increased 64 cents to $52, and is down 13 percent in 2012. â¿¿ Goldcorp Inc. gained 13 cents to $42.29, and has lost 4.4 percent this year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV