A strange thing occurred at 2:00 PM Eastern Time on Thursday. While the price of the SPDR Gold Shares ETF (GLD) continued its free-fall, curiously the price of the Gold Miners ETF (GDX) jumped on high volume, adding 2.5% for the day.
My first reaction was that the abnormal divergence between the spot cost of the metal from the price of miners' shares must be due to some kind of quarter-end portfolio rebalancing. Upon further review of the day's news, I think the miners' revival may be the result of another impetus, which may continue to contribute support to miner stocks.
As the market opened, it appeared that gold was due for a "dead cat bounce" from drastic losses earlier in the week, and the Miners rebounded with the metal. However, by 1:00 PM, GLD had given back the gains and the miners were pulling back as would be expected. Near 2:00 PM a story was circulating on the newswire that the World Gold Council had issued new guidelines for analyzing gold mining companies. The WGC distributed "a Guidance Note on 'all-in sustaining costs' and 'all-in costs' metrics, which gold mining companies can use to report their costs as part of their overall reporting disclosure. The World Gold Council has worked closely with its member companies to develop these non-GAAP measures which are intended to provide further transparency into the costs associated with producing gold."
Finally, A Reason To Buy Gold Miners