gold prices

APPLE INC., $520.03, Nasdaq symbol AAPL, sold 33.8 million iPhones in the three months ended September 28, 2013. That’s up 25.6% from 26.9 million a year earlier. The gain is partly due to strong sales of its new premium 5S and lower-priced 5C models, which the company started selling just a few days before the end of the quarter. Strong demand in Latin America, the Middle East, Russia and India also contributed to the higher sales. As a result, Apple’s overall revenue in the quarter rose 4.2%, to $37.5 billion from $36.0 billion a year earlier. iPhones supplied 52% of the total....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on trading stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

EZCORP, Inc., $15.99, symbol EZPW on Nasdaq (Shares outstanding: 51.2 million; Market cap: $862.8 million; www.ezcorp.com), is a Texas-based company that operates pawnshops and payday loan stores in the U.S., Canada and Mexico. Through its pawnshops, EZCORP offers loans that borrowers must back up by offering personal property as collateral. These types of loans are commonly known as pawn loans. The shops also sell merchandise, mainly collateral forfeited through the company’s pawn-lending operations....

IAMGOLD $4.59 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold- .com; Shares outstanding: 376.6 million; Market cap: $1.7 billion; Dividend yield: 5.5%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.

In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories....

Kinross Gold, $5.07, symbol K on Toronto (Shares outstanding: 1.1 billion; Market cap: $5.6 billion, www.kinross.com), is a Canadian senior gold producer with nine operating mines in the U.S., Brazil, Chile, West Africa, Mauritania and Russia. Kinross is forecast to produce 2.4 million to 2.6 million gold-equivalent ounces in 2013. The company has a big base of mostly unexploited properties, but it has incurred major cost overruns and writedowns as it has tried to bring mines into production. Its biggest challenges are at its Tasiast gold mine in Mauritania, which it received as part of its $7.1-billion acquisition of Red Back Mining in 2010. Kinross is now postponing an expansion of Tasiast that it planned for 2014, and possibly one in 2015, as well....

Detour Gold, $8.78, symbol DGC on Toronto (Shares outstanding: 138.1 million; Market cap: $1.2 billion; www.detourgold.com), has finished building its Detour Lake mine in northeastern Ontario and aims to achieve full production soon. The company estimates that the mine will produce 260,000 to 320,000 ounces of gold this year. In 2014, with the project operating at full capacity, its output will likely exceed 576,000 ounces. That should generate cash flow as high as $2.68 a share. Over the mine’s 21.5-year life, the company expects its annual production to average 657,000 ounces....

NEW GOLD $5.78 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 502.5 million; Market cap: $2.9 billion; No dividends paid) has four operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico, the Peak mine in Australia and the just-completed New Afton mine in B.C. It also owns 30% of the El Morro copper/gold project in Chile and 100% of the Blackwater mine in B.C.

In the quarter ended June 30, 2013, New Gold’s cash flow fell 10.0%, to $0.09 a share from $0.10 a year earlier. Lower gold prices offset new production from New Afton, which started up in late 2012.

New Gold’s $855.5 million of long-term debt is a moderate 28.5% of its market cap. It also holds cash of $562.5 million, or $1.12 a share.
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IAMGOLD $4.59 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold- .com; Shares outstanding: 376.6 million; Market cap: $1.7 billion; Dividend yield: 5.5%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.

In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld.

In the three months ended June 30, 2013, IAMGold’s revenue fell 17.4%, to $301.1 million from $364.5 million a year earlier. Cash flow per share fell 10.0%, to $0.18 from $0.20. The declines were mostly due to lower gold prices, partly offset by a 10% production increase.
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The price of gold hit a peak a little more than two years ago, in August 2011, at around $1,900 an ounce. It has generally been falling ever since. It fell below $1,200 in July, and is now around $1,300. If you had that kind of movement in a broad stock market average, you might say that now is a good time to consider if that market has come down into buying territory. You might wonder if prices were ready to reverse course and resume a long-term rise. However, if you try to make that kind of assumption with gold, you have a lot less information to work with. After all, stocks have a relationship with various measures of value such as earnings, dividends, sales and so on. The history of these relationships ranges widely, but they still give you a basis for comparison. Not so for gold. It doesn’t produce any sales, revenue or earnings. In fact, it consumes rather than produces income, because you have to pay to insure and store it. Unlike stocks which represent a share in a profit-seeking enterprise, gold is a commodity, and a highly specialized one at that....

Royal Canadian Mint Gold Reserves Exchange Traded Receipts (ETRs), $14.00, symbol MNT on Toronto (Receipts outstanding: 30.9 million; Market cap: $455.5 million; www.reserves.mint.ca), are receipts issued by the Royal Canadian Mint (the Crown corporation responsible for the minting and distribution of Canada’s circulation coins) that let investors own gold bullion stored in the Mint’s vaults. The value of these ETRs varies with the price of gold. Investors can trade their ETRs on the stock exchange, or once a month they can redeem them for gold coins or bullion with a minimum purity of 99.99%. This requires a minimum of 10,000 ETRs plus redemption and fabrication fees for the gold coins or bars. Instead of physical gold, investors can choose to redeem their units for cash equal to 95% of the lesser of: a) the ETR price on the redemption date; or b) the volume-weighted average price of the ETRs for five trading days prior to and including the redemption date....