Newmont Mining Corp (NEM), Kinross Gold Corporation (USA) (KGC): Why Cyprus May Save the Gold Market

Is it too soon to leap?
While the Cyprus bailout – which has been clearly explained as a model for future occurrences – poses significant risk to the global economy, shorter-term concerns are driving the market. A strengthening dollar is one of the primary culprits for the weakness being seen in the gold market. The SPDR Gold Trust (ETF) (NYSEMKT:GLD) is down roughly 6.5% on a year-to-date basis, while miners are down even more. Newmont Mining Corp (NYSE:NEM) is down about 15% this year, but has several positive factors working for it. A strong growth profile is helping the stock to address the rising production costs facing the entire market. Kinross Gold Corporation (USA) (NYSE:KGC) , for example, faces the same pressure but pays half the dividend yield at 2%, relative to 4.1% for Newmont Mining Corp (NYSE:NEM).

The immediate downward pressure on gold is too severe to warrant jumping in quite yet, but beware of the next EU economy to face problems. Additionally, as more investors and non-EU institutions get a handle on their EU exposure, gold has the potential to gain support. This is not the only factor driving gold, but it is one not to overlook.

The article Why Cyprus May Save the Gold Market originally appeared on Fool.com.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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