Gold rally saves Colorado stock index from a Brexit beating
Brexit fears sent investors scurrying for safe havens, including gold mining shares, a rush that saved an index of Colorado stocks from another underperforming quarter.
The Bloomberg Colorado index, a price-weighted basket of 74 stocks based in the state, rose 3.4 percent in the second quarter. That outpaced a 1.4 percent gain in the Dow Jones industrial average, a 1.9 percent gain in the S&P 500 and a 0.6 percent gain in the Nasdaq composite.
The first part of the second quarter was about as close to business as usual for the markets since early 2008, said Garvin Jabusch, chief investment officer at Green Alpha Advisors in Boulder.
The end of the quarter was anything but normal, especially after U.K. voters unexpectedly voted to depart from the European Union. Global stock markets fell hard for two days before jumping back up and dusting themselves off.
Once the hyperbole wore off, investors realized they had overreacted and started buying. But some also hedged their bets by holding onto gold-related investments.
“What you have in a Brexit is a symptom of the real risk, which is widening inequality,” said Jabusch.
Vista Gold, a gold developer headquartered in Littleton, saw its shares triple in price, making it the state’s top-performing stock in the second quarter.
Beyond renewed investor interest in gold, Vista’s 301.6 percent rise was driven by the company’s Mt. Todd gold project near Darwin, Australia. The mine, which is further along in permitting that other competing projects, has an estimated 5.9 million ounces of gold in reserves.
Gold prices are now near the point needed to obtaining financing to get the project into production, Vista Gold’s chief financial officer Jack Engele said.
Newmont Mining, based in Greenwood Village, saw its shares rise 47.2 percent, making it the state’s top performing large-cap company, while Royal Gold shares were up 40.4 percent.
The oil price recovery was another big theme during the quarter. Gevo, a Douglas County biofuels maker, gained 118.5 percent, while American Midstream Partners, a Denver natural gas processing, and transportation company, was up 70.9 percent.
At the other extreme were shares of Warren Resources and Real Goods Solar, which suffered declines of 86.8 percent and 72.1 percent respectively. Warren Resources, an oil and gas producer that recently relocated to Denver from New York, filed for bankruptcy protection on June 2, crushing what little market value it had left.
Real Goods Solar, by contrast, continued its long-running punishment of investors. Shares of the Louisville solar energy service provider have fallen from a split-adjusted price of $1,680 in March 2014 to $4.08.
More surprising was the poor showing of CPI Card Group, a Littleton-area maker of chip debit and credit cards. Shares were off 39.2 percent, including a 21 percent single-day drop on May 12.
The company told investors it would make about a fifth less in revenues this year than it had forecast in December due to a slower-than-expected conversion to chip cards.
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