NEW YORK, NY -- (Marketwire) -- 03/27/13 -- Gold mining stocks have largely underperformed gold prices over the past few years. Gold prices fell below $1,600 an ounce Tuesday as strong U.S. economic data and news of Cyprus' bailout deal tarnished the metals safe haven appeal to investors. The SPDR Gold Trust ETF (GLD) has fallen roughly 4.5 percent year-to-date, while the Market Vectors Gold Miners ETF (GDX) has fallen roughly 20 percent over the same period. Five Star Equities examines the outlook for companies in the Gold Industry and provides equity research on Eldorado Gold Corp. (NYSE: EGO) (TSX: ELD) and IAMGOLD Corp. (NYSE: IAG) (TSX: IMG).
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"Investors are not really looking for safe havens at the moment," Eugen Weinberg, head of Commodities research at Commerzbank, said to Reuters. "Gold as inflation protection should get more demand from investors in the second half of the year. Right now, the market participants are looking for more yield and they're finding it in other asset classes like equities."
While investment demand for gold has slid, purchases from central banks have experienced a steady rise. Gold purchases from central banks in 2012 totaled 534.6 tons, a 48-year high. Official gold reserves of global central banks have surged from $2 trillion in 2000 to over $12 trillion last year, according to a report issued by the World Gold Council.
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Eldorado Gold has seven operating mines and a pipeline of projects in different stages of construction and development. By 2016, the company aims to produce 1.7 million ounces of gold. That's more than double their forecasted 2012 gold production of 660,000 ounces and equates to 160% growth over five years. Shares of Eldorado have fallen nearly 30 percent year-to-date.
IAMGOLD is a leading mid-tier gold mining company producing almost one million ounces annually from 5 mines on 3 continents. IAMGOLD operates in West Africa, the Guiana Shield of South America and Québec and has a pipeline of development and exploration projects. Shares of the company have nearly 40 percent year-to-date.
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