Short Interest Shrinking for Barrick, Goldcorp

This set of figures indicates the market hasn’t left gold for dead, yet.

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler is Lead Advisor for Stock Advisor Canada. He is also the Chief Investment Advisor for Motley Fool Canada. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published April 19, 2013 6:38 am EDT

To test the market’s conviction in the recent sell-off that has occurred in gold-land, I had a look at the current short position against some of the big names that live in this sector. More specifically, it’s the change in this short position that was of real interest.

The basic assumption was that short positions across the sector should have increased since the meltdown began if the market has in fact convinced itself that gold and gold stocks are in a downward spiral. However, this doesn’t appear to be the case.

Tabled below are the results. The commodity, represented by the SPDR Gold Trust ETF (NYSEMKT: GLD), was included for some context.

Company Name	Short Interest (MM shs)	% Shs o/s	% Chg since Apr 1
SPDR Gold ETF (NYSEMKT: GLD)	15.4	3.5%	-39.2%
Barrick Gold (TSX:ABX,NYSE:ABX)	6.4	0.6%	-20.6%
Goldcorp (TSX:G,NYSE:GG)	4.1	0.5%	-15.2%
Yamana (TSX:YRI,NYSE:AUY)	6.5	0.9%	9.4%
Agnico-Eagle (TSX:AEM,NYSE:AEM)	1.6	1.0%	16.2%

Source: Capital IQ

We see that the commodity, along with the sector’s two biggest names, Barrick Gold (TSX:ABX,NYSE:ABX) and Goldcorp (TSX:G,NYSE:GG) have in fact seen their short interest shrink since the beginning of April. Mid-tier firms Yamana (TSX:YRI,NYSE:AUY) and Agnico-Eagle (TSX:AEM,NYSE:AEM) have experienced an increase.

In the context of total shares outstanding however, all of these short positions are very minor and unlikely to have impacted the stocks in a material way.

Foolish Takeaway

Because gold has historically been seen as a hedge against the world going bad, being long this sector was like shorting the rest of the market. Now that the commodity has lost some of its lustre, it will be interesting to monitor these figure to see if this behaviour changes with time.

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Fool contributor Iain Butler is short $32 July 2013 put options on Goldcorp, $14 June 2013 put options on Yamana and owns shares outright in Barrick Gold and Yamana. The Motley Fool has no positions in the stocks mentioned above.