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Here's Why SSR Mining Shares Soared This Week
Key Points
The company derisked its operations and is preparing to acquire stock for cancellation.
Investors are hoping the price of gold will decouple from the other asset classes in the future.
Shares in gold miner SSR Mining (NASDAQ: SSRM) rose by 19.9% in the week to Friday morning. The increase in the stock price is obviously good news for shareholders, and there are stock-specific reasons beyond the increase in gold prices this week. Still, investors buying into the stock and the sector on the basis that it would provide a haven would ultimately like to see some non-correlated performance before feeling fully confident in holding the stock.
Why SSR Mining's stock rose this week
As readers already know, there's plenty of evidence that speculative money flowed into gold and silver last year, even as demand destruction (notably in jewelry) due to high prices also emerged.
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As such, it's not surprising that gold has often traded in line with the equity market this year. When the broad market declines, investors often sell profitable liquid positions in other asset classes. That's fine and worthy, but it doesn't speak to the idea that gold is some safe port in a storm.
That said, the stock price rise is not just because gold rose; it also reflects the company derisking its operations by signing a definitive agreement to sell its 80% stake in a gold mine in Turkey for $1.5 billion. In addition, SSR Mining also received acceptance from the Toronto Stock Exchange to acquire (for cancellation) about 10% of its outstanding common shares.
What it means to SSR Mining investors
These developments help support the share price and focus the company on its core operations in the Americas. In addition, an analyst at the heavyweight financial company UBS raised his price target on the stock this week while maintaining a buy rating.
The combination of positive updates drove the stock higher this week and offered investors an excellent way to gain exposure to gold prices.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.