Very simply, the rotation from precious metals and in particular, Gold and Silver to equities is what we are experiencing today. Gold stocks have done nothing in 2 yrs and patience has run out with divestment taking place and moving into the fire hot equity mkt. With no dividends to speak of for most gold stocks and NewGold there is little reason to sit and park dead money. Gold is weak and with all the money printing I would have expected Gold to be at $1800+ but no such luck for Gold, at least not yet. The bottom line is simple: if the gold space cant give the investor the lift he needs, he's taking his money elsewhere! I expect ongoing weakness until we start seeing contrary indicators (economic) that will rain in the recent parade with equities. Until such time, prepare for much pain ahead and I only hope the extreme sell-off stops at some point because if we test $7.50 again, it wont be pretty for any NewGold shareholder.
If you ask me, the management at NewGold has one goal: maximization of shareholder value- last two yrs have been dismal. If they cant increase or support the stock price without a dividend given that 13' appears to be a strong FCF yr with almost $500-$600 MM in free cashflow then I suggest they start paying a dividend and kill the short interest in the meantime and support their share price. At the moment, there is little support for NewGold and now we are getting institutional money starting to bail on the sector. Sure, how long will they stand for terrible returns? This isnt a love in with the gold miners. If you cant produce a competitive return, why stay ? I surely hope we get some stabilization and with upcoming production / operational results forthcoming, I hope we dont get more surprises to the downside. I am long NewGold but loosing patience with this story and management ....In the end, you can blame the sector for a while but it will always come to company specific issues and NewGold needs to change the plan to at a minimum stabilize the share price because its trading like a technology company. For disclosure purposes: I am long NewGold.