July 11, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of gold miner Goldcorp (NYSE: GG ) fell more than 10% today after the company reduced production guidance.
So what: In 2012, the company now expects to produce 2.35 million to 2.45 million ounces of gold, down from a previous estimate of 2.6 million ounces. The silver estimate was also reduced to a range of 30 million to 31 million ounces from a 34 million ounce estimate. Operational problems at two of the company's mines were blamed for the shortfall.
Now what: The reduced production will have a big impact on earnings in the second half, and it's unclear when production will resume at a higher rate. Seismic activity near Dryden, Ontario, and a water shortage in Mexico are causing the problems at the current time. I don't see a reason to buy the current dip and would be cautious about shares until we know when production will pick up again.
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