What happened

After sinking more than 6% through 2020, shares of Kirkland Lake Gold (NYSE:KL) have followed the same downward trajectory in the beginning of 2021. Falling 7% in January, Kirkland Lake's stock subsequently tumbled 15% in February, according to data provided by S&P Global Market Intelligence.

Besides the falling price of gold, investors sold off shares in response to a bearish take on the stock from Wall Street.

Stacks of gold bars.

Image source: Getty Images.

So what

Since there is a strong correlation between the market price of gold and the price of gold mining stocks, it's unsurprising that shares of Kirkland Lake slumped in February. The average price of gold last month was $1,808 per ounce, representing a 3.1% drop from the average price of $1,867 per ounce in January.

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With the COVID-19 vaccine rollout ramping up last month and the fears of market volatility waning, investors seemed less compelled to broaden their exposure to gold -- that "safe haven" investment.

Another catalyst inspiring investors to exit their Kirkland Lake positions last month was news that JPMorgan had initiated coverage on the stock, assigning it an underperform rating and a $44 price target. While the underperform (or sell) rating caused shareholders consternation, it seemed much more concerning considering the fact that JPMorgan, at the same time, assigned overweight (buy) ratings to several other gold mining companies: Kinross Gold, Newmont Mining, and SSR Mining

Now what

Taking a cursory look at the recent performance of Kirkland Lake's stock, some investors may suspect that there's something fundamentally concerning about the company. But they'd be wrong. Rather than reflect a shortcoming in the company's performance, the stock's decline is largely attributable to the steep decline in the price of the yellow stuff. In fact, during its late-February fourth quarter 2020 earnings presentation, Kirkland Lake reported record annual gold production of 1.37 million ounces for 2020 and record annual free cash flow of $733 million. Consequently, investors looking to gain exposure to a leading gold mining company would be wise to consider a position in Kirkland Lake.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.