What happened
After rising higher on each of the last four trading days, shares of Sandstorm Gold (SAND 1.71%) are giving back some of their gains today. While the general bearish sentiment sweeping through the market on Wednesday is motivating some investors to exit their positions, others are selling the stock in response to an analyst's revised price target and the falling price of gold.
As of 11 a.m. ET on Wednesday, shares of Sandstorm Gold were down 4.3%, mitigating their loss of 6.1% earlier in the day.
So what
Resuming coverage on Sandstorm Gold, Rene Cartier, an analyst at BMO Capital, rated the stock as outperform with a price target of $8. While the outperform rating is bullish, Cartier's price target of $8 is lower than his earlier target of $9. It seems that this less-auspicious view of the stock's upside is what's irking gold bugs today.
The other factor contributing to the stock's decline is the falling price of gold. With gold-oriented stocks like Sandstorm, there is a high correlation between the movements in the market price of the metal and those of the stocks. After climbing about 2.8% yesterday, the price of gold is losing its luster today, falling about 1%.
Unlike mining companies, Sandstorm Gold is a royalty and streaming company. In exchange for providing up-front capital to mining companies to help develop their projects, Sandstorm receives the right to purchase the mined metal at a discount or to receive a portion of the production.
Now what
During times of economic uncertainty, investors often choose to fortify their portfolios with gold stocks such as Sandstorm. Today, however, it seems the market is placing greater emphasis on an analyst's downwardly revised price target and the falling price of gold -- two things that should not figure prominently in the minds of those with long-term investing horizons.
