On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Evolution Mining Ltd (ASX: EVN)

According to a note out of UBS, its analysts have retained their sell rating and cut the price target on this gold miner’s shares to $4.90. The broker notes that Evolution has downgraded its production guidance after recent drilling at its Mt Carlton operation led to a reduction in its life of mine plan. In light of this and the short life of some of its assets, the broker doesn’t believe that Evolution’s shares deserve to trade at a premium to its peers. The gold miner’s shares are changing hands at $5.24 this afternoon.

Fortescue Metals Group Limited (ASX: FMG)

A note out of Citi reveals that its analysts have retained their sell rating and $11.70 price target on this iron ore producer’s shares. The broker believes the market is expecting too much from iron ore prices over the medium term. It suspects that prices will soften when steel production peaks and demand falls. And while the miner is busy with exploration activities, it doesn’t expect this to result in meaningful project development for a number of years. Fortescue’s shares are up at $13.98 on Tuesday.

Stockland Corporation Ltd (ASX: SGP)

Another note out of Citi reveals that its analysts have retained their sell rating and $3.21 price target on this property company’s shares. According to the note, the broker is concerned that its retail property assets could experience a sizeable decline in valuations in the short term. It also notes that Stockland has declared a distribution notably lower than its guidance and has indicated that its CEO will soon retire. The Stockland share price is trading at $3.67 this afternoon.

More reading

• ASX shares in danger? Why the gold price is creeping towards all-time highs
• Renewed US-China trade war puts these ASX 200 stocks in the firing line
• ASX 200 flat: Westpac tumbles, Woolworths reveals strong sales growth, Challenger sinks
• The A2 Milk share price is up 27% in 2020, but is it time to buy?
• These ASX stocks might be a better option than Carsales.Com

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kalamazoo Resources Ltd (ASX: KZR) share price is flying higher today on the back of an acquisition from Northern Star Resources Ltd (ASX: NST).

Yesterday, Northern Star announced its decision to divest the Mt Olympus Project, comprising most of the Ashburton Project in Western Australia, to Kalamazoo.

While Northern Star shares jumped 4% on the news, Kalamazoo shares were stuck in a trading halt and only resumed trading this morning. At the time of writing, the Kalamazoo share price has rocketed 42% to 69 cents.

Kalamazoo is a gold and base metals explorer. Its focus is on identifying commercial mineral deposits to explore at its Victorian gold projects and Western Australian gold-base metals projects.

What’s the deal?

Kalamazoo has acquired the Ashburton Gold Project, which is located on the southern edge of the Pilbara Craton in Western Australia.

The project produced 350,000 ounces of gold between 1998 and 2004. It currently holds a JORC Code (2012) resource estimate of 20.8 million tonnes at 2.5 grams per tonne gold for a contained 1.65 million ounces.

Under the terms of the agreement, Kalamazoo will pay Northern Star deferred contingent cash consideration of $17.5 million. This consists of:

• $5 million on mining of the first 250,000 tonnes of ore;
• A 2% net smelter royalty (NSR) on the first 250,000 ounces of gold produced, with a 0.75% NSR on any subsequent gold produced from the tenements; and
• The same NSRs on any other metals produced from the tenements.

Kalamazoo views the acquisition as an important addition to its Pilbara gold assets. And in a similar investment strategy to the acquisition of its flagship Castlemaine Gold Project in Victoria, the deal structure enables the company to invest funds directly “into the ground”.

The company believes the project has significant regional greenfields and brownfields exploration potential; a large drilling, geological, geochemical, and geophysical database; and numerous walk-up drilling targets.

The exploration team will be led by Kalamazoo director Paul Adams, who was previously the managing director of Spectrum Metals. Exploration focus will include an immediate review of the exploration datasets, field reconnaissance of identified prospect areas, and target generation.

Management commentary

Commenting on the deal, Kalamazoo chair and chief executive Luke Reinehr said:

“This is a tremendous outcome for our shareholders and an outstanding addition to our prospective portfolio of gold projects in the Pilbara. Kalamazoo is in the unique position of having major assets and tenure in two of the most highly rated gold exploration provinces in the world today – the Victorian Goldfields and the Pilbara.”

Meanwhile, Northern Star executive chair Bill Beament said:

“The Ashburton project no longer fits in Northern Star’s portfolio but still has strong potential on both the exploration and production fronts. The royalty structure also enables Northern Star to retain an exposure to the project.”

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why Austal, James Hardie, Northern Star, & Ramelius are storming higher
• A $73m boost sends the Austal share price to the top of the ASX 200 today
• 5 things to watch on the ASX 200 on Monday
• 5 ASX shares that would’ve made you a fortune in 5 years

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Kalamazoo Resources share price rockets 42% on Northern Star deal appeared first on Motley Fool Australia.

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The Gold price is on the rise!

The S&P/ASX 200 Index (INDEXASX: XJO) is having a pretty flat day so far. At the time of writing, the ASX 200 is flat after ‘sine-curving’ up and then back down this morning. But that’s not what has caught my eye in early morning trade.

Instead, it’s a very special metal of the yellow variety that has me choking my coffee this morning.

Yes, gold is on the move this week and are creeping towards all-time highs. In early trading this morning, gold hit US$1,760 an ounce for the first time since 2012. It has since pulled back slightly but is still sitting around US$1,750 an ounce at the time of writing.

Why is gold suddenly in demand?

This may seem to have come out of the blue, but gold had actually been in its own mini bull market for a while now. Since dropping below US$1,200 an ounce back in September 2018, gold has been steadily climbing since. According to macrotrends.com, the commodity rose nearly 19% in 2019 and are up another 13.5% in 2020 so far.  There was a moderate dip during the ‘rush to cash’ we saw during the March market sell-off, but this was quickly bought up and gold has resumed surging. We’re now just below the all-time high of U$1,896.50 that we saw back in 2012.

I think gold is in demand right now for several reasons. Many investors (particularly our friends over in the United States) are very worried about inflation. The US government has been ploughing an unprecedented amount of cash into financial markets over the last few months in order to shore up markets in the face of the coronavirus pandemic. This is keeping the markets afloat right now, but printing money usually leads to long term inflation if history is anything to go by. And gold is traditionally viewed as a good asset to hold during inflationary periods.

Low-interest rates are also a factor. Almost every advanced economy around the world right now has interest rates at 0% or very close to it (our own cash rate is currently 0.25%). Low-interest rates make using cash and debt instruments very unattractive s investments. Why bother buying a government bond when it yields you less than 1%?

That leaves property and shares as likely the only real assets worth holding right now. And if you’re worried about having all of your money in these ‘risky’ assets, gold is the only real alternative.

Foolish takeaway

Whilst some investors like to diversify their wealth with gold, I think it’s not really a path that most ASX investors should follow. Warren Buffett likes to say that gold has no real use or ability to generate wealth – it’s simply worth what someone else is willing to pay for it at any one time. That’s why he sticks with good-quality shares, and that’s why I think most ASX investors should follow his example.

Take heed, though. A rising gold price could indicate that investors are seeing trouble for the share market on the horizon. So just make sure you’re prepped for anything in this market!

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• Renewed US-China trade war puts these ASX 200 stocks in the firing line
• ASX 200 flat: Westpac tumbles, Woolworths reveals strong sales growth, Challenger sinks
• The A2 Milk share price is up 27% in 2020, but is it time to buy?
• These ASX stocks might be a better option than Carsales.Com

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX shares in danger? Why the gold price is creeping towards all-time highs appeared first on Motley Fool Australia.

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