By Alastair Sharp
TORONTO (Reuters) - Shares of Canada's biggest gold miners plunged on Monday, dragging the country's main stock index to a five-month low as weaker-than-expected Chinese data prompted investors to beat a wholesale retreat from bullion and a string of commodities.
The resource-rich index fell 2.7 percent, its sharpest selloff since June last year, to close at its lowest level since Nov 16.
Barrick Gold Corp (Toronto:ABX.TO - News), the world's biggest producer of gold, plunged 11.5 percent to C$20.30 as the precious metal headed for perhaps a record single-day loss of more than $100 an ounce.
"Gold has completely lost its value in terms of the stock prices of gold companies," said Barry Schwartz, portfolio manager at Baskin Financial Services. "Gold companies used to trade for two or three times net asset value. Those days are gone."
And with supply and demand fundamentals unlikely to support bullion in the same way they would support a commodity with industrial uses, another asset manager said the metal's price could fall by another $250 to around $1,100 an ounce, the average incremental cost to get it out of the ground.
"Gold is all about animal spirits," said John Stephenson, a senior vice president at First Asset Investment Management. "You can't put a price on it."
With resource stocks making up around 40 percent of the weight of the Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), the index took the commodity price swoon harder than most, although U.S. indices were also sharply lower. (.N)
The TSX index closed 332.71 points lower at 12,004.88.
OIL, COPPER JOIN GOLD'S RETREAT
Investors, already reeling from bullion's fall at the end of last week, also retreated from other commodities including copper and oil after China undershot expectations with first-quarter growth of 7.7 percent. China is the world's top metals consumer.
Brent crude sank below $101 a barrel, a nine-month low, while copper hit its lowest price since October 2011 as the Chinese data reinforced fears about the global economic outlook.
"The prices of these commodities are falling as though China is growing at 3 percent," Schwartz said. "It's a complete over reaction."
"Whenever you have some nervousness in the market, some bad news like that on the headline definitely accelerates things in the short term," said Youssef Zohny, portfolio manager at Stenner Investment Partners of Richardson GMP.
The sharp falls in a gold sector already straining under rising costs could prompt some miners to rethink their capital spending.
And even the 20 percent decline so far this year in the S&P global gold index (.SPTTGD), made up mostly of Canadian miners, might not entice value investors into the space.
"It's a falling knife for gold, it may be the mother of all buying opportunities but I'm not taking that bet right now," First Asset's Stephenson said.
"It's a tug of war," Stenner's Zohny said. "Valuations across the sector seem to be pretty attractive, especially relative to the rest of the market, however there is quite a bit of fear when you see such fast downward momentum."
(Reporting by Alastair Sharp; Editing by Leslie Adler and Chris Reese)