When the price of gold started to wobble in February, we decided to exit our underwhelming buy advice on Highland Gold (HGM) - at that point the shares had slipped just 1 per cent. We argued at the time that precious metals prices were more likely to fall than rise over the near term, and that quickly proved prudent advice.
Indeed, gold went on to suffer its biggest ever one-day percentage price drop in 30 years in mid-April, and shares in gold miners of all stripes have been sold off in a hurry. Highland faces plenty of operational challenges, too. Specifically, the company suffers from ever-deteriorating gold grades, rising cash costs and hefty exposure to Russian political risk, not to mention the looming wind-down of its main MNV gold mine in 2016. However, Highland did deliver a strong performance during 2012. Total production rose 17.8 per cent in the year, while the price of gold received increased to $1,586 (£1,043) an ounce compared with $1,530 an ounce in 2011. But with gold now trading at $1,420 an ounce, the picture for 2013 isn't looking so rosy.