Best of the Week
Most Popular
1.Dow Stock Market Trend Forecast 2015 by Nadeem Walayat - Nadeem_Walayat
2.Gold And Silver – Forget The News. Silver $12 – 14? Gold $1,000 – 1,100? 5 - Michael_Noonan
3.A TOP Formation In Apple Inc. - Crash Condition Signal Recorded - David Harris
4.Gold Gets Safe Haven Bids But COMEX Has Stopping Power - GoldSilverWorlds
5.The Swiss 10-Year Bond Illustrates Central Banks` Flawed Monetary Policy - EconMatters
6.Exponential Explosions in Debt, the S&P, Crude Oil, Silver and Consumer Prices - DeviantInvestor
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.Is Russia Planning a Gold-Based Currency? - Marcia Christoff-Kurapovna
9.Stock Market Trend Forecast 2015 Video - Nadeem_Walayat
10.Gold GDX ETF Technical Analysis - Austin_Galt
Last 5 days
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15
"Audit the Fed"? We've Already Done That (Well, Kind of) - 26th Feb 15
Forget Peak Oil; Worry About Peak Demand - 26th Feb 15
Currency Wars, Again - 26th Feb 15
The Fed Waited Too Long: Here Comes Inflation - 26th Feb 15
Investing Inertia Won’t Keep Your Cash Safe - 26th Feb 15
The Net Neutrality Scam - 26th Feb 15
Will Conservatives Out of Control Immigration Crisis Boost UKIP Election 2015 Prospects? - 26th Feb 15
EU Warns Ireland and Euro Zone of Debt Dangers - 26th Feb 15
Commodity Prices Set To Plunge Below 2008 Lows - 26th Feb 15
Ukraine Hyperinflation as Currency Plunges 44% in One Week! - 26th Feb 15
The State of the Global Markets 2015 - 53 Page Report - 26th Feb 15
NASDAQ New 15 Year High - Stock Market Death By Overdose - 25th Feb 15
12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - 25th Feb 15
Sugar Commodity Price To Sweeten Up - 25th Feb 15
Investor Profits from China 2,000-Year Unstoppable Trends - 25th Feb 15
How to Borrow Cheaply from a Government-Owned Bank - 25th Feb 15
Debt Be Not Proud - 25th Feb 15
Liberal Democrat Election Blood Bath - Could Nick Clegg Lose Sheffield Hallam? - 25th Feb 15
Wheat Commodity Price Technical Trend Forecast - 24th Feb 15
Bitcoin Price Might Stay below $250 - 24th Feb 15
Another Important Stock Market Inflection Point Approaching - 24th Feb 15
Gold: The Good, Bad, and Truly Ugly - 24th Feb 15
Eurozone Gold Holdings Increase to 10,792 Tonnes As “Reserve of Safety” Amidst Crisis - 24th Feb 15
Bird Doo; Yellen Goes to Congress - 24th Feb 15
Is Gold Investing Risk Free? - 24th Feb 15
The Bull Case For Gold Price 2015, and the Bear - 24th Feb 15
Europe - The Intersection of Three Crises - 24th Feb 15
Gold Price Just Needs More Time - 24th Feb 15
Gold Price Downtrend Looks Set to Continue - 23rd Feb
Silver Price Depressing Downtrend Will Eventually End - 23rd Feb 15
5 Reasons Why You Should Sell Amazon Stock - 23rd Feb 15
Global System Catastrophe Is Key Threat To Human Civilisation - 23rd Feb 15
Greece Crisis Yields Ideal Market Opportunities - 23rd Feb 15
Gold and Silver Stocks or General Stock Market Indices? - 23rd Feb 15
Swimming With Sharks: Goldman Sachs, Schools and Capital Appreciation Bonds - 23rd Feb 15
Stock Market - The Fed Still Has Your Back - 23rd Feb 15
Soybean Commodity Price Technical Outlook - 23rd Feb 15
Gold Weekly COTs and More - 23rd Feb 15
Stock Market New Highs With Weak Breadth - 23rd Feb 15
Greece Surrenders to Troika - 22nd Feb 15
This Greek Tragedy is a Global Farce - 22nd Feb 15
Copper Commodity Price Technical Outlook - 22nd Feb 15
U.S. Dollar and Investing in Gold Stocks - 22nd Feb 15
Is Putin's Russia Ready For Total Economic War With the West? - 22nd Feb 15
Stock Market New All Time Highs - 22nd Feb 15
Dow New Stock Market All time High as Greece Surrenders to Germany - 21st Feb 15
Gold And Silver – Banker’s Grip On Precious Metals Not Over! - 21st Feb 15
What Uber Could Teach the American Economy - 21st Feb 15
The Morris Massey Stock Market - 21st Feb 15
Are Conditions Setting The Market Up For A Summer Washout? - 21st Feb 15
The Seven Financial Indicators of Highly Successful Biotech Stocks Investing - 21st Feb 15
Varoufakis’s Revolutionary Plan for Europe - Don't Tell Anyone in Berlin - 20th Feb 15
South Korea’s Keynesian Experiment Goes Global - 20th Feb 15
How Germany Can Save Greece and the EU - 20th Feb 15
Beware the Stocks Bear Market! - 20th Feb 15
Gold Bides Time – Massive Complacency Regarding Ukraine, Greece and Debt Crisis - 20th Feb 15
The Simplest Long-Term Investment Strategy You'll Ever See - 20th Feb 15
Greece Crisis - Germany Rejects Greek Trojan Horse Bridge Financing Loan Con - 20th Feb 15
UK Political Party Funding Suggests Another ConLib General Election Outcome 2015 - 20th Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

Gold Mining Stocks: Now is the Time to Buy

Commodities / Gold & Silver Stocks May 31, 2012 - 12:52 PM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleDon Miller writes: There are lots of reasons you should own some gold. Despite taking a recent breather, gold prices are still up by 139% in the last five years.

Even so, shares of gold mining stocks have suffered lately, hurt mainly by higher energy and exploration costs.


In fact, the stocks of the large gold miners have become nearly as undervalued as they were during the 2008 financial crisis.

The last time shares of these big gold producers were this cheap, they rallied by 283%.

At these levels, that means it's time to take a closer look at shares of big gold miners - while they are still a bargain.

Here's what you need to know...

The Gold Bull Market is Not Over

A number of factors point to higher prices for gold:

•Real interest rates remain in negative territory. Sitting in cash right now is a losing proposition.
•The austerity movement in Europe is being replaced with more fiscal easing. The European Central Bank may have to print trillions of euros of debt to keep the Eurozone intact.
•The odds of more fiscal stimulus in China and the U.S. have increased, as two of the world's largest economies struggle to gain traction.
•Despite healthy demand and rising prices, global production of the metal rose just 0.7% annually from 1999 through 2011.

Combined with aggressive gold-buying binges by China and other foreign governments moving away from the U.S. dollar, the stage is set for the price of gold to rally.

Indeed, a report from Morgan Stanley (NYSE: MS) earlier this month declared the bull market in gold remains firmly intact.

Gold Mining Stocks Are Oversold

That is typically good for gold mining stocks.

After all, as the price of gold goes up, gold stocks typically move even higher. When gold prices rallied in 2009 and 2010, gold stocks tracked right along with them.

But the two parted company in 2011. While spot gold moved higher for the 11th straight year, gaining 10% -- gold stocks plunged by 16% last year.

That trend accelerated in 2012. After peaking at $1,900.03 last September, gold bullion prices fell by roughly 21% to $1,486.

Meanwhile, gold stocks, as measured by the Market Vectors Gold Miners Fund (NYSEArca: GDX), plunged by as much as 41%.

In fact, the gap between the two has widened to almost historic highs.On May 1, gold stocks were trading 29% below where they normally would trade according to John Doody of the Gold Stock Analyst.

The only time these stocks have ever traded at a greater discount to gold was in the October 2008 crash, when they traded at a 34% discount.

On top of all that, sentiment surrounding the gold sector is extremely negative.

The Hulbert Gold Newsletter Sentiment Index, which measures the exposure recommended by short-term gold market timers was recently negative for 29 straight days -- longer than any other stretch in history.

In other words, how investors view gold is about as negative as it can get.

"Gold traders' increasing impatience has led even more of them to throw in the towel - which, in turn, is why contrarians are confident that gold's next major move is most likely up," Mark Hulbert told Money News.

Bottom line: the upside potential for gold shares clearly outweighs the downside risk.

Gold mining stocks are badly oversold.

Prices Start to Rally

Meanwhile, gold stocks are finally starting to outperform the metal itself. GDX is up 15% in the past two weeks, even as spot prices have gained only 2.5%.

If gold prices bounce back to $1,900, the index could nearly double.

Besides GDX, you may want to take a look at a few of the largest gold miners. These are well-diversified companies with a collection of mines in several countries to mitigate risk.

Shares of the world's second largest producer, Newmont Mining Corp. (NYSE: NEM), just bounced off their 52-week low and trade at just eight times projected 2013 earnings.

NEM pays a 2.9% dividend, tied to the price of gold. Newmont's profit went from $4.7 billion in 2009 to almost $6.5 billion in 2011. The price of gold contributes heavily to its bottom line.

The opportunity to invest in undervalued gold mining stocks is a rare occurrence in a gold bull market.

The last time it happened was four years ago and shares rose 283%. Take advantage while you can.

Source :http://moneymorning.com/2012/05/31/gold-mining-stocks-now-is-the-time-to-buy/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014