Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Gold Stocks Biggest Buying Opportunity in 25 Years

Commodities / Gold and Silver Stocks 2013 Feb 02, 2013 - 10:20 AM GMT

By: Investment_U


Mike Kapsch writes: Don’t look now but gold stocks are cheap, really cheap.

Just take a look at this chart:

(*Proven gold reserves calculated with gold price at $1,655/oz.)

Today, a number of major gold miners trade for even less than the actual amount of gold they have on hand. That excludes probable reserves.

It also leaves out any other mineral reserves these companies have. For instance, Goldcorp produces silver, copper, lead and zinc – in addition to gold. Meanwhile, Yamana also mines silver, copper, zinc and molybdenum.

The bottom line: Right now could be one of the best buying opportunities you’ll ever find for some of the world’s biggest gold miners.

In fact, as The Wall Street Journal reports, “The price of an ounce of gold today would buy more stock in gold-mining companies than at any point in a quarter century.”

But what has kept gold stock valuations so low? And what makes gold stocks a worthy investment to consider today?

Let’s get to the details.

The Downside
Last year, Nick Holland, CEO of Gold Fields Limited (NYSE: GFI), explained why gold stocks have underperformed in recent years at the Melbourne Mining Club. He said…

1.Miners have not met production promises: Among the world’s eight largest gold miners, production is down 2% since 2006.
2.Margins are up, but nowhere near the rise in gold prices: While the spot price of gold has increased about 20% annually over the past decade, miners have only expanded margins by 8%.
3.Companies spend more to produce less: Capital expenditure on a per ounce basis has gone up 32% over the past 10 years.
4.Management has failed to deliver: A lot of balance sheets at major gold firms have been under pressure because of gold hedges (i.e. selling future gold production at fixed prices), as well as overruns on projects.
5.Dividends have to increase: Currently, gold stocks only average dividend yields of around 1.8%. Simply put, that’s not enough for today’s income-crazed environment.
6.Investors are punishing the industry with re-ratings: The gold industry used to trade a significant premium to other sectors. Today, the gap has narrowed and investors have sold off their holdings due to the lower multiple ratings.
Holland also mentioned gold ETFs as part of the reason gold stocks have had limited upside in recent years. But all is not lost.

The Bright Side
On the other hand, here’s what makes gold stocks a compelling investment opportunity for 2013.

1.Demand for gold is rising: The World Gold Council expects gold demand will pick back up in 2013 after a sluggish 2012, thanks mainly to India and China.
2.Gold production is projected to jump: Compound annual production growth is expected to hit 6% through 2017. For 2013, Goldcorp already pushed its production estimate up by 10%. As long as companies can follow through on their production promises, this will be a plus for gold stocks.
3.Central banks are still printing money: From the United States to Europe to even Japan now, central banks are printing money to stimulate economic growth. And this is pushing other central banks, like China’s, India’s, Brazil’s and Russia’s, to boost their gold reserves in an attempt to hedge their downside risk.
4.Supply is limited: According to Kinross Gold, all the gold produced in the history of the world would fit into two Olympic-sized swimming pools. In other words, this stuff doesn’t grow on trees!
5.Gold prices are expected to spike: Despite spot prices falling in recent months, most analysts expect gold prices to test new highs long before they ever hit triple digits.
6.Gold stocks are a contrarian bet: Four out of the five gold companies mentioned in the chart above are down double-digit figures over the past two years. Any positive news could catapult share prices higher.

A Final Word
Chief Investment Strategist Alexander Green and Senior Analyst Steve McDonald both believe gold stocks will outperform gold prices in 2013. I agree. And adding a few of the best gold stocks to your portfolio today could prove very lucrative over the next 12 months and beyond.

Good Investing,


P.S. One of our favorite ways to play gold mining is through streaming, or royalty, companies. These businesses aren’t exposed to the high costs of production and avoid the volatile swings in the market. Instead, they earn a reliable income stream on gold mined at their properties. For more about them and two of our favorite companies in the space, click here

by , Investment U Research

Copyright © 1999 - 2013 by The Oxford Club, L.L.C 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 Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email:

Disclaimer: Investment U Disclaimer: Nothing published by Investment U 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 investment 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 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 - 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

6 Critical Money Making Rules