Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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