Gold stocks for current investment

bluelobster

Ok I realize many of you only buy the physical metal but other than numismatic coins i usually buy any exposure to natural resources through the securities market.

I'm out of gold stocks now other than a more speculative name in Cardero CDY, but the mining stocks are starting to look cheap to me. I've been eyeballing Yamana and am tempted. I've owned Royal Gold and think it's one of the better royalty plays but I'm looking at a pure mining play now. Any other more established mining stocks that look good to some of the gold investors here now, I know a few of you guys like RR and codhok and some others do buy mining stocks any others?....thoughts?

dbcoin

not a mining stock, but I love the parent company, CLCT. Been on a role lately and pays a great dividend.

as far as miners go, love SLW for silver and GG for gold. If I had to buy one, it would be SLW

The GDXJ for junior miners is a great ETF. Think juniors will do better than the bigger companies

roadrunner

I like GDXJ as well as it's one stop shopping and diversification while keeping fees as low as possible. It holds many of the juniors I listed below. Note that since GDXJ is 20% silver miners that it will outperform a pure gold play when silver is running stronger than gold. If Gold to Silver ratio is dropping, then GDXJ will probably outperform GDX.

Yamana just had a "bad" earnings report where they missed the quarterly eps by 1c (14c vs. 15c est.). On the revenue side they fell short by 5% ($400 MILL vs $424 MILL est). Both of those numbers were >200% better than last year. For this they were hammered pretty hard the past week. Their net earnings were smaller than they should have been at $16 MILL. I added up about 5 line items that took $87 MILL off the bottom line (G&A, "other" bus expenses, derivatives, etc.). It seems this keeps happening from time to time. They really should be socking the cash away hand over fist. In 3rd qtr of 2009 they got hammered with a huge derivatives loss. There are issues with how the company is run but they do have the gold and are bringing it to market. It's now bounced off the the $9.80-$10.00 point 3 times. Only question is whether the current earnings report will linger over it for the rest of the quarter. It's cheap enough at $10 and I did buy some shares.

Some others I like:

Seniors: Goldcorp
Intermediates: AEM, BVN, IAG, EGO, AUY, with KGC a possibility
Juniors/smaller caps: GRS, JAG, GSS, GBG, THM, NG, NXG, XRA, RBY, FRG, AZK, UXG, CGC, RIC, and others.

The above list doesn't mean these miners are in the buy zone. And many of these mining companies have mines in jurisdictions with substantial political "risk." Of the intermediates I believe only AEM is entirely in "safer" jurisdictions (Canada, US, Australia, etc.). But if the US decides to start levying environmental taxes on US miners, this jurisdiction will not be so safe either.

roadrunner

bluelobster

RR, you're right about Yamana being beaten down a bit after their earnings reports.
The stocks are usually more volatile than the metal and many times much more volatile, that can be an advantage, unless you're too early and a continued dollar rally
keeps the metal under pressure, which is my main caveat.

derryb

AUY
CDE
EGI
EXK
FRG
GSS
MGN
MVG
HL
NG
NGD
PAL
PALL
UXG
SLW
SVM
SWC
VGZ
XRA

Try this strategy, it works for me in my self managed IRA accounts (scottrade, only $7 trading fee). Buy equal dollar amounts in at least 10 of the above cheaper mining stocks (I'm playing them all). When one offers a pretty good profit take it and immediately put it in one (or two or three) showing the biggest decline for the day. This is also a good time to add one from the list that you do not own. If nothing offers a good profit, sell nothing. If nothing is showing a big decline, leave the money in cash until something does. Just keep selling the pluses and buying the minuses and you can build a nice portfolio. I more than doubled the intial investment in the first 6 months.

Pointers: when buying the minuses do not get to heavy in one particular stock. Most of these stocks are cyclical and react differently on the same day of trading. You will eventually learn the ups and down of each. Since they are all mining stocks they are subject to a big up day or a big down day, and will all ride the climb in precious metals. Always know your investment cost in each one you own and never sell for less unless you believe PMs are crashing.

This strategy should continue to do well as long as PMs are in a bull market.

roadrunner

Great list and great advice derryb!

roadrunner

Weg

Anyone look at EMT. EGS DJ Emerging Markets Metals and Mining Titans?
It's supposed to be the first non-U.S.-dollar-denominated metals and mining ETF

derryb

<< <i>Anyone look at EMT. EGS DJ Emerging Markets Metals and Mining Titans?
It's supposed to be the first non-U.S.-dollar-denominated metals and mining ETF >>



ETFs are ok for short term, but you don't want to be left standing when the music stops (paper metal runs the risk of too much paper and not enough metal). Not likely, but possible.