Gold stocks called ‘dirt cheap’
November 3, 2011, 2:00 PM
blogs.marketwatch.com
While many investors have been wondering if gold stocks might suffer from an improving stock market, two veteran gold investors had a strong message at the Schwab IMPACT Conference this week: Big-name gold stocks are cheap.
Caesar Bryan, manager of GAMCO Gold GOLDX, said that gold stocks – particularly of the large producers – are “dirt cheap. I have never seen them this inexpensive.”
Adding to their attractiveness is that many of the biggest players will be paying dividends, making them increasingly appealing to mainstream investors. Among his current favorites, Bryan cited Newcrest Mining NCMGY, Barrick Gold ABX among the stocks that appeal to him now.
Bryan noted that investors who go to gold right now thinking it will zig when the market zags will be disappointed for awhile, as precious metals have been closely correlated to broad market returns for some time now, a trend he blames on gold “becoming a much more mainstream investment, even though it is still under-owned.” That said, he expects gold to be a more divergent play when markets turn and the conditions for which most investors turn to gold – such as inflation – come back into play.
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“Ten years ago, you had to buy coins, bars or futures and gold stocks were the other primary vehicle for investing in golds,” Berol said, “but today the gold stocks can act more like stocks, because people have more ways to buy gold, and that has led to increased correlation right now. It will probably stay that way until inflation kicks up, at which point now more people will come into gold and the stocks will separate from the rest of the market.”
Berol, however, does not recommend waiting for that day to buy gold stocks.
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Like Bryan, Berol is a fan of Barrick Gold, but he also likes senior gold companies like GoldCorp GG, Yamana Gold AUY and Eldorado Gold EGO. He also likes Freeport McMoRan FCX as a combination gold-copper play.
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-Chuck Jaffe
http://blogs.marketwatch.com/thetell/2011/11/03/gold-stocks-called-dirt-cheap/
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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