On New Year's Eve 2012, the Gold (GLD) price will reach its 12th year of a record-breaking bull run that has increased the precious metal's value over 500% since 2001, from $272 per ounce up to $1,660 per ounce. The average yearly gain has been 16.7% as shown in the table below.
|Date||Gold price||yearly change|
|December 31, 2000||$272|
|December 31, 2001||$278||+2.2%|
|December 31, 2002||$348||+25.2%|
|December 31, 2003||$415||+19.3%|
|December 31, 2004||$437||+5.3%|
|December 31, 2005||$517||+18.3%|
|December 31, 2006||$634||+22.6%|
|December 31, 2007||$833||+31.4%|
|December 31, 2008||$881||+5.8%|
|December 31, 2009||$1,097||+24.5%|
|December 31, 2010||$1,408||+28.4%|
|December 31, 2011||$1,566||+11.2%|
|December 28, 2012||$1,660||+6.0%|
Despite gold being up every single year for the past 12 years, the Gold Miners (GDX) have had a down year in 2011 and 2012 as seen from the chart below.
The Gold Miners-to-Gold ratio is currently the lowest it has been in more than decade as seen from the chart below.
Based on these observations, I believe now is a good time to buy gold stocks. In this article I will feature two mining companies that have seen insider buying during the past 30 days.
1. Claude Resources (CGR) is a fully integrated Canadian gold exploration and mining company that has the proven ability to "Discover, Develop and Deliver." The company has a strong operating base and significant upside. Having been in operation during times of low gold prices, Claude has proven that it has the ability to survive challenging business environments.
The company is entering a new era in its development. Of particular note is the expansion and mining of satellite deposits at the Seabee Gold Operation in Northern Saskatchewan (Canada), the significant potential of the Madsen Gold Project in the prolific Red Lake gold camp in Ontario (Canada) and the expanding resource base at the Amisk Gold Project near Flin Flon Manitoba (Canada).
- Neil McMillan purchased 35,000 shares on December 12-17 and 100,000 shares August 21. Neil McMillan currently holds 892,000 shares or 0.5% of the company. Neil McMillan is President and Chief Executive Officer of Claude Resources and has served on the company's Board of Directors since 1996.
- Peter Longo purchased 25,800 shares on September 7 and currently holds 25,800 shares or less than 0.1% of the company. Peter Longo joined Claude Resources as Manager of Capital Projects in 2011 and was appointed Vice President of Operations in April 2012.
- Ted Nieman purchased 1,050 shares on September 4 and currently holds 25,900 shares or less than 0.1% of the company. Ted Nieman is Chairman of the Board.
The company reported third-quarter financial results on November 14 with the following highlights:
|Net income||$3.0 million|
|Gold production||15,073 ounces|
The company expects to meet its forecast gold production of 48,000 to 50,000 ounces for the full year 2012 at the Seabee Operation. Unit costs for 2012 are estimated to be about 10 percent higher than 2011 unit cash costs of $908. Completion of the Seabee Mine Shaft Extension Project, originally scheduled to be completed during the fourth quarter of 2012, has been deferred until the first quarter of 2013 in order to reduce interruption to operations. Hoisting down time has been reduced from 40 days to approximately 20 days.
The stock is currently trading very close to 52-week lows. There have been three different insiders buying and there have not been any insiders selling the shares during the last 6 months. The company has three Canadian gold projects. Each of these projects is expected to host multi-million ounce ore bodies and have the potential to produce over 100,000 ounces per year. The stock is trading at a P/E ratio of 27.00 and a forward P/E ratio of 10.80. I have a long position in the stock currently.
2. U.S. Silver & Gold (OTC:USGIF) is a newly formed silver and gold mining company focused on growth from its existing asset base and the execution of targeted accretive acquisitions. U.S. Silver & Gold owns and operates the Galena Mine Complex in the heart of the Silver Valley/Coeur d'Alene Mining District, Shoshone County, Idaho, and the Drumlummon Mine Complex in Lewis and Clark County, Montana. Within the Galena Mine Complex, the Galena mine produces high-grade silver and is the second most prolific silver mine in U.S. history, delivering over 200 million ounces to date. The Coeur mine is under late redevelopment and the Lead-Silver Zone is being evaluated for bulk mining development. The Drumlummon mine currently produces high-grade gold and silver with historical production of 1 million ounces of gold and 12 million ounces of silver and has never been fully exploited or explored.
- Darren Blasutti purchased 10,000 shares on December 13, 20,000 shares on November 15 and 17,300 shares on August 30. Darren Blasutti currently holds 226,423 shares or 0.3% of the company. Darren Blasutti is President, Chief Executive Officer and Director of the company.
- Gordon Pridham purchased 10,000 shares on August 16 and currently holds 148,020 shares or 0.2% of the company. Gordon Pridham is Chairman of the Board.
The company reported the third-quarter financial results on November 13 with the following highlights:
|Revenue (adjusted)||$35.5 million|
|Net income (adjusted)||$3.7 million|
|Gold production||4,421 ounces|
|Silver production||608,280 ounces|
The company's outlook for 2012 production is 2.6 - 2.8 million ounces of silver and 20,000 - 25,000 ounces of gold.
The stock is currently trading very close to its 52-week lows. There have been two different insiders buying and there have not been any insiders selling the shares during the last 6 months. US Silver & Gold currently produces approximately 2.7 million ounces of silver annually. The company expects to produce 5 million ounces of silver by 2014. The insider ownership is 3% and institutions own 22% of the shares. I have a bullish bias for the stock currently based on the fundamental picture.