Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

There are several prominent hedge fund managers who expressed skepticism over Fed’s monetary policy over the past couple of years. John Paulson made around $5 billion in 2010, thanks to his gold investments. Jim Rogers has been a vocal advocate of commodities, saying they will go up no matter what happens in the economy. Ray Dalio, the owner of world’s largest hedge fund, is extremely bullish about gold and emerging markets.

Hedge funds follow various strategies to benefit from increase in gold prices. Hedge fund managers such as David Einhorn bought physical gold. George Soros, Dan Loeb and Stephen Mandel prefer Gold ETF (NYSEARCA:GLD). John Griffin, Roberto Mignone, Brevan Howard, and Curtis Schenker like Gold Miners ETF (NYSEARCA:GDX). GDX outperformed the GLD by more than 5 percentage points over the past 12 months. However, we believe gold speculators who are certain that gold prices will keep increasing over the next five years can do better by constructing a portfolio of gold miners with higher expected growth rates or giving a higher weight to smaller gold miners. An equally-weighted portfolio of the following stocks would have returned 48% over the past 12 months, beating both GLD and GDX by a large margin. Here are the top gold miners and their recent performance:

Barrick Gold Corporation (NYSE:ABX): ABX has a market capitalization of $52.2 billion and a trailing P/E ratio of 15.6x. It’s expected to earn $4.15 per share in 2012. ABX gained 40% during the past 12 months and had a 320.7% quarterly earnings growth.

Goldcorp Inc. (NYSE:GG): Goldcorp has a market capitalization of $39.2 billion and a trailing P/E ratio of 23x. It’s expected to earn $2.08 per share next year. GG returned 32% over the last 52 weeks and its quarterly earnings increased by 397.5% over the same period last year.

Newmont Mining Corp. (NYSE:NEM): NEM has a market capitalization of $26.7 billion, which shows a trailing P/E ratio of 11.9x. It’s expected to earn $2.24 per share in 2012. NEM gained 11% during the last year and had a 45.5% quarterly earnings growth.

AngloGold Ashanti Ltd. (NYSE:AU): AngloGold has a market capitalization of $17.9 billion. AU shows a trailing P/E ratio of 185.3x and it’s expected to earn $1.69 per share in the next year. The company gained 27% during the last 12 months and had a year-over-year quarterly earnings growth rate of -87.3%.

Kinross Gold Corporation (NYSE:KGC): KGC has a market capitalization of $18.4 billion and a trailing P/E ratio of 17.4. The stock is expected to earn $0.99 per share next year. KGC lost 2% over the last 12 months, and had a -10.7% quarterly earnings growth over the last year.

Gold Fields Ltd. (NYSE:GFI): GFI, based in Sandton, South Africa, has a market capitalization of $12.1 billion. It has 78 million ounces of mineral reserves and 281 million ounces of mineral resources. GFI has a trailing P/E ratio of 72.05x and gained 42% during the last 52 weeks.

Randgold Resources Ltd. (NASDAQ:GOLD): GOLD has a market capitalization of $6.9 billion, and a trailing P/E ratio of 67.5x. The stock is expected to earn $0.50 per share in 2012. Randgold returned 5% during the last year and its quarterly earnings declined by -16.5% year-over-year.

Harmony Gold Mining Co. Ltd. (NYSE:HMY): Harmony Gold has a market capitalization of $6 billion. HMY shows a trailing P/E ratio of 248.9x. It’s expected to earn $0.44 per share next year. Harmony Gold returned 56% over the last 12 months and its quarterly earnings increased by 170.3% over the same period last year.

Agnico-Eagle Mines Ltd. (NYSE:AEM): AEM has a market capitalization of $11.4 billion and AEM shows a trailing P/E ratio of 34x. Next year, it’s expected to earn $0.55 per share. AEM returned 25% over the past year and had a 83.5% quarterly earnings growth.

Compania de Minas Buenaventura SA (NYSE:BVN): BVN has a market capitalization of $11.1 billion, showing a trailing P/E ratio of 17.09x. It’s expected to earn $0.96 per share in 2012. BVN returned 56% over the last year and its quarterly earnings growth rate is 17.2%.

Yamana Gold, Inc. (NYSE:AUY): Yamaha Gold has a market capitalization of $9.2 billion and a trailing P/E ratio of 20.4x. AUY is expected to earn $0.75 earn per share in 2012. AUY returned 29% during the past 12 months and had a 343.5% quarterly earnings growth rate.

IAMGOLD Corp. (NYSE:IAG): IAG has a market capitalization of $8.4 billion. It has a trailing P/E ratio of 30.2x and it’s expected to earn $0.47 per share in 2012. IAG, located in Toronto, Canada, returned 71% over the last year.

Eldorado Gold Corp. (NYSE:EGO): EGO has a market capitalization of $8.9 billion. EGO shows a trailing P/E ratio of 43x. It’s expected to earn $0.52 per share in 2012. Eldorado Gold returned 34% during the last 52 weeks, which had a 32% quarterly earnings growth.

Silver Wheaton Corp. (NYSE:SLW): Silver Wheaton has a market capitalization of $15.3 billion and it shows a trailing P/E ratio of 53.2x. $0.60 earn per share is expected next year. The company returned 187% during the last year, increasing its quarterly earnings by 142% over the same period.

Royal Gold, Inc. (NASDAQ:RGLD): Royal Gold Inc., which has a market capitalization of $2.88 billion, shows a trailing P/E ratio of 75.7x. It’s expected to earn $0.09 per share in 2012. RGLD returned 15% over the last year and had a quarterly earnings growth rate of 90.5%.

Pan American Silver Corp. (NASDAQ:PAAS): PAAS has a market capitalization of $4 billion. PAAS shows a trailing P/E ratio of 35.7x. It’s expected to earn $0.24 per share in 2012. PAAS returned 67% over the last year and has a 66.8% quarterly revenue growth rate.

Silver Standard Resources Inc. (NASDAQ:SSRI): Silver Standart Resources, formerly known as Consolidated Silver Standard Mines Ltd., has a market capitalization of $2.3 billion. It’s expected to earn $0.06 per share in 2012 and the company returned 72% during the last 52 weeks.

New Gold, Inc. (NYSEMKT:NGD): NGD, which shows a trailing P/E ratio of 25.3x, has a market capitalization of $4.5 billion. NGD gained 159% during the last twelve months and it’s expected to earn $0.21 per share next year. New Gold has a 30% interest in El Morro copper-gold Project in Chile.

Seabridge Gold, Inc. (NYSE:SA): Seabridge, located in North western British Columbia, has a market capitalization of $1.3 billion. SA is expected to earn $0.005 per share in 2012. The stock returned 45% over the last year. The company was formerly known as Seabridge Resources Inc.

Gammon Gold, Inc. (GRS): Gammon Gold has a market capitalization of $1.38 billion. It is expected to earn $0.09 per share in 2012. GRS returned 23% over the past 52 weeks.

Aurizon Mines Ltd. (AZK): AZK, founded in 1988 and located in Vancouver, has a market capitalization of $1.16 billion. AZK’s trailing P/E ratio is 69.6. It’s expected to earn $0.07 per share next year. Aurizon gained 57% over the previous 12 months. Its quarterly earnings grwoth rate is -37.1% year-over-year.

Hecla Mining Co. (NYSE:HL): Hecla Mining, also a producer and seller of lead, zinc and silver, has a market capitalization of $2.5 billion and a trailing P/E ratio of 69.6x. It is expected to earn $0.13 per share in 2012. Hecla Mining returned 71% during the 52 past weeks.

Northgate Minerals Corp. (NXG): Formerly known as Northgate Exploration Limited, Northgate Minerals has a market capitalization of $786.1 million. It lost 9% over the previous year and it’s expected to earn $0.06 per share next year. Northgate Minerals had total and provable reserves of 3,754,296 ounces of gold as of December 2009.

Great Basin Gold Ltd. (NYSEMKT:GBG): Great Basin Gold, founded in 1986 and is based in Sandton, South Africa, has a market capitalization of $1.06 billion. GBG returned 57% during the past 12 months. It’s expected to earn $0.09 per share in 2012.

Golden Star Resources, Ltd. (NYSEMKT:GSS): Golden Star Resources holds interests in several gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Ivory Coast and Niger. GSS has a market capitalization of $770.5 million and lost -18% during the past twelve months. It is expected to earn $0.09 per share next year.

Minefinders Corp. Ltd. (MFN): Formerly known as Twentieth Century Explorations Inc., Minefinders Corp. has a market capitalization of $1.01 billion and a trailing P/E ratio of 141. It is expected to earn $0.07 per share in 2012. MFN gained 36% over the last 52 weeks and increased its quarterly earnings by 183% over the same period last year.

Tanzanian Royalty Exploration Corp. (TRE): Tanzanian Royalty Exploration Corp., an exploration stage company engaging in the acquisition and exploration of natural resource properties, has a market capitalization of $583.4 million. TRE was formerly known as Tan Range Exploration Corporation before changing its name to Tanzanian Royalty Exploration Corporation in Feb 2006. It returned 56% over the last year.

Nevsun Resources Ltd. (NYSEMKT:NSU): Nevsun Resources has a market capitalization of $1.15 billion. NSU has 94.5 square kilometers of exploration license and 39 square kilometers of mining agreement area which includes 16.5 square kilometers mining license. It is located in western Eritrea. Nevsun Resources gained 104% during the past twelve months.

Wall Street analysts expect SSRI, AU, IAG, PAAS, GG, GOLD, AEM, NXG, HMY, and BVN to have at least 15% annual earnings growth rate over the next five years. On the other hand analysts expect NEM, SLW, ABX, GRS, HL, RGLD, and NGD to have at most 4% annual earnings growth rate. We believe an equally weighted portfolio of these gold miners will provide investors with significant upside and diversification.

Source: Best Gold Mining Stocks for Gold Investors