GLD Vs. Gold Miner Stocks

by: Brad Kenagy

This morning on Jim Cramer's "Six in 60," when he got to the last company, Barrick Gold (NYSE:ABX) he said, "Just can't stand these gold miners, they are awful. You want to own gold, own the GLD." The SPDR Gold Trust ETF is the largest Gold ETF in the world and holds physical gold. Being the competitive person that I am, I took Jim Cramer's statement as a challenge to see if there were gold miners that outperformed the GLD over the past year, and possibly going forward.

Before I ran my screen I found that the 1 year performance of the GLD was 24.52%, so that is where I would start my search was with companies that did better than the GLD over the last year. For my search I used the stock screener to screen for companies only with the industry classification of "Gold." There are 50 companies that are listed in the gold industry, and out of those 50, 13 companies had a better 1 year performance than the GLD. Out of those 13 companies I wanted to further screen them down by their financial condition and valuation to get a short list of the strongest companies.

The following are the screener criteria I used:

  • 1 Year Performance of greater than 20%.
  • Performance for the last half year is positive.
  • Current Price of greater than $10.
  • Dividend Yield that is positive (Company pays a dividend)
  • P/E ratio greater than 0 (Profitable).
  • Forwards P/E Ratio greater than 0 (Profitable).
  • Price/Book Value ratio of less than 3.

The following three companies met all of the above criteria. The PE ratio, dividend yield and 1 year performance are from and a short business summary for each company is from Yahoo Finance.

Royal Gold, Inc. (NASDAQ:RGLD)

Royal Gold, Inc., together with its subsidiaries, engages in the acquisition and management of precious metal royalties. It owns royalty interests in various producing, development, evaluation, and exploration stage projects that explore for gold, silver, copper, lead, and zinc metals. Royal Gold has a PE of 45.99 and a dividend yield of 0.88%.

1 Year Performance: +50.04%

Yamana Gold, Inc. (NYSE:AUY)

Yamana Gold Inc. engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. Yamana Gold has a PE ratio of 18.96 and a dividend yield of 1.27%.

1 Year Performance: +44.27%

Franco Nevada Corp. (NYSE:FNV)

Franco-Nevada Corporation operates as a gold-focused royalty and stream company with additional interests in platinum group metals, oil and gas, and other assets in the United States, Canada, and Mexico. Franco Nevada has a PE ratio of 40.69 and a dividend yield of 1.13%.

1 Year Performance: +41.59%


When I got done with the screen and read the business summaries for each company I noticed that two out of the three company's business models were based on royalties from gold mines as well as other types of metals, and only Yamana Gold Inc was engaged in actual mining. I looked at the holdings for the Market Vectors Gold Miners ETF (NYSEARCA:GDX) and found that Royal Gold and Yamana Gold were both included in the ETF, but not Franco Nevada.

My logic for why the above companies could do well against GLD in the future is they are all involved in gold mining in one fashion or another, so they all have exposure to gold. Also, each of the three companies pays a dividend, and even though each company's dividend is not very big, the GLD pays no dividends.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.

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