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Josh Hutheson
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I am a professional author, former Marine, and investment enthusiast.
  • Recent Underperformance In Gold Stocks Provides Opportunity 0 comments
    Jan 9, 2013 6:49 PM | about stocks: GDX, GLD, ABX, GG

    Gold miners have underperformed the gold commodity over the past three months to the tune of 10 percentage points in a comparison of the Gold ETF (GLD) and the Gold Miners ETF (GDX). This has created a buying opportunity, according to Sterne, Agee & Leach. The broker noted that North American precious-metals producers that focus collective attention on capital discipline and operating-cost maintenance should recognize in relative valuation the increased value placed on gold despite fighting geologic, metallurgy, capital cost and political challenges. Here are a few that could benefit from a reversal in the gold commodity versus gold miners trend.

    Barrick Gold (ABX) is the gold industry leader in production, reserves and market capitalization. The company operates globally, with a portfolio of 27 operating mines and advanced exploration and development projects located across the world, and large land positions on some of the most prolific and prospective mineral trends.

    The stock has struggled and is now hovering just above 52-week lows but the company now seems to be planning to take shareholder-actions to help its shares. The company is looking to sell assets in 2013 in an attempt to do that. CEO Jamie Sokalsky is reviewing the company's assets and the company has received approaches from companies interested in some of its assets and is continually reviewing its entire portfolio, Sokalsky said. In addition, "there are many people that see our assets as quite attractive," Sokalsky said.

    MineralRite (OTCPK:RITE) is a smaller company that goes unnoticed by the Street. The company is engaged in the processing, certification and sales of precious metals including gold, silver, and the platinum group metals. Using various proprietary and ecologically friendly processes and technologies, the company extracts precious metals from mining operations ore, reclaimed mine tailings and high value concentrate material.

    Based upon current trends in the mining industry, including mining, recovery, processing and spot pricing, MineralRite Recovery Group intends to specialize in the extraction of precious metals from ore bodies and reclaimed mine tailings. Service fees ranging from 3% - 15% on ore processing are charged. In addition a 15% recovery fee is charged on the additional commodity recovered (ranging from 20% -30% enhanced recovery). Management has a track record of identifying undervalued mineral and precious metal reserves on 3 continents, and therefore MineralRite Sales Group will focus on identification, certification and sale of undervalued mineral assets throughout the world.

    Recently, the company announced that it signed a Letter of Intent with a United States mining company to provide processing services and equipment to extract gold and other precious metals from the clients ore deposits.

    Goldcorp (GG) is one of the world's fastest growing senior gold producers. Its low-cost gold production is located in safe jurisdictions in the Americas and remains 100% unhedged.

    Just on Monday, the company announced gold production and cash costs for 2012 as well as provided near-term guidance. The final calculation of operating costs has not yet been completed, but total cash costs for all of 2012 are expected to be approximately $315 per ounce of gold on a by-product basis and approximately $645 per ounce of gold on a co-product basis.

    The company further noted that its emphasis has always been on growth in cash flow as opposed to growth in new ounces. GG will remain disciplined stewards of shareholder capital by focusing on high quality, high return projects and returning capital to shareholders in the form of increased dividends.

    For 2013, Goldcorp expects to produce between 2.55 and 2.80 million ounces of gold in 2013. Production is expected to build in the second half of the year based on the ramp up at Pueblo Viejo and higher grades late in the year at Peñasquito. Gold production is forecast to grow approximately 70% over the next five years to 4.0 to 4.2 million ounces in 2017.

    Stocks: GDX, GLD, ABX, GG
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