Goldcorp, Yamana Gold offer less risk among miners, Barclays says


Finding safety in gold miners (GDX) seems like an oxymoron these days, but Barclays believes some in the group offer “downside protection" if the price of gold doesn’t fluctuate too much in 2014.

Barclays believes reduced volatility in gold prices will allow for more certainty in making investment decisions regarding gold equities, which should benefit the sector given it is broadly under-owned; also, North American producers are poised to reduce operating costs on average vs. 2013, which should increase producers’ operating leverage to the gold price.

When capital begins to flow back into the sector, the firm thinks some investors will favor gold companies that offer protection from lower gold prices or leverage to flat gold prices.

Barclays names Goldcorp (GG) and Yamana Gold (AUY) as companies with strong production growth, falling costs, declining capital obligations and less debt than competitors.

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Comments (5)
  • DeepValueLover
    , contributor
    Comments (11311) | Send Message
     
    ...and slowly the institutions are changing their tunes on gold miners.

     

    Hmmm...
    17 Jan 2014, 11:29 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (1444) | Send Message
     
    I would also add EGO as a miner that institutions will feel safe adding. AUY and EGO are my two biggest positions in 2014.....
    18 Jan 2014, 12:14 AM Reply Like
  • Giacomo Paglia
    , contributor
    Comments (3) | Send Message
     
    "North American producers are poised to reduce operating costs on average vs. 2013, which should increase producers’ operating leverage to the gold price"
    what do they mean?? do they know what operating leverage is?
    18 Jan 2014, 10:13 AM Reply Like
  • daffyduck1
    , contributor
    Comments (6) | Send Message
     
    Daffy Duck agrees with the two above comments that The Feds have far too long artificially kept interest rates down by printing funny money the greenback I think now that Yellen the new Fed lackey is taking over we could see a pullback in the 85 Billion a month bond purchasing and inflation will show it head, one of the top investment newsletters is stating that gold and silver have a hit bottom and have now moved above there 50 day moving average for the first time in over a year so hold on and enjoy the ride up
    18 Jan 2014, 10:14 AM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (120) | Send Message
     
    Nothing has changed: The panic of 1907, the crash of 1929, 1937, 1946, 1957, 1962, 1966, the meltdown in 1974, crash of 1987, 2000, 2008, and so on.

     

    Using techniques from the early masters: Livermore, Wyckoff, and Loeb are still valid. They did not look for what has gone down the most or what would offer security.

     

    In a wipe-out such as the silver and gold sector, they looked for what has gone down the least. Looking at it from that perspective (and excluding the royalties), there are only two equities in the large and mid cap sector that meet their criteria: GOLD and AG.
    18 Jan 2014, 10:50 AM Reply Like
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