Posted by: Aaron Pressman on December 7, 2007
I had a story in this week’s BW magazine about investing in gold but inevitably, some good stuff got left on the cutting room floor. First, I also wanted to point out that the World Gold Council has a good web site for getting basic facts and figures here.
And what got cut? The magazine story ends on a sour note for gold mining stocks, recounting the travails of Novagold Resources (Symbol: NG), a mining company based in Canada which tumbled more than 50% on November 26. The company had to cancel a new mining project after construction costs spiralled out of control.
But we’ve got some better picks, too. Some companies have done better at expanding operations and controlling costs. Goldcorp (GG), another Canadian mining company, says it is opening new mines and expanding production. “They have one of the best growth profiles in the industry,” says Jim Vail, manager of the ING Global Natural Resources Fund (LEXMX). He also favors shares of companies that help build mines, such as Major Drilling Group (MDI) and Boart Longyear (BLY). “They’re benefiting from all of the natural resources development now,” Vail says.
There are also appealing stocks among mid-tier gold producers, according to Joe Foster, manager of the Van Eck International Gold Fund (INIVX). He favors Agnico-Eagle Mines (AEM), Randgold Resources (RANGY) and Kinross Gold Corp (KGC). Despite the industry’s difficulties locating new deposits, those three have significant new mines coming online soon and in areas that are politically stable like Mexico and Canada. With 4 new mines, Foster says Agnico has “the best growth profile of any gold company on the planet.”