Many Canadian gold stocks are raising production

We’ve analyzed junior gold and mineral stocks for many years in Stock Pickers Digest, our newsletter for more aggressive investors.

Many of our picks have shot up during the recent rise in gold from around $700 U.S. an ounce in the fall of 2008 to a recent peak of above $1,200 U.S. Gold has since dropped by about $100. But we think that’s a temporary fluctuation.

Use caution when investing in Canadian gold stocks

The long-term outlook for gold remains positive. That’s because government stimulus spending and low interest rates are likely to eventually spur inflation. That could prompt many investors to seek security by investing in gold. However, no one knows if that will take six months or three years, or if something will come along that will offset this widely forecast rise in gold.

We continue to believe that gold prices will remain volatile. That uncertainty is the main reason why we continue to recommend that you devote only a limited portion of your resource holdings to gold stocks.

If you want to invest in gold, one way to do it is through gold-mining firms that are expanding production and raising their cash flow. That describes many of the Canadian gold stocks we recommend as buys in our investment advisories.

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This aggressive Canadian gold stock is boosting production at just the right time

In the current Stock Pickers Digest, we update our buy/sell/hold advice on Yamana Gold (symbol YRI on Toronto). Like many Canadian gold stocks, Yamana is increasing production just in time to take advantage of today’s high gold prices.

Yamana owns six producing gold mines in Brazil, Chile and Argentina. It also holds interests in five properties that are still under development.

The company reported sharply higher revenue and earnings in the latest quarter. That’s mainly because it produced record amounts of gold, just as gold prices began their recent climb. This includes new gold production from its Gualcamayo mine in Argentina.

While it has been ramping up production, Yamana has been selling less-profitable projects. In June, it sold its San Andres mine in Honduras, as well as the Sao Francisco and Sao Vicente mines in Brazil to Aura Minerals (symbol ORA on Toronto). However, its 16% stake in Aura will let it continue profiting from these mines.

Yamana expects to produce 1.05 million to 1.1 million ounces of gold this year, or 40% more than it produced in 2008. It aims to increase that to 1.7 million ounces over the next few years with five more projects in advanced development.

For our latest buy/sell/hold advice on Yamana Gold and 19 other stocks that may be suitable for the aggressive portion of your portfolio, you shouldn’t miss the latest Stock Pickers Digest. What’s more, you can get this issue free of charge. Click here to find out how.