Gold rose from $300 an ounce at the beginning of this decade to over $1,000 in early 2008. It fell below $700 late last year before rebounding back over $1,000 earlier this year. Today, it trades around $954. We feel that gold will eventually surpass its recent highs. That’s mainly because low interest rates and government spending will spur inflation. Still, investors should use caution when investing in gold, and avoid buying gold directly, or certificates that represent an interest in gold. Unlike stocks, commodity investments like these generate no income. Instead, they come with a continuing cash drain for management, insurance and so on. We feel that the best way to profit from gold is by sticking with high-quality Canadian gold stocks. Even so, you should limit them to a modest portion of your portfolio, specifically the part you devote to more aggressive investments.
Two Canadian gold stocks with different philosophies
We’ve updated our views on two Canadian gold stocks in the latest issue of Stock Pickers Digest, our newsletter devoted to the more aggressive segment of the Canadian and U.S. markets.
IAMGold (Toronto symbol IMG), produces over 900,000 ounces of gold a year from seven operating gold mines. Five of these are located in Africa; one is in Quebec and one is in South America. [ofie_ad] IAMGold is focused on developing its Essekane project in Burkina Faso, and issued new shares in March to fund the project. By next year, the company expects to produce 300,000 ounces of gold a year at the site. If this prediction proves accurate, it would lift IAMGold’s overall production by about 29%. However, IAMGold’s concentration in Africa does entail some political risk. Northgate Minerals (Toronto symbol NGX) expects to produce 392,000 ounces of gold from its mines this year. That’s much less than IAMGold, but Northgate has a solid base of operations in politically stable Canada. Northgate’s major development project is its Young-Davidson property in northern Ontario. The company recently completed a positive pre-feasibility study that envisions a $293 million mine starting up in 2012. The mine would produce 170,000 ounces of gold per year, rising to 190,000 after two years. However, Northgate still needs to undertake a full feasibility study before it makes a final decision on whether to proceed. In the near term, Northgate’s Kemess South mine in B.C. and its mines in Australia, which it runs through recently acquired Perseverance Corp., are generating steady cash flow. You can read our full, in-depth report on these two gold stocks and get our latest aggressive investing picks in the latest Stock Pickers Digest. What’s more, when you subscribe today you can try Stock Pickers Digest for one month absolutely free. You have no risk and no obligation. Click here to learn more.
