gold prices
Precious Metals & Mining Trust, $11.55, symbol MMP.UN on Toronto (Units outstanding: 19.3 million; Market cap: $222.8 million; www.sentry.ca), is a closed-end fund that holds a portfolio of speculative, mostly gold-mining stocks. These companies include Semafo Mining, which makes up a very high 27.2% of the fund’s holdings, followed by Allied Nevada Gold (10.9%) and Golden Star Resources (10.3%). The trust has an MER of 1.83%. The trust has a high 10.3% yield. However, the companies it holds don’t pay dividends, so it pays that yield out of profits on stock sales. That works in a rising market — but it would not work if gold prices suffered a sustained decline. Moreover, the trust trades at a 22% premium to the net value of its assets. We don’t recommend buying closed-end funds at a premium.
All gold investments, even large, multinational gold-mining stocks like Newmont Mining (symbol NEM on New York), are somewhat speculative, due to their sensitivity to gold prices and the difficulty of finding gold mines. That’s why we recommend that you limit them to a small part of your overall portfolio — this is especially true of more volatile junior gold stocks. (You can get our latest views on the outlook for gold, as well as our latest advice on lower-risk gold investing strategies, in our free special report, “Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks.” Click here to download your copy now.)...
Stans Energy Corp., $2.33, symbol RUU on Toronto (Shares outstanding: 129.1 million; Market cap: $300.9 million; www.stansenergy.com), has moved up sharply on rising investor interest in rare earth elements. Rare earth prices have risen, especially since China put an embargo on its own rare earth exports. Rare earths are used in a variety of modern devices and applications, including catalytic converters and petroleum refining; magnets in small and large motors; glass additives and glass polishing compounds; rechargeable batteries; television and computer screens; lighting; X-ray machines; and lasers. Stans owns 100% of the former Soviet mine, Kutessay II, in Kyrgyzstan. Mining infrastructure is in place, and Stans holds a mining license for the property. However, Stans has already had a substantial rise, particularly of the above-average political risk of operating in Kyrgyzstan. Of course, it could move higher on continued momentum in rare earth stocks....
Anglo Swiss Resources, $0.25, symbol ASW on Toronto (Shares outstanding: 141.1 million; Market cap: $35.3 million, www.anglo-swiss.com), aims to build a mine at its 100% owned Kenville gold property near Nelson, in southeastern B.C. The company is also earning a majority interest in the 160-square-kilometre Nelson mining camp, south of the Kenville property. Both the Kenville property and the Nelson mining camp have produced gold in the past....
NEWMONT MINING $58.32 (New York symbol NEM; Shares outstanding: 484.7 million; Market cap: $28.2 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.newmont.com) is one of the world’s largest gold miners. Newmont has major mines in the U.S., Australia and Peru. In the three months ended September 30, 2010, Newmont’s revenue rose 26.7%, to a record $2.6 billion from $2.05 billion a year earlier. Before one-time items, earnings per share rose 36.7%, to $1.08 from $0.79. Cash flow per share rose 29.6%, to $2.41 from $1.86. Higher gold prices offset the the negative impact of a stronger Australian dollar, start-up costs at its Boddington gold mine in Australia, higher royalties, and lower production in South America....
NEWMONT MINING CORP. $61 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $30.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 1.0%; TSINetwork Rating: Average; www.newmont.com) is one of the world’s largest gold-mining companies. Newmont has major mines in the U.S., Australia and Peru. Gold accounts for about 85% of Newmont’s revenue. The remaining 15% comes from copper, zinc and other metals. Most of Newmont’s copper comes from its 35.4% stake in the large Batu Hijau mining complex in Indonesia. Gold has jumped 35%, from $1,062 an ounce in February 2010 to a new all-time high of $1,433 in December 2010. Newmont prefers to sell its gold at the market price instead of through long-term hedging contracts that lock in prices. This policy has helped it take full advantage of rising gold prices....
Commodities like gold and copper provide a hedge against inflation. But even if inflation stays low, commodity prices are likely to keep rising as rapid economic growth in Asia and South America spurs new construction and car sales. That will help BHP, Newmont and Alcoa. All three are high-quality, well-established resource stocks that have jumped lately. Still, we see only two as buys right now. BHP BILLITON LTD. ADRs $89 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $249.2 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. Regulators in Australia and Canada have recently forced the company to cancel two big deals....
Caledonia Mining, $0.12, symbol CAL on Toronto (Shares outstanding: 500.2 million; Market cap: $60.0 million), owns an early-stage copper/cobalt project in Zambia, the Blanket gold mine in Zimbabwe and a platinum/nickel exploration project in South Africa. In the three months ended September 30, 2010, the company earned $1.7 million, or $0.003 a share, up sharply from $862,000, or $0.002 a share, a year earlier. Revenue rose 28.4%, to $6.3 million from $4.9 million. The company produced 45% more gold than the year-earlier quarter. That’s because it revised its mine plan, recovered more gold from its ore and installed the first standby generator in late June. This generator has allowed underground operations to continue during power interruptions....
MAJOR DRILLING, $41.95, symbol MDI on Toronto, jumped 18% this week after the company reported sharply higher results in the latest quarter. In the three months ended October 31, 2010, Major’s revenue jumped 69.2%, to $127.8 million from $75.5 million a year earlier. The company earned $11.4 million, or $0.48 a share, up from $4.1 million, or $0.17 a share. Cash flow was $18.6 million, or $0.78 a share, in the latest quarter. That’s up 51.2%, from $12.3 million, or $0.51 a share. Major expects to see a continued rebound during 2011. Gold prices are at all-time highs, base-metal prices are strong, and many mining companies have raised new funds for exploration....
North American Palladium, $5.80, symbol PDL on Toronto (Shares outstanding: 148.8 million; Market cap: $863.1 million, www.napalladium.com), runs the Lac des Iles palladium mine near Thunder Bay. This mine produces about 130,000 ounces of palladium per year, but it could reach 250,000 ounces when production at the high-grade offset zone starts in late 2012. North American Palladium also operates the Sleeping Giant gold mine in the Abitibi region of western Quebec. This mine continues to experience difficulties, mostly because of low production and high costs. However, the company expects to finish deepening the mine shaft in the first half of 2011. North American Palladium is hoping that will help push Sleeping Giant’s production up to historic levels of about 55,000 ounces per year. In the three months ended September 30, 2010, the company earned $3.2 million, or $0.02 a share, on revenue of $38.5 million. North American Palladium restarted the Lac des Iles mine in May 2010, so there are no comparable year-earlier results. Cash flow per share was $0.04 in the latest quarter. The company holds cash of $113.6 million, or $0.76 a share, and has no debt....