Gold stocks are found almost everywhere: from the deserts of Sudan the wilds of Borneo, to the vineyards of Bordeaux; on the road to Mandalay; from Bombay to Santa Fe.
Author: Barry Sergeant
Posted: Tuesday , 08 Jan 2008


JOHANNESBURG - Six years into a protracted bull market for dollar gold bullion, and there are dozens of new listed gold stocks around the world. Gold mines are being found - or re-found - across the planet, from Kazakhstan to Nunavut, from Egypt to Romania, from Alaska and the Yukon to Guyana. But with the bullion price tracking to new records above $870 an ounce on Tuesday, the evidence shows a significant variance in the ratings of gold stocks.
In recent weeks, the biggest gold "stock" of size that has consistently outperformed the global universe of gold stocks does not mine gold: it's the world's biggest gold bullion ETF (exchange traded fund), Streettracks(GLD US, $86.30 a unit), which boasts a value of more than $17 billion.
Streettracks is trading right up at highs, like gold bullion. Amongst the nine stocks that may be classified as global Tier I gold stocks, five clear leaders can be identified: Goldcorp (GG US, $38.60 a share), Barrick (ABX US, $49.35), Newcrest (NCM AU, A$36.84), Kinross (KGC US, $21.27), and AngloGold Ashanti (AU US, $47.83). These five stocks are at, or close to, record highs. The clear laggards in the Tier I classification, by a large margin, comprise two of the big three South African gold majors: Harmony (HMY US, $12.09), and Gold Fields (GFI US, $16.68).
The recent relative outperformance of the Streettracks ETF, marginal as it may be alongside the five leaders among the Tier I group, has an element of déjà vu, from the realms of silver metal and silver stocks. The official launch of the silver ETF (iShares Silver (SLV US )) in May 2006 cast a pall over the silver stocks sector. Up to that point, silver stocks had been trading at premiums to both North American gold and base metal stocks. By the end of 2006, the ETF had attracted more than 120m ounces of silver, about 50% more than analysts had anticipated. Demand calmed somewhat during 2007, with about 140m ounces of silver in the ETF by year-end.
The flip side is that 41 selected silver stocks are currently trading by an average of 32% lower than high stock prices seen over the past 12 months. In the case of silver and silver stocks, it seemed that investors prefer to at least partially step aside from the operational and other risks associated with the actual mining of silver, and to be invested directly in a metal proxy.
To stay in the game, silver stocks had to show up something sexy to attract specific investor attention, be it strong operating results, super-reliable management, smart mergers and acquisitions, unexpected exploration success, or such like. But where silver stocks, broadly defined, are now trading an average of 32% off highs, Tier I gold stocks are just 9% off highs, on average.
The risk aversion is to be found where it may be expected: among explorers and developers. Among 36 selected Toronto-listed gold explorers and developers, average current stock prices are 30% off 12-month highs. The figure would be somewhat higher, were certain stocks not currently under bid, or expected to come under bid.
World's sexiest gold stocks


Stock
From
Value

price
high*
US$m
Goldcorp
$38.60
0.1%
27313
AngloGold Ashanti
$47.83
-4.1%
13271
Barrick
$49.35
0.0%
42887
Newcrest
A$36.84
-4.4%
14692
Kinross
$21.27
-0.1%
12833
Agnico-Eagle
$60.29
1.4%
8580
Randgold Resources
$38.71
-3.0%
2947
Yamana
$15.10
-4.9%
9351
Jaguar
C$12.63
-1.7%
709
Int'l Mining
C$5.90
-2.2%
571
Western Goldfields
C$4.00
0.5%
524
Streettracks ETF
$86.30
0.4%
17683
Detour Gold
C$12.74
-1.2%
520
Western Goldfields
C$4.00
0.5%
524
Wild cards



Centamin Egypt
C$1.29
-7.2%
986
Andean
C$1.84
-10.2%
644
Great Basin
C$3.10
-10.9%
637
Osisko
C$6.10
-15.7%
962
DRDGOLD
$8.45
-17.9%
318
Anatolia
C$5.49
-21.5%
461
Simmer & Jack
R5.45
-31.0%
845
Greystar
C$6.90
-33.9%
319
Gold Reserve
C$5.34
-38.8%
302
* 12-month high



Source: Mineweb.com