Gold Stocks For Value-Minded InvestorsPatience is key here for these next set of results could prove to be well worth the wait, I would be surprised if we didn't see results before 2 weeks time.
John Dorfman also figures that VIT is a good spec holding.
Gold Stock Discoveries for Value-Minded Investors: John Dorfman
By
Bloomberg · October 25, 2010 · 10:30 am
It’s not too late to buy gold stocks, even though the metal has gained about 21 percent this year.
The forces propelling the commodity’s rise are still at work. These include:
– Decreasing faith in the U.S. dollar. The Federal Reserve’s program of quantitative easing will increase the U.S. money supply, making dollars cheaper.
– International tension. U.S. investors fear Vladimir Putin,distrust Iran, worry about Islamic militancy, fret about the proliferation of nuclear weapons, and wonder whether Pakistan, Saudi Arabia and Iraq can maintain political stability.
– Possible inflation. Although tame at the moment, inflation might rekindle if Uncle Sam pumps up the money supply.
– Government gold purchases. Sovereign wealth funds in India, Saudi Arabia and other countries have been buying physical gold, pushing up the demand.
Liking gold is one thing. Figuring out which gold stocks to buy is another. The problem is that many gold companies sell for 35 to 70 times earnings — if indeed they have any earnings — thanks to the intangible psychological allure of this precious metal, and the strike-it-rich appeal of the idea that a mining company might make the next great gold discovery.
Speculative Choices
In buying gold shares, many investors prefer to speculate on junior companies that are exploring for gold but not producing it yet. Some juniors will become producers; others will sell out to bigger players once they have proved the extent of their resource by exploratory drilling.
For speculatively minded investors who want to take a flyer on a less-proven company, consider High River Gold Mines Ltd., Inter-Citic Minerals Inc., and Victoria Gold Corp.
Pockets of Gold
Victoria Gold Corp., based in Toronto,is trying to find gold and silver at half a dozen sites in Nevada and Canada. In September it reported finding isolated gold pockets with grades as high as 12 grams per ton at its Dublin Gulch site in Canada.The company stressed that it will not know the “true width of the gold zones” until it does further exploration.
Inter-Citic and Victoria both have small market capitalizations, which can make the stocks highly volatile.Inter-Citic’s market cap is about $164 million while Victoria’s is about $373 million. Victoria has had weekly moves up or down of at least 10percent 10 times this year, and Inter-Citic has had such moves 13 times.
Disclosure note: I own shares in Newmont, Inter-Citic and Victoria for clients and personally. I do not have any long or short positions in the other stocks mentioned in this column.
Source:https://www.bloomberg.com/news/2010-10-25/gold-discoveries-for-value-minded-investors-commentary-by-john-dorfman.html