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JakilaTheHun (99.90)

Worst Gold Miners, Best Gold Miners

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August 04, 2009 – Comments (4) | RELATED TICKERS: ANVGQ , GDX

I was looking over some of TigerPack's picks today and noticed the Tiger appears to be very bearish on gold miners.  One pick that particularly stood out to me was Allied Nevada Gold (ANV) which seems to be selling at insane multiples right now.  There is speculation that their deposits might be much larger than believed, but even if you triple the book value of their "Mineral Properties", that would still leave them with a rather high price-to-book ratio of around 2.8!

I'm not completely convinced that gold's run is over.  I've been neutral on it for the past several months, but I believe we are starting to see signs that inflation could hit us big-time in the next year and this makes me worry about going short on a gold miner.  If I were to play the gold miners, I'd rather hedge my bets and go one long and one short.   So that brings me to the question: which gold miners are the most attractive right now and which ones are the least attractive?

Anyone have any opinions on the matter?

Is anything more overvalued than ANV?  Am I missing something on ANV?  What's the cheapest gold miner out there at this point?

4 Comments – Post Your Own

#1) On August 04, 2009 at 1:46 PM, SockMarket (34.17) wrote:

Undervalued

GBG is a high risk, high reward candidate. If they can produce consistent profits (still haven't made a single one yet) they should be a $5-10 stock but if the losses continue for another couple years they will likely be toast.

KGC is safer and a nice growth stock. revenue has been climbing while costs have been dropping. quality reserves.

 

Overvalued

AU- they seem like a real dog. they haven't gone up since 2007 (gold was at 600) and are losing money. price to book of almost 5 doesn't bode well either

ANV

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#2) On August 04, 2009 at 2:06 PM, anticitrade (99.15) wrote:

From the fundamentals I am not really much of a fan of this industry.  However, I ran it through my model to see what Gold/Silver companies might be worth looking into.  From a "fair" value with prices generated relative to that specific industry (this is a very leniant valuation test) I found:

Ticker     (Fair relative value)

NXG              8.00

DROODY       17.05

HMY              16.9

GFI                20.19

RIC                3.84

NEM              52.02

PAAS            24.05

GRS              7.94

From my conservative valuation (the one I generally use), I would only recommend HMY (10% undervalued) and PAAS (3% undervalued). 

For all you "Yukon Corneliuses" out there, I hope that has some value to you. 

 

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#3) On August 04, 2009 at 2:07 PM, goldminingXpert (28.95) wrote:

ANV is a sick joke.

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#4) On August 04, 2009 at 10:55 PM, Tastylunch (28.84) wrote:

I see Gold as range bound between 800-1000 ish personally unless we get strongly decisive movements  in the dollar.

I'm leaning towards deflation personally (until I see the Fed doing something even more tragic than what they have so far), so I tend to agree with Tigerpack (although oddly enough he's an inflation guy)

All I see on my reorders is lower prices and very very slack consumer demand. I just don't see runaway infaltion that one would expect with money printing.With more mortgage resets coming,  I have a hard seeing where the printed money is actually going to circulate.

Perhaps later when MULT goes back above 1 again I'll worry about runaway trian inflation again...

No doubt ANV=worst of breed though.

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