Are there any miners whose stocks appear attractive from a valuation standpoint?
Because we own gold as insurance, we prefer to own names that currently produce gold. We also look at names that are building out mines and have a production plan in place. A company that makes a great discovery but doesn’t plan to build it out offers little in the way of insurance–in the ground, those ounces are worthless. We recommend striking a balance between junior, intermediate and senior producers. It’s a rare occasion, indeed, when one of these groups appears more attractive than another; stock-picking acumen and a corresponding sensitivity to individual situations are essential to investing in gold. Today South African companies appear cheaper relative to spot prices. By and large, these firms operate fixed-cost businesses whose revenues are more leveraged to gold prices than those of producers in other parts of the world. Of course, that leverage has both an upside and a downside. But those names are still trading at levels that provide a sufficient margin of safety. How muc
