Gold may have fallen yesterday but miners managed to maintain themselves and remain a more affordable entry point into the rising precious metals market. Major and junior miners are well below their highs prior to the 2008 financial crisis and yet gold is teetering at the top of its range. That said, miners could be an attractive option right now, especially given the current economic circumstances. Gold’s decline yesterday was the result of a newfound optimism among investors brought on by President Obama’s proposal of a $300 Billion job stimulus plan. Given the recent budget cuts, the coming reelection and the history of bipartisan stalemate during President Obama’s turn, this movement has a lot of challenges before it. Without the prospect of new jobs boosting the U.S. currency, the likelihood is that gold will continue to rise.
This, paired with the decision of the Swiss government to put a cap on its currency levels, makes gold among the last recognized safe havens available for investors. This should help gold, but as it reaches new levels, it will bolster mining shares as well. Evidenced by highs in previous years, there’s an awareness that investors are willing to shell out more for miners once the environment allows for it. In the past weeks, they have closed in on their 52-week highs and there appears to be little resistance.
The recent improvement are not limited to major miners but have also affected junior miners. There is a multitude of ways to pursue profits via mining stocks, from a long-term position in Gold Corp. (GG) or Barrick Gold (ABX), to smaller ventures or mutual funds that track a basket of miners.
Both Goldcorp. and Barrick are multi-billion market cap miners with near identical share prices. In recent trading, they have gained in relatively equal measure and are both at the same level in terms of their relation to their 52-week highs. Both miners are considered to be solid bets for gold bulls.
Yamana Miners (AUY) is a smaller company than either of the above but is also a third of the price. Yamana has been gaining faster than Barrick and Gold Corp. in recent sessions and has a market cap of 12.8 Billion. AUY is a gold producer with gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Colombia.
There is also the option of junior miners which can be appealing based on their low-pricing and attractive P/E ratios. Interest in junior miners can be explored by investing in a fund like Market Vectors Junior Gold Miners (GDCJ), which tracks multiple junior miners.
Mutual funds are also an option for those looking to invest in a basket of miners with concentrations in varying locations and methods. Solid mutual fund picks include Tocqueville Gold (TGLDX), Fidelity Select Gold Portfolio (FSAGX) or Dynamic Gold & Precious Metals (DWGOX). There’s also the Market Vectors Gold Miners (GDX), an exchange traded fund that invests in a range of miners.