All That Glitter is Gold
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I'm not a gold bug nor a doom and gloom-er. I believe in that old axiom that says those who don't learn from history are bound to repeat it. People are afraid, so they rush to what they perceive as investment safe-havens like 10-year U.S. Treasuries whose yield dropped to 1.45% on Friday. They want to maintain their principle all the while their purchasing power is being eroded by inflation. If one uses an online inflation calculator (which doesn't include food and oil) over the last ten years it takes $1.64 to purchase what was once a $1.00. With all the problems in Europe the talk for austerity is being softened with talk of more fiscal easing. How many euros will the European Central Bank have to print to keep the Eurozone intact? It is my opinion that fear and inflation will push the demand for gold higher and create a nice increase in gold stock prices.
This weekend's WSJ had an article on why investors don't need gold. It quoted a mining-stock analyst from an investment bank that the cost to produce an ounce of gold is between $1,200 and $1,400 dollars. With that in mind here are three gold stocks one may like to take a closer look at.
Goldcorp Inc. (NYSE: GG) is Canada’s number two gold miner. Having eleven mines which produced over 524,0000 ounces of gold at an average price of $654 in the first quarter of 2012. Goldcorp is trading down more than 19% over the past year with a dividend yield of 1.50%
Barrick Gold Corporation (NYSE: ABX) is the worlds largest gold miner invested in 26 operating mines and on track to produce between 7.3 and 7.8 million ounces this year. They have the largest gold reserves and market capitalization. Last year they produced an ounce of gold at an average cost of $460 dollars. They are trading down over 9% since June of last year with a dividend yield of 2.00%.
Eldorado Gold Corp (NYSE: EGO) is a Canadian international gold producer with seven operating mines. It produced over 155,000 ounces of gold in the first quarter at an average cost of $452 dollars an ounce. Eldorado is trading down over 25% over the last year with a 1.60% dividend yield.
I hoped you noticed all three produce an ounce of gold well below $1,200 an ounce, have a better dividend yield than the 10-year Treasury and all of them have solid financials. I hope these three gold stocks pan out for you.
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