In this wavering stock market, analysts recommend that investors purchase gold stocks in companies that actually have holdings of the precious metal. According to Al Korelin, publisher or the Korelin Economics Report, “advanced stage” gold development stocks provide the best opportunity for investors. Companies offering this type of stock are able to clearly show the potential viability and size of their gold deposits.
Mr. Korelin believes that “development stocks are also a pretty safe bet in this market.” He recommends shares in companies engaged in exploration to enlarge their existing assets rather than to discover an asset. The best are companies who already have enough assets to position them for takeover by middle to large producers of gold. The largest mining companies are trying to replenish their inventories and acquiring these organizations is the easiest means of accomplishing that.
One of the stocks Mr. Korelin recommends is Exeter Resource Corp., a company working on a gold and copper discovery project in north Chile. The Caspiche project has already yielded 24.3 million ounces of the precious metal. This makes it the second largest, and still growing, discovery in Latin America.
Novagold Resources Inc. is another junior gold mining company that is developing large deposits of gold. It has two deposits in the state of Alaska that total more than 31 million ounces. Ivanhoe Mines Ltd. represents another opportunity due to its Mongolian deposit of 45 million ounces. While a large quantity of gold is good, investors should not overlook quality. Higher grades of gold provide the project with more insulation against fluctuations in the price of gold.
Extorre Gold Mines has high grade deposits in its Cerro Morro operation located in southern Argentina. Having a high grade of gold removes a great deal of risk when it comes to potential mine development, says David West, a mining analyst with Salman Partners. He feels that Cerro Morro is “one of the better projects.”
Source: Resource Investor. Davis, Marc. Emerging Gold Stocks: ‘Show Me the Money!’