In the past year, the world’s second-largest gold miner Barrick Gold (Can:ABX) has seen its share price tumble by a quarter. The largest gold miner Newmont (US:NEM) is trading at the same price as a year ago. Investors priced in future earnings early because in recent weeks, both companies have announced record cash profits and are paying out hefty dividends.
IC TIP:
Buy
at
1,110p
Tip style
Value
Risk rating
High
Timescale
Medium Term
Bull points
Gold production increasing
Dividend consistent and set to rise
Net cash
Expansion plans outside Zimbabwe
Bear points
Power situation, country risk
Lack of access to debt
But gold investors can still find value. It does mean taking on more risk, however, just like miners moving to tougher jurisdictions or exploring unproven orebodies to make new discoveries.