I believe precious metal miners represent true value, but I cannot state when the market will come to the same conclusion.
Last week I bought a basket of miners with a significant amount of money. Many of these stocks are also held in various Sitka Pacific strategies.
Mish Miner Basket
| Symbol | Average Price | Initial Weight | PE | Dividend | Yield |
|---|---|---|---|---|---|
| NEM | $34.08 | 30% | 10.06 | $1.40 | 4.10% |
| GG | $29.18 | 15% | 15.70 | $0.60 | 2.10% |
| ABX | $20.64 | 15% | NA | $0.80 | 4.00% |
| GDX | $29.60 | 10% | 11.00 | NA | 1.20% |
| GLDX | $16.73 | 5% | NA | NA | 6.52% |
| HMY | $4.08 | 5% | 11.73 | $0.10 | 2.30% |
| SBGL | $3.38 | 2% | NA | NA | NA |
| SLW | $23.72 | 9% | 14.22 | $0.48 | 2.00% |
| PAAS | $12.65 | 9% | 42.38 | $0.50 | 4.10% |
General Comments
As you can see, most of the investment is with major mining companies that pay substantial dividends. PEs are trailing, not optimistic or unrealistic forward estimates. Price per book value is low in most cases. Each symbol is a clickable link to Yahoo!Finance statistics.
Gold Stock Comments
- NEM - Newmont Mining: My best value play and weighted accordingly. Price/book is a mere 1.19 and I have no reason to believe book value is overstated. Trailing PE is 10.04 and the dividend yield is 4.10%. What's not to like?
- GG - Goldcorp: A major Canadian gold miner with a respectable PE and dividend. Goldcorp trades right at book value (.99 to be precise).
- ABX - Barrick Gold Corporation: Another major Canadian gold miner with a respectable dividend. Earnings were negative last quarter due to writedowns. Dividend appears solid. Price/per book is a mere .88 (less than book value).
- GDX - Market Vectors Gold Miners ETF. Rather than pick too many additional stocks and following them all, I put 10% of my basket into a gold miners ETF basket.
- GLDX - Global X Gold Explorers ETF. This is a speculative play on gold explorers. Some of the companies in the ETF are likely to go bust. Hopefully some will strike it big. I weighted this according to risk, with only 5% of my basket.
- HMY: Harmony Gold Mining Company Limited: This is a South African mining company that stands to appreciate from its gold mining operations and also from a falling Rand.
- SBGL - Sibanye Gold Limited: This is another South African miner and arguably my most speculative play. It is weighted accordingly at 2% of the basket.
Silver Stock Comments
- SLW - Silver Wheaton Corp: SLW has a respectable PE and pays a reasonable dividend. It is a play on the price of silver which I expect to recover at some point.
- PAAS - Pan American Silver Corp: PAAS is a major silver producer with a nice dividend yield of 4.10%. Pan American is trading at 68% of book value.
As you can see I weighted the basket 82% gold to 18% silver which reflects my belief that gold is a far safer play. None of these picks constitutes a recommendation in any way. Please do your own due diligence.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
