Precious metals have been a disaster zone for years — since peaking in 2011, gold is down more than 36% and finished 2013 with its worst annual loss in 32 years — and that has led to a beating in gold stocks as well.
A combination of factors caused the meltdown: The rip-roaring performance in stocks, nonexistent inflationary pressures, fading geopolitical risk, and even the resurrection of a little bi-partisanship in Washington.
I discussed all this in my last post, as well as the prospect for a turnaround in the precious metals — led by tightening supply as unprofitable mines are closed as well as the inevitability that all the fiat currency alchemy being conducted by the major central banks results in higher inflation (if not an outright currency crisis). Just look at the way officials from South Korea are starting to push back against Japan’s yen depreciation strategy.
Last week, I recommended moving into silver as a way to prepare for a possible breakout move as the metal consolidated near its summertime lows. Recommendations included Silver Wheaton (SLW) and Endeavour Silver (EXK) — which are up 5% and 14%, respectively, since that post.
But more gains are coming, as gold mining stocks join what looks to be the first major breakout move in the precious metals since August and the summer of 2012 before that. Here are three additional gold stocks worth considering:
Allied Nevada Gold (ANV)
Click to Enlarge Allied Nevada Gold (ANV) operates the Hycroft open-pit mine near Winnemucca, Nev., that produced 137,000 ounces of gold and 794,000 ounces of silver in 2012. Through the end of Q3, revenues increased 34% year-over-year — impressive considering the decline in physical gold prices over that period.
Overall, analysts are looking for ANV’s revenues to swell to $269 million this year, up 25% from full-year 2012 results, and to $399 million in 2014.
After hitting a high above $45 per share back in 2011, ANV is trading at less than $4 now as it emerges from a consolidation pattern that’s been building since August.
Vista Gold (VGZ)
Click to Enlarge Vista Gold (VGZ) is an acquisition-and-exploration-stage gold company focused on projects in Australia, Mexico and Indonesia, as well as California and Utah. In October, the company sold its Las Cardones gold project in Baja California Sur.
Vista Gold was originally the parent holder of Allied Nevada’s assets until ANV was spun out in 2007. Now, the company is focused on its Mount Todd property in Australia, which is the largest undeveloped gold resource in Australia.
VGZ stock has fallen from a high of $4.60 a share to just 47 cents now — a whopping 90% decline! A return to the 200-day moving average now would be worth more than a 100% gain from here.
International Tower Hill Mines (THM)
Click to Enlarge Like Vista Gold, International Tower Hill Mines (THM) is an exploration-stage company. THM is focused on its Livengood project in Alaska, outside of Fairbanks. The project holds proven and probable gold reserves of 9.6 million ounces — enough to support production over a 14-year mine lifetime.
Shares are down to just 46 cents a share, down from $10.50 in 2011, and are moving into their first medium-term uptrend since late 2010. A continuation of the move higher here could be explosive.
As of this writing, Anthony Mirhaydari had added all three recommendations to his Edge Letter Sample Portfolio. He also has recommended ANV and THM to his newsletter subscribers.