Barrick Gold Corporation (USA) (ABX), Newmont Mining Corp (NEM): Could it be Time to Dump Gold Miners in Favor of These Silver Producers?

Page 1 of 2

Traditionally, gold is a safe haven asset, or it used to be. Currently, gold is anything but safe. Indeed, the SPDR Gold Trust has a beta of 0.19 indicating that the price of the fund and gold have a positive correlation to the general market. Additionally, the price of gold has hardly been steady in recent times as a combination of Federal Reserve comments and high frequency trading has thrown the price around.

Newmont Mining Corp (NYSE:NEM)

Is it time for gold bugs to give up?

Well it might be, the volatile price of gold would be enough to discourage even the steadiest of investors and the shares of gold miners have been on a steady decline for almost a year now without any signs of staging a turnaround.

Furthermore, these declines could be about to get a lot worse. After the suspension of the development at its Pascua-Lama mine Barrick Gold Corporation (USA) (NYSE:ABX) has been forced to admit that it will have to take a write-down of $5.5 billion on this one mine alone. Moreover, the company still uses a gold price of $1,500 per ounce to value the price of gold in its mines, paving the way for further write-downs and re-valuations – the company’s average cost of production from its Australia Pacific mines is expected to be between $1,200-$1,300 indicating that some of Barrick Gold Corporation (USA) (NYSE:ABX)’ production is already unprofitable.

Perhaps it is time to consider sliver?

Compared to gold silver appears to be relatively stable. Indeed, it would appear that silver miners have been much more sensible with the way that they spend their cash and reinvest their profits over the past few years when the times were good. In particular, Hecla Mining Company (NYSE:HL), personally one of my favourite mining stocks on the market.

You see, during 2011 and 2012 when precious metal prices were high, both Barrick Gold Corporation (USA) (NYSE:ABX) and Hecla Mining Company (NYSE:HL) were pulling in profits, however, closer look at company cash flows reveal a different story.

2011

Barrick Hecla
Net operating Cash Flow $5,260 $70
Net Investing Cash Flow -$12,690 -$80
Issuance of debt/ Stock $6,140 -$3
Net Change in Cash -$1,210 -$17

Figures in $US millions

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!