Newmont Mining Corp (NEM), Barrick Gold Corporation (USA) (ABX), Yamana Gold Inc. (USA) (AUY): Is Now Really the Time to Be a Contrarian?

Financially, the company is healthy with a total debt to equity ratio of just 0.11. Its ROI of 4.3% and profit margin of 16.2% are lower than Newmont Mining Corp (NYSE:NEM), but in the long run, Yamana Gold Inc. (USA) (NYSE:AUY)’s low all-in sustaining costs should boost its profitability.

When will gold stop falling?

It is hard to tell when gold will stop falling, but the age old supply and demand equation will have an important part to play. Mines cannot be shut down in the blink of an eye, and miners are hesitant to recognize losses. For these reasons, it will probably be some time before supply falls enough to boost prices.

Conclusion

Being a contrarian and simply buying up all of the gold miners may sound attractive, but it is difficult to support such a strategy. Newmont Mining Corp (NYSE:NEM)’s high all-in sustaining costs overshadow its high ROI and profit margin. Barrick Gold Corporation (USA) (NYSE:ABX)’s profits will return, but its cost overruns in Chile and large size make the company a questionable long-term investment. Yamana Gold Inc. (USA) (NYSE:AUY) is the one gold miner where it may pay to be a contrarian. The company’s low costs and small size mean that it will be able to grow its production and profit, even if gold is in a bear market.

The article Is Now Really the Time to Be a Contrarian? originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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