Barrick Gold Corporation (USA) (ABX), New Gold Inc. (USA) (NGD), Eldorado Gold Corp (USA) (EGO): How to Play the Spike in Gold

Another low-cost producer is mid-cap miner New Gold Inc. (USA) (NYSEMKT:NGD), which has an all in sustaining cost of $931 per ounce.  This like Barrick Gold Corporation (USA) (NYSE:ABX) is one of the lowest in the industry. New Gold Inc. (USA) (NYSEMKT:NGD) was also able to grow its gold production in the second quarter, despite slashing capital expenditures for exploration and mine development. For that period New Gold’s production, grew by 8% year-over-year.

New Gold Inc. (USA) (NYSEMKT:NGD) also has a solid project development pipeline and has been able to mitigate much of the risk from its troubled El Cerro mine development located in Chile. But unlike Barrick Gold Corporation (USA) (NYSE:ABX), New Gold’s appears fairly valued trading with an enterprise-value of 10 times EBITDA.

The final candidate is mid-cap Eldorado Gold Corp (USA) (NYSE:EGO), trading with an enterprise-value of eight times EBITDA. It is also a relatively low-cost producer having an all in sustaining cost of $1,010 per ounce.

But even more exciting for investors is that Eldorado Gold Corp (USA) (NYSE:EGO)-despite slashing its exploration and mine development programs-was able to grow second quarter production by a stunning 32% year-over-year. This leaves it well positioned to boost its revenue and margins on the back of the recent spike in the gold price.

Foolish final thoughts

It is unclear whether the recent spike in the price of gold is the start of a sustainable rally or a short-term recovery. There are too many mixed signals indicating that it could move either way. But what is clear is that there are a number of bargains to be found in the gold mining industry. Like Barrick, New Gold Inc. (USA) (NYSEMKT:NGD), and Eldorado Gold Corp (USA) (NYSE:EGO), the best are those that over time will reward patient investors.

The article How to Play the Spike in Gold originally appeared on Fool.com and is written by Matt Smith.

Matt Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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