One of the first lessons beginning investors learn is the value of diversification in preventing big losses. But in order to reap the largest gains when they make the right call, aggressive investors often use concentrated portfolios to tap into trends they see as potentially providing explosive growth opportunities.
Unfortunately, those big bets don’t always work out. Hedge fund giant John Paulson has learned that lesson well this year with his gold-oriented fund, which has lost 65% of its value so far in 2013. Let’s take a look at what happened to Paulson and what it can teach you about taking concentrated positions in your own portfolio, especially in volatile investments like gold.
Image source: Wikimedia Commons.
Top 10 Gold Companies To Buy For 2014: Northgate Minerals Corporation(NXG)
Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.
- [By Christopher Barker]
I’ve been reminding Fools to consider positioning for Northgate Minerals’ golden explosion for months, and patient gold investors continue to await the day when Northgate’s powerful prospects are more fully reflected in the shares. Construction of the critical Young-Davidson mine continues right on schedule, and first production now stands about two quarters away. That means Northgate is reasonably likely to achieve its 2012 production target of 300,000 ounces, followed by 350,000 ounces in 2013. Meanwhile, Northgate recently drilled "one of the best holes ever intersected on the property" — featuring 4.31 grams of gold per ton over a very wide 79.6-meter segment — from a new discovery zone outside of the existing 2.8 million-ounce reserve.
If Young-Davidson were Northgate’s sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill prog ram at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.
Top 10 Gold Companies To Buy For 2014: NEW GOLD INC.(NGD)
New Gold Inc. engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The company primarily explore for gold, silver, and copper deposits. Its operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. The company also has development projects, including the New Afton gold, silver, and copper project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is headquartered in Vancouver, Canada.
- [By Christopher Barker]
This stock has set the gold standard for share price appreciation among gold miners, advancing more than 140% since I introduced Fools to the new face of New Gold back in January 2010. Looking out over the long-term horizon, New Gold has constructed a gorgeous development pipeline to complement its trio of producing gold mines, featuring: a low-risk 30% stake in Goldcorp’s El Morro project in Chile, the New Afton copper and gold project in British Columbia (with production scheduled to begin mid-2012), and the recently acquired Blackwater project north of New Afton.
Although I expect the Blackwater deposit to expand considerably with further exploration, the project’s initial indicated gold resource of 1.8 million ounces already leaves New Gold in command of 14.7 million ounces of measured and indicated gold resource. Tossing in copious supplies of by-product metals — most notably 83.5 million ounces of silver and 3.5 billion pounds of copper — New Gold is positio ned to enjoy consistently low production costs throughout its sustained growth trajectory.
Top Value Stocks For 2014: Golden Star Resources Ltd(GSS)
Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.
- [By Curtis]
Golden Star Resources, Ltd Com (AMEX:GSS): This equity had 10,766,183 shares sold short as of Aug 31st, as compared to 9,400,663 on Aug 15th, which represents a change of 1,365,520 shares, or 14.5%. Days to cover for this company is 3 and average daily trading volume is 3,419,976. About the equity: Golden Star Resources Ltd. is a mid-tier gold mining company. The Company’s operating mines are situated along the Ashanti Gold Belt in Ghana, West Africa.
Top 10 Gold Companies To Buy For 2014: CME Group Inc.(CME)
CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.
Top 10 Gold Companies To Buy For 2014: Claude Resources Inc.(CGR)
Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.
- [By Christopher Barker]
Hardly a johnny-come-lately, Claude Resources initiated small-scale gold production from its flagship Seabee mine in Saskatchewan in 1991. Just last year, Claude added the Santoy 8 mine to that operation to offer a touch of timely growth. Meanwhile, the operation hosts a number of compelling exploration targets like the recently discovered Neptune zone. After 10 of 15 recent drill holes from Neptune featured visible gold, including a nice high-grade intercept of 84.66 g/t over 3.2 meters, prospects are building for Claude to add some additional years to this time-tested operation.
While I welcome the existing cash flow from Seabee, my investment thesis for Claude Resources centers around a pair of exciting exploration properties: the Amisk joint venture project southeast of Seabee and the Madsen property at Red Lake, Ontario. At Madsen, historical gold production between 1938 and 1976 yielded 2.4 million ounces at an average grade of 9 g/t. To date, Claude has ident ified an indicated resource of 928,000 ounces at a comparable grade. At Amisk, drill intercepts of eye-catching thickness suggest strong potential for a profitable open pit operation, including an intercept of 2.16 g/t over 241 meters! The deposit’s 921,000 indicated gold-equivalent ounces represent only an early stage hint of the deposit’s full potential. The stock is a top-10 holding for Sprott Asset Management, and a core holding for this Fool as well.
Top 10 Gold Companies To Buy For 2014: Goldman Sachs Group Inc.(The)
The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.
Top 10 Gold Companies To Buy For 2014: Australian Dollar(AU)
AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.
- [By Mel Daris]
AngloGold Ashanti (AU), a South African company, is trading for $33 and pays a dividend which yields 3.20%. The stock has an astonishing P/E of 1,015. Its net income totaled $112 million last year, but negative cash flows of $620 million. It holds net tangible assets of $4.3 billion and its balance sheet has not grown nearly as quickly as the other companies on this list. AngloGold has two new mines coming online in Congo and Colombia.
Top 10 Gold Companies To Buy For 2014: Goldcorp Incorporated(GG)
Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.
- [By Christopher Barker]
Every ship needs an anchor, and for gold investors looking to navigate the admittedly rough seas of the gold mining industry, I can think of no greater anchor than Goldcorp. With the important caveat that some of the company’s substantial challenges faced during 2012 could present further selling pressure in early 2013 as forward production guidance takes a bit of a haircut, I agree with Credit Suisse analyst Anita Soni that any such weakness may present a meaningful buying opportunity. I won’t go into great detail here, since investors can access my premium research report on Goldcorp for further discussion of the substantial long-term investment opportunity in the shares of this quality producer.
- [By Smith]
Although its name does little to denote this, Goldcorp is a well-positioned silver play for 2011, according to the analysts we surveyed.
“The name is one that people tend to think of it as gold, but it’s in the top 20 of silver producers globally with about 13 million ounces a year ,” says Peter Sorrentino of Huntington Funds.
Morningstar analyst Min Tang-Varner recently raised her fair value estimate for Goldcorp by $12 a share to $48 after the company reported a 28 per cent rise in revenue for the third quarter ended Sept. 30 compared with the year before.
This, despite 4 per cent decline gold production, as revenue received a boost from $1,239/oz realized gold prices and $19.15/oz silver prices.
Tang-Varner tells investors that the reduction of Goldcorp’s cash cost by $100/oz from the prior quarter to $260/oz due to higher silver, copper and zinc production and the run-up in their prices, was “rather extraordinary.&rdqu o;
Sorrentino says Goldcorp is a stock that investors would be “wise to consider” if they were looking for a name that would be discovered suddenly as a major silver play, without feeling that they were overpaying for it.
Goldcorp also prices everything that it does in Canadian dollars, which should reduce currency risks for investors in Canada.
Top 10 Gold Companies To Buy For 2014: Agnico-Eagle Mines Limited(AEM)
Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.
- [By Vatalyst]
With headquarters in Canada, Agnico-Eagle is a gold producer that has been around for a while with operations in Canada, Finland and Mexico and the United States that has paid a cash dividend for 29 consecutive years. AEM gained 25% over the year and reported 83.5% growth in quarterly earnings. It has a market capitalization of $11.4 billion and a trailing P/E ratio of 34x with expectations of earning $0.55 per share. AEM, like other operators like it, are likely a better bet than ETF trust options like SPDR Gold Shares (GLD).
Top 10 Gold Companies To Buy For 2014: Thompson Creek Metals Company Inc.(TC)
Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.
- [By Christopher Barker]
My recent survey of bargain-basement stock valuations among gold miners identified Thompson Creek Metals as a glaring opportunity for value investors. The miner sports two world-class molybdenum mines with 534 million pounds of reserves between them, along with an array of attractive development projects in the pipeline. Foremost among those is the Mt. Milligan copper and gold project, where Thompson Creek expects to launch itself into the ranks of intermediate gold producers with production commencing in late 2013.
With 6 million ounces of gold reserves, accompanied by 2.1 billion pounds of copper, Mt. Milligan will deliver about 262,100 ounces of gold per year for the first six years of a 22-year mine life, averaging 194,500 ounces annually over that entire span. Although 25% of that gold production is already spoken for through a gold stream agreement with Royal Gold (Nasdaq: RGLD ) , Thompson Creek Metals is sure to enjoy a powerful cash-flow explosio n.