After struggling for about two years, I think it is time for gold mining stocks to be accumulated at current levels. Even George Soros got back into them a few months ago. I think that at $1,250 per ounce, there are struggles that will need to be overcome in cost-cutting measures, labor, etc., but if gold comes back to the $1,300 level and above, I think these stocks will shine brightly. I have previously outlined the various reasons why I believe the metals and mining stocks, particularly with gold and silver exposure, are buys. From 2009 to 2012, quantitative easing was pushing gold and silver to the moon.
It all changed in October 2012, and the sector has since been as unattractive as the plague. But is now a good time to enter the gold mining stocks? The short answer is yes, particularly for the long term, as I see gold prices continuing to rise due to inflationary pressures over time. Right now inflation is at bay, and deflation has been a concern. However, it is only a matter of time before it picks up, in my opinion. Those holding gold, silver, and stocks in the sector as insurance against inflation will be rewarded. Among my favorite gold miners is Yamana Gold (NYSE:AUY). The stock has been beaten down. It currently sits at $8.08, having been cut in half as metal prices have plummeted. However, with costs under control and metal prices stabilizing, I think it is time to get back in and do some buying in this name.
Before citing some specific numbers, I want to summarize the company’s properties. The company has precious metal properties and land positions throughout the Americas, including in Brazil, Chile, Argentina, and Mexico. Its portfolio includes seven operating gold mines: Chapada (copper, gold), El Peñón (gold, silver), Jacobina, Gualcamayo, Minera Florida (gold, silver, zinc), Fazenda Brasileiro, and Mercedes (gold, silver), as well as a 12.5 percent indirect interest in the Alumbrera mine (copper, gold, molybdenum). It also has various development-stage projects and exploration properties in Brazil, Chile, Argentina, and Mexico. That said, let’s delve into why this company is turning around and it’s a buy.