The key to finding a successful gold/silver equity is to realize individual miners have little influence on the price of the metals but as a collective can have an impact. However, chances are you are not financially able to create your own ETF basket of equities in a sector. Therefore, most of you are probably searching for one or two miners and maybe a third speculative one at most. Realize that one thing each miner can attempt to manage are costs. Average production costs are up year after year. Labor costs rise and machinery costs are up, as are fuel costs.
When the price of gold was rising, companies were focused on producing more and funding exploration rather than on cutting their expenditures. With gold $550 off its highs in 2011, times have changed. Most gold miners have started to implement a multitude of cost-cutting measures. One successful miner that I believe is seriously worth your consideration is Alamos Gold (NYSE:AGI) because there is still strong demand for gold. Second, Alamos has managed to keep its costs as low as possible. In this article I will discuss the latest quarter from Alamos, which sparked a near 20 percent selloff stemming from guidance that was less than expected. I view it as an opportunity.
Alamos has two main projects, one in Mexico (Mulatos) and two others in Turkey (Agi Dagi, Kiralzi) – see Figure 1 and Figure 2, respectively.