Skip to main content

The Globe and Mail

Gold miners look cheap, compared with bullion

Shares of many gold-producing companies appear to be undervalued based on the spot price of bullion and historical patterns, a report says.

Using two-year trailing data, Steven Butler, senior analyst at Canaccord Genuity Corp., looked at the relationship between gold-producer stock prices and the spot price of the precious metal. He concluded that the top five stocks, offering the best value at the moment based on their departure from the historical pattern, are: Golden Star Resources Randgold Resources Aura Minerals Northgate Minerals and Eldorado Gold

Mr. Butler then looked at the price-to-net-asset-value per share of various producers. Based on average multiples, he determined the spot gold prices implied by the price of each gold stock today. On this basis, senior and intermediate gold producers are priced at an average multiple that discounts gold by $95 an ounce, he said.

Story continues below advertisement

Goldcorp Inc. valuation appeared to discount the price of gold by $174 an ounce, Randgold Resources' stock price suggested a $225 discount and Aura Minerals a discount of $243.

"We continue to believe that equities are inexpensive relative to the gold price and to historical trading multiples," Mr. Butler wrote in a recent report.

"We forecast renewed upward pressure on the price of gold as investors focus again on the sovereign debt issues in Europe, as Portugal, Spain, and Italy are all due to issue bonds later this week," he wrote.

Report an error Licensing Options
Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at