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Value Investors Are Slowly Looking at Gold Stocks

August 31, 2011 | About:
Value investors are not known for investing in gold because in the end, gold does not produce any cash flow. However, some, like Seth Klarman, are slowly realizing that there are tremendous opportunities in gold mining stocks. Although the price of bullion increased significantly, the prices of gold mining stocks have not followed the same path. The following are very good videos that can help you understand why there are tremendous opportunities in gold mining stocks.

Lawrence-Roulston-with-Scott-Gibson.bmp

This video is great as it covers some of the basics of the mining industry.

Lawrence-Roulston-Mining-Basics.bmp

Lawrence Roulston discusses China and its role in the precious metals markets.



Lawrence Roulston talks about Gold and Economics.





Posted in About Industries

About the author:

Mariusz Skonieczny
Mariusz Skonieczny is the founder and president of Classic Value Investors, an investment management firm. He is also the editor of Ultimate Value Finder, a monthly newsletter that features three underfollowed, unknown, and undervalued companies ignored by Wall Street.

Visit Mariusz Skonieczny's Website


Rating: 2.1/5 (10 votes)

Comments

AlbertaSunwapta
AlbertaSunwapta - 3 years ago
The gold miners haven't followed? Sounds like a generalization. The market may have good reason for discounting "the market" lower. How have the high quality miners with great moats done?

Maybe in the aggregate, the mining companies haven't followed because people recognize the nature of gold pricing - it peaks and then crashes and it requires rather extreme views and circumstances to drive it up. Additionally, there's tons of known, marginal and readily mine-able gold in the ground out there - at the right price. As the price has risen the supply potential will likely vastly expand.

There's a lot of arguments favouring gold and hence gold mining companies. i.e. There's the usual supply of emotional buyers always fearing some sort of crisis (seems to me they are living in the past), there's asian wedding demand, there's the argument that it's WAY under held as a asset class by pensions, etc., there's growing academic justification and on and on...

Still, I'm sure that even during the 1990s tech bubble, some "value" investors started to see 'relative value' among some tech shares too. Another form of "value trap" occurs where your benchmark itself is inflated if not in bubble territory.

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