The mining team at Haywood Securities says now is a good time to invest in undervalued gold stocks.
“In the first nine months of 2018 the price of gold has declined 9%, while gold equities have declined about 20% (GDX and GDXJ), and we see the relative underperformance of the precious metals equities as an opportunity to build a position in undervalued names with upside potential,” Haywood analysts state in a new research report.
“Gold has tested support in the US$1,180/oz. range several times over the last two years and with the US dollar appearing overbought, we expect gold is much closer to the bottom of the trading range.”
Haywood’s pick of companies that have strong organic growth, which should in turn generate lower costs and increased cash flow per share, include B2Gold (TSX: BTO), Endeavour Mining (TSX: EDV) and Semafo (TSX: SMF) among the mid-cap gold producers, and Roxgold (TSX: ROXG) among the junior gold producers. In terms of exploration and development stage gold companies, it likes Barkerville Gold Mines (TSXV: BGM).
For the rest of this year, Haywood forecasts a gold price of US$1,250 per oz. (down from its previous estimate of US$1,282 per oz.) and a silver price of US$15 per oz. (down from US$19.35 per oz.)
Next year it believes gold will rise to US$1,300 per oz. (down from its earlier estimate of US$1,400 per oz.) and silver will climb to US$17 per oz. (down from its previous estimate of US$20 per oz.).