Tuesday, March 22, 2011

Focus Shifting From Juniors To Seniors

There has been a bit of gate-jumping in the gold stock arena this past year. Seniors have lagged, while juniors have motored. As a result, P/Es of senior maing stock have shrunk. That could change this coming year, says Alix Steel of TheStreet.com, because gold investors are getting tired of promise and want to see production.
Miners have to live up to all their talk and actually produce the gold they promised, at low cash costs, and show that they can manage rising inflation. It's this wicked combo that is making Barrick Gold and Goldcorp potential winners....
J.P. Morgan has buy ratings on both stocks, noting that Barrick has the strongest pipeline and Goldcorp has a huge new mine:
Penasquito produced 4.6 million ounces of silver in the fourth quarter, its first in production. The mine has 18.6 million ounces of proven and probable gold reserves and 1.1 billion ounces of silver, making it one of the biggest in the world.

In a smoother world, the exploration stocks wouldn't have motored before the junior producers. They doing so speaks to a bit of greed entering the gold stock world.

Speakign of the majors, a Reuters survey of five senior-producer CEOs reveals they expect gold to go up to $1,500 this year and $1,600 next year. That's bullish, but moderately so.

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