Some hedge funds expect a falling dollar and rising gold prices. Could gold mining stocks benefit?
One of the most common questions on the minds of individual investors and hedge fund managers alike is, when will the US treasury start its tapering? In other words when will the Fed start to lease the markets off of its quantitative easing - the easy money that's been boosting credit markets and staving off another recession.
And many investors are considering the ways in which tapering could affect the dollar relative to the price of gold. The two trade inversely – when people are bearish on the dollar they put their money into other markets, gold in particular - and when they are bullish on the dollar the price of gold often goes down.
The Senate finance committee is expected to goad a more finite answer from the next Fed Chair, Janet Yellen this Thursday regarding when tapering will commence: estimates ranged from anywhere between this past September through the next year. As explained in the video by our friends at Hedgeye, constant speculation about the timing and intensity of tapering have led to a lot of volatility, including in the gold markets:
If the dollar falls, which Hedgeye's analysts suspect it will, that could lead to a long term spike in the value of gold.
Now, while many factors can influence the success of a particular mining stock - one of the major factors impacting their business is the global price for whatever metals they pull out of the ground. Typically, higher prices for firms that sell raw materials can lead to bigger profits.
[Read more on mining from Kapitall: Will Cliffs Continue to Outperform Other Mining Stocks?]
We decided to look for mining stocks that would benefit from higher gold prices, should Hedgeye's analysis prove correct. Beginning our screen with the roughly seventy companies that sell or mine gold, we looked for those experiencing spikes in institutional buying. When hedge funds, mutual funds, and other financial institutions are buying more of company's stock, it is generally because those institutions expect the stock to perform well.
We were left with five gold mining stocks on our list.
Click on the interactive chart to view market capitalization over time.
Do you see investing opportunities in these gold mining stocks? Use the interactive list below to begin your analysis.
1. Allied Nevada Gold Corp. (ANV, Earnings, Analysts, Financials): Engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in the state of Nevada. Market cap at $375.17M, most recent closing price at $3.86.
Net institutional purchases in the current quarter at 8.9M shares, which represents about 9.26% of the company's float of 96.08M shares.
Major Holders: Wellington Management Company, LLP (13.93%); Van Eck Associates Corporation (8.26%).
2. Banro Corporation (BAA, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of gold properties in the Democratic Republic of the Congo (DRC). Market cap at $193.03M, most recent closing price at $0.81.
Net institutional purchases in the current quarter at 24.9M shares, which represents about 9.97% of the company's float of 249.72M shares.
Major Holders: I.G. Investment Management, Ltd (8.95%); Tradewinds Global Investors, LLC (8.2%).
3. Compania de Minas Buenaventura SA (BVN, Earnings, Analysts, Financials): Engages in the exploration, mining, processing, and development of gold, silver, and other metals in Peru. Market cap at $3.58B, most recent closing price at $14.07.
Net institutional purchases in the current quarter at 13.0M shares, which represents about 5.95% of the company's float of 218.64M shares.
Major Holders: Van Eck Associates Corporation (6.73%); Vontobel Asset Management, Inc. (4.92%).
Net institutional purchases in the current quarter at 82.8M shares, which represents about 7.26% of the company's float of 1.14B shares.
Major Holders: First Eagle Investment Management, LLC (5.44%); Van Eck Associates Corporation (5.08%).
Net institutional purchases in the current quarter at 3.5M shares, which represents about 5.49% of the company's float of 63.78M shares.
Major Holders: Van den Berg Management Inc, dba Century Management (10.21%); U.S. Global Investors, Inc. (3.11%).
(List compiled by James Dennin. Market capitalization sourced from Zacks Investment Research, all other data sourced from Finviz.)
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Allied Nevada Gold Corp.(ANV, Chart, Download SEC Filings)
- Banro Corporation(BAA, Chart, Download SEC Filings)
- Compania de Minas Buenaventura SA(BVN, Chart, Download SEC Filings)
- Kinross Gold Corporation(KGC, Chart, Download SEC Filings)
- Comstock Mining, Inc.(LODE, Chart, Download SEC Filings)
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