Gold prices high. But gold stocks a bargain.
While聽gold prices聽are not far from the highs of last September, gold stocks are hitting 52-week lows. So why choose gold stocks over the real thing?聽聽
Right now, they鈥檙e a bargain, said Patrick Chidley, mining analyst for HSBC.
聽鈥淢ining companies have been expanding their margins rapidly and as their earnings increase, these companies are paying very strong dividends,鈥� he told CNBC Thursday.
聽Chidley cites聽Barrick Gold听补苍诲听Newmont Mining聽as top examples. 鈥淓very year they鈥檝e been replacing their reserves. With the stock, you鈥檙e buying the reserve gold, plus you鈥檙e getting a return,鈥� he added.
Chidley has an 鈥渙verweight鈥� rating on Barrick Gold,聽Randgold Resources, and聽El Dorado Gold.聽
鈥淲e think the whole mining sector is attractive right now,鈥� he said. 鈥淎lthough we鈥檙e seeing gold prices come down off recent highs [the precious metal has dropped over $60 from Friday鈥檚 close], at $1,660, or $1,650 an ounce, these gold companies can make decent money.鈥�
On Friday,聽spot gold聽was hovering around $1,645. HSBC is forecasting a rise in price to $1,850 an ounce, not based on gold鈥檚 value as a safe-haven asset, but for its performance against other currencies.聽
鈥淲e have been seeing devaluation of currencies versus gold,鈥� he said. 鈥淚t seems to be the anti-dollar 辫濒补测.鈥�
