Gold: Taking a Shine to Dividend-Paying Miners

Sean Brodrick

Gold continues to flop around, and recently dropped below $1,400 per troy ounce again. This is due to a stronger U.S. dollar, continued bearish sentiment among gold investors and further selling by Exchange-Traded Funds.

ETF holdings of gold recently declined 16% so far in 2013 after gaining every year since the first Exchange-Traded Product launched in 2003.

At the same time, gold holdings in ETFs dropped 6.2 metric tons to 2,219.7 tons, the lowest since July 2011, according to Bloomberg data.

So, it’s hard for gold miners to make any progress in this market. In fact, many of them continue to sink like they have millstones around their necks.

Gold Sinks Despite Consumer Buying

I believe gold is going to find its feet sooner rather than later …

Physical buying is huge, especially in Asia. And the cheaper gold gets, the more people in India seem to think they yellow metal is a value worth buying.

  • India’s trade deficit widened in April by more than 70% from March, as imports of gold and silver doubled! India imported $7.5 billion worth of gold and silver in the past month, compared with $3.1 billion in the year-earlier period.
  • Mainland China’s imports of gold from Hong Kong more than doubled to an all-time high in March. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg data.
  • And here in the U.S., sales of gold coins by the U.S. Mint rose in April to the highest level since December 2009.

Meanwhile, the gold miners themselves are becoming bargains by many metrics. One metric we’re going to look at today is dividends.

It may surprise you to know that leading gold miners have been raising their dividends rather nicely. In fact, during the past 15 years, the world’s top 20 gold companies have increased their dividends at a compound annual growth rate of 16%.

By comparison, gold only rose 12% annually. Here’s a chart from Frank Holmes of U.S. Global Funds  …

In fact, many gold miners offer yields that are much-better than the payouts you can receive on Treasuries.

So here, I’ve put together a list of the top 10 dividend payers among precious-metals miners …

Some of these don’t just mine gold and silver — for example, Freeport-McMoRan (FCX) is a more-diversified miner that also produces copper and molybdenum. But they’re all leveraged to the price of gold and/or silver.

Projects at Incredible Discounts

If you think the discounts on miners are huge, you should see the discounts on explorers and developers.

Stockhouse.com reports that the average value of 50 gold juniors that it tracks, each with a minimum of 1 million ounces in resources, has seen the value of that resource collapse to $17 per ounce.

That’s an average. Some of these are priced like the projects are radioactive.

For example, Victoria Gold has a resource of 6 million ounces of gold — and $35 million in cash — and it’s trading at 14 cents a share. That’s with a market cap of $47.6 million.

Back out the cash, and its gold in the ground is being valued at $2.1 per ounce.

And this isn’t a low-grade resource — Victoria recently came back with drill results of 2.69 grams of gold per ton on one hole!

To be sure, it takes money to build a mine; and gold in the ground is not the same as gold in a vault. Still, Victoria is being priced like the world is giving up on gold.

I’m not giving you the symbol for Victoria Gold because I don’t think you should buy it now. Give the bears their due; gold looks like it will go lower in the short term. Longer term … well, I think you can make a mountain of profits.

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If You’re Selling Your Gold

(or Thinking About it) …

Gold’s been on its longest losing streak in four years. Holdings in the largest gold-backed ETF are also at four-year lows.

With gold currently at a four-week low, it’s clear investors are ditching the safety and security of the yellow metal for more-speculative returns in the market.

Should you hold on to your gold … get out while you can … or load up before the market changes its mind? Watch this explosive new video before you make any sudden moves!

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Plenty of Money to Be Made

I don’t know where or when we’ll see the bottom in gold, but I’m expecting sooner rather than later. And just as there is more than one way to skin a cat, there is more than one way to make money in gold.

Less than a month ago I recommended my Global Resource Hunter subscribers buy a company leveraged to gold prices; that position is already up more than 9%!

Don’t tell me you can’t make money in gold. We’re doing it right now!

By the way, I just gave my Global Resource Hunter subscribers a list of 19 top dividend-payers in gold, so they can make their own shopping lists. And I told them about three dividend-payers I would avoid for very good reasons.

Global Resource Hunter focuses on gold, silver, oil, natural gas and other power-packed plays in natural-resource stocks. On top of that, we zero in on some pretty attractive dividend-payers in the commodities world, and we’ve been kicking the market’s butt recently.

There’s always a bull market somewhere, and big, fat dividends are the icing on the cake. When gold’s rebound comes, those big dividends will make the amazing values in the mining space all the more attractive — and that could be rocket fuel for the next leg up.

With diligence, hard work and strong picks that pay you while you wait for them to go up, you can also make buckets of money. If you’re doing this on your own, be careful. It’s easy to get hurt.

But to get my timely, detailed picks, my strongest recommendation for you right now is to give my Global Resource Hunter service a try. In fact, I just released my newest issue on Friday. You can get instant access to it when you activate your membership today!

All the best,

Sean

Your thoughts on “Gold: Taking a Shine to Dividend-Paying Miners”

  1. We see miners,that should appreciate by 100%,or more,when this gold decline ends, and you’re talking about 4% dividends.Why bother?

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Sean travels far and wide to seek out small-cap values in the natural resource sector. His journey started in New England. As a youth he worked on Mt. Washington, on the cog railroad that runs to the summit.