Investors seeking promising gold miners should look Down Under, says Markus Bussler in German business weekly Der Aktionär. Unlike their North American counterparts, local producers didn’t binge on acquisitions at the peak of the gold bull market in 2010 and 2011, so their balance sheets are virtually debt-free, helping them take over peers in North America now.
The gold price expressed in Australian dollars has climbed to a new record peak above $1,800 an ounce as the Australian dollar has declined in foreign-exchange markets. Australian producers make their sales in the local currency, while operating costs are around $1,200 an ounce, so margins are healthy. Northern Star and Saracen Mineral are worth researching.
“On 31 May, 1999… Barron’s… was warning about market risks, especially in the technology sector… Over the next few years, Amazon’s stock would drop 95%, eventually falling to below $6 in 2001… [yet] Amazon has [also] risen 4,606% since Barron’s published [that] column, with an annualised average return of 21.1% — about quadruple what the S&P 500 returned over the same period… [So] anytime some company is said to be ‘the next Amazon’ (or Apple or Microsoft), keep in mind that most people would be unable to withstand the sort of pain and wealth destruction that goes along with investing early, even if the ups and downs are temporary. Only if investors can withstand the subsequent drawdown – in Amazon’s case, 83% in 2000; 73% in 2001; 41% in 2004; 46% in 2006; 64% in 2008 — will they be amply rewarded.”
Barry Ritholtz, Ritholtz.com