Demand for industrial and consumer gold (think: cash-for-gold jewelry ads) is booming, but typical sources of supply—including central banks—are dwindling. Production problems with ore have limited the supply of gold, explains Laurel S. Alberty of Alberty Financial Planning Services. These factors have led gold mining companies to scramble to cash in, experts say.
Tom Winmill of Midas Fund favors Barrick Gold (NYSE: ABX; Price: $34.57) and Jaguar Mining (NYSE: JAG; Price: $9.32).
Prakash Dheeriya, who is a professor of finance at California State University-Dominguez Hills, believes that Jaguar Mining is “severely overpriced.” He says Barrick Gold is a better buy; it is more diversified and less vulnerable to gold speculation.
Robert J. Fuest of Landor & Fuest Capital Managers also likes Barrick Gold. He believes that Jaguar Mining is uniquely positioned for the long term. “South America will be one of the biggest winners in this global shake-out,” he says, and Jaguar operates in Brazil. But he concedes that the company’s cash flow is not in good shape right now and that the volatility of its share price is akin to that of a growth stock.