With all the noise and uncertainty floating around these days in the global economy, it’s no surprise everyone is looking for a unique way to profit from gold, the generally acknowledged safe haven in times of strife.
John Redstone, analyst with Desjardins Securities, has come up with a list of six base metals companies that are also well-leveraged for a rising gold price. Interestingly enough five of the six companies on the list are also on a similar one published by Stonecap Securities a week ago, perhaps one of those rare instances when analysts actually agree on something.
“Our list includes companies that provide immediate or day-to-day exposure to changes in the gold price, and excludes those producers that have pre-sold a significant percentage of production at a fixed price, or have minimal exposure due to large hedge positions through 2011,” he said in a note to clients.
Desjardins forecasts gold to rise to US$1,325 an ounce in 2011.
Here’s the list, based on sensitivity to changes in gold price (annual EPS change per +US$100/oz increase):
Freeport-McMoRan (+US21 ?): "Positioned to produce over 1.5 million ounces of gold this year. Provides the largest exposure to the gold market within our base metals research coverage."First Quantum Minerals (+C13 ?): "Although primarily a copper producer, gold is produced at the Kansanshi and Guelb Moghrein mines."Imperial Metals (+C10 ?): "A quarter of the company's total revenue during the first half of 2010 was generated by the sale of gold."QuadraFNX (+C5 ?): "Produces approximately 90,000 ounces a year."HudBay Minerals (+C4 ?): "Currently produces slightly less than 100,000 ounces a year."GlobeStar (+C1 ?): "A small copper producer, GlobeStar's earnings are only slightly affected."