Are you wondering what are the best gold stocks to invest in for next year – the top 5 best gold stocks for 2013? I’ve put together this list of what I consider to be the best gold stock picks for 2013 – I believe these companies will significantly outperform other stocks and the general market.
Please keep in mind that some of these picks are small cap or even micro cap gold stocks and bear some risk. This article should be read for informational purposes only, and not investing advice.
The gold stock sector is a volatile one, meaning that these stocks are prone to big swings up and down. You must be able to stomach possibly losing 20 percent or more in any given day.
What Are the Top 5 Best Gold Stocks for 2013?
I believe there are many opportunities out there to make good money. I believe some of the stocks mentioned below may double or even triple in the next year alone.
#5 - Brigus Gold
Brigus Gold (Quote: BRD) currently sits at just .95 cents a share, with market cap of about $220 million. With a current P/E of just 11, analysts project earnings of .19 cents per share in 2013. This would give Brigus a current Forward P/E of just 5! Either this gold mining stock stays ridiculously undervalued, or the share price starts to move up.
The company expects to produce 85 - 100 K ounces of gold from its Black Fox operation in 2013, at cash costs of about $700 an ounce. If they can deliver with higher production and lower costs of production, I think the company will see a boost in its share price.
My price target for 2013 is $2 a share, potentially providing a nice double for 2013. If the price of gold goes higher than $2,000, I think this company can go even higher with it.Credit: BrigusGold.com
#4 Claude Resources
This is another very undervalued gold mining stock. Claude hasn't been getting much love for a couple of reasons.
First, the company's cash costs have been among the highest in the industry, reaching $1,000 an ounce earlier this year. However they have been declining every quarter to acceptable levels of $800 per ounce or so. Secondly, I think a lot of people have gotten discouraged with the gold mining stocks of late. But I think it's just a matter of time before the junior mining stocks like Claude bounce back.
Sitting at 53 cents a share with a market cap of just $90 million, Claude looks dirt cheap. The company IS currently profitable, producing 50,000 ounces of gold this year. In the 3Q, Claude earned .02 cents per share on revenue of $23 million. Located in Canada, this companies properties are in one of the best mining jurisdictions in the world.
The company is currently very low on cash and has some short-term debt. However, that debt is manageable, and I see the company re-arranging some sort of financing to fix that issue. In the 4Q, they should focus on rebuilding their cash position instead of spending the money on exploration and development, just to be safe.
Current Price - .53. Target Price for 2013 - $1.25.
#3 Sandstorm Gold
This is the largest gold stock on the list with a current market cap of about $1 billion, sitting around $12 a share. This is also different than the other companies because it is NOT a mining company - is it a gold streaming company.
The business model of the gold streaming companies are quite awesome - they are mine financing companies more than anything. What they do is give money to companies looking to build a mine. For that upfront deposit, they receive a portion of the gold production from the gold mine, for the life of the mine.
Example - Sandstorm gives company XYZ $35 million upfront to receive 10 percent of the life of mine gold production at $500 an ounce. The company expects to produce 100,000 ounces a year. So Sandstorm is entitled to purchase 10,000 ounces of gold a year at $500 an ounce.
Since gold is currently at $1700 and going higher (in my opinion), this leaves Sandstorm with ridiculously high margins. They get all of the upside in the rise of the price of gold, and NONE of the risk of inflation costs. The average cost of mining gold is rising every year, but Sandstorm has the price locked in, forever. This stock is much less risky than other mining stocks, in my opinion.
Current Price: $12 Target Price for 2013: $16-20.
#2 St. Andrew Goldfields
"St Andrew Goldfields Ltd. ("SAS" or the "Company") is an evolving Canadian based gold mining company targeting annual production of ~100,000 ounces of gold in 2013. SAS also has an extensive land package in the Timmins mining district, Northeastern Ontario, Canada, which lies within the world famous Abitibi greenstone belt."
This is another Canadian mining company, like Claude and Brigus, that I feel is ridiculously undervalued at the moment.
The stock price is just .40 cents with a market cap of 150 million. The company has EPS this year of .08 cents, giving them a current P/E of just 5!
The company is currently very profitable - In the last quarter, they earned net income of $6.3 million or $0.02 per share. Other results:
- Generated operating cash flow of $14.7 million.
- Achieved record production of 25,742 ounces of gold from three operations (Holt, Holloway and Hislop) reaching a steady state run rate that will sustain annual gold production of about 100,000 ounces.
Current price: .40 cents. Target price for 2013: .80 cents - $1.
#1 Colossus Minerals
Colossus Minerals owns the Serra Pelada deposit in Brazil (very mining-friendly, and are aiming to get into production by mid-2013.
A little background on Serra Pelada is necessary before we even talk about this stock. Serra Pelada is host to one of the highest grade gold and platinum group metals deposits in the world. It is quite possibly the greatest, highest grade gold deposit out there.Drilling by Colossus has confirmed absolutely BONANZA grades of gold (7 meters of 1,500 Grams per tonne gold in one drill result - which is very, very good).
"Discovered in 1979, Serra Pelada hosted the largest ever gold rush in Latin America. During the 1980s, up to 80,000 garimpeiros (artisanal miners) produced an estimated 2 million ounces of gold plus platinum and palladium, from a 400m x 300m x 100m hand dug open pit."
This project has the potential to be the lowest cost gold mine IN THE WORLD, because of the significant platinum and palladium resource. Cash costs may even be negative.
With a market cap of $425 million ($4 a share) and a current cash balance over $100 million, Colossus is well positioned to get this thing into production. A $75 million streaming deal with Sandstorm Gold gives away 35 percent of the platinum and palladium production, plus 1.5 percent of the gold production. However, this deal gives Colossus more than enough cash to get to production, and will pay off big in time, in my opinion.
My guess is that Colossus gets Serra Pelada into production by mid-2013 as planned, and starts making serious cash for their shareholders.
Current price: $4.10. Target price for 2013: $8-10.
(Full disclosure: I own shares of Brigus (BRD), Claude (CGR) and Sandstorm Gold (SAND). This post is for informational purposes only and is not an investment recommendation).
The Highest Risk - Highest Reward Potential Space is Gold Exploration
1,000 Percent Gains Potential - Gold Exploration Stocks - However, with that risk comes a chance for great reward. I've said multiple times that some gold and silver stocks out there have 10-bagger potential - meaning 1,000 percent or more returns! That means potentially turning $1,000 into $10,000 or more in less than a year. There aren't many other places you could make that much money so fast.
GoldQuest Mining - Getting Rich Overnight in Gold Stocks
Another sector you may want to consider is gold exploration companies. These companies don't actually mine gold, rather they search for it in the ground. You can make HUGE gains with these companies, but there is more risk involved.
Again, the potential for gains is enormous. Take a company called GoldQuest Mining Corp. for example. This is a gold exploration company with a project in the Dominican Republic.
- On May 14, 2012, the share price of GoldQuest was a measly .06 cents per share.
- On Sept. 17, 2012, the share price of GoldQuest peaked - at $1.95 PER SHARE!
Just to put that into context - say you put down $5,000 in GoldQuest shares in May of 2012 at .06 cents a share. That would net you about 84,000 shares of the company.
If you held the shares for just 4 months, the price of each share would be worth $1.95. Your 84,000 shares would be worth approx. $163,800! You turned just $5K into $163K in just 4 months.
While this example is very rare, and while you needed to sell the shares at that exact point to get the gains (the share price settled down afterwards), it just shows you that these types of gains are possible. Check out this article on gold exploration companies for further reading.
Some gold exploration stocks I like include Alexandria Minerals, Northern Tiger Resources, Pilot Gold and Wildcat Silver. These are all considering speculative plays, so be careful if you decide to invest in this investing space.
Thanks for reading the Top 5 Best Gold Stocks for 2013!