How to Pick Top Gold Stocks for 2016?
Going into next year, gold prices are expected to perform better. With this, gold mining companies could really provide solid returns. In the following slides, we have identified the top 10 gold stocks to watch for 2016.
When looking at gold mining companies for 2016, we are looking at three factors:
- One of the biggest factors we are paying attention to is the company’s ability to produce. When gold prices are down, you want mining companies to be ramping up the precious metal production and lowering their costs. Know this: a company may be producing more gold, but if its production costs aren’t going down, there could be trouble ahead.
- The second factor we pay attention to is cash flow from operating activities. When times are tough, when precious metal prices are down, cash flow from operations becomes very critical. You see, a mining company can go on with losses for a little bit, but if the cash flow isn’t there, long-term survival becomes very difficult. Remember: raising capital or borrowing could be difficult if the entire sector is disliked and gold prices remain low for an extended period of time.
- Last but not least, the third factor we look at are a company’s properties and whether they have solid gold reserves and resources in safe geopolitical areas. Having other metals, such as silver. in reserves doesn’t hurt either.
1. Richmont Mines Inc. (NYSEMKT:RIC)
Headquartered in Rouyn-Noranda, Quebec, Canada, Richmont Mines Inc. (NYSEMKT:RIC) is involved in the mining, exploration, and development of gold properties focused in Canada. The company has six underground mines and one open-pit mine.
As of December 31, 2014, Richmont Mines had 217,950 ounces of proven and probable reserves. The company also had 1.89 million ounces of gold in measured and indicated resources and 2.76 million ounces of gold in inferred resources. (Source: “Mineral Reserve & Resource Table,” Richmont Mines Inc., last accessed December 2, 2015.)
For the first nine months of 2015, Richmont Mines produced 75,651 ounces of gold at all-in sustaining costs of $1,024 per ounce. With a market capitalization of $176 million, this gold stock trades around $3.00 per share.
2. Newmont Mining Corporation (NYSE:NEM)
Newmont Mining Corporation (NYSE:NEM) is headquartered in Greenwood Village, Colorado and it is one of the biggest and well-respected gold mining companies. It has operations in the United States, Australia, New Zealand, Peru, Indonesia, and Ghana.
As of December 31, 2014, the company had 82.19 million ounces of gold in its proven and probable reserves. Newmont Mining also has 26.73 million ounces of gold in measured and indicated resources and 15.96 million ounces in inferred resources. (Source: “Reserves and Resources,” Newmont Mining Corporation, last accessed December 2, 2015.)
In the first nine months of 2015, the company produced 3.78 million ounces of gold, six percent higher compared to the same period a year ago. Its all-in sustaining costs were $864.00 an ounce. This was 16% lower than the same period a year ago.
With market capitalization of $9.5 billion, this gold stock trades around $18.00 per share.