Hey, I thought gold miners were supposed to keep on falling. And gold was predicted to drop through $1,000/oz, right? Well, someone forgot to tell these four gold miners as over the past month they have been rising in share price and gold seems to be holding over $1,200/oz.
An old US baseball player, Yogi Berra, once said about a popular tourist location: "Nobody goes there anymore. It's too crowded." That's the mindset of a market sometimes when everyone knows the same thing, usually the opposite is true.
That's when you can find beaten-down stocks that are avoided by the masses because "everyone knows" they're bad or risky. Another phrase comes to mind – "everything's a bargain at a certain price".
Silver Lake Resources Limited. (ASX: SLR) has fallen from about $4 a share in October 2012 to as low as $0.40 recently. However, within the past month it has climbed 39.5% from about $0.43 to $0.60. It's only 73% of its book value per share currently.
Newcrest Mining Limited (ASX: NCM) is the biggest gold miner on the ASX and traded around $40 in late 2011. It declined to almost $7, but has since risen 27.6% to $9.34 over the past month. Today the company announced that all of its mines are now at profitable levels. This is due to cost-cutting efficiencies and concentrating only on high-grade gold ore.
Medusa Mining Limited (ASX: MML) scored a 13.7% rise to $2.11 in the same period. It should be increasing its production in The Philippines in the March 2014 quarter, when its new mill ramps up production. This will more than double throughput to about 2,500 tonnes a day.
PanAust Limited (ASX: PNA) announced today that its gold production was up 35%, silver up 35% and copper up 2.5% for the full year to 31 December. It has risen 16.3% to $1.78 since about mid-December.
Foolish takeaway
Once all the negatives about an industry or company are baked into stock prices the discounting by the market may have taken stocks to such a low level that there may not be much risk left.
