Tags: HSBC | Gold | Stocks | metal

HSBC: Gold Stocks Still a Bargain as Metal Soars

Monday, 19 March 2012 08:00 AM

HSBC mining analyst Patrick Chidley says that while gold prices are near their all-time highs, gold mining stocks are a bargain.

“Mining companies have been expanding their margins rapidly and as their earnings increase, these companies are paying very strong dividends,” Chidley told CNBC.

According to Chidley, Barrick Gold and Newmont Mining are excellent examples. “Every year they’ve been replacing their reserves," he says. "With the stock, you’re buying the reserve gold, plus you’re getting a return." 

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“We think the whole mining sector is attractive right now,” says Chidley. “Although we’re seeing gold prices come down off recent highs $1,660, or $1,650 an ounce, these gold companies can make decent money.”

Chidley has an “overweight” rating on Barrick Gold, Rangold Resources, and El Dorado Gold.

HSBC is forecasting a rise in price to $1,850 an ounce, not based on gold’s value as a safe-haven asset, but for its performance against other currencies.

“We have been seeing devaluation of currencies versus gold,” Chidley says. “It seems to be the anti-dollar play.”

MarketWatch reports that gold futures rebounded last week as investors flocked to the precious metal on a combination of bargain hunting and a weak U.S. dollar.

Gold for April delivery added $16.60, or 1 percent, to settle at $1,659.50 an ounce on the Comex division of the New York Mercantile Exchange.

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Monday, 19 March 2012 08:00 AM
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