Five Ways to Profit as Gold Rallies Past $935 Amid Economic Mire

Monday, June 30, 2008 8:07 PM

Sectors: Basic Materials , ETFs
Symbols: ABX, AUY, GFI, KGC

And with a $17 billion-plus market cap, it has ample liquidity.

Barrick Gold Corp. (ABX) is a Toronto-based company with mostly North American production, as well as properties in South America and Africa, and some copper and zinc add-ons. It has a $38 billion market capitalization, so there’s plenty of liquidity. By gold-mining standards, this company has a substantial presence, is reasonably valued, and has little political risk. The company also recently sent some very bullish signals to the market and reasserted its confidence in meeting its 2008 output target of up to 8.1 million ounces of gold. [For more details, check out a recent related story about Barrick Gold].

Yamana Gold Inc. (AUY) is another U.S.-listed/Canada-based company, but this one does its mining in Brazil, Argentina, Chile, Honduras and Nicaragua. Despite its geographic reach, it faces only a medium geopolitical risk. Expect the company to double production to 2.2 million ounces per year by 2012, primarily in Brazil and Argentina.

Gold Fields Ltd. (GFI) is a South African company that mines in South Africa, Ghana, Australia and Venezuela (where it just sold control to a local company, reducing its exposure to an arguably risky market). It faces a somewhat upper-medium political risk, depending on what you think of South Africa, where the electricity supply to the gold mines is currently unreliable and there’s a good chance of Jacob Zuma winning the presidency in April 2009. Given his record as an anti-Western leftist, and the corruption charges he faces, his potential return can only be viewed as a major negative.

Kinross Gold Corp. (KGC), another U.S.-listed Canadian company, engages in gold and silver mining, with primary operations in Canada, the United States, Brazil, Chile and Russia. In February, Kinross issued shares to buy a large company with operations in both Brazil and Russia. The political risk is low-medium.