Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Gold bars. (LISI NIESNER/REUTERS)
Gold bars. (LISI NIESNER/REUTERS)

Number Cruncher

Gold miners with bullion brawn Add to ...

Michael Bowman is a portfolio manager at Wickham Investment Counsel Inc. in Hamilton, Ont.

What are we looking for?

The gold companies that are producing the largest amount of bullion in relation to their share price.

This is interesting because of the fundamental choice that faces every gold investor – to buy bullion or to buy shares in a gold miner.

More Related to this Story

There is a place for both assets, but over the past few years, gold stocks have failed to keep pace with the rising price of bullion. They have moved in tandem with the broad market.

Gold stocks can now offer more potential for gains than physical gold. However, any individual gold stock can lag because of many factors – rising energy and labour costs, political risk or economic turmoil. That’s why many investors are showing a preference for gold miners that offer good dividend yields. These companies at least offer some immediate payback for shareholders.

Bullion carries far less risk than the shares of mining companies. Over the long term, it has performed better on a risk-adjusted basis as measured by the Sharpe ratio.

Hence, our screen. We wanted to find gold miners that offered attractive dividend yields, but are also producing large amounts of physical gold in relation to their share price. These companies would seem to be the best positioned to reward investors.

The Screen

My colleague Rob Belanger and I looked at gold stocks to find how many ounces of gold bullion production we would be buying for a $10,000 investment.

We looked at 22 of Canada’s more prominent gold companies and took each firm’s 2011 year-end production in ounces, and divided that by the number of shares outstanding.

That gave us the number of ounces of gold bullion that each company produced, per share. We then assumed a $10,000 investment in the stock, which gave us the number of produced bullion ounces that an investor would own for that amount of money. We also looked at any dividend that the company pays.

What did we find?

For a $10,000 investment in Centerra Gold Inc., an investor would be picking up 3.77 ounces of bullion production, and a 2.28 per cent dividend. A $10,000 investment in Canada’s largest gold company, Barrick Gold Corp., would buy 2.33 ounces of production, and a 2.45 per cent dividend yield. With Goldcorp Inc., you are receiving less than an ounce of production.

Investors should not base their gold investing solely on this screen, but it is an interesting place to start a more detailed analysis.

 

 

Screening for gold

Name Ticker Ounces produced in 2011 Market cap (millions) Price Yield $10,000 = oz
Yamana Gold Inc. YRI-T 916,284 11,123 14.8 1.76 0.83
Semafo Inc. SMF-T 250,100 839 12.04 1.31 2.9
San Gold Corp. SGR-T 74,277 293 0.9 0 2.49
Primero Mining P-T 37,378 297 3.49 0 1.23
New Gold Inc. NGD-T 387,155 4,629 10.08 0 0.82
Lake Shore Gold LSG-T 83,585 423 1.04 0 1.98
La Mancha Res Inc. LMA-T 121,446 490 3.45 0 2.47
Kirkland Lake Gold KGI-T 81,860 832 3.05 0 1
Kinross Gold K-T 2,610,373 9,194 7.75 1.98 2.74
Iamgold Corp. IMG-T 972,000 4,073 11.06 2.38 2.31

Source: Bloomberg

Print

Download table as a CSV file

View full table

  • ABX-T
  • ABX-N
  • G-T
  • GG-N
  • YRI-T
  • AUY-N
  • K-T
  • KGC-N
  • K.U-T
  • ELD-T
  • EGO-N
  • AEM-T
  • AEM-N
  • NGD-T
  • IMG-T
  • IAG-N
  • AGI-T
  • AUQ-T
  • AUQ-N
  • BTO-T
  • HRG-T
  • CGG-T
  • DPM-T
  • SMF-T
  • KGI-T
  • ARZ-T
  • AZK-A
  • LMA-T
  • LSG-T
  • LSG-A
  • P-T
  • PPP-N
  • SGR-T
Live Discussion of ABX on StockTwits
More Discussion on ABX-T
Live Discussion of ABX on StockTwits
More Discussion on ABX-N
Live Discussion of G on StockTwits
More Discussion on G-T
Live Discussion of GG on StockTwits
More Discussion on GG-N
Live Discussion of YRI on StockTwits
More Discussion on YRI-T
Live Discussion of AUY on StockTwits
More Discussion on AUY-N
Live Discussion of K on StockTwits
More Discussion on K-T
Live Discussion of KGC on StockTwits
More Discussion on KGC-N
Live Discussion of K.U on StockTwits
More Discussion on K.U-T
Live Discussion of ELD on StockTwits
More Discussion on ELD-T
Live Discussion of EGO on StockTwits
More Discussion on EGO-N
Live Discussion of AEM on StockTwits
More Discussion on AEM-T
Live Discussion of AEM on StockTwits
More Discussion on AEM-N
Live Discussion of NGD on StockTwits
More Discussion on NGD-T
Live Discussion of IMG on StockTwits
More Discussion on IMG-T
Live Discussion of IAG on StockTwits
More Discussion on IAG-N
Live Discussion of AGI on StockTwits
More Discussion on AGI-T
Live Discussion of AUQ on StockTwits
More Discussion on AUQ-T
Live Discussion of AUQ on StockTwits
More Discussion on AUQ-N
Live Discussion of BTO on StockTwits
More Discussion on BTO-T
Live Discussion of HRG on StockTwits
More Discussion on HRG-T
Live Discussion of CGG on StockTwits
More Discussion on CGG-T
Live Discussion of DPM on StockTwits
More Discussion on DPM-T
Live Discussion of SMF on StockTwits
More Discussion on SMF-T
Live Discussion of KGI on StockTwits
More Discussion on KGI-T
Live Discussion of ARZ on StockTwits
More Discussion on ARZ-T
Live Discussion of AZK on StockTwits
More Discussion on AZK-A
Live Discussion of LMA on StockTwits
More Discussion on LMA-T
Live Discussion of LSG on StockTwits
More Discussion on LSG-T
Live Discussion of LSG on StockTwits
More Discussion on LSG-A
Live Discussion of P on StockTwits
More Discussion on P-T
Live Discussion of PPP on StockTwits
More Discussion on PPP-N
Live Discussion of SGR on StockTwits
More Discussion on SGR-T

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories