[Daily Trade Alert note: Our favorite way to profit from the disconnect between gold stocks and gold bullion is with the Market Vectors Gold Miners ETF (AMEX: GDX) — one of our “9 Best Stocks to Own Right Now.” With yesterday’s sell-off, now may be a good opportunity to add to your position.]
I hope you’ve taken our advice to buy gold stocks. Because the money is coming…
Regular Growth Stock Wire readers know the gold stock sector in general is cheap relative to the price of gold. When we’ve seen this kind of setup in the past, gold stocks have returned double and triple digits in about a year.
So seeing gold stocks as cheap as they are right now should be enough to get you interested. But what you might not realize is that big gold mining companies are starting to bring in huge amounts of cash.
Take Barrick Gold for example. Barrick is the world’s largest mining company. It produces gold from 26 operations on five continents.
[ad#Google Adsense 336×280-IA]In the first quarter of 2006, with gold around $550 per ounce, Barrick netted about $114 for every ounce of gold it produced. Its total revenue for the quarter was $1.2 billion.
Fast-forward to the first quarter of 2008… The average gold price had risen to $925 per ounce. That was an astounding (at the time) 68% climb. Barrick’s profit almost tripled to $295 per ounce of gold it produced. Its total revenue was $1.96 billion.
Today, gold is near all-time highs at $1,800 per ounce. That’s going to mean even more revenue and even higher profits for Barrick. The latest results show Barrick made $586 per ounce of gold it produced… a 414% increase since 2006. Its latest quarterly revenue was $3.42 billion.
Here’s a chart that illustrates Barrick’s revenue and profit growth over the last seven years. You can see how gold’s climb has both accelerating higher…
Other big miners are seeing similar results. Goldcorp’s profit per ounce is up 86% over the last three years. Eldorado Gold’s profits rose 49% over that period.
In short, the cash is rolling in. If gold simply stays north of $1,800, the big numbers will continue to add up. And if gold climbs over $2,000, the profits will get ridiculous.
Pretty soon, all that money coming in will force these gold stocks higher. Make sure you’re onboard.
Good investing,
— Matt Badiali
[ad#jack p.s.]
Source: The Growth Stock Wire