01/19/2015 7:00 am EST
Gold stocks are trading at their lowest valuations for a decade or more. Many analysts now believe gold is turning; if the metal recovers, the gold stocks will shine once again, suggests Adrian Day, editor of Global Analyst.
Agnico-Eagle (AEM), a major Canadian miner (set to produce 1.4 million ounces this year), has not escaped. It peaked at $80 at the end of 2010 and has dropped from over $42 just this past July.
The company however has been more adept than most in surviving the downturn and is well positioned for a recovery. It did not overpay for marginal properties in the giddy markets of 2010 and 2011, unlike many other major minors.
And, in the recent downturn, it has been one of a handful of companies acquiring projects and other companies at depressed levels; others are just hunkering down. This year, it has bought a 50% interest in a major long-life Quebec mine and also a small exploration company.
Agnico has nine mines in Canada, Finland, and Mexico. It is active across the spectrum, from grassroots exploration to development and finally production, unlike many who have given up on exploration.
It has been active joint-venturing with juniors, where it enjoys a strong reputation as a partner. The company is growing, with production of 1.6 million ounces expected in 2015.
Finally, the balance sheet is strong, and, with its no maturities until 2017, it can withstand further weakness.
It is trading at valuations considered reasonable for gold stocks, while is in a far stronger position than most. Agnico, my top speculative pick for 2015, is a buy for the next gold cycle.