Are Gold and Silver Too Cheap to Igno...
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Tim Lambert
Are Gold and Silver Too Cheap to Ignore?

Even though there have been many bullish signs, the exchange traded funds for gold, SPDR Gold Shares (NYSE: GLD), and silver, iShares Silver Trust (NYSE: SLV) continue to fall.  For the last week of market action, SPDR Gold shares was off by more than 2%.  Over the same period, iShares Silver Trust fell, too.  Both the SLV and the GLD are down for 2014.  It is the same story for Barrick Gold (NYSE: ABX), one on the world’s largest miners.  Wishbone Gold PLC (PINK: WISHY) has stayed stable in recent trading, though.

Looking at the financials of Barrick Gold shows how undervalued the sector appears to be.

The forward price-to-earnings ratio for Barrick Gold is 8.  For a member of the Standard & Poor’s 500 Index, the average price-to-earnings ratio is around 19. The operation margin for Barrick Gold is nearly 40%.  As to the value of the stock based on assets, an analyst stated in a recent article in Barron’s that it should be around $44 a share.  At present, Barrick Gold trades for under $18.

Wishbone Gold PLC is undervalued, too, according.  Beaufort Securities just recommended Wishbone Gold PLC.  The holdings of Wishbone Gold PLC in Australia have a great deal of potential.  When India and China recover, Wishbone Gold PLC should do very well with its position in Australia.

As detailed in a previous article on this site, there have been many bullish developments for gold and silver rising in value.  Vice Chair Janet Yellen, just nominated to be head of the Federal Reserve, is regarded as being pro-growth.  That is bullish for gold and silver investing.  The Chinese economy is becoming stronger, which is positive for the gold and silver sector, but especially Wishbone Gold PLC with its position in Australia.

The article in Barron’s about Barrick Gold stated that activist investors might make a run at the stock.  There is no surer sign of a company being undervalued.  Should that happen, all gold and silver investments should benefit.

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