An Interesting Metric

Come up with by Dundee Securities analyst Paul Burchell, it calcluates the stock price over net asset value per share. Burchell looked at the price to NAV multiple for six senior and intermediate gold stocks and found that the value for most of the companies normally fluctuates in a fairly narrow range. Every now and then, though, the value deviates enough to make for a buy or sell signal. According to his research, as passed on by Jonathan Ratner of the Financial Post:

Barrick Gold Corp., Goldcorp Inc. and Agnico-Eagle Mines Ltd. are currently trading at the lower end of the P/NAV range and may offer better returns at this time, the analyst said in a research note. Kinross Gold Corp., IAMGOLD Corp. and Eldorado Gold Corp. are trading closer to the mid-point of their P/NAV ranges, which suggests lower, but still potentially positive, returns.

For gold stocks, this approach is fundamentally-driven analysis. A gold stock isn't a closed-end fund, for which discount-to-NAV analysis is a better theoretical fit, but it does yield a kind of intrinsic value for a mining company. Earnings of those companies tend to fluctuate too much for standard funadmental analysis to do the trick.