Barrick Gold Corporation (USA) (ABX), AngloGold Ashanti Limited (ADR) (AU) & Goldcorp Inc. (GG): Scary Days Down the Gold Mine

Price boom in the offering? Ask the feds

Thankfully though, it very well just might be. The Federal Reserve has made efforts to convince the investing world that it will continue its stimulus efforts into 2014, due to a still-slow US economy. Stronger economic data typically means a scaling back on stimulus spending, but to many Fed bankers, this hasn’t arrived yet. This news has contributed to a two-day rally in international stock markets after an incredibly volatile last couple of weeks. News of stimulus spending should mean that gold prices will be on the rise soon, but like other industries, it will come down to 10-year bond-yield figures as well as any news from Fed chairman Ben Bernanke.

Who glitters?

If gold does get back on its feet pricewise, these three companies will rise with it, a welcome sign for gold mining investors. AngloGold’s holding of the Mponeng mine gives it the inside track in South Africa due to lower output costs than rival Barrick Gold Corporation (USA) (NYSE:ABX), as well as a cheap P/E of 5.1. It has a significant advantage in terms of profit margin as well with nearly an 8.0% margin compared to the -6.0% margin of Barrick Gold Corporation (USA) (NYSE:ABX).

Analysts give this company a hold rating for the most part, though that represents a downgrade for AngloGold Ashanti Limited (ADR) (NYSE:AU), but it should improve if continuing stimulus is going to be the law of the land. Also, a 1.4% dividend yield is something that seems pretty solid given the volatility of the market.

Goldcorp is always pretty solid, and is without a doubt the strongest of the three companies with profit margins at 30.1% and an E/P ratio of 7.9% growth. Dividend yields are the strongest as well at 2.4%, and a fairly solid 7.0% return on equity. However, its forward P/E at 11.5 is twice that of AngloGold Ashanti Limited (ADR) (NYSE:AU), so it isn’t as affordable a pickup, but it does have a strong foundation and is a safe investment regardless.

If gold glitters again, AngloGold and Goldcorp Inc. (NYSE:GG) could ride the tide, but in an increasingly volatile market, the horizon is far off.

The article Scary Days Down the Gold Mine originally appeared on Fool.com.

John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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