NEW YORK (TheStreet ) -- Gold stocks provide more money-making opportunities than owning physical gold, says one analyst.
The typical belief is that gold mining stocks can rise as much as 20% to 30% more than gold prices making them an attractive investment for those who want exposure to gold without the hassle.
The spot gold price has popped 7% year to date while the Market Vectors Gold Miners ETF (GDX), a basket of large mining companies, has risen over 8%. Many analysts expect mining companies to profit from higher gold prices over the long term.
Atyant Capital is a believer in the gold stock thesis. Its one-year-old Global Opportunities Fund was created to invest solely in small, mid-size and large gold mining companies. The fund rose 7.60% in April while gold prices rose 4.9%, but year to date the fund is up only 0.07%. I spoke with Vedant Mimani, managing partner and lead portfolio manager, to get his approach to the gold market and to find out if he was changing his investment strategy as gold prices surged.First off, tell me about your fund. Mimani: We're a global macro trading fund. We're focused on precious metals because we think that's where the best risk/rewards lies in the entire world. What precious metal do you like the best? Mimani: I like gold the best. And I only consider precious metals really gold and silver. What stocks do you have in your fund? Top four to five stocks? Mimani: Well, these are the stocks we hold in the fund I like Gold Fields (GFI), Harmony (HMY), Iamgold (IAG), and Royal Gold (RGLD). Why do you like these big guys? Mimani: I like the big guys as a whole because they're the ones that have all the money and in a world where money and credit are tight they hold a lot of cards ... I like Goldfields and Harmony because they're very levered to the price of gold. [I like] Iamgold and Royal Gold because they're proven winners. They've done a great job of creating wealth in the last nine to 10 years. What you don't have on the list you just told me are the really big guys, Barrick (ABX), Newmont (NEM), and Kinross (KGC). Why did you leave those out? Mimani: They're good too. Not to be glib, but you try to maximize the upside. Some of those guys are pretty good too. Barrick is a little bit undervalued say relative to Goldcorp (GG) ... but we went a little bit down, a little bit lower in the food chain. There's nothing wrong with those companies in my opinion.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV