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3 Glittering Gold Stocks To Watch As Prices Rise

Stocks in this article: ABX GLD KGC NEM

​Chris Lau, Kapitall: Gold and related gold mining companies are rebounding from lows reached at the beginning of July. SPDR Gold Shares ( GLD ) rose 4.51% last week after the Comex Gold rose to $1,375 by the end of the week. It’s impossible to forecast the future price of gold, but one strategy you can use is to look for mining companies that are moving to improve their balance sheets. Companies cutting dividends are supposed to be companies to avoid, but investors might want to take a contrarian view on companies saving their cash. Below are three companies to watch, investors should carefully consider the movement in gold prices.

[Read more from Kapitall: 7 Stocks with Strong Inventory Trends and High ROI]

Comparing gold prices to gold miners

Click on the images below to see prices over time. Sourced from Zacks Investment Research. 

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Gold miners outperformed the gold shares trust in the last three months. This is not surprising, because concerns of liquidity and quarterly losses had encouraged investors to sell their shares. A rebound in the price of gold alleviated some of those concerns. If gold prices hold at current levels, more mining companies will be operating with comfortable profit margins.

Investing ideas

Mining companies that dropped nearly 50% in the past year could provide investors with a strong return. Barrick Gold ( ABX ) expects cash costs for gold production this fiscal year to be $575 – $615/oz. The miner also produces copper. Last quarter, the company said it expected cash costs for copper production to be $1.95 – $2.15/lb. One negative side to holding the stock is the fact that the dividend was cut to $0.20 per share, but that saves the firm nearly $600 million a year. Barrick has a heavy debt burden, so the dividend cut will alleviate pressure on its balance sheet.

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