VanEck portfolio manager Imaru Casanova recently shed light on the significant undervaluation of gold mining companies.

What Happened: Speaking at the latest Benzinga's Virtual Event, Casanova highlighted that gold companies are currently greatly undervalued, and underperforming relative to gold prices, thus presenting an attractive investment opportunity.

Casanova emphasized that the gold mining sector is trading at the cheapest valuations ever seen. Key metrics such as price-to-earnings (P/E), price-to-cash flow, and price-to-sales (P/S) ratios are at their historical lows.

"The stocks have never been at these levels, and yet fundamentally, the sector is in great shape with strong balance sheets and largely unhedged," she claimed.

Challenges And Future Outlook

Casanova points out that miners are now trading at approximately a 20% discount to gold, based on various valuation metrics.

Chart from VanEck

However, the outlook for these companies is improving, with cost controls and persistently high gold prices expected to boost profitability next year. Casanova foresees a market dislocation in the gold equity sector at present, but remains optimistic about the future.

"We see gold approaching all-time highs of $2,075/oz next year comfortably," she stated, predicting that gold stocks are set to outperform.

"In a year where gold is up you would expect gold stocks to be doing much better,” she noted.

Casanova’s Top Picks

Casanova also shared insights into her top holdings in the active gold strategies she manages, underscoring their potential:

Alamos Gold (NYSE:AGI): Praised for its strong execution in delivering growth, particularly through an ongoing expansion, making it a top holding.
Wheaton Precious Metals Corp. (NYSE:WPM): A streamer and royalty company, offering a balanced play between owning metal and producers, with impressive silver exposure.
Bellevue Gold Ltd. (OTCPK: BELGF): The Australian company has a commendable track record in delivering new projects.
Endeavor Mining (OTCPK: EDVGF): A favorite for its organic growth and aggressive exploration targets, consistently meeting targets and expectations.

The VanEck Gold Miners ETF (NYSE:GDX) rose 1.7% Thursday, extending its weekly gain to over 5%, as gold prices surged to over %1,980/oz

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Thursday, November 16, 2023