So far, we are in technical correction territory. To early to call it a bear market situation. We are heading towards the end of the year and Investors might clear out their portfolio and sell the “ducks” to deduct losses on their tax bills. I wouldn’t be surprised if we saw this correction continue for a couple of months, getting investors frustrated who are looking at safe havens to park their money. they might try to time the market and get in again when the storm is over and the boat sails in quiet waters.
What about gold then, or may be even better gold stocks, the mix of defensive investing and value investing in a falling market?
In October money was flowing out of index tracking stock funds and at the same time flowing into gold tracking funds.
But many gold miners are heavily discounted, even at todays Valuations. There are Randgold Resources, American Barrick or even Silver Miner Pan American Silver Co. but my favourite is Sibanye Gold Limited (NYSE: SBGL / Current Price: 2.55). Look for details here: Bloomberg.com
Sibanye Gold Limited is the largest gold producer in South Africa one of the 10 largest miner in the world. Shares dropped big times but looks like having found a bottom. Sibanye rose in October over 37%! It shows decent sales growth over the past years and is only trading at a quarter of its book value per share. Definitely something to consider. Looks like a bargain in a corrective market that could see higher gold prices.
Sven Franssen