The spot price of gold rose above the $1,700 mark late on March 8 before retreating when the global market bloodbath really got going on March 9. Still, the yellow metal has proven once again that it is a reliable safe haven. However, those who own gold stocks are likely still disappointed. Gold producers have failed to reach even the highs we saw in the short gold bull run in 2015 and 2016.
Fundamentals for gold producers are improving with the heightened spot price. Reports indicate that governments around the world are considering even more dramatic easing, which is a bullish sign for gold going forward. Gold stocks have been held back by uncertainty, but a more substantial breakthrough may be on the horizon.
Newmont (TSX:NGT)(NYSE:NEM) is the largest gold company in the world. Its shares have climbed 25% over the past three months as of close on March 9. The big producers do not offer the kind of big bursts that junior miners can generate, but in a bull market for physical gold they can become cash machines.
Newmont stock is still trading at a favourable price-to-book value of 1.8 and is undervalued relative to its industry peers right now.
Barrick Gold (TSX:ABX)(NYSE:GOLD) is the second-largest gold producer in the world. Its stock has increased 22.5% over the same period.
Shares are up 58% year over year. Barrick stock last had a price-to-earnings ratio of 8.9, which is below the domestic industry average. Both of this mega producers boast nice value today.
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