The gold mining sector has been hit hard of late as inflation expectations have picked up. Bond yields are on the rise, which is broadly bearish for gold, and investors are largely steering clear of this sector on these worries.
However, I view the precious metals mining space as one which is extremely undervalued right now. Before this recent correction, the industry was already cheap, and has only gotten more attractive to long-term value investors today. Gold miners are trading at a ridiculous discount to the underlying commodity price, and I don’t think this is sustainable long-term. Yes, gold miners have been historically terrible at allocating capital. However, I think these miners have learned from past cycles and are better positioned now than ever to rake in higher profits due to elevated gold prices relative to a few years ago.
As far as gold producers go, Kirkland Lake Gold (TSX:KL)(NYSE:KL) is my top value pick on the TSX right now. This is a mid-cap producer which is largely undercovered and has flown under the radar for some time. The company’s fundamentals are excellent, and Kirkland Lake remains one of the cheapest gold miners out there for those seeking value right now. At only 11-times earnings, this stock screams value today, particularly when one considers what the average valuation multiple is right now.
This is a company gold bugs, and those who dislike gold alike, ought to consider right now.
Invest wisely, my friends.
