A Short List of (Relatively) Safe Gold Stocks

April 16, 2013 2:32 PM EDT
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Price: $115.27 -0.45%

Rating Summary:
    1 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 19 | Down: 19 | New: 13
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This week gold and silver were the talk of the town on Wall Street after panic sent precious metals sharply lower. There is no shortage of theories about gold's massive plunge - everything from Cyprus central bank selling, a large margin call, fears of Fed tightening, ETF liquidation, and so on. Whatever the case, it's clear that gold bulls have taken it on the chin.

After 2 days of pain, gold eked out a modest gain on Tuesday, giving battered longs time to reassess the situation. After examining the environment, Deutsche Bank analyst Jorge Beristain admitted gold is a dangerous game these days. For those brave enough to hang on or enter new positions, Beristain said he favors gold equities with lower balance sheet risk.

"It is difficult to find cover in a market which is throwing the baby out with the bathwater but we would say investors looking for 'relative' safety should favor stocks with lower balance sheet risk. In terms of highest to lowest quality balance sheets, we would rank Goldcorp (NYSE: GG), Kinross (NYSE: KGC), Newmont (NYSE: NEM), and Barrick (NYSE: ABX) in that order," said the analyst.

Deutsche Bank's 2013 price target on gold remains $1637. Beristain said a "$300/oz (-17%) change in DBe's gold price deck would lead to a 50% change in the average Net Present Value (NPV) of our North American Gold coverage."

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