Gold’s precious mettle

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Once again, political and economic uncertainty is pushing to the fore gold’s attractions as an investment haven. But this time investors wanting to allocate capital to the precious metal have a better option than just buying bullion bars or futures contracts. Gold mining stocks are looking particularly good value. Indeed, gold miners have become such an attractive proposition that they’re proving irresistible to the some of the industry’s best informed bargain hunters: their rivals. Ever since Barrick Gold took over Randgold Resources last September for USD6 billion, there’s been growing enthusiasm for mergers and acquisitions in the sector. When miners start acquiring each other, this suggests the market is underpricing the value of their assets, namely the gold they’ve yet to mine. What’s more, not only are gold miners’ stocks attractively valued relative to their reserves and the price of bullion, but also compared with the materials sector as a whole and with global equities in general.