After The Fall, Huge Upside & Value In Gold/Silver Miners (GDX, SIL, ABX, GG, NEM, AU, KGC, AEM, GFI, AUY, IAG, HMY, EGO, RGLD, SLW, PAAS)

Gold and silver have finally indicated that the free fall we saw over the last month may have at least stabilized.  The markets are mixed today in the commodities and the miners and we admit that no one truly knows what is the bottom-dollar that these can hit and no one knows the real top-dollar that investors will pay in a rally.  What we do know is that the sell-off has literally gutted many of the key players in gold and silver and there is huge upside and value here if the consensus analyst price targets for one year from now are anywhere near correct.

At issue may be a stock market stabilization, or perhaps it is a stabilization aimed solely at the commodities and those companies which profit from either the rise of commodity prices or the rise of the demand for those commodities. It was just yesterday evening that Dennis Gartman of the Gartman Letter was talking up gold miners as his method of choice to play the current bounce in gold.

To show just how much implied upside there is we found some large cap gold stocks that have upside of about 100% and many of the big players have implied upside of well over 50%.  The key ETFs for these miners show just how widespread the damage was during the last sell-off.  The Market Vectors Gold Miners ETF (AMEX: GDX) trades at $43.35 against a 52-week trading range of $39.08 to $66.98 and that is down about 35% as a group from the highs.  The Global X Silver Miners ETF (AMEX: SIL) trades at $18.00 against a 52-week range of $16.54 to $29.05 and that is down almost 38% from its high in the last year.

We included the implied dividend yields but due to foreign issues and ADRs causing currency translations and due to some payouts not being quarter like U.S. companies do, we would urge you to only consider the dividend as a footnote and something you should be verifying on your own.  Besides that, who buys gold (and silver) miners because of their dividend yields only?

We have evaluated the following large-cap gold stocks: Barrick Gold Corporation (NYSE: ABX); Goldcorp Inc. (NYSE: GG); Newmont Mining Corp. (NYSE: NEM); AngloGold Ashanti Ltd. (NYSE: AU); Kinross Gold Corporation (NYSE: KGC); Agnico-Eagle Mines Ltd. (NYSE: AEM); Gold Fields Ltd. (NYSE: GFI); Yamana Gold, Inc. (NYSE: AUY); IAMGOLD Corp. (NYSE: IAG); Harmony Gold Mining Co. Ltd. (NYSE: HMY); Eldorado Gold Corp. (NYSE: EGO); and Royal Gold, Inc. (NASDAQ: RGLD). We have covered also two of the larger silver players of Silver Wheaton Corp. (NYSE: SLW) and Pan American Silver Corp. (NASDAQ: PAAS).

Barrick Gold Corporation (NYSE: ABX) traded at $37.60 and has a market value of $37.6 billion.  The consensus target price from Thomson Reuters is $59.10 and the 52-week range is $34.82 to $55.95.  Barrick has a dividend yield of 2.2%. The implied upside to the consensus target: 57% but we would note that the target is above the 52-week high.

Goldcorp Inc. (NYSE: GG) traded at $34.90 with a market value of $28.2 billion.  The consensus target price from Thomson Reuters is $60.42 and the 52-week trading range is $32.16 to $56.31.  Goldcorp’s most recent yield was listed as 1.6%. The implied upside to the consensus target is 73% but we would note that the consensus target is still above the 52-week high.

Newmont Mining Corp. (NYSE: NEM) traded at $47.30 and is worth almost $23.5 billion.  The consensus target price from Thomson Reuters is $69.26 and the 52-week trading range is $43.23 to $72.42.  Newmont’s most recent yield was listed as about 3%. The implied upside to the consensus target is 46% and that target price is more than $3.00 under the 52-week high.

AngloGold Ashanti Ltd. (NYSE: AU) recently traded at $35.00 and the consensus target from Thomson Reuters of $53.02 compares to a 52-week trading range of $30.70 to $49.14.  The yield here is about 1.2%. The implied upside to the consensus target is about 51% but this is one where the consensus target is above the 52-week high.

Kinross Gold Corporation (NYSE: KGC) recently traded at $7.95 with a market value of $9.05 billion.  The consensus target price from Thomson Reuters is still $13.26 and the 52-week range is $7.11 to $18.25. Kinross yields about 2.1%. The implied upside to the consensus target is almost 67% and the target price is well under the 52-week high due to its problems.

Agnico-Eagle Mines Ltd. (NYSE: AEM) traded at $37.07 with a market value of $6.3 billion.  The consensus target price from Thomson Reuters is $44.76 and the 52-week range is $31.42 to $73.09.  Agnico-Eagle’s dividend yields is about 2.2%.  The implied upside to the consensus target is “only” about 20% higher than the price today and that is way down from its 52-week high.

Gold Fields Ltd. (NYSE: GFI) traded at $12.67 with a market value of $9.1 billion. The consensus target price from Thomson Reuters is $19.55 and the 52-week trading range is $11.71 to $18.49. The indicated dividend yield of 5.1% may be exaggerated here because the last semi-annual payout was so much higher in dollar terms than any recent payout.  We would not count on that dividend as a permanent issue.  The implied upside to the consensus target is about 54% and that target price is less than $1.00 above its 52-week high.

Yamana Gold, Inc. (NYSE: AUY) traded at $14.02 with a market value of $10.4 billion.  The consensus target from Thomson Reuters is $20.71 and the 52-week range is $11.10 to $18.16.  The indicated dividend yield is 1.6%. The implied upside to the consensus target is about 47% but we would note that this target price sits about 14% above its 52-week high.

IAMGOLD Corp. (NYSE: IAG) traded at $9.89 with a market value of $3.7 billion.  The consensus target price from Thomson Reuters is $20.04 and the 52-week trading range is $9.20 to $23.88. The annual dividend is listed as over 1%.  The implied upside to the consensus target leaves over 100% in implied upside and that target is still almost 15% shy of the 52-week high.

Harmony Gold Mining Co. Ltd. (NYSE: HMY) traded at $9.40 with a value of $4.05 billion.  The consensus target price from Thomson Reuters is $14.75 against a 52-week range of $8.64 to $15.10.  The indicated dividend yield is 1.20%.  The implied upside to the consensus target is about 56% and that target is just under the 52-week high.

Eldorado Gold Corp. (NYSE: EGO) traded at $11.10 and has a market value of $7.9 billion. The consensus target price from Thomson Reuters is $20.38 and the 52-week range is $10.20 to $22.12. We are not showing a dividend yield here because of limited history and different payouts. The implied upside to the consensus target is about 83% and that price target is still about 10% under the 52-week high.

Royal Gold, Inc. (NASDAQ: RGLD) traded at $66.60 with a market value of just under $4 billion.  The consensus target is now $84.63 and the 52-week trading range is $55.00 to $83.87. Royal Gold has a dividend yield just shy of 1.0%.  The implied upside to the consensus target is ‘only’ about 27% and that consensus target is almost $1.00 over the 52-week high.

Silver Wheaton Corp. (NYSE: SLW) is a pounded silver mining player that traded at $25.70 with a $9.1 billion market capitalization.  The consensus target is $45.32 against a 52-week range of $22.94 to $42.50.  Silver Wheaton’s dividend yield is indicated around 1.3%.  The consensus target implies upside of almost 77% but we would note that this target is almost $3.00 above the 52-week high in the stock.

Pan American Silver Corp. (NASDAQ: PAAS) has also been pounded and the stock’s value of over $1.7 billion is less than half of what it used to be within the last year.  Pan American traded at $16.52 with a $1.74 billion market value. The consensus target is $27.88 against a 52-week range of $14.80 to $34.59.  Pan American Silver’s dividend yield is implied at about 0.9%.  The consensus target implies upside of about 68% and that is well within the 52-week range.

JON C. OGG