Every investor knows betting on iron ore in today's market is a one-way ticket to the poor house.
Those miners will stay lower for longer.
However, unlike iron ore, one Australian mining sector has soared in 2015, so far…
Gold.
Source: Google Finance
In the above graph the blue line shows the S&P/ASX All Ords Gold Index (ASX: XGD) (Index: ^AXJO) versus the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), represented by the red line.
Australian gold stocks, as a whole, have soared 28% in 2015 whilst the broader market has returned just under 10%.
A big reason why we're seeing continued strength in gold stocks could be accredited to the stronger AUD gold price.
Usually, gold – like most commodities – is priced in U.S. dollars.
With the well-documented fall of the Australian dollar (versus the greenback), gold miners' profit margins have been boosted because they're now receiving more for their product but are still producing at the same cost.
If you can find miners which are low cost and have plenty of reserves (not just resources!) then you're on your way to picking a winning gold stock.
Here are three ASX gold miners which could be worthy of further investigation…
- Newcrest Mining Limited (ASX: NCM) is Australia's largest gold miner, with an $11 billion market capitalisation. Newcrest was hit hard during the fallout of gold prices in 2013, but has since begun to recover. It's already up 33% in 2015.
- Northern Star Resources Ltd (ASX: NST) has been one of the best-performing companies on the entire ASX throughout the past decade. The gold miner is well run, has low costs and continues to use its flexible balance sheet to make timely acquisitions. It is now the ASX's second-largest gold company.
- Independence Group NL (ASX: IGO) is another strong miner with its shares up 27% for the year so far. However its operations are more diversified than most miners. In addition to gold, it mines nickel, zinc and copper. Having this diversification has enabled it to handily outperform the market in recent years.
An even better resources stock pick…
Regular readers will know The Motley Fool's analyst team picked Northern Star Resources as one of their 'under-the-radar' high-risk/high-reward stocks picks during 2014. Safe to say, they got it right -with the stock more doubling between then and now!
