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Investing in mining companies is one way to invest in commodities such as precious metals without actually having to buy and store those bulky items. As the price for the commodity rises, the price of mining stocks also tends to rise. Plus, as they produce more from their mines, their stock price also rises, so you get the benefit of both an inflation hedge and a growing company.

Over at CAPS, our system of finding the best stocks through the collective opinions of more than 165,000 members, mining stocks have been especially popular. Here are three highly rated ones for you to consider, along with some relevant thoughts of people investing in them.



Recent Price

CAPS Rating
(out of 5)

North American Palladium (AMEX: PAL  )

677,000 oz. gold, M&I

3,727,000 oz. palladium, M&I



Taseko Mines (AMEX: TGB  )

7,590,000 oz. gold, P&P

2,946,900 tons copper, P&P



Northgate Minerals (AMEX: NXG  )

3,754,300 oz. gold, P&P

33,800 tons copper, P&P



Source: CAPS, company filings, and Capital IQ, a division of Standard & Poor's.
M&I = measured and indicated; P&P = proven and probable.

North American Palladium digs out palladium and gold from its properties in Ontario and Quebec, Canada. With a healthy cash balance, no long-term debt, and recent exploration in its Sleeping Giant mine nearly doubling resources there, the company is poised to turn things around from the net loss reported last quarter. CAPS All-Star member TSIF, ranked in the top percentile of all CAPS members, had this to say just a couple of months ago:

While North American Palladium is known best for it's Palladium mine, it is also expanding a gold operation in Quebec. Profits for [NAP] have been slightly elusive, resulting in the share price fluctuation. They were forced to curb production during the recession peak. Investor expectations never seem to be met. With the initial opening of their Sleeping Giant mine in early January and ramped up production expected this quarter, investors have been expecting a good return as Gold and Palladium prices increase. ... All in all, I can think of worse places to invest. If the economy recovers, then [NAP] will do very well on Palladium. If it doesn't then it could stand to do very well on Gold. Given a little luck, both should do well.

Taseko mines gold, copper, and molybdenum from properties found in British Columbia, Canada. Unlike NAP, Taseko has actually been profitable over the past year. Its reserves are larger than NAP, too. CAPS member lewloG likes their prospects, as shown in this pitch from last spring:

Profitable miner of copper, actually making money, interesting speculative new mining project with plenty of capital and heavy Asian investment, excellent Canadian company now established success record, large confirmed reserves, inflation hedge in a commodity.

Northgate Minerals operates in Canada (of course) and Australia. It's primarily a gold miner, so it should be more sensitive to the price of the yellow stuff than the other two are. Even though it lost money last year, it had been profitable for the six years before that. The Fool's mining guru, Christopher Barker, calls the company "my personal favorite" among a set of junior gold miners. It compares quite favorably against several others, with more proven and probable gold reserves than either Aurizon Mines (AMEX: AZK  ) or Gammon Gold (NYSE: GRS  ) and a better net cash position than either Jaguar Mining (NYSE: JAG  ) or Golden Star Resource (AMEX: GSS  ) .

You'll find more commentary on these and other mining companies over on CAPS, either on the individual stock pages or Chris' highly followed blog. Come and join your fellow investors for some stock talk today.

Jim Mueller does not own shares of any of the companies mentioned. The Fool's disclosure policy went out and purchased some potted plants made of gold having misunderstood the meaning of "gold hedge."

Read/Post Comments (1) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 28, 2010, at 9:31 AM, TimoDOZ wrote:

    A couple other Canadian Gold miners with the same ramp up in production story as PAL are KGILF/KGI.TO & MEAOF/MTO>TO. Kirkland very nearly the same market cap as PAL, recently reported a qtr over qtr increase in gold bullion production of 82%. Their ramping up further is expected to continue. Metanor has moved nicely off the 51 cent price to 65 on gold peaking. Now backing down to 54 cents area. An interesting micro cap but with strong proven and expanding proven reserves and it's own processing mill. The infrastructure alone may be worth 75 cents a share. Guidance is for production to continue increasing on the development of newly proved reserves. PAL willl be reporting in another two weeks results like those seen at KGI in terms of expected production increases could indeed move that stock. Unfortunately the gold market just now a bit weak on the cusp of a lot of so many of these miners finally reporting 2nd qtr results with their ending fiscal year results in August.

    This morning 7/28 Myanville is reporting a bearish technical reversal in gold. We have now seen the first +$100 retrenchment in gold this year. A huge market sell off back to the recent lows and a continuing range trading market could further unhinge gold. It seems that when margin calls come "they" sell what they can. This could knock gold and silver back. Gold would find very strong support between $1040 and $1060 where some major central banks would step up to be buyers to protect their current positions. Silver has a less perilous line. It has continued to trade in a $16.35 to $19.90 price range for more than a year now. This has made it a great trading vehicle as compared to gold which until now has just not made a significant correction until as of late.In the Meantime on the recent currency crisis the Central Euro bank just recently sold off 25% of their gold into the market. Perhaps a little GLL might be a good way to hedge your current gold positions and the short silver fund ZSL for silver?

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