With gold's price continuing to flirt with the all-time high posted in March 2008, investors are understandably hesitant to dive into new positions. Although the macroeconomic landscape continues to point to further strengthening of the gold price, no one wants to be the last buyer in a stampede.
Although the long-term outlook for gold is clear and defensible, the short-term volatility in mining stocks can be absolutely gut-wrenching. Fools investing for the long haul may always be subject to the vagaries of market swings, but some measure of protection can be found by identifying relative values from within the universe of high-quality gold miners.
Looking back even further, Yamana shares remain 48% beneath the $19.47 peak they attained in March 2008 ... before the sector tumbled into an extended correction. Larger competitors Newmont Mining
Historical share prices by themselves say very little about present-day valuation, but in the case of Yamana, I think they speak volumes. Incredibly, Yamana shares closed at $12.96 on the last trading day of 2006. This predates Yamana's game-changing acquisitions, which sparked a massive production growth spurt, and helped to quadruple gold reserves from 4.5 million ounces to 19.4 million ounces.
Notably, the price of gold has appreciated 56% in the intervening period. Competitors such as Goldcorp
My selection of Yamana Gold for my silverminer CAPS portfolio has outperformed the S&P 500 by roughly 130% since November 2008. The stock has earned four stars out of five, with more than 3,400 investors expecting further outperformance. Join the free CAPS community today, and let us know what you make of my purported price dislocation.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Kinross Gold, and Yamana Gold. The Motley Fool has a gilded disclosure policy.