 Good day fellow investors. Now I have been saying already for a long time that everybody should own a little bit of gold in one's portfolio. Now you can own gold if gold prices fall to let's say 600 you lose 50% if gold prices double you double what you own the gold value of your portfolio. However if you own gold miners if gold prices fall to 600 you probably lose everything. However if gold prices double you don't just double that part of your portfolio you increase it by 5, 10, 20 times depending on what miner you are buying. In order to go deeper on that topic I will discuss all the 50 holdings of the Van Eck gold miners ETF in order to show that every miner is different so each portfolio has to be approached has to be fitted with miners that fit that portfolio and another story is that the Van Eck ETF is again an ETF that is skewed towards the biggest miners which we are going to discuss in this video I will later make more videos about the miners that are positioned from 11 to 50 and that will give you a different picture of what you can invest in the gold mining industry. However if we look at the top 10 holdings of the ETF you can see that 9.27 of it is in one company Newmont Barrick has 7.2% the top 10 have a 54% weight in the ETF that is a lot because the remaining 40% have then 46% weight in the ETF this means that you are very much skewed towards the biggest miners and that's not really proper diversification because as we're going to see now the biggest miners are a little bit expensive especially the royalty companies there is one two interesting among them so let's immediately start with discussing the miners. Before that just a quick note when you're looking at miners lower costs longer reserves lower the risk higher mining costs higher debt increase the risk of investing however also give much more leverage in case gold prices increase because the margins expand much much better than with those where the margins are already big thanks to low mining costs or no debt. The first company I want to discuss is Newmont mining corporation the largest gold miner in the world according to market capitalization as you can see all sustaining mining costs are around 900 dollars per ounce which gives them a margin of 400 dollars per ounce which is a healthy margin but also indicates that the company would be in trouble if gold prices fall close to that level which is always a possibility you never know what will happen to gold prices. Mining costs are expected to be around 900 for the next 10 years everything that I say is sourced from the relative investor relations page of the company operations are mostly focused 41% in North America 31% in Australia and a little bit of diversification in South America and Africa what is very important here to know is that Newmont won't be able to increase its production as its mines get depleted and new projects aren't big enough to replace and grow production but Newmont offers stability with relatively low costs 900 per ounce the company has 12 years of operating reserves with an average grade of 1.2 grams per ton further the company has been really lowering its debt in the last few years and now the net debt is just 1.1 billion which is relatively low for that company a little bit about valuations according to the company 100 gold price increase increases the cash flow per share by 67 cents but if that happens as it has happened gold prices have improved by 100 in the last 12 months it will still keep the price to earnings ratio high and close to 40 the free cash flow yield would however be in 2018 I'm saying this around 5 to 7 percent which is a good okay return in this environment if you expect stability if you want 5 to 7 percent that's good if gold prices double new stock price would do well as it did in the last three years where where gold prices went from almost 1000 to the current 1300 and Newmont stock price increased 70 percent so what you can expect from Newmont stability a little low risk of course if gold prices go down Newmont stock will also fall if gold prices go below 900 then there is a little bit more trouble but Newmont is one of the most fixed most stable gold miners that you can find however the price to cash flow expected is around 5 to 7 percent good return perhaps a little bit better than the scp 500 so if you're interested you can really look at such a company for me it's a little bit too expensive a little bit better than Newmont is barric gold especially because the price has declined a little bit in the latest period barric was usually the largest gold miner but Newmont's price went up and barric's price went down as you can see in the last year and a half from above 20 to the current 14 barric had some problems with their subsidiary in Tanzania and with their veladero mine due to a leech incident so that's perhaps one reason why the stock price has fallen nevertheless it's still a very very stable company there is four billion in debt however the maturity of that debt is post 2032 so very very long term and even lower gold prices don't bring to refinancing problems which means that the company is stable or should at least be stable further all in sustaining costs are expected to be around 730 which is much lower than Newmont's but there is higher debt in this case at barric's so you are there at the end as you have seen the interest rate on the debt is 5.6 percent 4 billion on 5.6 percent is pretty much what is very interesting about barric is that it has the largest gold reserves in the world 86 million ounces so that's pretty pretty important so if barric's situation stabilizes a bit I wouldn't be surprised to see it have a price to cash flow yield of 10 so 10 percent cash flow yield which is very very good and better than Newmont's so you might take advantage again if you want a company that will have stable production in the long term big pipeline but producing a lot well diversified then perhaps now barric is a little bit better than Newmont if you invest in an ETF an ETF will buy more of Newmont and less of barric even if barric is now cheaper when the things revert an ETF will buy more more of barric and less of Newmont which will be cheaper that's why I don't like ETFs I prefer to buy barric now that's cheaper than Newmont and vice versa in another scenario all right Franco Nevada is the third gold miner on the list however that's not really a gold miner that's a gold royalty company there is a video where I describe what are gold royalty companies they invest in projects in the developing stage and they get a royalty from the whole production for the rest of them life mine which it has been proven a very very good business model since royalty companies became interesting and really grew in the last 15 years and Franco Nevada is one that really did well in the past however that brings to price to cash flow ratio of 27 which leads to a yield of 3% which is one third of barric's yield or half of Newmont's so yes they are a good business model very low risk however expensive Newcrest miner is a very interesting miner an Australian miner that has an extremely long reserve life you can see here that it has almost 30 years of or to be mined at current rates the cash flow yield is 8.5% and about to increase as Newcrest had some issues due to a seismic event at its flagship mine 2017 so we could expect better results in 2018 also staining mining costs are below 800 so that's a great margin of safety in relation to gold prices given the largeness of its mines Newcrest has the potential to further grow in the future which is not the case for barric and Newmont the pipeline the lee here mine increasing cadia increasing production further increasing working on those production improvements they can develop the golpu project in new papagini they have a lot of long-term pipelines that can really increase production as the reserves are extremely extremely long so for the same price you can get a growth company in comparison to barric and Newmont also Newcrest owns 14.5% of the sol gold project in Ecuador which owns the potential tier one cascable operation with extremely high copper and gold intersections if we look at the top copper intersection we can see that sol gold has a lot of them from the top 30 however you can also see that Newcrest is here on position four and five with the wuffy golpu project also with cadia and so so very very interesting gold copper miner with growth potential and extremely long reserve life i have heard that australian miners traded in australia are priced lower than miners like barric and newmont traded on the new york stock exchange so just because it is an australian miner it doesn't deserve a lower valuation so if you're looking for growth stability long-term great projects then Newcrest might be an investment for you gold corp is another company focused on the americas it's all in sustaining costs are 825 so in the middle of what we have seen up till now and the company expects to lower its mining costs by 20 in the next few years increase production by 20% and increase reserves by 20% if the company manages to do that it would be one of the best gold performers in the next few years you can see here that the portfolio is mostly focused in the americas argentina chili canada and mexico however to improve what they have been announcing they will spend a lot of money and their capital expenditure guidance is to spend around 800 900 million per year which is a lot when you have an operating cash flow of 1 billion and that's something the market doesn't like so you can see that in the last three years gold corp's stock price has declined 38% which is a big difference when you compare it to newmont that has increased 70% nevertheless if they manage to do what they have promised and you attach a price to cash flow of 9 9.5 which is current the returns might be very very good so this is a reversal story to look at agnico eagle mines will produce 1.5 million ounces of gold and expects to produce 2 million ounces of gold in 2020 with also in sustaining costs of 845 dollars so another growth company that's focused on growth the reserve grade is 2.2 grams per ton which is much higher than the average most mines are in canada with one in finland and three smaller mines in mexico so major canadian exposure lowers the political risk however most of agnico's mines are underground which can be costly and risky nevertheless the company has been doing very well in the past safe jurisdiction price to cash flow ratio is 15 which is a little bit high wooden precious metals is another royalty company smaller than franconeveda it has deals with 20 operating mines and nine development projects it has a dividend yield of 1.53 which is the highest we have seen up till now the price to cash flow is also high at 17.8 which applies a yield of 4. something percent if i'm not wrong now a royalty streaming company doesn't have development costs doesn't have to invest in capex sustaining capex whatever they just get they just buy a little bit of gold at a low price usually around 400 per ounce and then they can sell it at market price which is a great business model so we can't really look at price to cash flow the best way to look at that is to price to earnings ratio as their mines get also depleted and the price to earnings ratio is 46 which means that the yield is a little bit lower when compared to what they have invested in the past so again royalty companies for me look expensive they are great they are good they are growth but they are a little bit expensive from an investment business common sense rent gold resources is an african focused miner with operations in mali democratic republic of congo drc senegal and the ivory coast now it owns a kibali mine in congo where they have spent 2.5 billion and they expect production to increase in the next year but there are always issues with local governments the democratic republic of congo has been changing the mining code which would increase the taxes payable while the government of the ivory coast has issues with illegal gold mining non-transparent exploration permitting etc so africa jurisdiction everybody is telling and that it is a problem and it is a problem if you invest 3 billion in a country you expect to get your money back for a long long time not there is a government oh let's increase their taxes because they have already invested they cannot back up and if they're not happy they can always leave the country that's a high risk and therefore it should be cheaper the stock should be very cheap for that however the price to cash flow ratio is at 25 implying a four percent yield very low for the jurisdiction risk i would expect a much higher yield for that risk royal gold is another royalty streaming company you can see that here in the invested in new golds rain river barracks cortez and gold corpse panaskito it's a little there is a little risk now the price price to cash flow is 18 implying a yield of what 5. something percent which is okay but you can see here how there is also risk with those miners because if they invested in a mine that is about to shut down or to be idled because of lower prices then there is no revenues there is no royalty if a mine doesn't produce so you can see here that the stock price has gone down to around 40 in 2016 january and now is at 88 so if you're patient it pays to buy such companies when nobody wants to look at gold not when it's very expensive to do so kinross gold produces 2.5 million ounces of gold per year at all sustaining costs of around 1000 which are a bit higher than what we mentioned previously but has a price to cash flow of just six but the price to free cash flow of 75 as the company has higher investment costs because it's developing a lot of project it's expected that all the projects would be developed at 2020 then as the company has now that maturity up to 2021 it can invest heavily the tassiast phase 2 will increase production from the current 250 000 ounces to 800 000 ounces so if you want a growth story this is a very interesting company however the costs are a little bit higher so you can expect higher leverage to gold prices from such companies now these are the bigger miners except from new crest i wouldn't invest now in those because i am perhaps attracted by more risk and much higher potential that gives me much more leverage because i want to keep a small part of my portfolio in gold and have a good effect on the other part of the portfolio because investing in gold in miners is a hedge not an investment because what is the value of gold apart from that i really look forward to showing you the other 40 miners and then after we have seen all the 50 miners you can get the great idea of what best fits your risk reward appetite your portfolio and how to hedge it at this moment in time it's extremely important that we are hedged for currency devaluation for market crashes for turmoil for a more monetary easy helipopter money and one way to be hedged is invested in gold miners there are other hedges we will all cover them as it's a very very interesting topic thank you for watching looking forward to your comments what was i wrong somewhere probably was because i didn't dig that deep into the company so looking forward to the comments and see what i can learn from you thank you for watching see you in the next video