Among the gold mining sector are the explorers, the producers, and the royalty companies, with each offering different risk profiles. The explorers are the highest-risk with regular capital raises and no guarantees that they’ll build a mine; the producers are medium-risk, with risk dependent on diversification and margins; and the royalty companies are the lowest-risk but offer the least reward. Producers are most likely to have the best returns, relative to risk, as they rarely trade at a discount even though they offer safety. In this update, we’ll look at Newmont (NEM), Kirkland Lake Gold (NYSE:), and Orla Mining (ORLA), two producers that are best in breed, and one explorer fully financed to graduate to the producer ranks in December.While the general markets have put up strong year-to-date performances (despite Monday’s sell-off), the precious metals sector has turned in a lifeless performance since January. This has led to the Gold Miners Index (GDX (NYSE:)) lagging the S&P-500 (SPY) by more than 4000 basis points this year and over 5000 basis points since Q3 2020.

Although the underperformance can be demoralizing for investors, there are opportunities in this situation. Mixed valuations at multiple-year lows, as well as sentiment in the gutter, typically yield strong 6-month forward returns to the GDX. Like any market, the best times to buy are when the majority of investors have given up. Even the best-known names have seen their valuations drop in recent years. This is a good thing. Let’s take a look at three of the most attractive names below:

(Source: TC2000.com)

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