What are we looking for?
The Bank of Canada is well into a cycle of interest-rate cuts, with the U.S. Fed expected to join it this week. In Canada we have had three reductions in the central bank rate since June. In the United States, the markets are pricing in a nearly 50-per-cent probability of a half-percentage-point cut on Wednesday with a total two-percentage-point reduction by March of next year. Lower interest rates weaken the underlying currency and strengthen the price of gold in that currency. In this environment, gold keeps setting new highs but are the gold stocks following? Let’s look at what are the stockcalc models are telling us for valuations here.
The screen
We used stockcalc’s screener to select the top 10 listed gold mining companies by market capitalization on the TSX. We then used stockcalc’s valuation tools to calculate fundamental (or intrinsic) valuation for each stock to see if it is undervalued or…
