Wellington West Studies Eight Gold Equities, Picks Two Favorites

Gold is one of the only asset classes in the world that has maintained its value in recent months, so many investors are looking at increasing their exposure to gold equities. But which ones to buy?

Wellington West Capital Markets analysts Catherine Gignac and John Miniotis compared eight producing companies based on their production growth, reserve composition, political risk, corporate activity, and management and financial strength. The eight companies studied are Kinross Gold Corp (KGC), Agnico-Eagle Mines Ltd. (AEM), Yamana Gold Inc. (AUY), Iamgold Corp. (IAG), Aurizon Mines Ltd. (AZK), New Gold Inc. (NGD), Golden Star Resources Ltd. (GSS), and Western Goldfields Inc. (WGW).

Of those eight, the analysts determined that Yamana Gold and Western Goldfields "offer the best potential for investment outperformance" in 2009.

Yamana is favoured because it offers excellent growth potential, yet still trades at a discount to its more established peers. The analysts think that the market is still a little skeptical that the young company can meet its guidance, but there is big upside potential if it does.

Western Goldfields is considered the best "value play" as it trades at very low multiples that they believe are not justified. The company also has strong near-term production growth and little political risk, they noted.

In terms of gold bullion itself, Ms. Gignac and Mr. Miniotis maintained a very positive outlook during this period of financial market uncertainty. They predicted an average price of $850 an ounce in 2009, with plenty of volatility.

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