The first step of deciding on the companies is to filter a few companies from the other hundreds. You will have to analyze them properly so that you can pick the better opportunities. You can easily gather the information required for the analysis from the company websites, press releases, and various gold publications. Here are some points that you should analyze while choosing these stocks.
1. Market Capitalization: Market cap is simply the number of outstanding shares multiplied by the stock price. Comparison between the market cap and the market price of gold at reserves shows whether a company is undervalued or overvalued. The market cap analysis is different for both the junior companies and the bigger ones.
Studies say - whether it is for gold stocks or any other stocks, it is a good decision to invest your money in those companies which are undervalued relative to its peers with overvaluation. The studies also say that the margin of safety is much greater in such companies.