Get Long Copper and Gold at a Discount with Northgate Minerals (NXG)

Monday morning has seen relatively heavy volume for Canadian small cap gold and copper miner Northgate Minerals Corp. (NXG).  April has been a slow month for the stock as it has had only one trading day above average three month volume and has underperformed the SPDR Gold Shares ETF (GLD) by 10% and the Russell 2000 by nearly 25%.  Stochastics also show that NXG shares may indeed be oversold on this low volume.  Despite a 17% single day drop in mid February, the year-to-date trend here is clearly upward.

In October 2007, Northgate expanded its operations into Australia through the purchase of gold miner Perseverance Corporation.  While this $257M purchase may look foolish to some, gold prices are up 20% since that time while equity indices have been nearly halved.   At $1.28/share, NXG trades at a 21% discount to tangible book value and is an underappreciated way to play both precious and industrial metals.