Small and mid-cap gold stocks will outperform physical gold and large-cap gold stocks in 2011, according to a Citi report.
These companies which have a market capitalisation of under $3 billion include Oceana (OGC), Medusa Mining (MML), Kingsgate (KCN), Petropavlovsk (POG), and Centamin (CEY). Citi projects their average expected total return for these companies is 38%.
Petropavlovsk has a medium risk rating because a large part of its earnings are derived from gold and most of its business is done in Russia. OGC is rated high risk based on investment demand, a potential appreciation of its domestic currency and production growth.
The smaller stocks are however expected to see increased production, at a lower cost with good P/E levels as compared with large-cap stocks. For now, Citi is bullish on those.