In a commodities market that has gone decidedly off-script over the past four months, it is heartening to see gold sticking to the stronger-for-longer script.

At the time of writing, the bullion price stood at an Australian dollar record price of $1400 an ounce. If Kevin Rudd and Co really want consumers to feel confident and secure, maybe they should send a bar of the lustrous stuff to every working family instead of cash.

For working investors, however, there is a regrettable gap between the performance of the gold price and that of the listed gold sector, even though gold at $1400 an ounce makes for monstrous margins.

Just as Paul Simon crooned about 50 ways to leave your lover, there are about as many ways for gold miners to falter: imprudent hedging, production glitches, mine disasters and too much debt come to mind.

In the words of gold bugs Fat Prophets: “Given the ongoing bear market in equities, gold stocks have not responded to the healthy gold price as positively as some would expect.”

However what is not so apparent is that the bigger stocks — notably sector leader Newcrest Mining (NCM) — have outperformed the market since October.

For years, Newcrest has promised to deliver in spades but has been held back by some of the above obstacles. But having paid $US1.2billion ($1.83billion) for AngloGold Ashanti’s one-third interest in the Boddington mine in Western Australia, Newcrest has truly entered the big league with a stake in what is tipped to be a 1 million ounce a year producer over the first five years.

Newcrest of course already owns Telfer, the biggest current producer. Having bought out its unfavourable hedging positions, Newcrest remains the logical one-stop gold exposure with 91 million ounces of reserves and an average cash cost of $US400-$440/oz.

Yet, on valuation, Newcrest shares always seem to emit the wrong pheromones, because they anticipate the upside before finding a new way of disappointing investors. Lihir Gold (LGL), also a major producer, shares the same trait.

There is better value among the emerging producers, with the caveat that there is little wiggle room if things go wrong (literally in the case of Beaconsfield Gold’s infamous mine collapse).

Despite the robust gold price, there have not been too many fresh projects. But take a squiz at Intrepid Mines (IAU), which owns the 70,000oz a year Paulsens mine in WA and is developing the huge (1.5 millionoz) Tujuh Bukit field in Indonesia.

One factor in Intrepid’s favour is its move to retire its Paulsens hedge book, which had limited the received price to $600/oz.

As ABN Amro Morgan notes, Intrepid holds $US19 million cash, which should enable it to fund further deep drilling at Tujuh Bukit. “We expect this to prove to be a major (read: world class) resource, with a commensurately long and expensive exploration and development period,” says the firm, which reckons the shares are worth 60c apiece.

Criterion in late November looked benignly on Troy Resources, which sports the apt ASX code of TRY. At the time, CEO Paul Benson described the 68c share price as ridiculous and personally bought 60,000 shares to prove his point.

With the shares now well over $1 he has indeed proved his point. Troy’s main projects are the Andorinhas open cut and underground mine in Brazil and its ageing Sandstone mine in WA.

The latter provides the cash flow and the former provides the promise. With cash backing of 80c a share and an amazing nine-year record of earnings and dividends, Troy’s one horse is worth letting into the paddock.

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