Goldcorp: Difficult Quarter, But a Buy on Company’s Cost Control Efforts Tuesday, Aug 2 2011 

Goldcorp: Difficult Quarter, But a Buy on Company\'s Cost Control Efforts

Advertisements

3 Gold Stocks Investors Should Consider Wednesday, Jul 27 2011 

3 Gold Stocks Investors Should Consider

4 Long Ideas and 2 Short Ideas for July Monday, Jun 27 2011 

4 Long Ideas and 2 Short Ideas for July

Gold and Silver Stocks to Accumulate Over Summer Wednesday, Jun 8 2011 

Gold and Silver Stocks to Accumulate Over Summer

5 Long and 3 Short Ideas for June Wednesday, Jun 1 2011 

5 Long and 3 Short Ideas for June

Gold Price and Gold Stocks – Get Ready for the Breakout Monday, Mar 21 2011 

Gold Price and Gold Stocks – Get Ready for the Breakout

http://seekingalpha.com/article/256410-goldcorp-great-2010-and-even-better-2011 Friday, Mar 4 2011 

Goldcorp: Great 2010 and Even Better 2011

2011 Investment Commentary – Specific Sectors Wednesday, Jan 12 2011 

Position disclaimer: At the present time I am long Gold, Crescent Point, Qualcomm, and Alcoa. I have no positions in the other securities mentioned.

Charts: I would like to thank sharelynx.com, the World Gold Council, Haver Analytics, and Gluskin Sheff for the Dow-Gold and Dow-S&P charts used in this commentary.

2011 will likely start a bit bumpy as the market works off its overbought condition setting the stage for a nice rally to begin in February leading up to the end of QE2 sometime in the second quarter. The second half of 2011 should feature a sideways move into 2012.

I think Financial stocks will continue to underperform. Looking back after the tech bubble many companies never saw their stock prices recover (Cisco, Intel, Dell, Yahoo, and Microsoft are examples). There are still a number of questions concerning foreclosures and a black swan in terms of the balance sheet pricing from the FASB/IFRS.

It is possible that financial stocks begin to outperform but investors need to pick through the sector with care. Do not think that just because the stock is beat up it represents great value. Underperforming stocks are generally underperforming for a reason.

There will be select buys at the regional level but the large money center banks with significant mortgage exposure will likely see continued difficulties in 2011.

Technology in select areas should do very well.

Companies tied to Android rather than Apple in the cellphone/tablet area as Android has matched Apple in terms of OS penetration in the smartphone sector and appears to be well placed to make significant inroads in the emerging tablet sector.

Google may be on its way to winning the smartphone/tablet OS battle segmenting both Apple and Microsoft but it is early yet and the real winner may emerge over the next two years.

In this sector I like Qualcomm as a play on Android.

I continue to like both Gold and Silver in the hard commodity area after a short correction in January. Gold has an absolute floor at $1265 with $1500 being the upside.

For investors wondering when to sell Gold I would like to introduce the following chart showing the Dow/Gold and S&P/Gold ratios.

For my personal portfolios I am using the following ratio system, 5:4:3 for the Dow and .5:.4:.3 for the S&P.

When the Dow/Gold and S&P/Gold ratios reach 5/.5 sell one-third of your holdings, another third at 4/.4, and the final third at 3/.3. Any holdings below 3/.3 should be met with tight stops as this will likely be the mania phase where volatility reigns supreme.

Investors should implement proper risk management systems in order to manage their risk with respect to increased volatility in the Gold/Silver sector.

In terms of Gold and Silver stocks the exploration sector provides the most upside over developers and producers so long as investors look for properties in well established mining districts in safe mining jurisdictions. These properties continue to offer very good value.

The theft of $2 million in Gold from a mine in Brazil should highlight the risks of dealing in Emerging Markets, even ones as advanced as Brazil.

Oil companies with solid dividend ratios continue to be attractive. The same goes for oil service stocks. Strong dividend yields and cash flows should protect investors on the downside while providing a nice additional return on capital. Crescent Point Energy is a very attractive Canadian oil producer who just switched from being a trust to a corporation in Canada. Crescent Point owns a significant portion of the Bakkan oil reserve in Saskatchewan just across the border from the United States.

The substitution effect should begin to take effect in 2011 as high primary commodity prices force investors to seek cheaper alternatives. This has already taken effect with respect to Gold as investors rushed to Silver in the 4th quarter as a cheaper alternative to Gold causing the Gold/Silver ratio to move to pre-financial crisis lows.

As a contrarian trade I like Aluminum over Copper. There are a significant number of people on the long side of the Copper trade and with the price above $9400 Aluminum looks like a bargain at its resistance level of $2500. A move above $2500 would signal a rally to the market. Alcoa, one of the largest global Aluminum producers, has already broken through initial resistance anticipating a move in Aluminum.

The soft commodity sector is especially attractive right now. Agricultural producers in the sugar, palmoil, and soybeans sectors all look attractive for a variety of reason. Palm oil especially as a biofuel in Asia as oil prices rise putting a strain on economic growth.

Fixed income yields should continue to rise until stocks top then fall into the end of the year with the top in yields coming when QE2 ends.

Looking out over the year it appears as though the trade will be long equities until QE2 ends then switch into fixed income securities in the second half of the year.

Manage risk appropriately in this environment. As we saw with the flash crash last year corrections can come quickly and with force. This is a stock pickers market and even in the areas I cited above a rising tide is not lifting all boats.

Just because I mention a stock that I may like or hold does not mean it is appropriate for the reader. As always, do your OWN homework and come to your own conclusions before investing.

Companies like Microsoft and Intel have not had the same returns as companies like Apple and Google. In the Gold sector, juniors producers and stocks like Pinetree Capital have outperformed their large cap producer brethren like Goldcorp.

There are great values in the market waiting to be found if investors are willing to kick the tires and turn over some rocks and stones.

Investors need to manage risk appropriately and do their homework in the respective sectors in which they invest. The landscape in every sector is changing rapidly and companies that were hot and hold dominant positions are seeing those positions usurped by new entrants that are less than a decade old. Some of the new entrants have yet to go public but hold dominant positions in emerging and established industries.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Gold Stocks – Where is the Bull Market? Tuesday, Sep 14 2010 

Gold bullion has been on a strong and steady march since its bottom in late 2008 but Gold stocks have remained mired in a sideways movement as investors become impatient waiting for the sun to shine upon them. But to understand why Gold stocks are moving sideways investors first need to have a brief history lesson about the industry .

For the 80’s and 90’s Gold was looked at with disdain after Paul Volcker broke the back of inflation and equities started their great bull market. With the Gold price trading in a tight range close to the production price Gold producers were forced to hedge against price declines. With profit margins tight, hedging was the smart strategy as it gave downside protection to the mining companies. Exploration projects were difficult to fund and companies instead focused on increasing production and efficiency at current mines.

When the Gold bull market started gold producers continued to be wary of the runup in price after spending almost 2 decades in a zero profit margin environment.

In the early part of the 2000 decade new investors looked to mothballed projects drilled out in the 70’s and 80’s which were shelved because they were uneconomic at the current prices. Savvy investors purchased many of these projects and looked over the drill results with new technology, often leading to major new discoveries.

Technological advancements also led to new discoveries at existing mines and greenfield areas. Exploration companies popped up overnight and a global Gold rush began as investors scoured the globe looking for major projects in South America, Canada, the Caribbean, and Africa.

New producers realized that having only one mine with a 10 to 20 year lifespan puts an end date on the company if additional projects are not discovered/purchased. This pushed the new producers to use the rising Gold price as an opportunity to acquire assets and build up the inventory to increase the life span of the company.

More importantly, it allowed the new producers to continue to move up the curve from being an exploration company to a development company then to a small and mid-tier producer and finally a major producer.

This in turn led to companies like Goldcorp growing into major Gold producers since before companies like Barrick Gold and Newmont Mining dominated the landscape.

The new producers have become even more aggressive than their old guard counterparts acquiring bolt on projects similar to Goldcorp’s activities at Red Lake to increase the assets and existing life of a project.

In most cases stock is used as currency to acquire the new projects diluting current shareholders but offering long-term value as a more ounces in the ground extends the life of the company.

This has caused stock prices of most companies to trade sideways while the price of Gold bullion rises disappointing investors. But hope is on the way, as the remaining major exploration and development projects are acquired Gold producers, new and old, will have to turn inward for growth. This means corporate efficiency and a decrease in development expenses which will translate into a jump in profits.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Gold in Uncharted Territory with Silver Following Along Tuesday, Oct 20 2009 

Many reasons have been given for the rise in Gold and Silver during the month of October but overlooked by the mainstream press is an important point; the beginning of the 2010 United States fiscal year. Spending is expected to balloon to upwards of $3.55 trillion dollars with a budget deficit of $1.75 trillion dollars.

It is clear that the next bubble is not in US Treasuries but in the US Government itself. Under Bush II, government was allowed to expand far in excess of what was necessary. Discretionary spending exploded and deficits were allowed to run rampant. Sprinkle in a massive increase in US Treasury issuance along with artificially low interest rates, a touch of monetary supply growth while interest rates were being increased, the collapse of the US real estate market severely weakening the US banking system, and you sow the seeds for the massive increase in government spending we have today.

Three points are certain at this moment in time.

The first is that the United States, with the amount of debt outstanding and coming down the pipeline, is not able to undertake a policy of raising interest rates from these low levels to normalized levels for a number of years.

The second point is that Asian economies, starting with Australia, are going to lead the rate cycle as their economies and banking sectors have weathered the storm in better shape than the US and Europe. Expect to see conventional and unconventional (by Western standards) monetary tightening during this cycle.

The increased focus on Asia will provide investors with very interesting opportunities in a number of sectors.

The third and final point is that Gold and Silver will only go higher from here over the next 6 month period with a spike in price during the March-May time frame after which we trade sideways for at least a year in order to digest the run higher and the increase in gold supply coming on market from new mines coming into production.

The peak in Gold should coincide with a peak in Silver as well along with a test of the USD lows made last year.

In terms of supply, we should remember that Penasquito, Goldcorp’s massive mine in Mexico, is scheduled to come into commercial production in January of 2010. This supply of gold, silver, and zinc should be enough to keep each market in a sideways range for some time until the supply is properly digested.

Investors who do their homework should find themselves well rewarded by the end of the first quarter next year.

Disclaimer
Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

Next Page »