Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Archive for the ‘gold stocks’ Category

Possible Opportunity in Gold Bullion Due to Indian Strike

By for Profit Confidential

Much time has been spent recently discussing the up and down moves in the price of gold bullion. People with a long-term investment strategy need to weigh a lot of different variables when determining what they should be doing with their funds and the varying factors that are impacting the price of gold bullion.

Gold bullion has been a store of value for thousands of years and in some cultures it is more readily part of everyday life. One such nation is India. The Indian government’s attempts to raise taxes through a higher import duty on gold bullion are having a worldwide impact on this investment strategy, as gold bullion retailers have shut their stores, have stopped buying gold bullion, and have staged massive strikes.

The Indian government has decided to double the import duty on gold bullion to four percent and enact a 0.3% tax on jewelry made from gold bullion starting in April. For over 11 days, the gold bullion retailers have been on strike and this is being felt in the price for gold bullion. While we did see a push higher in the price of gold bullion on hints last week by the Chairman of the Federal Reserve, Ben Bernanke, the long-term demand of Indian consumers is important in maintaining a stable price for gold bullion.

While some estimate that gold bullion imports could fall over 20%, I think this might be an overly pessimistic viewpoint. With so much political pressure by the people of India, if we get a repeal of this tax policy, we would get a strong surge in the price … Read More

Mining Stocks: Six Potential Moneymaking Picks

By for Profit Confidential

gold stocksWe are seeing some calm return to the equity markets after Greece managed to convince its debt holders to take a loss of over $200 billion. The aftermath has hurt gold, as the precious metal has hit a snag; it’s down below $1,700 and looking to a possible retest at $1,600. A break below could send the precious metal down to $1,525.

With the current weakness in gold, I do not feel it is time to dump gold stocks and I believe major price weakness should be viewed as an opportunity to accumulate stocks.

I favor the metal plays and continue to smell opportunities, especially in the mining companies and junior gold miners.

China and India continue to be the world’s top buyers of gold and this is expected to continue. The Chinese have also been buying mining companies around the world in an effort to increase the country’s reserves. This is a reason why I like some of the smaller mining companies, especially those with a massive reserve of proven metals in the ground waiting to be developed and needing a cash rich partner to get the ore out of the ground.

You can buy the major gold players such as Free port-McMoRan Copper & Gold Inc. (NYSE/FCX), Barrick Gold Corporation (NYSE/ABX), and Newmont Mining Corporation (NYSE/NEM), as I discussed in The Gold Stock at the Top of My List, but for an opportunity for some real big gains, you need to own some of the smaller miners.

If you want to play the small mining companies, there are hundreds of plays.

I have listed several small … Read More

Mining Stocks: Four Potential Takeover Candidates

By for Profit Confidential

mining companiesFollowing the news of Glencore International plc’s purchase of Xstrata Plc, which will create a diverse firm involved in a variety of precious metals, there is increased investor interest in mining companies, with everyone looking over their shoulder, asking, “Who’s next?”

Since the deal is so large, this essentially raises the bar for other mining companies about who can be acquired and for what price. It used to be that only small, junior gold miners and other precious metals firms were the ones to be bought. This deal opens the doors to larger mining companies and throws down the walls for more mergers by precious metals firms on a large scale.

Mining companies are sitting on a ton of cash, as precious metals prices remain strong. Looking at one segment of the precious metals space, gold miners’ per-share cash flow and earnings reached the highest level in nine years during the third quarter of 2011, according to Bloomberg. This positive cash flow is being seen by most mining companies in the precious metals space.

Economies of scale are another driver for precious metals mining companies. As mines are becoming more complex and it’s becoming more difficult to extract precious metals out of the ground, mining companies are being forced to partner up with or sell completely to larger mining companies with more capital to develop the properties. This large scale allows mining companies to lower operation costs. Small junior gold miners simply don’t have the same cost of financing or technical knowledge in-house as large mining companies do.

 With the price of the Glencore/Xstrata deal worth approximately $41.0 billion, … Read More

Gold Stocks: There’s Value in Them There Hills

By for Profit Confidential

For years, I’ve been a bull on gold mining stocks, but also precious metals stocks in general.

Gold mining stocks and precious metals stocks did not perform very well last year (compared to recent years), but that doesn’t mean there is no value in them. Usually, when a sector like this is beaten down or forgotten by the market in general, value players come in and buy it up (myself, when gold bullion prices dip, I try my best to buy gold-related investment to average down my overall investment cost).

Analysts who follow the mining sector and who have earnings forecasts for these gold mining stocks typically value them as if the price of gold bullion was trading well below its current level. This means that, not only are the gold mining stocks cheap, they are also trading on the assumption that the price of gold bullion will fall to within the range of $1,200-$1,500 an ounce in a few years. Why buy gold bullion when you can buy a quality gold mining stocks at a discount to the price of gold bullion?

It’s been a frustrating time for investors of the gold mining stocks, but if the value players are hesitant to jump in feet first, there are other players who will.

Pan American Silver Corp. (NASDAQ/PAAS), the world’s second-largest primary silver miner, has just offered $1.5 billion in combined cash and stock deal to acquire Minefinders Corp. Ltd. (ASE/MFN), a medium-sized silver producer whose primary assets reside in Mexico. The price tag is a 36% premium to where Minefinders traded last Friday.

This, in my opinion, is … Read More

The Gold Stock at the Top of My List

By for Profit Confidential

The Gold Stock at the Top of My ListAfter the tech bubble in March 2000 popped and before the recent financial and credit crises struck, at least three sectors have managed to post significant gains: bonds; real estate; and small-caps. For some reason, however, gold remained under the radar for most investors. Yet, since the stock market peak, prices have climbed past many psychological marks. The shares of companies that mine the metal have gone for the ride.

The perennial question for any gold investor is whether to buy bullion or gold mining stocks. I favor gold stocks over the higher risk of other commodity options.

While generally favoring gold stocks, I view Newmont Mining Corporation (NYSE/NEM) in particular as a really good investment, because we see this stock bringing value to your portfolio for years to come.

Without a doubt, for those investors looking to hedge their portfolios with gold exposure, Newmont Mining deserves to be at the top of the list. This company stands out among other players for two reasons: 1) size; and 2) low production costs, even in the rising price environment.

Over the years, Newmont has grown rapidly through mergers and acquisitions, as well as the development of its existing reserves. This strategy resulted in the company’s diversified risks; namely, unlike junior producers, Newmont doesn’t depend on one or two of its mines for its future and it is certainly not exposed to politically unstable regions.

In that regard, the risk is spread out, as the company continues to maintain an aggressive worldwide exploration program and is actively participating in and taking advantage of the ongoing industry consolidations.

In terms of costs, Newmont Read More

Trading Opportunities: Why Nothing
Looks Great at this Time

By for Profit Confidential

It’s a crazy trading environment out there. Whether you are in bank stocks, gold stocks, silver stocks, or even cyclical stocks, the stock market risk is high at this time, as we just completed a volatile week of trading. The European debt crisis is keeping buyers on the sidelines and waiting for something magical to happen. The economic recovery is showing improvement here, but, with a high unemployment rate and declining home prices, it will continue to be a difficult path.

10-year Strategy of Buying Gold Stocks When Gold Bullion Moves Lower in Price Still Working

By for Profit Confidential

There is one strategy investors have (or at least this investor has) been following for 10 years to make money in this treacherous market. The strategy is quite elementary. Every time the price of gold bullion moves down three percent, I like to go in and buy more gold-related investments. This strategy has worked for 10 years and I still see the opportunity continuing in buying gold stocks when the yellow metal has sharp, one-day corrections.

Newmont Mining: A Class Act in Gold

By for Profit Confidential

The gold stock that George Leong views as a strong example of the type of stock that should bring value to your portfolio for years to come. Since the bursting of the tech bubble in March 2000 and before the recent financial and credit crises struck, at least three sectors have managed to post significant gains: bonds; real estate; and small-caps. For some reason, however, gold remained under the radar for most investors. Yet, since the stock market peak, prices have climbed past many psychological marks. The shares of companies that mine the metal have gone along for the ride.

The perennial question for any gold investor is whether to buy gold bullion or gold mining stocks. I favor gold stocks over the higher risk of other commodity options.

While generally favoring gold stocks, I view Newmont Mining Corporation (NYSE/NEM) in particular as a strong example of the type of stock that should bring value to your portfolio for years to come.

Without a doubt, for those investors looking to hedge their portfolios with gold exposure, Newmont Mining deserves to be at the top of the list. This company stands out among other players for two reasons: 1) size; and 2) low production costs, even in the rising price environment.

Over the years, Newmont has grown rapidly through mergers and acquisitions, as well as the development of its existing reserves. This strategy resulted in the company’s diversified risks; namely, unlike junior producers, Newmont doesn’t depend on one or two of its mines for its future and it is certainly not exposed to politically unstable regions.

In that regard, the risk is spread out, as the company continues to maintain an aggressive worldwide exploration program and is actively participating in and taking advantage of the ongoing industry … Read More

Investing in Gold with a Spot Price Near its Record—Time to Buy High & Sell Higher

By for Profit Confidential

In turns out that gold stocks are resuming their upward price trend in an environment where the spot price is ticking close to its all-time record. Gold stocks are the place to be if you’re a stock market speculator and if you believe that investing in gold will be fruitful in a slow growth environment. Nobody can with any real expertise predict where the spot price of gold will trade in the future, but all the fundamentals continue to line up. Investing in gold is something that I really believe in.

Top Five Reasons Why Gold Bullion Prices Will Move Even Higher

By for Profit Confidential

Michael Lombardi’s top five reasons why gold bullion prices will move even higher.“Considering gold bullion has gone up about 500% since 2001, how can we be so sure gold bullion in not in a bubble?” This is a common question we hear from new PROFIT CONFIDENTIAL readers.

Here are our top five reasons why we believe gold bullion prices, far from being in a bubble, have much higher to move. (Also see: Answered: Can I Still Make Money Buying Gold Now?)

  1. Few investors are aware of the bull market in gold bullion that started in 2001. If we were to take a survey of retail investors, our best guess is that less than five percent at this point have purchased gold mining stocks or gold producing stocks. Few investors understand how the actions of the government and the Federal Reserve are resulting in the price of gold bullion rising.
  2. The U.S. dollar, a fiat currency once issued by a creditor country, is now issued by a debtor country. The U.S. dollar is the reserve currency of about 70% of world central banks. As the debt of U.S. has spiraled out of control, the currency of America, the dollar, has gone from a system where it was once partially backed by gold bullion reserves to a currency that is mired in debt.
  3. The monetary policy of the U.S. has been to expand the money supply, create more dollars, to keep monetary policy expansive. Economics 101 dictate that the more of anything there is in supply, the less the eventual demand. The U.S. dollar is not exempt from supply/demand rules. Too many dollars in circulation? What other currency can investors run to when
  4. Read More

Debt Crises & Economic Fragility Around the World: Is There a Better Reason to Buy Gold Right Now?

By for Profit Confidential

I find it absolutely laughable how Prime Minister George Papandreou needs to hold a national referendum to determine if the country’s citizens want to accept another $150 billion or so in emergency capital in order to repay Greece’s initial bailout from its debt crisis. I mean, we are talking of survival here for Greece. What is there to discuss? Let me put it this way: can you imagine being on the brink of losing everything, your own personal debt crisis, but someone pops up and says, “Don’t worry; I have money for you, even if you may not be able to pay it back?”

Central Bank and Inflation—the Top
New Fundamentals for Gold Stocks

By for Profit Confidential

So the stock market is gyrating and this is the new norm. All equities can’t escape the prevailing trading action in the stock market, but the one sector that continues to have above-average potential is precious metals; gold stocks in particular. Not all gold stocks are doing well in this market, but there’s a lot that are, and they are smaller players that have their own growth stories. If I were a stock market speculator focused on only one industry group, it would be on gold investments. The outlook is that good within the industry.

It’s Still a Bear Market,
But Not in Gold Stocks

By for Profit Confidential

The top stocks in this market are large-cap, higher-dividend-paying companies with strong international operations. For speculators, gold stocks remain some of the best stocks in this stock market. The big companies have the cash and the economies of scale (to withstand the shocks to fundamentals and the stock market) and gold stocks have some of the best potential for capital gains, because these are the companies that are generating the most growth.

Precious Metals Mergers About to Take Off

By for Profit Confidential

Gold bugs are feeling the pain, as precious metals continue with their slower-economic-growth correction. As well, the prospect of action on the Europe debt crisis is tempering the marketplace’s appetite for gold futures. My view is that gold and silver continue to represent some of the most attractive assets going forward over the next several years. We’re in a market where new trends take a long time to develop and we’ll likely see the spot price of gold trade around $1,600 an ounce for quite a while yet.

The Strongest Indication Yet That
Stocks Are Short-term Oversold

By for Profit Confidential

Without getting too technical, investors have two ways to bet on the price direction of stocks. They can go “long” the market, which means they believe that stock prices will rise. Or they can go “short” the market, which means they are betting that stock prices will fall. Going “long” is easy; all investors need to do is buy stocks. And usually, when investors have a strong general consensus that the stock market will move higher, like they last did in October of 2007, stock prices go the opposite way and fall.

« Older Entries
Newer Entries »
Enter your e-mail address to subscribe to
Profit Confidential — IT'S FREE!
Enter e-mail:
ALSO RECEIVE A FREE COPY of our exclusive report:
"A Golden Opportunity for Stock Market Investors"