A Great Summer for Gold Stock Cherry Picking
Wednesday, May 7th, 2008
By Michael Lombardi, MBA for Profit Confidential
Back on March 20, in a PROFIT CONFIDENTIAL story titled “Another Golden Opportunity for Investors… Almost,” I wrote about how I believed that investors in gold would have another chance soon to get into the yellow metal at attractive prices. On that day, gold bullion was selling at $920.00 U.S. per ounce.
I also wrote on March 20 how I felt that, from my readings of the charts, I wouldn’t be surprised to see gold bullion fall to $800.00 per ounce. Today, gold trades at $866.00 an ounce and my opinion about a move closer to $800.00 remains unchanged.
For investors in gold stocks:
Patience is a virtue. If you follow my writings, you are familiar with my belief that gold is a seasonable commodity. From the spring of each year to the fall, gold bullion usually moves sideways in price. Over the past five years, any big upswings in the price of gold have occurred in the periods from October to March.
I’d personally take any price weakness in major gold producing stocks during the summer months as an opportunity to add to my positions… to dollar cost average down. The stock of Barrick Gold Corp., one of the world’s largest gold producers, trades at under $40.00 today. Back in January, that stock traded for $54.00. Could Barrick go down to $35.00? Yes, say my price charts… and that’s when dollar cost averaging down on your gold stocks becomes ever so prudent.
Talking about Barrick, the company reported net profit of five hundred and fourteen million dollars in the first quarter of this year on sales of almost $2.0 billion. (Barrick has 27 operating mines and produced gold at a cost of $393.00 per ounce in the first quarter of 2008.)
For speculators in gold stocks:
You are in trouble. Speculating in gold stocks is very difficult. Personally, I only see gold stocks as a long-term play. If like me you believe that the U.S. dollar will continue to fall against other world currencies… that the U.S. deficit will only continue to grow… then the long-term benefits of gold stocks in your investment portfolio are obvious. Make this summer your gold opportunity to cherry pick major gold producing stocks at great prices.
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Tags: gold, gold bullion, gold stocks, U.S. Deficit, U.S. dollar
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
