There is a general belief that the value of gold decreases in terms of market value when the markets are beginning to stabilize, and this does seem to be the case with Goldcorp (GG). There is no reason, however, for people to stray from this company or any others in the same industry, as these companies deal with fungible assets-the original fungible asset, when you really think about it, precious metals. Beliefs that the volume of trading is down seem to be exaggerated, especially considering the fact that the volume is coming from the sellers. In addition, if there is one thing that classical investors always contend, it is the fact that the market corrects itself. This means that the rebound will be "positively smile-inducing, perhaps life-changing."
Another stock writer indicates that despite its fairly recent problems related to its clean-up operation with the Marlin mine, Goldcorp is in a good position. This is due in part to its investments in the Cero Negro project, which is probably worth the $4 billion price tag that Goldcorp paid for it. Combining this with the fact that it has low production costs, Goldcorp is a good buy right now. Of course, you can also look at the fact that the company is in a good position because of the Federal Reserve's decision to leave interest rates alone. This decision could weaken the dollar and raise the overall value of gold, which would have a fairly universal and positive effect on gold stocks.
It has come time to spin the wheel a little and confuse you in the process. As I just mentioned, the Federal Reserve lowered interest rates, and this would supposedly weaken the dollar against the other currencies, raising the value of gold. This means that companies like Kinross Gold (KGC) should be doing well, right? Unfortunately, it is not. The dollar surged, and Kinross dropped in price even though it had a buy rating from an analyst. While this analyst maintains the buy rating, this certainly seems like cause for concern and makes the stock appear unstable to me.
There is more than just bad news in the industry though. Coeur d'Alene Mines (CDE) was speculated to be the "perfect" stock. Others believe that Coeur d'Alene is not yet good enough to be the perfect stock, but it will be heading there. This means that there is a lot of potential in this company, which investors can take as a great sign for improvements in the near future.
In another positive story, Brigus Gold (BRD) has resumed its operations in its Black Fox mill, and this is a good move for the company because Brigus might be able to hit its production target. This is something that is great news for the investors in the company, as it means the outlook is very positive for the company. This also means direct competition for Goldcorp.
Brigus is not the company to watch in terms of production though. Almaden Minerals (AAU) just reported 29.45 meters of gold from its Tuligtic project, which means that it is in a strong position as well. This is not something you can ignore, as investors will now be thinking about the implications of this production. With more gold being in the market, the value is going to drop more, and gold companies will not be in a very good position at all.
Despite all this, there seems to be a positive sentiment that in 2013, Goldcorp will be in a very good position. Some even suggest it will improve the value of its price by 15% because of the fact that it has solid financials and will eventually get everything in order. Does this mean that investors can hang their hat on this company? The report seems to say that it is a good investment, even from a slightly longer-term standpoint. You cannot really commit to it though, as experts can be wrong, much like the recent case with Kinross.
There seems to be more evidence showing the future of Goldcorp to be promising, as Fitch Ratings maintained its BBB rating for a multitude of reasons. For example, Fitch claims that the company has mines in good areas, which means that there is little-to-no risk for collapse or any other negative events. Fitch also factored in the liquidity of the company, which enables it to go on a shopping spree for capital, which is good for the company and for investors.
Fitch is not the only one praising Goldcorp. Another writer is high on this stock, believing it would be a good investment, and others like it for reasons that have already been mentioned. Also, when you factor in how the Dow Jones could go up and down on any given day, people could be looking to gold. The purpose will be to secure their portfolios. Furthermore, this is already happening, as calls on Goldcorp are up twice the average call volume and almost thrice the number of puts.
What does this entire confusing and pieced-together picture of the industry mean for investors of Goldcorp? Take advantage of the recovering Dow to obtain this undervalued stock, and watch it bounce back.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.