Today we want to continue to focus on our precious metal names as it is apparent that inflation will tick higher with the European Union now poised to leverage their rescue funds up to $2 trillion euros in an attempt to make the fund large enough to bail out many small countries or even large ones if necessary. We continue to like oil as well, but if the EU does move forward with this plan then the precious metals arena shall take another few steps forward and push gold and silver to new highs.
Oil & Natural Gas
This morning we want to direct readers' attention to Chesapeake Energy (CHK) which currently trades at $19.36/share. Over the past few months shares have rebounded from their lows as the company has undergone a transformation of sorts on the executive level and with how they conduct business. There are still a few questions remaining regarding accusations of bid rigging on leases, but we think there are a lot of other positives investors need to be looking at. We view this as a deleveraging play as the company continues to sell off non-core assets and bring on partners to develop assets they wish to keep. Investors should get excited over the prospects here for the next 6-12 months as the company gets others to pay for their drilling while building up a production base to continue to develop the rest of their extensive property portfolio. We view this as a long-term buy and a component which could lower the beta in our Utica recommended portfolio moving forward due to the size and diversification of the company.
AuRico (AUQ) continues its move higher, as the stock rose $0.24 (3.32%) to close at $7.46/share on volume of 8.9 million shares. We would like to point out that the shares are now trading above the level they were at prior to the sell-off due to the new release discussing the drop in production at the company's properties. We continue to think this is one of the better plays out there for investors due to the worries about the production losses. With gold prices continuing to show strength, so too should shares in AuRico. This is a recommended hold until we reach double digits, at which time we shall have to revisit the situation here.
Our other favorite gold miner, Yamana Gold (AUY), hit another new 52-week high Friday although shares finished off of those highs. Volume remains strong here as does the interest from buyers and we remain bullish as well. In our experience in the commodity space, it is necessary to ride your winners and cut your losers, and with that said readers need to recognize the momentum here and continue to ride it higher.
The one silver name we have thrown out there in the past has been Silver Wheaton (SLW). The company has considerable exposure and leverage to the silver market and we like silver's prospects, as we personally own physical silver. Truth be told, Silver Wheaton offers a more favorable tax situation for investors and is much easier to buy and sell than coins. We think that silver will continue higher and that the company will continue to track higher as the economy grows stronger with silver being both an inflation hedge and an industrial metal. This is a long-term hold right now.
Allied Nevada (ANV) saw shares finish at $39.52/share after rising $1.53 (4.03%) with volume coming in at 2.9 million shares in Friday's trading. The gold company is somewhat similar to Silver Wheaton and has been gaining a following among 'gold bugs' we know, so this is one we are adding to our research list to do some more work on. The stock is near 52-week highs and we mention this only because we have had a lot of emails as of late asking about any new recommendations related to the gold miners. This is not a recommendation to buy/sell, but throwing a name out which we are working on knowing that some readers will be able to perform the DD much quicker than we are with all of the names we are going through right now - leveling the playing field right now.