Precious Metals Stocks to Consider as the Dollar Falls, Banks Fail

Here are six beaten-down precious metal or energy-related stocks or funds that I believe offer exceptional values right now (although in the last two days they have rallied nicely, they still are attractively priced for the long-haul).

All of the stocks are still well beneath previous highs. But don’t try to pick the bottom out of all of this. Just get into the precious metals/energy company lifeboat and tighten the straps of your life vest. It will be a very rough voyage.

All of these have great inherent value. The companies control gold and silver or are involved in the energy business, and all but one have serious amounts of ore in the ground.

As the dollar falls, investment banks fail, the U.S. government nationalizes insurance companies and people worry, these are great companies with great managements.

If precious metals and energy prices continue to rise, these stocks/funds ought to be leading the pack someday.

The Central Fund of Canada (AMEX:CEF) Latest price: $11.36, 52-week range: $8.57-$14.93 Central Fund of Canada Limited, an investment holding company, invests in gold and silver bullion primarily in bar form. Check out their web site info carefully at http://www.centralfund.com/

Pioneer Drilling Company (AMEX:PDC) Latest price:$13.96, 52-wk range: $8.95-$20.75 Pioneer Drilling Company, through its subsidiaries, provides contract land drilling services to oil and natural gas exploration and production companies in the United States and Colombia. As of February 22, 2008, it had 67 operating drilling rigs, which include 17 rigs in south Texas division, 20 rigs in east Texas division, 10 rigs in north Texas division, 6 rigs in western Oklahoma division, 11 rigs in Rocky Mountain division in Utah and North Dakota, and 3 rigs in Colombia. The company was founded in 1968 and is based in San Antonio, Texas. Check out their key financial statistics at http://finance.yahoo.com/q/ks?s=PDC . They are selling at slightly above their book value.

Hecla Mining Co. (HL: NYSE)
Latest Price: $5; 52-Week Range: $4-13.14
A lot of people call Hecla a silver miner. But Hecla is more than a one-trick pony. Hecla is a well-established hard rock miner with impressive reserves of silver, zinc, lead and gold. It controls one of the best silver mines in North America, at Greens Creek, Alaska. Its mineral holdings in the Silver Valley of Idaho are world-class. And Hecla has great prospects in both Mexico and south-central Colorado. Hecla is a long-term play on rising prices for silver, gold and other ores.

Silver Standard Resources Inc. (SSRI: NASDAQ)
Latest Price: $17.26; 52-Week Range: $14.40-48.16
Silver Standard has the largest published in-ground silver resource of any publicly traded silver company. Its project pipeline includes mines in Argentina, Peru, Mexico, Canada, Chile, the U.S. and Australia. Silver Standard is transitioning from development to production, with particular emphasis on a significant ore body at Pirquitas, in northern Argentina

Kinross Gold Corp. (KGC: NYSE)
Latest Price: $14.60; 52-Week Range: $11.47-27.40
Kinross controls and operates a string of gold mines in both North and South America. And Kinross just poured its first melt at a new mine in eastern Russia. Kinross benefits from recently completed capital investments in mine upgrades that are just now coming online. So Kinross is ahead of the mad dog of capital cost inflation. Kinross will be selling increased output into a rising market.

Yamana Gold (AUY: NYSE)
Latest Price: $9.28; 52-Week Range: $7.27-19.93
Yamana is on track to produce 2.2 million ounces of gold annually by 2012. In addition to gold, the company has significant interests in operations that produce silver and copper. Its claims are diversified, in Brazil, Argentina, Chile, Mexico, Central America and the U.S. Yamana has seven operating mines and five development projects.

SPDR Gold Shares (GLD: NYSEArca)
Latest Price: $85.46; 52-Week Range: $71.24-100.44
Formerly known as streetTRACKS Gold Shares, this stock offers investors a cost-efficient and secure way to own gold. SPDR Gold Shares represent fractional, undivided beneficial ownership interests in gold bullion (and, from time to time, in cash). So each share represents a fractional claim in gold. SPDR Gold Shares offer a means of “owning” gold without the issues of access, custody and transaction costs that prevent some investors from holding physical gold.

Of course I'm not calling these investments "safe" or the safest investments. I'm saying that "safety" is a relative term.

If you do your homework,get advise from registered investment people who are fiercely independent, if you do careful "position sizing" and if you use reasonable trailing stop-losses you'll be able to mitigate risk and set yourself up for decent rewards and returns in the months ahead.

Disclosure: Author is long all of the stocks/ETFs mentioned

Comments

[alligator b...:]

I rather own Sherritt. Coal, oil, nickel/cobalt and power businesses. See my blog for details.

2008 Sep 22 04:44 PM

[GMiki1:]

Goldcorp (GG) and CNX for a nice bargain in a lovely coal stock.

2008 Sep 22 06:39 PM

[Mark Anthony:]

For silver, SIL is a good play.

Why no one talks about platinum/palladium? There are only two primary palladium producers in the whole world: SWC and PAL.

The PGMs (platinum group metals) are a precious metal play, a critical war time material play, a critical industry material play. And play of an extremely bullish supply/demand fundamentals due to disruption of production in South Africa. It is also an alternative energy play (fuel cell, and cold fusion). Palladium is also a monopoly play (Russians control 50% of the world palladium supply and they can corner the market any time they want). Nothing can be more bullish than the combination of all these:

seekingalpha.com/autho...

2008 Sep 22 11:34 PM

[JimCramer:]

Best gold producer that you could consider is Metanor Resources Inc. TSX-V: MTO as they have no long term debt, are unhedged, are scaling up new mill to 1200 TPD, making cash hand over fist, and are trading under infrastructure value (forgeting the reserves and vast expansion underway). Crazy upside with next to no downside. Here is an overview www.miningmarketwatch....

2008 Sep 22 11:35 PM

[Peter Cooper:]

My favorite gold junior LNXGF on NYSE jumped 43% last week on the day gold jumped 10%. You don't need anybody to tell you gold juniors have been out of fashion and tanked over the summer. They are also not about to find gold. But these firms do own 'claims' and these gold claims rise exponentially in value by comparison to the gold price. LNXGF has claims next to existing huge gold mines, made a successful placing this summer to raise cash and is not going bust. These assets are worth x20 or x30 the current share price!

2008 Sep 23 08:47 AM

[bowman711:]

CEF holds roughly half gold and half silver, so it is a good way to play both precious metals. TODAY is a great time to get into CEF - it is down about $1.60 to fall in line with the following: TORONTO, ONTARIO, Sep 23, 2008 (Marketwire via COMTEX News Network) --
Central Fund of Canada Limited (TSX:CEF.A)(TSX:CEF.U)... ("Central Fund") of Calgary, Alberta announced today that it has entered into an underwriting agreement with CIBC World Markets Inc. under which the underwriter has agreed to buy and sell to the public, in Canada and in the United States under the multijurisdictional disclosure system, 11,900,000 Class A Shares of Central Fund. The offering will be made under a second prospectus supplement to Central Fund's US$750,000,000 base shelf prospectus dated March 31, 2008.

The purchase price of U.S.$10.80 per Class A Share is expected to result in gross proceeds of approximately U.S.$129 million. Substantially all the net proceeds of the offering have been committed to purchase gold and silver bullion, in keeping with the investment policies established by the board of directors of Central Fund, for settlement at closing of the issue. The additional capital is expected to reduce the annual expense ratio in favour of the shareholders of Central Fund.

Closing is expected to occur on or about September 26, 2008.

[I doubt today's drop in price will stay that way very long.]

2008 Sep 23 12:19 PM

[Socialism c...:]

Confiscation risk?? Um...zero. We're talking total melt-down in order for that to happen - Great Depression II. And I think the govt. would come to confiscate and be met with people bearing arms in that case...because ability to eat and pay bills would require tradeable commodities with real value, i.e. gold...and in life vs. death (as opposed to appreciable investment tools) situations, noone's giving up their ability to buy food. Although I think at that point, the govt. will be rather more busy with panic and chaos, riots in the streets, than to spend time confiscating gold. I'm long AUY and accumulating on dips. The dip today was profit-taking on the last couple days' strong moves. The move up is not done...today's dollar-up move was also a faux move, given the state of all things finance - remember, although there is global weakening, the U.S. finance & housing sectors are the *epicenter*. Thus, the long-term trend is dollar down, gold up.

2008 Sep 23 03:21 PM

[kelly14:]

Beware of the author. Courtenay is an outright plagiarist. He claims these thoughts are his, when in actuality he is quoting verbatim ( even down to the commas) an article on "Six Screaming Buys" issued on 9/18/08 by Byron W. King, author of "Outstanding Investments" newsletter. Courtenay's introduction and thoughts on HL, SSRI, KGC, AUY, and GLD are Byron King's. Courtenay quotes King word for word without any recognition to King.

The only original thoughts Courtenay may have is re: CEF and PDC. But, beware of that also.

A true empty head who has to plagiarize an article in order to be seen as knowledgeable.

2008 Sep 24 12:51 PM

[mr clark:]

GFI... 80+ million ounces in reserves...at $1000/ounce thats worth... and yes, SWC, as short squeeze play and play on the rare platinum/palladium metals... $6 could be 12 with strong metals imho

2008 Sep 28 11:35 PM

[saltymoney:]

Don't forget GTU, from the people who bring you CEF. Much like GLD but domiciled in Canada.

2008 Oct 02 03:17 AM

[User 314218:]

Hello,

We have in stock 2100 kilo of Gold dust + 22 carat to sell.
Our price per kilo is: 14.000 us Dollar
Contact us at: [e-mail]

2008 Dec 06 12:23 PM