As you dip your foot into gold stocks, here are some things to look for:

Management: Yes management counts. Pick a company with a proven leader at the helm. Rob McEwen, current CEO of U.S. Gold, is one CEO that comes to mind. Using innovative gold-locating strategies, McEwen helped turn the failing Goldcorp into a global giant.

There are several ways to value large gold producers. One of the conventional methods is to use “price to earnings” ratio calculations, commonly referred to as “PE”. This method of analysis is the one of the most basic valuation techniques. Lower PE ratios suggest a company is undervalued relative to competitors. PE ratios are best used as a “first cut” in due diligence to see how the market is valuing gold mining companies relative to others in the industry.

As the table below (sorted by 2010 PE ratios) shows, current PE levels in 2010 for 14 major and mid tier gold producers elegantly break down into two groups—those above a 20 PE and those below.

Yes that's a jaguar, but not the car. Rather, it's the best in class emerging Junior Miner with a unique set of attributes among its peers. I think of Jaguar Mining (JAG) as a junior hybrid of Agnico-Eagle (AGM) (due to the extraordinary production growth over the next 3 years or so) and Yamana Gold (AUY) (due to the location of their flagship mines in South America, not to mention their low cash cost profile). Jaguar has been around for a while but instead of the explosive growth it has set itself up for (2009-2013), it has displayed remarkable execution growing production at a consistent steady rate. Before I go into the details of why this is such a value among the junior mining industry, I will give a brief overview of its current mines and those which will come-on line in the not too distant future.

Natural resource companies with global operations have no shortage of business challenges to deal with—supply and demand trends, political instability, regulatory hurdles, remote and dangerous working conditions, inadequate infrastructure and much, much more.

And even if they have managed all of these factors, there’s another variable that can have a huge impact on their success and yet is completely out of their control.

I am often asked at this time whether it is a good idea to be in the precious metals market during the summer period known as the "Summer Doldrums", in which demand for gold dries up temporarily while farmers in India plant crops and wait for the monsoon rains. When they harvest in the early September, demand for gold picks up again as they are anxious to convert their profits into gold.

After looking at the seasonal effects on gold, one might think it prudent to wait through the summer in hopes of entering the market at lower prices.

Geotechnical problems impacting production at the Highland Valley Copper ((HVC)) project will limit upside in Teck Resources Ltd. (TCK) stock, says UBS analyst Brian MacArthur.

Mr. MacArthur maintained his "buy" rating on Teck shares but lowered his price target from C$22 to C$21, after the diversified miner reduced its total copper production guidance from 725 million pounds to 690 million pounds in 2009 and from 870 million pounds to 755 million pounds in 2010. For the HVC project alone, 2009 and 2010 production is expected to fall to 258 million pounds and 187 million pounds, respectively.

		Last Week's Performance*
	vs. Previous Week	vs. Previous Month	YTD**
Warrants (+24mo.)	-8.6	-4.3	72.1
Stocks with Warrants	-5.1	-1.2	44.4
CDNX***	-4.3	2.8	51.6
HUI****	-2.8	-10.4	12.4
GDM*****	-2.9	-8.7	13.3
SPTGD******	0.1	-5.8	7.9
TSX	-4.5	3.7	23.6
S&P 500	-2.6	2.7	2.1
Silver	-4.1	-3.1	25.8
Gold	-0.5	-2.4	5.7

* All calculations are based on U.S. dollar equivalents

Gold: Gold regained a lot of ground Thursday, breaking through $940. News from the Federal Reserve, that they are to keep interest rates at record lows put the dollar under pressure and it gave up some of its recent gains. If the dollar remains under pressure, which is almost certain given the Federal Reserve’s continuing cheap money policies, then the outlook for gold remains bullish. Many investors internationally will look to move some of their wealth into the safe haven asset to hedge against inflation. Gold is currently trading at $943/€672/£573.

Silver: Silver also rebounded with a healthy kick Thursday and moved through $14 and is currently trading at $14.18/€10.10/£8.63

Following the sale of three non-core assets earlier this month to Aura Minerals, Yamana Gold Inc. (AUY) is looking more and more like a takeover target, says Dundee Securities analyst Ron Stewart.

Mr. Stewart said:

The hottest gold stock listed on the TSX looks to be heating up again.

Ventana Gold Corp. (VENGF.PK), an exploration and development miner with assets in Colombia, has risen 11% or C$.54 to C$5.15 halfway through Thursday's afternoon session and after a week-long cooling off period looks to be back in striking distance of its 52-week high of $6.30, reached on June 16.

It is hard to believe that just seven months ago, the junior gold sector appeared to be completely dead. But times have thankfully changed. Analyst Michael Curran of RBC Capital Markets demonstrated that the sector is rebounding strongly towards its historic valuations.

Mr. Curran tracks non-producing golds through a unique measure called "adjusted market capitalization per total resource ounce" (AMC/oz). Historically, he wrote that the group average has been in a range of $50 to $75 an ounce. But when the market bottomed out last November, it fell to a woeful low of just $12 an ounce.

The junior mining sector has been performing much better in the last few months and we have seen many of the shares prices jump up substantially in price. Investors may be asking, ‘is it too late to buy or should we sell?’

Standard & Poor's has launched a new S&P/TSX Global Base Metals index for investors looking to buy into industrial metals and mining.

The new index, which captures companies that mine for metals such as aluminum, zinc, copper and nickel, will complement the index provider's existing S&P/TSX global gold and mining indexes.

Thomas Steyer's hedge fund firm Farallon Capital Management has filed an amended 13D on Global Gold (GBGD.OB) and they now show an 11.3% ownership stake in the company. The filing was made due to activity on May 26th, 2009 and it owns 4,466,456 shares. This is a decrease in the amount of shares Farallon previously owned and the fund attached numerous details of sales in its filing. Farallon was selling in excess of 119,000 shares on May 26th and 27th, as well as June 2nd. Shares were sold at the prices of $0.11 and $0.09, with the bulk of sales coming at $0.11. While we haven't covered Farallon's entire portfolio in our hedge fund tracking series, we will note that it has much fewer positions than in the past.

And, this is obviously due to the fact that Farallon saw a big decrease in assets under management ((AUM)) for 2008. In fact, it narrowly escaped being on the top 10 asset losers list. Yet, despite losing so many assets, Farallon still managed to land themselves on the #10 spot in Alpha's 2009 hedge fund rankings, where it was tied with Jim Simons' Renaissance Technologies.

If you are in the market as an investor or trader, it is almost impossible not to get a solicitation about the next hot gold stock. The claims range from the incredible to the ridiculous. Some of them may become the next “Big Thing”, but most likely not. What makes these pitches so enticing is all of the hype surrounding gold. Some of the solicitations I have read question whether gold will top $2,000 an ounce when it still hasn’t topped $1,000. If the hyperinflation hits, as many pundits say it will, then such numbers are not out of the realm of possibility.

In Yamana Gold Inc. (AUY), investors have a chance to invest in a pure gold play that is making money, is fundamentally sound and has excellent growth potential. Canadian-based Yamana engages in significant gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Central America. It also has mining interests in other metals, most significantly copper and silver. The company has 9 operating mines and 3 development-stage properties. According to the company, they are actively pursuing growth by expansion of their existing operations, new exploration and strategic purchases of other gold mineral properties in the Americas.

Gold producer Iamgold Corp. (IAG) recently increased the resource estimate at its new Westwood mine in Quebec, but Blackmont remains unconvinced about the value of the company moving forward.

Richard Gray, mining analyst with Blackmont, said in a note Tuesday:

The six-month soap opera is over for MAG Silver Corp. (MVG), as its joint venture partner Fresnillo PLC (FNLPF.PK) has finally dropped a peculiar takeover bid that investors never thought had much chance of success. MAG claims that the turning point came when Fresnillo chose not to comply with an Ontario Securities Commission order to hand over information about the Juanicipio property, where the two companies have a joint venture.

BMO Capital Markets analyst John Hayes is wrote that the bid withdrawal is a positive for MAG because it was acting as an overhang on the company's share price. He calculated that the stock is trading at a 57% discount to his 0% net asset value estimate of $10.74 per share.

Gold stocks are among the most volatile asset classes, but old and new research shows that their judicious use can enhance investor returns without adding portfolio risk.

The iShares MSCI All Peru Capped Index Fund (EPU) will allow US investors to easily access one of Latin America's hottest markets by tracking a pure free float market cap weighted index. Its 25 names are heavily concentrated in the materials sector (65%), with a particular focus on gold, silver, and copper. Its largest holding at 19% Cia De Minas Buenaventur (BVN) who produced nearly half a million ounces of gold last year (compared to Goldcorp's 2.4), and its second largest at 15% is Southern Copper (PCU), the biggest player in the world's fourth largest copper producing nation.

The board of Anglo American (AAUK) met Monday to discuss the offer made by Anglo-Swiss mining company Xstrata (XSRAF.PK), and reportedly the board of Anglo American unanimously decided against the merger. The board’s decision was not all that unexpected as management had characterized the merger talks as preliminary. The deal was billed by Xstrata as a merger of equals based on the similar capitalization sizes of the mining companies, and their complementary products. The proposed company would be half owned by each company and no cash change hands. However, Anglo American doesn’t seem to be too interested in linking up with Xstrata in the $68 billion all stock deal.

Analysts have estimated that the joining of the two large miners would save somewhere in the neighborhood of $750 million to $1.7 billion per year, which is certainly appealing to both sides. However, Anglo American is skeptical that the cost savings would be as substantial as reported, and believes it is bringing more attractive assets to the table than is Xstrata; as Anglo American is already the worlds biggest miner of platinum. The combined company would be a leader in mining of such base metals copper, zinc, nickel, and of course platinum.