E.D. Hart

3 Promising Gold Stocks

I dunno, Citigroup and Bank Of America are under new management too...not so sure about them when I have proven racehorses in the stall. Why do I want to bet on a wildcard (horse)? Excuse the mixed metaphor.

To paraphrase uncle Warren, "Id rather be sure of a good thing than hopeful of a great thing". True, Barrick may outperform, but its a little too much hope and not enough evidence for me.

I'll stick with capital creators, and not capital destroyers. I might be wrong, and Barrick may shoot the lights out--but I'll sleep better. Isnt that what gold is supposed to do?

3 Promising Gold Stocks

Barrick has been an absolutely horrible investment over the last decade compared to the other gold miners because they have lost a ton of money. Going forward with hedges is good, but I'm not enamored of their management.

Goldcorp does a much better job, and has a higher growth profile. NG as holdings in Alaska which may or may not be developed. They have gone nowhere in ten and five years, and lose money every year. Good lottery ticket, but that's not why people usually buy gold. For security, consider consistently profitable miners in politically safer jurisdictions: GG, AUY, and consider RBY.

The last company Rubicon Minerals is worth owning, because, unlike NG, it is surrounded by existing mining infrastructure that makes it almost inevitable they will either be bought out by their large mining neighbor Goldcorp, or they will develop a mine with highgrade ores next to existing roads and processors. Also, Rob McEwan owns something like 23% of RBY--he is the former CEO of GoldCorp.

Long GG, AUY, RBY.

Four Major Developments Gold Investors Should Watch

As others have pointed out, the gold market is a very small market that requires only a few hundred billion to drive it up a great deal. This is in contrast to treasuries, or equity markets (think indexes).

The governement has admitted on several occasions that it regularly manipulates gold prices--down. They are running out of ammunition to do so on a sustainable basis.

Gold is not in a mania. Very few of the folks I talk to have 5 or ten percent of their net worth in gold. Middle class Americans I work with and talk to, and e-mail have their worth in pensions, social security, their homes, bonds, and equities. Some people have gold and silver coins, a few grand worth perhaps.

The gold bull market will be a mania when an unsustainable proportion of the populace have 20-30 percent of their net worth tied up in gold, that they have gone into debt to buy, and are awaiting getting rich on. This is simply not the case now.

Unlocking the Money Matrix: Gold Price Suppression

Excellent research, and well written to boot! There is no conspiracy if the parties involved admit to what they are doing, as they have. This is publicly documented. But there will always be the UNBELIEVERS no matter what is presented as evidence. (for example 6% of the US population still believes that we never landed on the moon). Thanks for the good read.

Gold - Not the Safe Haven People Think it Is

The US dollars value is purely psychological, and only accepted as valuable because it is backstopped by the "full faith and credit of the US Government." In short, the ability of our government to tax and borrow.

Every paper currency ever created has reverted to its intrinsic value given enough time.


Gold has had value in every society ever discovered, from tribes in the Amazon, the Egytians, the Macedonians, Greeks, Romans, and Byzantines. Gold has 10,000 years of history as a store of value.

To say golds value is purely irrational and psychological begs the question: compared to what?

Five Ways To Ride Gold to $1500

oh, and Gordon Brown didn't sell all the British reserve gold, just a big chunk.

How Cheap Are Gold Stocks Relative to Bullion?

Actually, I didnt win it, rather I own it. My largest position.

How Cheap Are Gold Stocks Relative to Bullion?

I won GG and notice that UBS came out with it as their top pick among the majors for precisely the reason of higher margins, and lower costs, as well as that their gold is located in politically stable countries. I would continue to add to GG at the right price.

Is the Gold Rally Really Over?

David,
First you raise some valid points about credit creation. You make a good case that we are facing two options: deflation or inflation. Then you call previous SA community members "gold bugs", which is both dismissive, and implies a certain shallowness of thinking, and emotional response to the markets.

The people I know that invest in commodities are some of the most critical thinkers, and objective analysts I know. Its not dumb money.

I cant speak for the others, but I agree with the author. I read in Barrons in 2001 that gold was only going down because of the coming deflation.

oops.

Soooooo, noboby really knows what the future holds. We might be facing deflation. But that would require several unlikely events to occur concurrently.

Yes, that Japaneese managed to deflate...this is true. But with Bernanke at the helm, as a known and committed inflater, who has written white papers on how to avoid deflation, we are most likely in inflation territory.

The commitment, the knowledge, and most importantly the political will and motive is there to make sure deflation never happens in this country. Elections coming up, significant underreporting of real inflation to hide the governments sleight of hand, the GLOBAL growth in M3 of almost all developed countries at rates well in excess of 10%. Fortyfive, or $54 trillion in unfunded future liabilites of the US Government, the real cost of the Iraq war at $3 trillion.

Great debts typically get inflated away--thats been the lessons of governments of Governments which promise more than they can deliver.

Finally, the bull market in gold and commodities is a GLOBAL phenomenon. Its not confined to the major but contained US debt implosion.

The New Pillars of Inflation

Excellent summary. You mention base metals, agriculture, and gold, but what about energy stocks with low current prices to NAV? One stock that has appreciated 40% annually from 2002- 2007 is COSWF and it pays a 9% dividend (approximately). I agree with your thesis but it seems that you leave out dividend paying energy stocks. I like TOT, PWE, and ECA and currently hold positions in each. Also, energy service companies are a bargain right now--look into XES as a basket to play that sector.