Cramer's Mad Money - There Is No Gold Bubble (10/29/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday October 29.

CEO Interview: Paul Wright, El Dorado (NYSE:EGO), Agnico Eagle Mines (NYSE:AEM), GoldShares ETF (NYSEARCA:GLD)

Cramer says rumors of a gold bubble are greatly exaggerated, especially since the yellow metal is in the midst of a multi-year cycle and it really behaves like a currency rather than a commodity. Paul Wright thinks Cramer's prediction that gold is going to $2,000 from $1,300 is quite realistic, given the international gold shortage. In fact, it is becoming more difficult and expensive to find gold, a challenge for El Dorado (EGO), which likes to keep its production costs low. The company has had to search far afield to find new sources, but has had great success in conventional gold venues like China, which was the top gold producer in 2008 and the world's number one consumer in 2009. In fact, Wright says sometimes it is easier to mine in China than in the U.S, because the Chinese are so gold hungry and are more eager to relax regulations.

Concerning its recent unsuccessful acquisition, Wright said the deal was simply not a good one for El Dorado, and the company will be on the lookout for better deals.

El Dorado missed its earnings by a penny, but beat revenues by $5 million. Cramer is a fan of El Dorado, along with Agnico Eagle Mines (AEM) and GoldShares ETF (GLD). "Gold? it isn't done. It's just beginning."

BP (NYSE:BP), Anadarko Petroleum (NYSE:APC), Vulcan Materials (NYSE:VMC), Chesapeake Energy (NYSE:CHK), Emerson Electric (NYSE:EMR), 3M (NYSE:MMM), Clorox (NYSE:CLX)

Cramer expects a 3-10% easing next week in stocks, given events that threaten to trump even strong earnings. The Fed's talk of quantiative easing and how the amount of assets it will need to sell to keep interest rates low, the labor report on Friday and the elections will likely take stocks down. In terms of the election, if the Democrats control either the House or the Senate, the decline will be greater than if the Republicans are ahead; the reasoning is that Since Obama has been anti-business up until now, a Republican victory will spell gridlock which will prevent the government from interfering with business.

Earnings worthy of note in the coming week are BP (BP), which should discuss the continued effect of the oil spill on earnings and rival Anadarko Petroleum (APC). Vulcan Materials (VMC) will give a sense of how much is being spent on roads and infrastructure and Chesapeake Energy (CHK), the only natural gas stock Cramer recommends, will indicate if things are looking any better for natural gas. Emerson Electric (EMR) on Tuesday will give an idea of macro trends, the industrials sector and emerging markets. Cramer is hoping for a good result from Emerson, especially after 3M's (MMM) report was a "big downer." Clorox (CLX) is expected to talk about international expansion, pricing, volume and the cost of raw materials.

However, while earnings might matter, all of the news could be trumped by the macro picture next week.

CEO Interview: Chuck Bunch PPG Industries (NYSE:PPG)

While the economy might seem slow, chemicals are performing well, and Cramer would play the trend with PPG Industries (PPG) which is a play on coatings with a strong international exposure. Chuck Bunch says the company has been able to beat pre-recession targets through organic growth and acquisitions. The lower taxes in emerging countries also expands profits. Concerning the government's role in business, Bunch said:

I would say many of the administration's policies today do not benefit corporations and aren't helping us to get our economy and jobs going in the right direction here in the U.S.

However, he added the company is still able to import to China while creating jobs at home.


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