"People want to own more gold when there's a perception of growing global economic and political turmoil," explain resource experts Roger Conrad and Yiannis Mostrous.
In their Vital Resource Investor, the advisor offer their long-term bullish assessment for gold as well their favorite gold mining stock: "Goldcorp (NYSE: GG).
"Every commodity bull market eventually ends when consumers permanently reduce demand with conservation and switch to alternatives, and the producers ultimately over-expand. This, however, only happens over a period of many years.
"To be sure, we've seen demand in the US drop for many vital resources, from copper to energy, as the economy has slowed. Demand from developing nations, however, remains entrenched by necessity, as these suddenly more affluent nations struggle to upgrade their vital infrastructure.
"And although we may see Chinese economic growth slow from its current off-the-chart 10% rate, that country will still face critical needs to build out its cities to meet the millions of new migrants that come every year. And that's a huge call on raw materials.
"The bottom line is the key long-term drivers of gold's run this decade are still very much in place. And the metal remains a cornerstone investment. And while the market is spectacularly volatile, we expect much higher gold prices over the next few years.
"Goldcorp is our favorite major gold company. It was the acquisition of Glamis Gold in late 2006 that vaulted Goldcorp to the forefront of global gold producers.
"The company now has growing gold production, low cash costs, solid earnings generating ability, large reserves, strong balance sheet and one of the most respected management teams in the industry.
"In the second quarter of 2008, the company reported higher output with higher costs versus year-earlier totals. We view the production gains as a positive and the cost increases as temporary. Basically, the company faced some operational problems and lost power at one of its mines for more than a month in midsummer.
"Overall, Goldcorp has been doing an excellent job of controlling costs, and we expect that this will continue in coming quarters. Costs will rise in line with the industry's norm, but we believe the company will keep a lid on them.
"The company is on time and on budget with its expansion projects and should increase gold output from 2.4 million ounces this year to 4 million in 2012. Its strong balance sheet will allow for easy project financing, which will add straight to the bottom line."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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