Gold stock to sell #4: Goldcorp (GG)

Posted Sep 13th 2009 11:00AM by Jamie Dlugosch
Filed under: Goldcorp Inc (GG), Stocks to Sell

Imagine what happens to gold mining stocks if gold were to trade for less than $500 per ounce? It would not be pretty. These stocks are priced to perfection and beyond. That is why they should be sold.

Add Goldcorp Inc. (NYSE: GG) to the list of overvalued gold miners. At $40 per share, GG now trades within spitting distance of previous highs.

Those highs were attained at the end of an expansionary period, not at the beginning.

What the gold fanatics fail to tell you is that we are at the beginning of a new period, not the end. Prices should adjust to a deflationary world, yet they trade as if we are in the midst of a horrible inflationary period. Earnings at Goldcorp will not support this share prices, and if the price of gold drops, the situation goes from bad to worse.

I would sell GG immediately, as shares trade for more than 40 times forward earnings.

Next: Gold Stock to Sell #5

Tags: GG, gold stocks, goldcorp, jamie dlugosch, stocks to sell

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Reader Comments (Page 1 of 1)

10-12-2009 @ 5:47PM

tileguyy said...

Gold is going nowhere but up. I would not listen to this advice.

9-14-2009 @ 12:07AM

tileguyy said...

You need to do a little research on Gold my friend. Gold is REAL MONEY. It has intrinsic worth. There is a reason that the Constitution required Gold and Silver as tender. By the way we are entering a huge INFLATIONARY period. What planet are you on?

9-13-2009 @ 11:54PM

tileguyy said...

http://www.bloomberg.com/apps/news?pid=20601012&sid=ab_E6aL4H7tQ

9-13-2009 @ 3:45PM

Dan Barnett said...

Tileguy,

The place to sell stocks & commodities is at theri high. The article you cite, showing the higs for gold & silver prove the point that Jamie is making. They are at a high. Take the money & run.

As for gold being "REAL MONEY", does your local grocery store take it?

You are entitled to you opinion on the coming value of gold. This is why God made horse races. So Jamie, we revisit the issue in 6 months?

9-13-2009 @ 11:59PM

tileguyy said...

I claim it is not near its high. As for the local grocery store.. lol thats funny. So now grocery stores tell us what is money and whats not. Gold is very easy to sell. You just hang on to your paper fiat currency and see how you are rewarded down the road. Gold is real money. Paper is worthless. The paper has lost 90% of its value in the last 75 years. Not going to be able to buy many groceries with that stuff.

10-12-2009 @ 5:49PM