Barrick Gold (NYSE: ABX) shares are trading higher today as gold futures have advanced by almost 2%. Gold is being propped up by yet another record high for crude, which investors expect to drive inflation. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ABX.

After hitting a one-year low of $28.89 in August, the stock hit a one-year high of $54.74 in March. ABX opened this morning at $46.42. So far today the stock has hit a low of $46.00 and a high of $47.00. As of 12:05, ABX is trading at $46.55, up $1.05 (2.3%). The chart for ABX looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as ABX is above $37.50 at August expiration. Barrick would have to fall by more than 19% before we would start to lose money. Learn more about this type of trade here.

Minyanville's Lance Lewis dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about gold miners stocks. For more original thought, visit www.minyanville.com or see some more thoughts on gold here.

Prof. Lewis,

Any thoughts on the theory being advanced by Jim Sinclair and James Puplava that naked shorts are responsible for beating down the junior gold stocks? Seems like the market is willing to give anyone more benefit of the doubt than Minefinders Corporation (NYSE: MFN) or similar new producers. Thanks in advance.

-Minyan Scott

MS,

Some people like to look for a conspiracy every time market prices don't do what they "believe" they should. However, I don't find that attitude very helpful or conducive to making money.

Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.

• If S&P 1340 doesn't hold, you're going to hear a lot of chatter regarding the March lows (S&P 1275) in a hurry. Be prepared. Be very prepared.
  
  
• One very savvy soothsayer, who I just got off the phone with, doesn't think we get there. He's looking for S&P 1320-ish as a long side opportunity. Just so you're hearing what I'm hearing as heck, we don't call him "As Good As It Gets" for nothing.
  
  
• Moi? Are you talking to me? You know my drill: I've got a pretty sizable ratio bet on (short crude, long oil), which I'm trading around as a function of price, along with some tertiary trading exposure, including Goldman (GS) calls.
  
  
• Speaking of taxi drivers, how long do you think it'll be before cabs are allowed to pick up multiple passengers in the Big Apple? That should help with societal acrimony!
  
  
• If you looked up "Where there's smoke, there's fire," you'd probably find a picture of Lehman Brothers (LEH)., this thing trades funky.
  
  
• I'm seeing a lot of stocks trade "wide," which is to say they're jumping around. That's a recipe for smaller size. Adapt, don't conform.
  
  
• Given the amount of typing I do on any given day, do you think I should get finger insurance?
  
  
• Baidu (BIDU) trades dry, so you see it.
  

R.P.

Newmont Mining (NYSE: NEM) shares are trading higher today as gold futures prices have risen to break above $900 per ounce once more. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NEM.

After hitting a one-year low of $38.01 in August, the stock hit a one-year high of $57.55 in January. NEM opened this morning at $48.35. So far today the stock has hit a low of $47.95 and a high of $49.31. As of 12:30, NEM is trading at $49.28, up $0.96 (2.0%). The chart for NEM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $42.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 8.7% return in just six weeks as long as NEM is above $42.50 at July expiration. Newmont would have to fall by more than 13% before we would start to lose money.

NEM hasn't been below that level since August and has shown support around $46 recently. This trade could be risky if the price of gold futures drops in the next few months, but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is currently around $47.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in NEM.

MOST NOTEWORTHY: Barrick Gold, Bank of Nova Scotia and Wal-Mart were today's noteworthy upgrades:

• CIBC upgraded Barrick Gold (NYSE: ABX) to Sector Outperformer from Sector Performer based on stronger 2H08 production.
  
• RBC Capital upgraded Bank of Nova Scotia (NYSE: BNS) to Sector Perform from Underperform citing expectations for benign credit deterioration near-term, retail momentum, and asset growth in international banking.
  
• Morgan Keegan upgraded Wal-Mart (NYSE: WMT) to Outperform from Market Perform based on improving productivity and earnings outlook.

OTHER UPGRADES:

• Rangold Resources (NASDAQ: GOLD) was upgraded at HSBC to Overweight from Neutral.
  
• Goldman raised ORIX Corp (NYSE: IX) to Neutral from Sell.
  
• Liquidity Services (NASDAQ: LQDT) was upgraded at Pacific Crest to Sector Perform from Underperform.

Goldcorp Inc. (NYSE: GG) shares are trading higher as gold futures are advancing today. GG is also holding its annual shareholders' meeting today at 2 pm, which will probably move the stock. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on GG.

After hitting a one-year low of $21.00 in August, the stock hit a one-year low of $46.30 in March. GG opened this morning at $41.75. So far today the stock has hit a low of $41.67 and a high of $42.72. As of 12:20, GG is trading at $42.66, up $1.40 (3.4%). The chart for GG looks bearish but improving slightly.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $32.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just nine weeks as long as GG is above $32.50 at July expiration. Goldcorp would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.

Today's Wall Street Journal reports (subscription required) that demand for gold from IRA investors is on the rise as the precious metal's value has soared on concerns about inflation, the weakening dollar, and the credit crunch.

According to the Journal, "George Cooper, senior account executive with Centennial Precious Metals, has been handling gold IRAs for 17 years. Back in the mid-1990s, he said he might get one such call every month or two. Now he said he gets up to 50 inquiries daily."

In his book Hot Commodities, Jim Rogers warned that the sign of a top in a market is when speculative money chasing past performance starts to pour in. The flow of IRA money into gold should be seen as a sign of caution for investors.

Remember: gold has been a strong performer of late but its long-term track record. In a letter, S&P's Paul Konstadt wrote that "The price of gold in the US was fixed at the end of WWII and deregulated only in August 1971. Someone who had invested in gold at that time would have had a total return of about 3% per year after inflation from then until now."

Gold doesn't pay dividends and is incredibly difficult to value: it produces no reliable stream of cash and fluctuates based on speculation rather than actual need.

I'd be very careful about jumping on the gold bandwagon, especially in my IRA.

Billionaire investor George Soros said Thursday that the boom in commodities is still in a "growth phase" despite the fact that prices for oil, wheat, rice, and gold have risen to records in 2008, Bloomberg News reported Thursday.

Soros said the relative stock market slump, combined with favorable, long-commodities demand, has prompted institutions to direct money to commodities, creating a "commodity as asset class" phenomenon, Bloomberg News reported. He added that increasing institutional involvement was creating a generalized commodity bubble.

Relative shortages

Moreover, demand for selected commodities (oil, rice, wheat) is so great, it's creating relative shortages, Soros added, which is only heightening the return on equity potential of commodities, Bloomberg News reported.

Barrick Gold Corp. (NYSE: ABX) shares are rising today, helped by higher gold futures. Gold futures are not back up to their record $1,000+ prices, but are recovering after a dip down below $900 in late March. The front-month contract is up almost 2% today, nearing $950 possibly due to investor worries about inflation as the dollar continues to struggle against foreign currencies. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ABX.

After hitting a one-year low of $27.71 in May, the stock hit a one-year high of $54.74 in March, ABX opened this morning at $44.77. So far today the stock has hit a low of $44.75 and a high of $46.20. As of 12:40, ABX is trading at $45.63, up $2.16 (4.9%). The chart for ABX looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just one month as long as ABX is above $37.50 at May expiration. Barrick would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.

You know that the rally in Gold has reached bubble proportions when the International Monetary Fund (IMF) announces that they are selling a huge chunk of their gold reserves. The sale of a 12.5% share of their gold position is a big supply that is going to be coming onto the market, and could potentially pressure gold prices.

According to the Marketwatch report: " In a statement on Monday, Managing Director Dominique Strauss-Kahn said the IMF had made "difficult but necessary choices" to close an income shortfall and make the agency more efficient through a "new and sustainable income and expenditure framework."

The sale could generate over $13b. I knew that the IMF was a bloated bureaucracy that had all kinds of debt, but they need to sell $13b? Ouch.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. And with this in mind, Freeport-McMoran is worth a review.

Globally-oriented miner Freeport-McMoran (NYSE: FCX) is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in 2007 means that it has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.

But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead. The Reuters F2008/F2009 EPS consensus estimates for FCX are $10.07/$11.07.

Further FCX's p/e of 12 is reasonable given its advantageous market position and prospects for growth. Don't expect Freeport's ascent to be perfect and calm, given its dependence on commodity prices, but that does not blot-out the secular trends that point to good things for FCX's in the years ahead.

The risks? Freeport's copper segment would be hurt by a global economic downturn.

The First Call mean rating for FCX is: Buy [19 firms]. Mean 2008 target: $117.00 [high: $135, low: $65.00].

Stock Analysis: Freeport is a moderate-risk stock not suitable for low-risk investors. Investors should expect above-average volatility with FCX. Don't buy FCX if your portfolio already contains a mining/mineral component. Investors with an investment horizon longer than two years should be rewarded from FCX's shares. Sell / Stop Loss if you were to buy shares in this company: $68.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Every day another story about our recession and the related fallout pops up. Are we in a recession or not? Or will we just teeter on the edge? The debate continues between those anal retentive types that must see all the actual facts, and those that see the signs all around and proclaim that "if it looks like a duck and it quacks like a duck, then by golly..."

The Federal Reserve Board has acted as if we are in a recession. They sit on one side of the teeter totter lowering interest rates to counter balance the weak economy and moderate the impact of potential negative growth. Clearly they are throwing ballast off a sinking ship.

There has been much debate recently about the Fed's dramatic bailout of The Bear Stearns Companies, Inc. (NYSE: BSC) with the cooperation and maybe hand rubbing of JP Morgan Chase & Co. (NYSE: JPM). Some feel Bear Stearns should have been allowed to collapse and others feel that the Fed had no choice in the matter and was not protecting BSC, but the overall confidence in world financial markets.

With gold prices plummeting 11% since Monday, the question is whether we can say that the run up in the precious metals sector is over? Investors need to remember that nothing goes up in a straight line forever. No matter what analysts say, their is no new paradigm or anything like that, and with gold enjoying a nice seven-to-eight year run, it could very well be over.

From Internet stocks to real estate to China we always hear new reasons, that even though these sectors already produced returns in the hundreds of percent, it's still worth it to pull the trigger and invest.

I know about the argument that you need to hold gold as a hedge against inflation, but let's get real. That reason has been thrown around for the last few months. Previously, investing in gold was a supply and demand issue.

With such strong global growth causing major demand for gold, supply wasn't able to meet that demand. As such, we were told the price needs to rise. Now everyone is saying that global growth is slowing dramatically, so we need a new reason for the price of gold to rise and that is inflation. Well you can't have it both ways.

If you ask me, the inflation issues are temporary. I expect the Fed to start aggressively raising rates as soon as there is a hint of economic recovery.

As such, investors should be very careful when investing in the gold sector. Remember, nothing goes up in a straight line forever.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/21/08.

International investing expert Nick Vardy is making a bet on coal, selecting the recently launched Market Vectors Coal ETF (NYSE: KOL).

In his Global Bull Market Alert, the advisor explains, "Profits from coal may prove to be even bigger than from gold, coal's more glamorous and higher-profile rival." Here's his review.

"Despite its status as the most 'environmentally-incorrect' source of energy, coal provides 25% of the world's energy and generates 40% of the world's electricity.

"Coal plays a key role in the production of steel with approximately 70% of global steel production depending on coal as a source of energy. And coal already is in a strong bull market.

"Richard Gibbs, head of the global economics unit at Australia's Macquarie Bank, calls 'the new gold.' He expects thermal coal prices to rise more than 50%, to an average $88 per metric ton, in the coming contract year.

The price of gold and other precious metals has been rallying sharply, helped by a falling dollar, worries about rising inflation and concerns over the health of the global financial system. So far this year, the yellow metal is up around 20%.

Gold mining shares have not fared as well. They have been held back by broad-based weakness in equity markets and the prospect that higher costs for energy and other commodities could cut into those companies' operating profits.

Since the value of the ratio of the Market Vectors Gold Miners ETF (AMEX: GDX) to the streetTRACKS Gold Shares ETF (AMEX: GLD) hit a peak on October 31st, the yellow metal has outpaced the basket of mining shares by almost 20 percentage points.