"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.
When gold was trading above $1,000 an ounce, Curtis Hesler reversed his buy signal and fortuitously warned of a seasonal pullback expected over the summer.
In his The Professional Timing Service, he stated, "Gold should settle into the cyclical and seasonal lows due in early August. Although you will hear plenty of bearish arguments as gold prices pull back, weakness will be a buying opportunity."
He now explains, "I don't think there is much left on downside for the mining shares. We will likely see the miners firm up and begin to rally before the bullion. My adice is to hold tight and exploit the fear.
"This weakness presents a final opportunity before the late summer and early fall strength returns to precious metals. The coast is clearing for gold to advance to new highs by October when its next seasonal high is due.
"Longer-term, I can't help but wonder if gold isn't anticipating the next break in the dollar. We all should be thinking about the trillions of dollars in U.S. government unfunded liabilities for Medicare, Social Security, pensions, etc. There's going to be a tsunami of dollars printed to cover all of that.
"At the top of my buy list is Kinross (NYSE: KGC). Yamana (NYSE: AUY) is an excellent diversification in the precious metals sector. Also among my favorites is Goldcorp (NYSE: GG)."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
"Gold is the only financial asset that isn't someone else's liability and it's the only asset that's reliably held its value over time," notes global investor and resource expert Yiannis Mostrous.
In his Vital Resource Investor, he adds, "Indeed, gold has held its value for millenia. An ounce of gold still buys a quality men's suit, just as it did in the days of ancient Greece." Here, he reviews a trio of ideas, each for investors with various levels of risk tolerance.
Mostrous explains, "To date, Americans have never had to experience the society-wrenching events that have affected much of the world for centuries. But most of the globe's population hasn't forgotten the value of gold in times of extreme strife and social turmoil.
"And with incomes rising in many of these countries, beneficiaries have used their newfound savings to beef up their holdings. That's a trend with serious legs, particularly as Asia continues to grow.
"Then there's inflation, the ultimate debaser of all paper currencies. Despite surging energy and food prices, core inflation remains at elevated -- but still relatively moderate -- levels in most of the developed world.
"Developing world inflation, however, is a far different story. And many countries have seen sharp price acceleration across the board, including China.
"The number one reason I like gold is because of inflation -- now a big problem in the emerging markets and the major economies," says resource expert Eric Roseman.
In his industry-leading Commodity Trend Alert, he says, "One of my favorite companies in the world is Goldcorp (NYSE: GG)." Here, he looks at this gold mining firm.
"Inflation sits at a nine-and-a-half-year high in Asia at 7.5%, a 15-year high in the Euro-zone at 3.7% and in the United States it's at 4.2% -- if you believe government data in the first place. I don't. I say inflation is running closer to 10% in 2008, not 4.2%.
"The cost of living, mainly in food and energy, is now totally out of control and destroying business margins and eroding the purchasing power of consumers, especially in the emerging markets where food and energy consumption devours more than 65% of wages.
"It seems very obvious to me that Asian governments have now lost control of inflation. The same applies to the Gulf countries which peg their currencies to the dollar. And in Europe, the European Central Bank is freaking out because of high inflation.
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.
When gold recently moved above $1,000 the Aden Forecast presciently noted that the metals were overbought and forecast a "well deserved breather" for the precious metals.
Now, with the setback in metals prices, Mary Anne and Pamela Aden explain, "We can't stress enough that you should stay invested in the major uptrend, which still has years to run. Don't get left behind or shaken out." Here is their outlook on metals and some favorite mining stocks.
"Are commodities the new bubble? Have they replaced the real estate bubble, which replaced the tech stock bubble, as investors move from one bubble to another? It sure looks like it.
"But the big difference is that this metals and commodities bubble has a lot further to go. Why? Basically, the perfect storm has been gathering and it's going to fuel a mega rise that will likely last for years to come.
"Most important is China and other growing nations, which are keeping demand and prices super strong. China's growth has been astounding at over 9% each year for more than 25 years. During that time, China has lifted 300 million people out of poverty and it's quadrupled the average income.
Technician Yola Edwards had forecast a rise in gold to $1032; it rose to $1034, before correcting. In her Edwards Charts she offers a technical outlook for gold, Goldcorp (NYSE: GG) and Barrick Gold (NYSE: ABX).
"Gold exceeded my $1032.50 level by posting an intraday high just shy of $1034 but it turned on a dime and plunged over a US$100. The daily chart now indicates prices are oversold according to the MACD and RSI as the price bounces off support at the lower Bollinger band.
"However, a negative bias remains. A corrective wave four will retrace to the top of wave 1 at about US$865 if the decline holds true to theory, which should be viewed as a buying opportunity as the fifth advancing wave should see gold rally to about $1145 over the next four months.
"Goldcorp has traced out a 'U' shaped bottom over the past two years and is now in a consolidation phase. Since pulling back from its high two weeks ago the month ended with a type of spinning top which halted the previous decline.
Gold has been strong lately, and gold stocks have been following gold's lead. It seems like gold is following its upside trend today as well, as the current surging oil futures made gold prices relatively cheaper for foreign investors who use other currencies.
However, some analysts believe this is far from being over and expect even higher values for the price of gold. Clément Gignac, National Bank Financial 's chief economist and chief strategist, believes that gold prices will reach $1,500 an ounce within the next 12 to 18 months. Nick Barisheff, portfolio manager of the Millennium Bullion Fund, shares the same belief and anticipates that gold could even touch the $2,000 to $3,000 mark in the "next two to three years."
Goldcorp Inc. (NYSE: GG) shares are rising today after gold futures rose to $1000 for the first time ever. Gold prices have received support from a weaker dollar, which has recently hit lows against multiple currencies. If you think that the company 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 high today. GG opened this morning at $43.94. So far today the stock has hit a low of $43.94 and a high of $44.95. As of 12:20, GG is trading at $44.63, up $1.63 (3.8%). The chart for GG looks bullish and steady.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $30 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 four months as long as GG is above $30 at July expiration. Goldcorp would have to fall by more than 32% before we would start to lose money.
GG hasn't been below $30 since September and has shown support around $35 recently. This trade could be risky if the price of gold drops, but even if that happens, this position could be protected by the support the stock might find at its 50- and 200-day moving averages, which are around $38 and $31 respectively. Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in GG.
Another day, another story on commodities hitting new highs. Yep, oil has done it again today, and so has that most famous metal, gold.
According to a Marketwatch piece, gold has reached a record delivery price of $992 for April delivery (as of this writing). Pretty darn amazing. Of course, the more amazing -- or, perhaps, the more sad -- thing is that I've been ignoring the gold bull run. And I don't feel good about it whatsoever. The problem is, though, that commodity prices can be quite risky, especially for individual investors. Putting money to work in gold at this point could definitely be a gamble, especially as there are other bets out there that might be more worthy in this environment (to me, at least); for example, I am bullish on certain mortgage real estate investment trusts because of the trend of the Fed; I currently own MFA (NYSE: MFA), for example. (Yes, I did end up finding an acceptable entry point.)
Looking at the one-year chart of GLD (NYSE: GLD), the tracking stock for gold value, it is nearly implausible to deny that gold is in a definitive uptrend. And gold-related stocks such as Goldcorp (NYSE: GG) are following the commodity's movement. The old adage about trends being friends rings pretty true here. But, I just don't know if I want to do any inflation-hedging right now, and I don't know if I want to chase gold at these levels. At the very least, I would wait for a pullback to the 50-day moving average before even considering allocating some of the glittery asset to my portfolio. If you are an individual investor and you do decide that you can't take it anymore, that you want in on this ride, certainly make sure that you have enough cash on hand after your first purchase to improve your cost basis if it becomes necessary.
"Will there be a recession or not?" asks Mary Anne and Pamela Aden. In The Aden Forecast they note, "The scales are now tipping to inflation," which they view as bullish for gold and silver.
"Sure, the economy will probably slow down in the months ahead and stagflation is also a likelihood. That is, slower economic growth combined with inflation.
"The Fed and the world's largest central banks are working together in a massive, historical concerted intervention to provide all the money and liquidity that's globally needed to keep things rolling along. Money supply, for instance, is soaring at a 16% growth rate, the most in 47 years.
"The latest producer price figure strongly supported our view since it was the highest in 34 years, showing inflation running at a 38% annualized rate. Since producer prices lead consumer prices, this is a huge red flag that big inflation is coming.
"The new record high in the gold price is telling us the same thing, and so are the record highs in oil and the commodity markets. In other words, if a serious recession were coming, gold and commodities would not be soaring.
"Gold is an inflation barometer and the action in this market alone is signaling that inflation will very likely dominate the economic scene in 2008. Inflation is bad for bond prices. It usually means higher interest rates and this time is not an exception.
As Michael Fowlkes discussed yesterday, gold prices have been rising strongly over the past few days as fears about a possible recession increased and the U.S. dollar continues to weaken. Gold for February delivery rose in the previous session $9.10 to end at $869.10 an ounce on the New York Mercantile Exchange. There have been a handful of notable names that have benefited from these news to trade up to new highs.
Gold has been strong lately, and gold stocks have been following gold's lead. Gold had a very strong day yesterday, with prices breaking through a new record for the second straight day. Josh Bridges, analyst at JP Morgan, anticipates the new year would be a strong one for gold as "it must be remembered that gold is typically a late-stage performer."
When gold was trading above $1,000 an ounce, 
Goldcorp 
As Michael Fowlkes discussed yesterday, 
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