There’s GOLD in them thar hills!
You’ve heard the news, gold is the hottest thing since sliced bread… especially in this devastating stock market environment. Gold has historically been one of the best flights to safety for investors in troubled times, and 2008 is no exception. With bullish analysts predicting prices from $1,600 (Jim Cramer) to $3,500 (Jim Rogers), current trading values at $919.60 are far too low and present one heck of an opportunity. It’s no surprise that Yamana Gold’s CEO Peter Marrone said there was a “good chance” gold goes over $1,500 in 2008.
Earlier in the week, gold was trading at over $1,003 an ounce. After the biggest dollar decline in 28 years on Thursday and a terrible week overall, gold lost just about $100 of its value. I call this selling on strength and taking profits off the table. I call this the best entry point of the year! 
The Best Gold Stock of The Year – Yamana Gold (NYSE: AUY)
If you want to capitalize on appreciation in the value of gold, you want to buy Yamana Gold! I’ve already owned and sold this stock in 2008, taking a quick 19.4% profit (bought at $15.28 January 17th, sold last week at $18.24), and with the latest drop in value… I’m gearing up to buy more. Risky? Yeah. Rewarding? You bet. I think gold will trade up to $1400 in 2008, making me the most conservative of Jim’s… but that is still a pretty impressive amount of upside.
Why Yamana? Ever since Yamana, Meridian and Northern Orion Resources became one in September of 2007, this mineral (70% gold) monster is in the best stock of all to make money on a rise in the commodity. Among the Tier II gold producers, Yamana is the most liquid and one of the “growthier” companies in the mix. They have historically traded at a premium, and I feel that they deserve this. There are a number of earlier-staged projects coming from Yamana that haven’t been factored into the stock’s outlook yet.. and I think these could be a huge 
catalyst for the year. Cash flow multiple’s were increased last week from 20x to 25x because of copper operations. Yamana is in the smartest places of the commodities party, and with their smaller relative size and growth capacity (management projects 120% production increase to 2012)… I expect good things.
Let’s talk briefly about valuations. Yamana’s target price was recently raised by RBC Capital Markets to $21, and they were trading above $20 just a few weeks ago! I got greedy and held them, I ended up attaching a trailing stop to my position in order to lock in 20% gains.. and its a good thing I did. This stock was trading too high for its own good, but now that it was pulled back under… I don’t see any reason you can’t buy into it at $15 and sell at $20 once again. Rinse and repeat.
Feeling Conservative? Safer Gold Stocks Offer Security
As much as I am married to Yamana, and don’t see much risk in buying at $15, I realize that many of you might be scared off by its Tier-II status and want a more established player. That’s fine, and I have two winning stocks for you in Barrick Gold (NYSE: ABX) and Goldcorp (NYSE: GG).
Starting with Barrick, these guys are a bit more secure than Yamana in the fact that they are 5 times bigger, and after dropping 7% on Friday they present an interesting buy point. There are, however, some problems at home. In a recent article from the Wall Street Journal, some tax-sharing problems were exposed in Barrick between Argentina and Chile. Most of Barrick’s mining is in Chile, but most of the processing is in Argentina… there are a few uncertain government taxation issues at hand that could hurt you in handling costs. But as a whole, Barrick is one of the best stocks to get growth on gold with a nice valuation.
Let’s move on to Goldcorp. The fourth quarter was great news for GG, and added revenues from their plants in Alumbrera and Red Lake were definitely helpful. This is one of the few established companies that actually increased guidance into 2008. They were able to produce 623,000 oz at total cash costs of $208/oz, versus an anticipated 617,000 oz at total cash costs of $175/oz for the quarter. Investors considering an investment in Goldcorp should consider the risks associated with development of the large scale Penasquito project, and the risk associated with expected improved performance of the recent startup of the Marlin mine. Overall, I give the green light on this mineral powerhouse.
“There is a good chance we will see it before the end of this year.” – Yamana CEO Peter Marrone on gold’s $1500+ future
There are a lot of mineral gold/silver companies out there, but the others are just too risky for my blood. Newmont Mining (NYSE: NEM) issued very poor guidance and rising production costs, Agnico-Eagle (NYSE: AEM) is essentially at its target price with no upside, Harmony Gold Mining (NYSE: HMY) is just too speculative for my blood and Gold Fields (NYSE: GFI) is much too volatile. I would stick with Yamana at the current price. The gold producers as whole are a BUY for me with the recent fire-sale. Don’t be scared off when people move to secure gains, the time is approaching when you should put more money in.
-Jimvesting
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I have never predicted gold would go to US$3500. That was a statement by someone else at a conference where I spoke which was mistakenly attributed to me. I have often said gold is going higher, but I have never said US$3500.
Twitter: @jimvesting
March 22, 2008 at 8:24 pm #
@ Jim: While I cannot conclude one way or the other if this is the real Jim Rogers or not… if it is, I am proud that you have visited my website and read one of my articles… WOW!
Sorry about that misstatement. I am not one to misquote, I was given this information by another website and if it is a misrepresentation I apologize. The point remains that gold is hot
Barrick owns 10% of mining junior TNR Gold Corp which was closely associated with Lundin and Tenke (google this up!)
Inferred resource on Los Azules and resulst on 10,000+ m of drilling soon, it’s one junior to watch out for in Argentina. They just sponsored the Argentina Minning Show down there under their 100% Argentina subsidiay name – PetraGold and Solitario Argentina.
The prediction had gone wrong,in the last quarter the gold price today is $740/.
Unrealistic speculations can some time make high too.
Listened to bad advice an got killed in this stock. Bought at 14.50 and it is now 3.75.
What is my projected profit after one to two years if I purchase $10 – $15,000.00 in gold (coins, bars, etc.) as an investment.
What would my profitable investment be after 1 – 2 years if I purchase $10 to $15,000.00 in gold (coins, bars, etc.).
I have heard the news, gold is the hottest thing since sliced bread, especially in this devastating stock market environment. Gold has historically been one of the best flights to safety for investors in troubled times, and 2008 is no exception.
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Hello,
Thanks for the information about the Yamana Gold. There is much profit in investing in Gold.
hi ,
nice article ..considering gold is gone over $1000
Its the time the shine has come on
Nice design for blog too
Regards
jeff ( http://www.goldinvestmentstocks.com )
jeff´s last blog ..Midday Australian Market Roundup
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