The recent slump in gold prices has puzzled many investors who considered the yellow metal a safe haven. But Mike Caggeso says the inflationary impact of the government’s $700 billion bailout program could send gold soaring towards $1,500 an ounce by the end of 2009. He recommends five ways to play this coming gold bull run.
It is a confusing market for the world’s miners. Commodity prices are dropping, global demand is slowing, and earnings have been slashed. Yet the valuations of some of the world’s most prominent miners have increased by double-digit proportions over the past few days.
After yesterday’s dismal earnings announcement, it would not be surprising to see shares of Newmont Mining (NYSE:NEM) deep into negative territory today. After all, the company announced a decline of net earnings of over 51%.
Even worse was the statement made yesterday by the company’s CEO, Richard O’Brien.
“Our company and our industry are currently operating in an unprecedented macro-business environment consisting of extreme commodity price volatility, uncertainty, mass portfolio liquidation, global inflation, and limited, if any, access to capital,”…
Commodity prices have been among the hardest hit by the wave of market panic. This has dragged down the stock of International Royalty Corp. (AMEX:ROY), which owns a portfolio of royalties from 80 mines around the world. Chris Mayer says this presents a great buying opportunity for investors. The company is not exposed to rising mining costs, yet it receives a slice of every ounce of metal that it pulled out. Chris says it’s “like a big bucket of call options…that don’t expire.”
Martin Hutchinson in Money Morning says that over the long-term oil and agricultural commodities are likely to deflate.
This is because, once the threat posed by the US housing crisis has passed, the Federal Reserve will be forced to increase interest rates to fight inflation. Other countries will follow, which will deflate the commodities boom.
However, over the short-term, gold, whose movements are directly linked to inflation, is likely to bounce. Martin reckons a price tag of $1,500 an ounce for the yellow metal is entirely possible. He recommends two ETFs and four gold miners to profit from this situation…
The precious metals suffered mixed fates on Thursday as gold and silver ended their sharp declines of the past two days by posting modest gains, while platinum continued its freefall.
U.S. Federal Reserve Chairman Ben S. Bernanke is caught between a rock and a hard place right now. Sure, he would prefer that you focus on “core inflation,” since it excludes sharply rising food and oil prices. But we all have to eat and we all consume energy.
Editor’s Note: Gold is back. The yellow metal traded at a 10-week high today. Gold for immediate delivery hit $941.35 an ounce at 1:25 p.m. in Singapore, after reaching $946.08 yesterday. Silver for immediate delivery added 0.2 percent to $18.14 an ounce. But Russel McDougal from Investor’s Daily Edge notes that junior mining companies have not seen soaring commodity prices feed into stock gains. This, he says, means a big chance to make big money.
Today, I’d like you to imagine a hot-dog business. After buying your cart, permits, insurance, hot dogs, buns, and condiments, you hit the street. You sell hot dogs people will happily pay $2 for. Let’s say it costs you about $1.50 to produce a hot dog, so you’re making a gross profit of $0.50 per unit.
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