Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Goldcorp Golden Buying Opportunity

Commodities / Gold & Silver Stocks Sep 18, 2012 - 04:35 AM GMT

By: Elliot_H_Gue

Commodities Best Financial Markets Analysis ArticleThe price of gold one year ago touched an all-time high of over $1,900 per ounce, as investors flocked to the yellow metal in the wake of the first sovereign-debt downgrade in US history and above-target inflation in most emerging markets.

However, the bull market in gold was due for a breather. The Midas metal has punctuated its 700 percent rally over the past decade with several 10 percent to 20 percent pullbacks; the sell-off in May to just over $1,500 per ounce fits the pattern.


Gold is now poised for another surge that will take the metal to well over $2,000 per ounce by the first half of 2013.

The Federal Reserve stands ready to start a third round of quantitative easing (QE3) barring a substantial improvement in the US economy, a distant prospect given recent weak data. That’s driving up inflation worries, which in turn boost gold prices (see chart, “Inflation Expectations”).



Resource nationalism is another potential catalyst. South Africa has long been a leading producer of gold; the country’s mining industry also occupies the front lines in the fight over wealth redistribution. President Jacob Zuma’s reaction to recent inter-union carnage at a major platinum mine was to attack the mining companies, not the perpetrators of violence. 

With Zuma’s ruling African National Congress battling to retain its monopoly on power, risk is growing of continued mine company bashing. The more inflated the rhetoric, the less capital is likely to flow into the country. However, any drain of capital or drop in output can only push up prices and directly benefit companies operating elsewhere. Other countries give Africa plenty of competition for high gold production (see the chart, “Gold’s Diverse Origins”).

In the near term, mining stocks’ prices move with the price of what they produce.

Over the long pull, only rising production and growing reserves create value. The larger a mining company becomes, the more difficulty it has in replacing output. Finding meaningful new resources requires going “ever-further, ever-deeper,” often into ever-more politically unstable places.

The upshot? Rarely has there been a better time to invest in gold. All investors should hold at least a portion of their assets in gold, either in physical gold purchases through a dealer or the SPDR Gold Trust Shares (NYSE: GLD) exchange-traded fund.

Also consider the stocks of gold mining companies with strong production growth prospects; here’s a look at one of my favorites.

Goldcorp (NYSE: GG) has the three key value investing qualities I look for in a senior gold producer: strong production growth potential through near-term mine projects, a low cash production cost per ounce and focus on mining jurisdictions with below-average political risk.

Goldcorp will generate just under half of its 2012 gold output from Canada and another one-third from Mexico. In Canada, the company’s largest project is the Red Lake mine in Ontario where it produced 622,000 ounces of gold in 2011 at a cash cost of just $360 per ounce.

Goldcorp also has plans for further expansion of its low-cost Canadian production in coming years. The Cochenour project in the Red Lake district of Ontario is scheduled to come on stream in late 2014 and produce 250,000 to 275,000 ounces of gold per year at a cash cost of around $360 per ounce.

In Quebec, Goldcorp’s Eleonore project is also due for start-up in 2014 and will produce around 600,000 ounces of gold per year at an estimated cash cost of less than $400 per ounce.

Goldcorp’s second-largest mine is Penasquito in Mexico, which started production in 2010 and ramped up to produce over 250,000 ounces in 2011 and an estimated 425,000 ounces in 2012.

The company has a host of additional projects in the latter stages of construction. The list includes its 40 percent-owned Pueblo Viejo mine in the Dominican Republic that went into production in the middle of this year. The mine is expected to produce between 415,000 and 450,000 ounces of gold per year for its first five years of operation for less than $350 per ounce.

Even more attractive is the Cerro Negro mine in Argentina that’s expected to open in late 2013 and produce more than half a million ounces per year at industry leading cash costs of under $300 per ounce. Last year, the company produced about 2.5 million ounces of gold for a cost of just $529 per ounce.

Management estimates new projects underway across the Americas will boost output 70 percent by 2016 to over 4.2 million ounces per year. For 5 more picks that stand to benefit from rising demand for precious metals, see my free report.

© 2012 Copyright Elliott H. Gue - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Elliott H. Gue Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in