Copyright Š 2009 by Real Wealth Report Publication Date: September 2009
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Double, Triple And Quadruple Your Money In The Gold Stock Breakout Of 2009-2010 If you’d been among the exclusive handful of investors who acted quickly on my “buy” and “sell” signals for gold stocks since January 2001, you could have made a bundle: ■
Your Anglogold (AU) and Newmont Mining (NEM) shares would have jumped 31 percent and 105 percent respectively ...
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Your Tocqueville Gold Fund (TGLDX) would have earned you 81 percent gains …
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Your Agnico-Eagle (AEM) shares would have more than doubled your money, earning you a 144 percent payday in just over a year
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Your two plays on Northgate Minerals (NXG) would have earned you 197 percent and 272 percent gains, and ...
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You may not think of yourself as a gold investor. That’s fine. This report isn’t really about gold. It’s about making more money in less time than you are now — with stocks that are already outperforming both the Dow and the Nasdaq by a wide margin.
Why I Believe The Greatest Gold Bull Market Of Our Lifetimes Is Just Beginning Some people I talk to wonder if they’ve missed the boat in gold. They fear they’ve waited too long to buy gold stocks and missed one of the most profitable rallies ever. Balderdash! Right now, every indicator I use is telling me flatly:
Your Glamis Gold (GLG) shares would have earned you a total after-commission windfall of 553 percent — enough to turn a $50,000 investment into $326,500!
Now, we all know that past performance is no guarantee of future results, and temporary setbacks in gold are always possible ¯ sometimes sharp ones.
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“It is NOT too late to profit from soaring gold prices!”
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“This great new bull market in gold is just beginning!”
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“The gold stock profits we’ve seen so far are just a taste of the profits to come!”
And I’m going to show you why in this report. In it, I give you all the reasons why I believe skyrocketing gold prices are virtually locked in for the next few years.
But it’s precisely those setbacks that open up grand buying opportunities. Indeed, I’m convinced we’re about to make all those astonishing gains look like a drop in the ocean — when gold prices explode higher in its next leg up: Back through the $1,000 an ounce barrier ... on to $1,250 ... then to my longer-term target of at least $2,270 an ounce ... and perhaps even higher!
I introduce you to gold stocks and other gold investments that give you the potential to multiply your money over and over again in the months and years ahead. But let me start by telling you why I’m more excited about gold and natural resources now than I’ve been in nearly three decades ...
And this time, as a subscriber to my Real Wealth Report, I want you to profit along with me!
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First, because they are firmly grounded in real wealth — the exact opposite of the flimsy, no-assets, no-earnings, high-debt, smoke-andmirrors, B.S. companies Wall Street loves to push off on you.
Although I work intensely in the entire natural resource market, I cut my eyeteeth on the gold market 31 long years ago. In the early 1980s, I even gained fame as one of the world’s largest gold futures traders.
In contrast, I insist on investing only in real companies with real assets, that spin off real profits, and that deal with tangible value — things that consumers, corporations and entire nations must have to survive.
Don’t get me wrong. I have never been one of the perpetually bullish gold bugs you hear about. In fact, when gold supplies skyrocketed and demand cratered in the late 1980s and 1990s, I told everyone who’d listen to stay away from the gold market.
Stocks like these give you something no high-tech start-up or pie-in-the-sky puff job can: REAL ASSETS, relative stability and enhanced safety in the worst of times — like we have now with the financial crisis that’s engulfed the world — plus virtually unlimited profit potential!
But now, all that has changed. In the next few pages, you’re going to see why. You’re going to discover how virtually all the factors that have depressed gold prices — central bank selling, speculative selling (the “carry trade”), forward-selling by mines, and soaring supplies — are now history!
Whether the big move is in energy products, industrial metals, precious metals, or any other tangible asset or natural resource, my job is to help you profit from it!
And, in their place, you’re going to discover how dwindling supplies, skyrocketing U.S. government deficits — plus enormous new demand from China, India and the Muslim world — point to a crashing dollar, soaring gold prices, and skyrocketing gold stock prices as far as the eye can see.
Second, because every indicator I watch is telling me, “If you want to own the stocks that are destined to leave the Dow, S&P 500 and Nasdaq far behind, you must take advantage of any significant dips in gold stocks to buy.”
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Part I
Seven Powerful Drivers Behind the Gold Bonanza What’s more, over the past several years, some mining companies have spent little to discover new sources, opting instead to increase reserves through merger and acquisition activities.
I count about a dozen fundamentals forces that should power gold and gold investments much higher in the months and years ahead. But the seven below are the most powerful ... Force #1: Gold supplies are shrinking. In 2007, the world’s gold supply dropped 2.6 percent to 3,488 metric tonnes. It dipped further to 3,468 metric tonnes in 2008. This was due to several factors, including a reduction in central bank gold sales and lower mine output — which fell 3 percent in 2008, the third straight year of declines.
Other fundamental forces that will drive gold higher include ... Force #3: The U.S. dollar is on a slippery slope. Since July 2001, the greenback has plummeted 30 percent against other major world currencies, and there’s plenty of room for the dollar to keep falling.
South Africa and Australia had the steepest production declines. South Africa’s production dropping to its lowest level in 86 years, while Australia’s gold production hit 19-year lows. And mine production has the potential to fall even further this year as the credit crisis continues to impact mining companies.
And a massive U.S. government debt of $11.1 trillion, bailout commitments and guarantees from the U.S. Treasury and the Federal Reserve equaling almost $13 trillion, a massive spending budget of $3.5 trillion, and other government financial obligations is going to help push the dollar even further down the slope.
Adding to the supply crunch: Big miners are simply not finding world-class deposits. Why? It’s simple ...
Since gold is priced in dollars, as the dollar goes down, gold usually goes up. Force #4: Investors are running for gold. One of the major factors pushing gold higher is fund and physical gold buying. As the global financial crisis has worsened, investors have fled to the safe-haven of gold. In 2008, 321.4 metric tonnes of gold flowed into Exchange Traded Funds (ETFs), a 27 percent increase over a year earlier. ETFs continued to grow in the first quarter of 2009 as investors bought a record 469 metric tonnes, bringing the total holdings in ETFs to 1,658 metric tonnes, worth more than $48.6 billion.
Force #2: Exploration lag-time leads to supply-demand gap. Global nonferrous-metals exploration spending has been on the rise since hitting bottom in 2002, but the lack of past spending has caused a large exploration and development gap. In fact, it can take seven to 10 years to bring a new mine online. While there may be an increasing pipeline of new mining projects in the planning stages, the lack of major projects and the time constraints inherent in the business will hamper global supplies for years to come!
ETFs and similar products are now listed in exchanges in 12 countries, and they are a great 5
Force #6: China and India are liberalizing their gold markets. The reopening of China’s gold market to investment after 50 years of Communist suppression is one of the great forces driving gold today.
way for investors to buy and sell gold without taking delivery of the metal. Investor demand for physical gold — bars and coins — has also soared and was up a whopping 87 percent in 2008, causing shortages across the globe. Shortages continue as demand for bars and coins remains very strong.
In 2007, China overtook the United States as the second-largest gold consumer in the world. Consumer demand reached 432.1 tonnes in 2008 — 18 percent higher than 2007. Meanwhile, investment demand rocketed 131 percent higher and jewelry demand reached 326.7 tonnes, or 7 percent higher than the previous year.
This increasing demand for the yellow metal in a time of shrinking supplies will put serious upward pressure on prices. Force #5: Increased demand from developing nations. Both India and China have a cultural affinity for gold, and we’re sending both those countries more of our money all the time.
China consumes more gold than it produces — this couldn’t be more bullish for gold, in my view. And demand for the yellow metal in China looks very promising this year and going forward.
Not only has China consistently thumbed its nose at doomsayers who periodically predict its economy is about to collapse ... its economy actually turns out to be bigger than anyone thought.
What’s more, China has reported its boosted its gold reserves by 76 percent to 1,054 metric tonnes, becoming the world’s fifth-largest holder of gold. I expect China to continue to build its gold reserves, which will also be very bullish for the yellow metal.
China’s economy is worth about $2.5 trillion. And still, it continues to grow at an impressive rate. And despite the global financial crisis, last year China’s economy grew by 9 percent — multiples higher than any other country in the world! That makes it larger than the United Kingdom, France and Italy — some of the world’s largest industrial economies. And earlier this year, China officially surpassed Germany to become the world’s third-biggest global economy.
Meanwhile, India is the world’s largest consumer of gold in tonnage terms, accounting for about 22 percent of global gold jewelry demand and about 24 percent of global net retail investment (gold bars and coins). Since the repeal of the Gold Control Act (which forbade holding gold in bar form) in 1990, demand has grown steadily. Last year in value terms, Indian gold demand extended the positive-performance streak it began in 2003 by rising 13 percent year-over-year. This is a sign of even better things to come.
Meanwhile, India is no slouch. Its economy grew by 7.1 percent in 2008. While that’s the slowest pace in six years, it’s still a strong growth rate against the backdrop of a worldwide financial and credit crisis and shows the resilience of the Indian economy.
Both India and China want to compete with the New York and London markets in setting the price of gold.
The bigger China and India’s economies become, and the richer their people get, the more gold they’re going to buy. There are literally hundreds of millions of people joining the consumer class, and they are going to want a lot of everything, precious metals included.
My opinion: These new players in the game will help gather up more investors in Asia, funneling their money into the world markets and
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in the first four months of 2009 alone. Reason: As the global economy has melted down and stock markets have collapsed, oil-rich sheiks are taking their oil gains and socking them into the hardest asset of all — gold.
boosting the demand for gold globally. It’s as simple as that. And speaking of up-and-coming nations with lots of cash ... Force #7: Petrodollars continue pouring into gold. Gold isn’t the only commodity that’s been moving up for the past couple of years. Oil has as well, hitting a record $147.27 per barrel in July 2008. As a result, oil exporting nations have grown their foreign reserves to $1.2 trillion. And while oil prices plummeted to nearly $60 per barrel by the end of last year, thus, slowing revenue growth rates, foreign reserves in the oilrich gulf countries still grew 25 percent in 2008.
Moreover, in March, the World Gold Council (WGC) launched a new gold ETF based in Dubai, aimed at Middle Eastern investors as it follows Islamic laws. It’s the first such ETF of its kind. The WGC expects the Middle East to become one of the top two consumers of gold in 2009. I believe gold is about to enter its most powerful bull market phase yet and these are just some of the forces that will help power gold higher in the coming year. Now, let’s look at four gold investments that I think have the potential to double, triple and even quadruple your money, as well as a list of my 25 favorite gold stocks.
Just a small fraction of those funds rushing into gold markets are enough to keep the gold freight train running at uncontrollable speeds. Net retail investment in gold in the Middle East jumped 40 percent last year and 140 percent
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Part II
FOUR Hot Gold Investments pulls almost than 220,000 ounces of gold out of its main property per year. Agnico has a long, stellar reputation of not hedging their gold reserves or production, meaning it can fully participate in gold’s long-term bull market.
Hot Gold Investment #1: Goldcorp Inc. (GG) Goldcorp Inc. (GG), the world’s secondlargest gold producer, is based in North America and is a low cost, debt free, unhedged gold producer with operations in Canada, Argentina, Mexico and Australia. Its primary asset is the Red Lake Mine in Canada.
The company recently opened two new mines and three more are in development in Canada and Mexico. It’s also adding on to its LaRonde mining operation. These projects are expected to raise annual gold production to more than 1.2 million ounces by 2010. This year, the company expects to produce 590,000 ounces of the yellow metal.
In 2008 ... The company’s sales increased 10 percent to $2.42 billion while profits more than tripled to $1.48 billion. Its proven and probable gold reserves increased 7 percent to 46.3 million ounces
For 2008, gold production was up 20 percent and hit a record 276,762 ounces at cash costs of $162 an ounce. These costs place AgnicoEagle in the lowest quartile of gold production costs compared to its competitors.
GG produced a record 2.3 million ounces of gold at cash costs of $305 an ounce. The company expects to increase its gold production by 50 percent over the next five years to 3.5 million ounces of gold while decreasing its already low cash costs thanks in part to a well thought out development pipeline. This should help boost profits and the company’s share price even higher!
Production in 2009 is expected to rise more than 100 percent from the 2008 level. And AEM is set to more than quintuple its gold production over the 2007 to 2010 period with low cost, unhedged, long-life mining projects.
In 2009, the company expects to produce 2.6 million ounces of gold at a cost of only $250 an ounce.
Last year the company’s gold reserves totaled a record 18.1 million ounces, up 8 percent from 2007.
Buy GG at the market and place a protective sell stop 20 percent below your entry price on a good-till-cancelled basis.
What’s really special about this company is that it doesn’t dilute down its profits by advance selling gold in the futures markets at today’s prices (hedging). Instead, it recognizes, as we do, that gold prices are going to be a lot higher in the future. Because it does no advance selling, it stands to reap 100 percent of the profits from gold’s skyward surge!
Hot Gold Investment #2: Agnico-Eagle Mines Ltd. (AEM) Agnico-Eagle Mines Ltd. (AEM) is an extremely well-managed mining company and is one of the world’s lowest-cost producers that 9
Buy GSS at the market and place a protective sell stop 20 percent below your entry price on a good-till-cancelled basis.
This company has proven its ability to find, develop, and mine gold over the course of almost three decades, and it’s primed to open two of those new mines this year and the third one in 2010.
Hot Gold Investment #4: Kinross Gold Corp. (KGC)
Buy AEM at the market and place a protective sell stop 20 percent below your entry price on a good-till-cancelled basis.
Kinross Gold Corp. (KGC) is based in Canada and is the third-largest gold producer in North America. KGC also has operations in the United States, South America, and Russia. It also maintains a no-hedging policy.
Hot Gold Investment #3: Golden Star Resources Ltd. (GSS)
In 2008, the company’s sales soared 48 percent to a record $1.6 billion. Cash flow hit a record $634.6 million — a 102 percent increase over 2007.
Golden Star Resources Ltd. (GSS) is a mid-sized mining company with operating mines on the Ashanti Gold Belt in Ghana. It has 2.36 million ounces of reserves overseas on a property that has already produced more than 11 million ounces of the precious yellow metal. GSS took advantage of the recent downturn in commodities prices to acquire property at low prices, thus becoming the largest mining property holder in the Ashanti Gold Trend.
KGC’s production increased 16 percent in 2008 to a record 1.8 million ounces of gold. Its gold reserves totaled 45.6 million ounces. Three new mines in the United States, Brazil and Russia commenced production last year and are expected to boost overall gold production to 2.4 million to 2.5 million ounces in 2009.
GSS’s gold revenues increased 46.5 percent to $257.4 million in 2008. The company produced a record 295,930 ounces of gold tlast year — a 20 percent increase over 2007.
In addition, KGC completed two strategic acquisitions ensuring future growth: Aurelian Resources — including the Fruta del Norte deposit, one of the most promising gold discoveries this past decade — and Lobo-Marte in Chile.
But here’s what really gets me excited about this stock — and why I believe it’s likely to start doubling in value virtually any minute:
Buy KGC at the market and place a protective sell stop 20 percent below your entry price on a good-till-cancelled basis.
The company continues to develop its properties and operations at Bogoso/Prestea and Wassa. Its Benso project commenced commercial production in 2008 and Hwini-Butre is expected to come on line in 2009. The company expects to boost production by 35 percent to 400,000 ounces this year. When this happens, these shares could take off like a rocket!
With these four hot gold investments in your investment portfolio, you’ll be well on your way in potentially profiting from the Gold Stock BREAKOUT!
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My 25 Favorite Mining Shares Based on these and other considerations, here are the 25 mining companies that I currently like the best and are on my “buy list”: Ticker
Company Name
Ticker
Company Name
ABX ............................. Barrick Gold Corp.
HL ............................... Hecla Mining Co.
AEM ............................ Agnico-Eagle Mines Ltd.
IAG ............................. Iamgold Corp.
AUY ............................. Yamana Gold Inc.
KCN AU ...................... Kingsgate Consolidated Ltd. (Australia)
AZK ............................. Aurizon Mines Ltd.
KGC ........................... Kinross Gold Corp.
BHP ............................ BHP Ltd.
LIHR ........................... Lihir Gold Ltd.
CBLRF ....................... Campbell Resources
NCMGY ...................... Newcrest Mining Ltd.
CDE ............................ Coeur D.Alene Mines Corp.
NEM ........................... Newmont Mining Corp.
DROOY ...................... Durban Roodeport Deep Ltd. FCX ............................ Freeport-McMoran Copper & Gold Inc. GFI ............................. Gold Fields Inc.
NG .............................. Novagold Resources Inc. NXG ........................... Northgate Minerals Corp. OXR AU ...................... Oxiana Limited (Australia)
GSS ............................ Golden Star Resources Ltd.
GOLD ......................... Randgold Resources
GG ............................. Goldcorp Inc.
RTP ............................ Rio Tinto
HMY ........................... Harmony Gold Mining Co. Ltd.
For specific buy, sell and hold recommendations — along with more details on each of the stocks — be sure to stay current with my latest issue of Real Wealth Report.
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