a golden opportunity for stock market investors

8/6/2019 A Golden Opportunity for Stock Market Investors

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A Golden Opportunityfor Stock Market Investors


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A Golden Opportunity for Stock MarketInvestors

There isnt a precious metal that has fascinated

humankind more than gold. There isnt a precious metal

that has infiltrated our everyday lives as much as gold

has. This rich metal has made its way into our language:

heart of gold, as good as gold, and all that glitters

is not gold! are just a few examples.

For centuries, gold has been at the heart of many

societies. The Egyptians awarded the yellow metal

godly powers and used the perfect shape of a circle to

symbolize it in their hieroglyphic writings. To early

Hindu philosophers, gold was the mineral of light,

and to early Western philosophers, it was the light of the

sun captured on Earth in a stone.

Throughout history and in mythology, gold has not

been merely a philosophical fascination; it also lured

men across oceans and continents, over cold mountain

ranges, and into Arctic tundra and deadly jungles.

Gold has graced beautiful necks in European courts

and pushed millions into slavery, wars and death. No

other metal has created so much beautyand no other

metal has caused so much misery.

Aside from its splendor and mythical fascination,

gold also has an unparalleled combination of chemicaland physical properties that make it invaluable to a wide

range of everyday applications essential to modern life.

Thousands of everyday medical, industrial

and electrical appliances require gold for optimum

performance. It is virtually indestructible, completely

recyclable, and immune to the effects of air, water and

oxygen. The metal is benign in all natural and controlled

environments. It is also among the most electrically

conductive materials around.

Gold is the most ductile of all metals, as it can be

drawn out into extremely tiny threads without breaking.For example, a single ounce of gold can be drawn out

into a thread five miles long! In addition, its malleability

is unparalleled, as it can be shaped into extraordinarily

thin sheets and recycled back into something completely

different, without losing any of its characteristics. It is

truly wondrous that an ounce of gold can be stretched

into a 100-square-foot sheet!

Golds wide-range applicability has made it an

important sector in any countrys economy. For decades,

75% or more of the gold needed by U.S. manufacturers

was imported from other countries. However, from the

1980s on, U.S. gold production rose steadilyfrom one

million to more than 11 million ounces per year, mainly

due to advances in mining, exploration and processing

technologies. Today, the U.S. produces more gold than

any other nation, except South Africa, and meets its

domestic demand in addition to exporting roughly 23%

of the metal.

In addition, gold plays a key role in a number

of rapidly developing technologies. Billions of gold-

coated electrical connectors are used in the computer,

telecommunications and home-appliance industries.

Weather and communications satellites depend

on gold-plated shields and reflective apparatuses for

protection from solar heat and electrical interference

while in space. Advanced laser technology used in

industrial and medical applications also employs interior

gold coatings to concentrate its powerful light energy.

The automobile industry depends on gold-coated

contacts for sensors that activate automobile air-bag

systems, while modern medicine relies on gold to

monitor heart functions or functions of the chemical

procedures for diagnosis and treatment of cancer, viral

and bacterial diseases, and allergies. Its no wonder then

that gold is critical to the global economy.

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A Golden Opportunity for Stock Market Investors


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Gold Market Today

An investor is fortunate to experience one or two bull

markets in his or her lifetime. Some bull markets last

for long periods of time and many investors often enjoy

the benefits of such rewarding periods, especially those

who recognize the bull market early on and get on board

before the stampede follows.

However, bull markets in their infancy are seldom

immediately recognized. Usually, both investors and

market observers are too busy focusing on the fallout

from the previous bearish cycle to recognize the onset of

the next bullish market. As economic data start pouring

in, most investors are still deciphering what came first

the chicken or the egg.

Considering a number of economic indicators, a

new bull market has been definitely happening in the

commodities markets, especially in gold and silver since

2002-2003. Most precious metal prices are consolidatingright now, but our view is that gold in particular is still

very much in the early stages of a long bull market. The

price of gold is trading in a range and its just waiting to

break out over its current level.

This current bull market seems very similar to the

last bull market for gold, which began in the 1970s. At the

time, both physical gold and gold stocks were rallying.

After the dollar was taken off the Bretton Woods

system, gold and silver prices became deregulated. As

a result, investors turned their focus to owning precious

metals.

During the first phase of the bull market in the early

1970s, the only buyers of gold were investors seeking

refuge from the weak dollar, along with some industry

insiders who continuously kept gold on their radar.

This phase lasted until about the mid-1970s, at which

point both the stock and precious metals markets went

through a correction. The second phase started in 1976,

when bigger players came into the game, such as high

net-worth individuals and financial institutions.

During that second bullish period, monetary

conditions were shaping up to be to gold bullions

advantage on many levels. Arthur Burns, the former

chairman of the Federal Reserve Board, tried to control

interest rates through credit.

Burns strongly believed that the government should

have the power to control the economy regardless of

the external mechanisms that also must be factored in.

He viewed monetary policies from a credit perspective,

thinking that he could control the economy through

credit markets. In addition, Burns thought that unions

and monopoly pricings of large corporations causedinflation, referring to price spikes in oil and food prices.

The problem was that Burns viewed inflationary

spikes as one-time events that were not intertwined with

a number of other factors appearing within a business

cycle, and never attempted to deal with them through the

policies of the central bank.

Only when the new chairman, Paul Volcker, took

over the reins, did inflation and interest rates become real

tools of real monetary policy. Volcker was also the one

who put an end to the great bull market in commodities,when he recognized that too much money and too much

credit were eating away at the very foundation of the U.S.

financial system.

However, before Volcker took over, a number of

things shaped the great bull market for commodities

in the 1970s. Burns monetary and fiscal policies were

primary drivers of the gold bull market. However,

supply and demand fundamentals were also out of

shape, therefore helping precious metals prices.

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History is repeating itself today. America is again

having issues addressing its monetary policy, while most

economists view the dollar as being weak and likely to

get even weaker as a result of spiraling deficits and a

slowing economy. In that sense, the price of gold is very

often a result of psychological shifts.

For some people, gold is a material used for making

jewelry. For others, it is the worlds original currency,

and thus the only real protection against inflationary

pressures, financial bubbles, and even global economic

meltdowns. The most fervent gold bugs run to it every

time the U.S. economy teeters on its path to recovery

or when foreign investors threaten to call in the U.S.

massive loans.

For the first time since the 1980s, the worlds

economies (particularly Western economies) are

growing and faltering almost in tune with one another.

There are indications that this positive correlation will

continue well into the next decade. Generally, this spells

good news for producers of basic commodities, such as

agriculture, copper and oil.

Investors should remember that gold and silver

were the worlds first true money and, when paper

money starts depreciating, the precious metals tend to

resume their historical role as currency. Freely floating

currencies are by default unstable and, since there are

no reassurances in tangible assets, paper money is

inherently prone to losing its value.

In addition, both the worlds gold and silver suppliesare running out. So, those companies with large resources

of both mined and in-ground precious metals will be

the big winners in the commodities bull market that is

shaping up before us.

The time seems to be right for picking precious

metal stocks, as the renewed momentum of the bullish

reign in commodities develops. Some observers go so

far as to claim that we could expect another 10 years of a

commodity price boom.

The simple truth is that gold is a trustworthy and

realistic investment instrument that should be in every

investors portfolio. Golds traditional role as a safe

haven has made it the underdog in the world markets

an investment that people turn to only when the stock or

bond markets arent performing well, or when monetary

policies are running amok. It is high time to move gold

from its apocalyptic pedestal and accept it as a credible

and realistic investment vehicle.

This brings us to the only gold stock that we believe

you need to own for the next decade. This company

is a leader in the gold industry and it is the gold

investment of choice for most portfolio managers. Since

the subprime mortgage crisis, this companys stock price

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The simple truth is that gold is a trustwor-

thy and realistic investment instrument thatshould be in every investors portfolio.

Ratings IndexSpeculative Buy: A buy recommendation for a stock with high investment risk.

Enthusiatic Hold: Keep holding your position in this stock; company and stock prospects look great; maintain a

moving stop-loss limit.

Hold: Keep holding this stock; maintain a moving stop-loss limit.

Sell: A recommendation to sell or take profits from a stock.

Radar Screen: A recommendation to begin watching the trading action in a particular stock.

NYSE: New York Stock Exchange AMEX: American Stock Exchange

NASDAQ: NASDAQ Stock Market OTCBB: Over-The-Counter Bulletin Board

NASDAQ/SC: NASDAQ Small Cap Market TSX: Toronto Stock Exchange

TSXV: Toronto Stock Exchange Venture Exchange


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has done very well, carried by a strengthened balance

sheet, and the company does not hedge its selling gold

prices. This stock has already corrected, so now is the

time to be considering a new position.

This company firmly believes in its product and sees

no need to hedge against the price of gold depreciating.

It is growing internally and by acquisition. The companywe are talking about is Goldcorp Inc. (NYSE/GG), which

we believe is the only stock that you need to own for

the next decadea truly golden opportunity for stock

market investors.

About Goldcorp

Company History

Goldcorp is one of the worlds leading gold producers.

The companys main assets are comprised of 11

operations and six development projects throughout the

Americas. Over 70% of Goldcorps reserves are situated

in politically stable NAFTA countries.

According to the company, in 2006, it doubled its

reserves and resources from five million to 10 million

ounces through the acquisition of assets from Placer

Dome and Glamis Gold Ltd. Gold production is forecast

to increase by over 50% over the next five years.

The company has a solid pipeline of projects,

including the 100%-owned Eleonore gold project in

Quebec, Canada, and the 100%-owned Peasquito project

in Zacatecas, Mexico. These two assets, along withseveral others, are expected to be the growth drivers for

the company over the coming years.

Finally, Goldcorp is one of the worlds lowest cost

and fastest growing multi-million-ounce gold producers.

The company has a strong and liquid balance sheet and

does not hedge its gold production.

Strategy for Growth

Low-cost gold producer

High-quality reserves in the Americas

Gold production 100% unhedged

Strong focus on organic growth

Experienced operating and project development

teams

2010 production estimated at 2.6 million ounces

at $350.00 per ounce.

Senior Executives

Charles Jeannes, President and CEO

Lindsay Hall, Executive VP & CFO

Steve Reid, Executive VP & COO

Directors

Ian Telfer

Charles Jeannes

John Bell

Larry Bell

Beverley Briscoe

Peter Dey

Douglas Holtby

Randy Reifel

Dan Rovig

Kenneth Williamson

Head Office

Park Place, 666 Burrard Street, Suite 3400

Vancouver, BC, Canada V6C 2X8

Tel.: (604) 696-3000; Fax: (604) 696-3001

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Goldcorps Latest Results

According to Goldcorp, its gold production in the second

quarter of 2010 grew to 609,500 ounces at a total cash cost

of $363.00 per ounce. This compares to production of

582,400 ounces in the second quarter of 2009.

Provided by Stockwatch, www.stockwatch.com

Copyright 2010, Canjex Publishing Ltd. All rights reserved.

These gold sales generated total first-quarter

revenues of $844.3 million, representing a 34% increase

as compared to the same quarter in 2009.

Goldcorps net earnings attributable to shareholders

were $828.3 million, or $1.13 per share, as compared to a

loss of $231.6 million, or ($0.32) per share. Adjusted net

earnings were $198.8 million, compared to $99.2 million.

Operating cash flows were $382.6 million, as

compared to $263.6 million.

GoldcorpA Golden Opportunity

Since the bursting of the tech bubble in March 2000, three

sectors of the stock market managed to post significant

gains up until the middle of 2007: bonds, real estate, and

small-caps. For some reason, however, gold remained

under the radar for most investors.

One of the main reasons for a change in sentiment

toward gold is the falling U.S. dollar. Over the years,gold has moved in the opposite direction from the dollar,

mainly because it was considered the ultimate currency

and the only safe haven when paper currencies have

suffered.

The perennial question for any gold investor is whether

to buy bullion or gold stocks. We are in favor of gold

stocks, because other commodity options come with

strings attached. For example, retail mark-ups on gold

coins and bars are hardly ever fair, while exchange-

traded bullion, even in rising markets, doesnt appreciate

in price as fast as gold stocks do.

While generally favoring gold stocks, we view Goldcorp

in particular as a Strong Buy , because we see this stock

bringing value to your portfolio for years to come. Wellgo even so far as to say that this stock is the only one you

will need to own for the next decade!

Without a doubt, for those investors looking to hedge

their portfolios with gold exposure, Goldcorp deserves

to be at the top of the list.

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...we see this stock bringing value to your

portfolio for years to come.
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a golden opportunity for stock market investors

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