Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

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

6 Critical Money Making Rules