by Curtis Hesler, editor Professional Timing Service
In looking over my work for the last couple of months, I am forced to
conclude that the best asset to own right now is gold. We have suffered
through a long, drawn out correction, but support levels have held up.
I
am looking forward to higher prices through the end of the year and
beyond; the worst is behind us. Meanwhile, the mining stocks are as
cheap as you will likely see them ever again.
That does not mean there will be no more corrections, but I would be
surprised if we encounter another adjustment this deep or extended.
The
ride from here should be more exciting with prices gradually
accelerating into an exponential rise, culminating with the ultimate
high in the gold bull. The time frame on that high is several years out,
so don't panic about missing that top.
There will be some headwinds from $1,600 to $1,700; but as time goes on, prices will strengthen.
Longer term, I expect to see gold approach the $5,000 level at the top,
but $2,000 is not out of the question yet this year. We could well see
$2,500 within the next 12 months.
Not since the beginning of the
gold bull have we seen the monthly slow stochastic on the popular gold
mining averages as oversold as now.
Any way you slice it, gold
stocks are historically cheap compared to gold, and this is a rare
opportunity if you have new investment dollars to commit.
During
the next bull phase in gold, I fully expect the miners will outperform
the metals (both gold and silver) handily. Bottom line, this is a good
place to buy mining stocks, even if we were in a bear market.
In assessing our recommended list,
Goldcorp (
GG)
comes bubbling to the top. They have been having some difficulties, but
this perhaps gives us an advantage during the overall price weakness of
late.
They announced that 2012 production would fall short of
original estimates due to ongoing operational struggles at its two
biggest mines - Red Lake mine in Ontario and the Penasquito mine in
Mexico.
In the case of Red Lake, it is a safety problem. They
are dealing with some rock anomalies that require an extra effort to
ensure the safety of their miners. This is causing a delay in production
and extra expense, but it is the responsible thing to do.
The
gold is still there, however, and they will be digging it up and selling
it at higher prices than we have today, so the delay might not be all
that bad. Who can argue with the safety issue? This is a responsible
company.
The Penasquito problem is due to delayed production, in
turn due to a lack of water. This, too, is being addressed, and the
effect is to forestall production of reserves that are still there. They
will be extracted and sold at better prices than we have today.
If you are of a mind to buy Goldcorp, buy into weakness; I think Goldcorp is an excellent buy below $36 per share.