You Can Buy Gold at a Discount
Source: Investor's Daily Edge (6/10/09)
"Excellent companies with proven and growing resources are being largely ignored."
Many gold stocks are presently priced as though gold was a mere $500 due to the carnage. Excellent companies with proven and growing resources are being largely ignored. This represents nothing short of an opportunity to buy gold at a discount.
I expect gold to take out $1,000 and touch $1,200 per ounce this year. $1,200 is "only" a 26% increase from the current price. That's certainly attractive but nowhere near where the price is ultimately headed. Few have any idea how $1,200 gold will play out in the small cap resource stocks.
There is presently a huge disparity between the gold price and gold stocks. A gold price well north of $1,000 will bring so much attention to the sector that gold shares will, once again, show leverage to the price of gold. This is an opportunity you can count on.
You would be hard pressed to find another market sector that received anywhere near the damage of small cap resource stocks. The larger stocks have rebounded nicely since that time frame but they are just getting warmed up. Practically no one yet has any interest in the smaller gold exploration or development companies.
The resource market is set to change. Company fundamentals, higher gold prices and a return of speculative money to the markets will bring gold-related companies back into focus. The downside risk is much better protected on all of these stocks that have been mindlessly trashed. The upside is better than ever.