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Originally Posted by Dupree00
If you dont mind my asking. What do you buy to represent GOLD? Right now I have a Fidelity Gold Fund but thinking of getting something else to compliment it.
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I like US Global Investors Funds. They have their Precious Minerals Fund(UNWPX), which has returned 43.5% per annum for the 6 yrs ending 12/31/07, and their Gold Fund(USERX), which has returned 37% per annum for the same period. Also, these funds pay big distributions every year in December, so pretty good for income.
For stocks, I like Yamana Gold Co.(AUY) and Goldcorp(GG). These are pure gold plays, and I think they are very well-priced at the moment, but starting to move back up again. GG is more of a blue chip gold stock. Yamana is a smaller producer. The PE on GG is 56(ttm) which may seem very high, but it is really based on selling gold at an average price of about 700 which they were getting last year. If current gold prices hold up in the 850 range for 2008, the earnings will soar, since their cost of producton is probably close to 500 now, so that is a 75% profit increase. If gold moved to 1000 then the increase becomes more in the 150% range. Compared to oil, these PEs are very high, even after projecting profit increases, but oil is a relative newcomer to the idea of buying it to offset inflation and currency weaknesses. Yamana has a PE of 38(ttm), so there is more upside there. It appears to be heating up again this week, after gold's downward momentum seemed to be checked by new dollar weakness, and support at the 850 level. Imho, these are good stocks to average in on.
One other stock I like is Anglo-American(AAUK). It is more of a lower leverage play, since it is a conglomerate that has its' fingers in a lot of pies. But it does have gold, platinum, diamonds, and other precious metal interests, and benefits nicely from increases in these areas, while not being as hard hit if there is a rollback in price of gold. The recent gold weakness didn't affect this stock much at all.
I also own some bullion, but I would have to look it up to tell you which one.