If Oil falls, then Gold will rise
Posted June 13th, 2008 by Steve Reeves
Think what you may, but the Masters believe oil prices are headed down. Ever since crude oil passed through $90, gold started to descend from $1,035. Today gold is at $868 per ounce, time to revisit the gold stocks, let's go.
Good article out today at BullionVault.com and they are thinking what we are thinking.
We have not seen any significant affect on the Gold Price from the oil market since the price of crude passed through $90 and gold started to descend from $1,035.
Will oil start pulling on Gold from now on? Many analysts feel the oil price is in a bubble, so the same that happened to the housing market could happen to oil. They believe that's why gold hasn't reacted more directly.
Wouldn't it be nice if the oil "bubble" burst, in other words. But wouldn't that be unrealistic given the above supply-demand information?
More to the point, the oil price is now holding at triple-digit levels for a protracted period. If it persists further at this level – or even higher – the concept of oil being in a bubble evaporates and it becomes a structural cost adjustment in our lives.
Once this happens, the Gold Market will then readjust accordingly.
Yamana Gold Inc. (USA) (Public, NYSE:AUY), Kinross Gold Corporation (USA) (Public, NYSE:KGC), Coeur d'Alene Mines Corporation (Public, NYSE:CDE)., Royal Gold, Inc. (NASDAQ:RGLD), and even the Godfather of mining, Rio Tinto (NYSE:RTP). It's time to revisit those stocks. A while back we wrote: Forget Gold, Invest in Silver, a good time to review those stocks.
Even if the U.S. dollar outpaces gold, the companies that profit from gold are trading at a weakness thanks to gold being knocked down so hard. Gold was first used to back the US dollar, it has been the basic hedge against inflation.
Think gold is headed down? Then short the hell out of these stocks, the point is, oil is impacting gold, so play it how you see fit.
Here's the list of Gold stocks to play:
| Ticker | Company name | Home Country | $ Price Jan.8 | % Sales current yr. growth | %EPS current yr growth | %EPS next year growth | P/E current year | P/E next yr. |
| AGI-T | Alamos Gold Inc. | CA | 6.57 | 38.5 | 188.9 | 327.9 | 75.4 | 17.6 |
| ACO-N | Amcol Int'l | US | 32.43 | 18.9 | 26.0 | 18.0 | 17.3 | 14.6 |
| BW-N | Brush Engineered Materials | US | 31.81 | 24.3 | 45.2 | 28.8 | 15.5 | 12.1 |
| RIO-N | Cia Vale Do Rio Doce | BR | 31.23 | 62.3 | 60.1 | 12.9 | 13.1 | 11.6 |
| ELD-T | Eldorado Gold | CA | 6.35 | 121.7 | 1383.3 | 111.8 | 42.6 | 20.1 |
| EGU-T | European Goldfields | CA | 6.24 | 45.5 | 560.1 | 26.7 | 31.5 | 24.9 |
| FNX-T | FNX Mining Co. | CA | 25.98 | 76.5 | 49.7 | 98.8 | 21.4 | 10.8 |
| GFI-N | Gold Fields Ltd. | ZA | 16.71 | 19.7 | 33.1 | 34.9 | 22.0 | 16.3 |
| HMY-N | Harmony Gold | ZA | 11.96 | 22.8 | 250.0 | 100.0 | 57.0 | 28.5 |
| KMT-N | Kennametal Inc. | US | 32.60 | 10.8 | 23.1 | 16.1 | 11.6 | 10.0 |
| LIHR-Q | Lihir Gold Ltd. | AU | 33.37 | 37.9 | 47.6 | 104.1 | 55.2 | 27.0 |
| PAA-T | Pan American Silver | CA | 36.99 | 16.7 | 57.5 | 47.3 | 30.7 | 20.9 |
| OPYGY-Q | Polyus Gold | RU | 45.50 | 6.4 | 37.4 | 29.3 | 43.6 | 33.7 |
| RTP-N | Rio Tinto PLC | GB | 394.10 | 14.9 | 5.7 | 40.4 | 16.8 | 12.0 |
| RGLD-Q | Royal Gold Inc. | US | 31.60 | 56.7 | 29.1 | 9.3 | 31.0 | 28.3 |
| SLW-T | Silver Wheaton | CA | 17.11 | 9.1 | 2.3 | 39.0 | 44.8 | 32.3 |
| YRI-T | Yamana Gold Inc | CA | 15.50 | 363.0 | 570.8 | 46.7 | 23.0 | 15.7 |
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Thanks for Reading.
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