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Get Long Gold Stocks

By Matt Badiali, editor, S&A Resource Report
Wednesday, September 21, 2011

I hope you've taken our advice to buy gold stocks. Because the money is coming...
 
Regular Growth Stock Wire readers know the gold stock sector in general is cheap relative to the price of gold. When we've seen this kind of setup in the past, gold stocks have returned double and triple digits in about a year.
 
So seeing gold stocks as cheap as they are right now should be enough to get you interested. But what you might not realize is that big gold mining companies are starting to bring in huge amounts of cash.
 
Take Barrick Gold for example. Barrick is the world's largest mining company. It produces gold from 26 operations on five continents.
 
In the first quarter of 2006, with gold around $550 per ounce, Barrick netted about $114 for every ounce of gold it produced. Its total revenue for the quarter was $1.2 billion.
 
Fast-forward to the first quarter of 2008... The average gold price had risen to $925 per ounce. That was an astounding (at the time) 68% climb. Barrick's profit almost tripled to $295 per ounce of gold it produced. Its total revenue was $1.96 billion.
 
Today, gold is near all-time highs at $1,800 per ounce. That's going to mean even more revenue and even higher profits for Barrick. The latest results show Barrick made $586 per ounce of gold it produced... a 414% increase since 2006. Its latest quarterly revenue was $3.42 billion.
 
Here's a chart that illustrates Barrick's revenue and profit growth over the last seven years. You can see how gold's climb has both accelerating higher...
 
 
 
Other big miners are seeing similar results. Goldcorp's profit per ounce is up 86% over the last three years. Eldorado Gold's profits rose 49% over that period.
 
In short, the cash is rolling in. If gold simply stays north of $1,800, the big numbers will continue to add up. And if gold climbs over $2,000, the profits will get ridiculous.
 
Pretty soon, all that money coming in will force these gold stocks higher. Make sure you're onboard.
 
Good investing,
 
Matt Badiali




Further Reading:

Right now, you have the opportunity to buy into gold mining companies at May 2011 prices… before the price of gold spiked and oil crashed. Take advantage of it. DailyWealth's Steve Sjuggerud tells you two ways to get started in the sector here: Gold Up, Oil Down... It's Time to Buy Gold Stocks.
 
Another big opportunity is shaping up in the energy industry... Matt calls it the "unconventional oil revolution." Find out which "picks and shovels" providers will benefit the most here: The New American Oil Boom Starts Now.

In The Daily Crux
Market Notes
Gold miner fund GLD looks set to break out... sits less than 2% below fresh all-time highs.
 
China Unicom and China Telecom hit all-time highs after reporting their latest subscriber numbers.
 
Copper sinks to its lowest level since last November.
 
Casino stock Las Vegas Sands breaks out to a six-month high.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1202.09 -0.2% +5.2%
Oil (USO) 33.43 +0.4% +0.6%
Gold (GLD) 175.78 +1.4% +40.8%
Silver (SLV) 38.83 +0.5% +91.4%
U.S. Dollar 77.09 +0.6% -5.2%
Euro 1.37 +0.0% +4.8%
Volatility (^VIX) 32.86 +0.4% +52.8%
Gold Stocks (^HUI) 622.44 +3.1% +24.0%
10-Year Yield 1.95 +0.5% -28.0%

World ETFs
Symbol Price
Change
52-Wk
USA (SPY) 120.17 -0.1% +7.3%
Canada (EWC) 28.08 -0.1% +2.8%
S. Africa (EZA) 63.48 -1.2% +1.8%
S. Korea (EWY) 51.83 +0.5% +0.0%
Taiwan (EWT) 12.87 -0.6% -1.3%
Japan (EWJ) 9.58 -0.1% -1.9%
Singapore (EWS) 11.93 -0.1% -4.8%
Israel (ISL) 14.26 +1.1% -8.4%
Lat.America (ILF) 43.02 -1.0% -9.4%
Russia (TRF) 17.10 +1.4% -10.2%
China (FXI) 35.22 -0.5% -15.4%
India (IFN) 25.76 +0.2% -22.7%

Sector ETFs
Symbol Price
Change
52-Wk
Internet (HHH) 80.53 -2.2% +29.0%
Retail (PMR) 20.29 -1.6% +19.0%
Oil Service (OIH) 125.32 -1.4% +16.3%
Big Tech (QQQQ) 56.36 -0.4% +16.3%
Utilities (XLU) 34.28 +1.5% +14.4%
Consumer Svcs (IYC) 68.69 -0.5% +14.3%
Health Care (IYH) 68.29 +0.8% +10.0%
Big Pharma (PPH) 66.80 +0.9% +7.5%
Semis (PSI) 13.36 -2.1% +5.7%
Basic Mat (IYM) 66.69 -1.6% +5.4%
Media (PBS) 12.84 -1.7% +5.3%
Real Estate (IYR) 55.41 -0.3% +4.2%
Industrials (IYJ) 59.20 -0.9% +4.0%
Telecom (IYZ) 21.67 -0.3% +2.7%
Transportation (IYT) 81.68 -1.3% +2.0%
Defense (PPA) 17.13 -0.5% +0.9%
Biotech (PBE) 19.38 -0.1% +0.8%
Software (PSJ) 22.56 -1.2% -0.3%
Water (PHO) 16.01 -1.7% -0.9%
Construction (PKB) 10.68 -1.9% -3.7%
Insurance (PIC) 13.78 -1.6% -9.2%
Financials (IYF) 47.19 -0.3% -11.1%
Nanotech (PXN) 6.80 +0.6% -22.5%
Alt. Energy (PBW) 6.33 -3.2% -31.5%

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