06/17/2005 12:00 am EST
The trio of advisors featured here truly excel in their areas of expertise. John Murphy is a technician par excellence, while Adrian Day and Eric Roseman both have industry-leading reputations within the world of natural resources. Here are their views on precious metals. (Click on each advisor's photo to read his bio.)
"Gold is starting to gain upside traction against all of the world's key currencies," says John Murphy, head market analyst at StockCharts.com. "One of the hallmarks of a true bull market in gold bullion is its ability to rise against all foreign currencies, not just the dollar. The last time that happened was the 1970s. Gold has broken out to a new record high vs. the euro after having been in sideways trading range since the start of 2002. Gold to yen is now trading at the highest level in ten years. Maybe most impressive of all is the ability of gold to rally in the face of a rising dollar. Some skeptical market observers have taken the view that the rally in gold since 2002 has been a function of the falling dollar and not much else. The fact that gold is now rising against all currencies suggests that view no longer holds true (if it ever did). streetTRACKS Gold ETF (GLD NYSE) has climbed back over its moving average lines and is coming close to challenging its six-month downtrend line. The five-year view shows that bullion recently bounced off a rising trendline extending back to the start of 2002. I continue to believe that this is an opportune time to increase one's exposure to the precious metals sector."
"Though I am not suggesting anyone put over 20% of his portfolio into silver stocks, I do like the white metal and feel patience will be rewarded," says Adrian Day, a leading expert on natural resources, with a deep knowledge of both junior and senior miners. "The fundamentals are strong and there is a lack of new supply over the next few years, which should make the metal price sensitive to any increase in demand. Silver Standard (SSRI NASDAQ) has the most leverage to silver as well as a strong balance sheet. The stock is a strong buy under 11. Pan American (PAAS NASDAQ) has production risk, but is highly liquid and is an institutional favorite. The stock is well priced as a multiple of NAV and there is little risk in the company and strong growth ahead. The stock is a buy up to $14. Silver Wheaton (CA:SLW Toronto) is not a producer, as such, but generates its revenue from producing mines. The stock has a combination of low risk and positive upside and is undervalued (on an NAV basis) relative to others."
"We're seeing some very impressive price action for gold stocks," notes Eric Roseman, editor of The Commodity Trend Alert . "With the dollar charging ahead versus most foreign currencies, spot gold prices should be below $400 an ounce. Incredibly, gold and silver have remained relatively strong. Part of the bullish price action is demand. Gold jewelry demand in India surged 72% in the first quarter as prices hit a six-month low. Any short-term decline in gold is rapidly absorbed by the market, namely from India and China. That is very bullish market action and strongly supports the trend. We're still buying Goldcorp ( GG NYSE) and Newmont Mining ( NEM NYSE), which are both enjoying a recovery off their April low with GG leading the charge over the last two weeks. Also, Canada's Silver-Wheaton ( CA:SLW Toronto) is the only major silver mining company earning a profit. This stock will fly as spot silver eventually breaks through $7.50 and heads to $10 an ounce over the next 12 months."