Skousen's Golden Resources

09/18/2002 12:00 am EST

Focus:

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Mark Skousen, PhD, is a professional economist; in fact, the advisor was a former economist with the CIA.  He has an uncommon knack for turning his understanding of economics into valuable investing advice. Since 1980, he has edited Forecasts & Strategies. He currently recommends that all investors hold a small position in gold to balance their overall portfolios.

“We recommend that investors maintain 10% of their portfolios in gold and natural resources. One would expect higher gold prices in sympathy with rising oil prices. Gold stocks and mutual funds have continued to show weakness. We emphasize that gold stocks are inherently volatile. It’s best to buy after a major correction, such as we have seen. Despite recent corrections, I still feel that gold is in the early stages of a major run-up, so I would continue to hold on, given the deficits, the Fed’s easy money policies, and world turmoil.

Barrick Gold (ABX NYSE) is way under $22, its seasonal high. Newmont Mining (NEM NYSE) has done better, but is still down from its high. Unlike Barrick, Newmont does not hedge its gold positions, which means its stock is likely to rise faster when gold prices move back up. You should also buy the Freeport McMoRan gold convertible B (FCX-B NYSE), which will mature of August 1, 2003, at 10% of the gold price. Investors should also now start looking at Freeport McMoRan convertible C (FCX-C NYSE), which also invests in gold, and the Freeport McMoRan convertible D (FCX-D NYSE), which invests in silver. For mutual fund buyers we recommend American Century Global Gold.”

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