If we see higher risk assets further over-valued, do not chase the move, but rather sell into price ...
Dines: The Original Gold Bug
10/03/2003 12:00 am EST
Long known as the original gold bug, Jim Dines has been publishing The Dines Letter for 43 years and his record is not only remarkably long, but remarkably successful. Indeed, he has kept his readers on the right side of the market - for both stocks and metals - for the better part of those four decades. Here's his latest on gold, and his core gold holdings.
"Even the minority who are aware of this major gold bull market might not grasp the magnitude of what we envision. Think of the Internet in the late 1990s, and what we expect for gold could be a multiple of that. To be totally confident we need to wait for confirmatory upside breakouts by gold at $416 and silver at $8, which would clinch for us that this bull market is major in scope. For the investor interested in growth, the next couple of years in golds and silvers should be an adventure well worth the risks.
"We look at it this way: there has been a two-decade bear market in the golds, which wrung out costs to a remarkable degree. That the price of gold has risen 52% since 1999 means that all the extra revenue will drop straight to the bottom line. Further, the long drought caused severe curtailment of exploration expenses and it will be years before a catch up in gold production begins to relive the supply-demand imbalance. With Greenspan gushing paper money into the system, and the President planning trillions of dollars in government deficits that will require additional paper printing, the final bull market peak in gold might be sky high. We can foresee those seeking to escape a plunging paper currency hurling oceans of money at a finite supply of gold – resulting in prices far higher than the masses would even consider rationally possible now.
"Near-term, we would not be surprised by some lateral motion in the form of a healthy consolidation. There have been many such pauses over the last two years, and our best counsel has been to ride them out, because we are not smart enough to jump out and them back in at precisely the right time. If we are right about gold being in a major bull market, the risk of getting out prematurely is greater than the temporary anxiety of a short term consolidation. Therefore, it is not too late to buy golds and silvers, although for the moment we would try to wait for dips."
Although Jim Dines recommends a variety of stocks ranging from long-term growth situations to low priced, high risk trades, he maintains a core blue chip portfolio of 10 precious metals stocks that he recommends for all portfolios. Here are those stocks, all of which are currently rated as buys:
Agnico-Eagle (AEM NYSE)
Barrick Gold (ABX NYSE)
Newmont Mining (NEM NYSE)
AngloGold (AU NYSE)
ASA Ltd. (ASA NYSE)
Placer Dome (PDG NYSE)
Meridian Gold (MDG NYSE)
Gold Fields (GFI NYSE)
Harmony (HMY NYSE)
Anglo American Plc (AAUK NASDAQ)
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