01/09/2015 7:00 am EST
For his Top Pick for 2015, market timing expert Alan Newman picks a gold miner that he cautions is a speculative play. For those comfortable with the risk, the editor of CrossCurrents offers this assessment.
The shares of IAMGOLD Corp. (IAG) have performed dreadfully over the last year, the last two years, and since almost every point back to the summer of 2008. However, we believe IAG has a lot of promise and is worthy of continued modest accumulation.
While the choice of a gold stock might seem strange with respect to bullion’s huge drop from the highs of 2011, we believe a super bull market commenced with the 9/11 terror event.
The world changed that day and we are now living with additional threats to fiat currencies as well, for example, the yen, the euro, and the ruble, all down significantly in the last two years.
While the US dollar still functions as a reserve currency, our country is far too leveraged in too many ways to consider the dollar to be safe. Simply put, we believe the age of paper assets is in the process of ending.
IAG shares are currently selling at $2.30 and have traded as high as $22 when gold bullion was making its big run to the August 2011 high of $1920 per ounce.
Given our eventual targets would take gold over $3000 per ounce, IAG certainly seems to be worth a small position.
Again, we would stress this is a risky and speculative play accompanied by excellent potential in the reward column. IAG currently has cash equivalent to $0.49 per share and book value is $7.30 per share.