2A Golden Opportunity for Stock Market InvestorsIn addition, gold plays a key role in a numberof rapidly developing technologies. Billions of gold-coated electrical connectors are used in the computer,telecommunications, and home-appliance industries.Weather and communications satellites dependon gold-plated shields and reflective apparatuses forprotection from solar heat and electrical interferencewhile in space. Advanced laser technology used inindustrial and medical applications also employs interiorgold coatings to concentrate its powerful light energy.The automotive industry depends on gold-coatedcontacts for sensors that activate automotive air-bagsystems, while modern medicine relies on gold to monitorheart function or functions of the chemical procedures fordiagnosis and treatment of cancer, viral and bacterialdiseases, and allergies. It’s no wonder then that gold iscritical to the global economy.The Gold Market TodayAn investor is fortunate to experience one or two bullmarkets in his or her lifetime. Some bull markets lastfor long periods of time and many investors often enjoythe benefits of such rewarding periods, especially thosewho recognize the bull market early on and get on boardbefore the stampede follows.However, bull markets in their infancy are seldomimmediately recognized. Usually, both investors andmarket observers are too busy focusing on the falloutfrom the previous bearish cycle to recognize the onset ofthe next bullish market. As economic data start pouringin, most investors are still deciphering what came first—the chicken or the egg.Considering a number of economic indicators, anew bull market has been definitely happening in thecommodities markets, especially in gold and silver since2002–2003. This new bull market seems very similar tothe last bull market for gold, which began in the 1970s.At the time, both physical gold and gold stocks wererallying, as they are today.After the dollar was taken off the Bretton Woodssystem, gold and silver prices became deregulated. Asa result, investors turned their focus to owning preciousmetals.During the first phase of the bull market in the early1970s, the only buyers of gold were investors seekingrefuge from the weak dollar, along with some industryinsiders who continuously kept gold on their radar.This phase lasted until about the mid-1970s, at whichpoint both the stock and precious metals markets wentthrough a correction. The second phase started in 1976,when bigger players came into the game, such as highnet-worth individuals and financial institutions.During that second bullish period, monetaryconditions were shaping up to be to gold bullion’sadvantage on many levels. Arthur Burns, the formerchairman of the Federal Reserve Board, tried to controlinterest rates through credit.Burns strongly believed that the government shouldhave the power to control the economy regardless ofthe external mechanisms that also must be factored in.He viewed monetary policies from a credit perspective,thinking that he could control the economy throughcredit markets. In addition, Burns thought that unionsand monopoly pricings of large corporations causedinflation, referring to price spikes in oil and food prices.The problem was that Burns viewed inflationaryspikes as one-time events that were not intertwined witha number of other factors appearing within a businesscycle, and he never attempted to deal with them throughthe policies of the central bank.Only when the new chairman, Paul Volcker, tookover the reins, did inflation and interest rates become realtools of real monetary policy. Volcker was also the onewho put an end to the great bull market in commodities,when he recognized that too much money and too muchcredit were eating away at the very foundation of the U.S.financial system.Dear Reader: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for priceappreciation can only be achieved through proper and rigorous research and analysis. The opinions in this e-newsletterare just that, opinions of the authors. We are 100% independent in that we are not affiliated with any bank or brokeragehouse. Information contained herein, while believed to be correct, is not guaranteed as accurate. Warning: Investingoften involves high risks and you can lose a lot of money. Please do not invest with money you cannot afford to lose.Nothing herein should be considered personalized investment advice. Before you make any investment, check withyour investment professional (advisor). We urge our readers to review the financial statements and prospectus ofany company they are interested in. We are not responsible for any damages or losses arising from the use of anyinformation herein. We are a publishing company offering the opinions and commentary of our editors and analysts.Past performance is not a guarantee of future results.
3A Golden Opportunity for Stock Market InvestorsHowever, before Volcker took over, a number ofthings shaped the great bull market for commoditiesin the 1970s. Burns’ monetary and fiscal policies wereprimary drivers of the gold bull market. However,supply and demand fundamentals were also out ofshape, therefore helping precious metals prices.History is repeating itself today. America is againhaving issues addressing its monetary policy, while mosteconomists view the dollar as being weak and likely toget even weaker as a result of spiraling deficits and aslowing economy. In that sense, the price of gold is veryoften a result of psychological shifts.For some people, gold is a material used for makingjewelry. For others, it is the world’s original currency,and thus the only real protection against inflationarypressures, financial bubbles, and even global economicmeltdowns. The most fervent gold bugs run to it everytime the American economy teeters on its path torecovery or when foreign investors threaten to call in theUnited States’ massive loans.For the first time since the 1980s, the world’seconomies (particularly Western economies) are growingand faltering almost in tune with one another. There areindications that this positive correlation will continuewell into the next decade. Generally, this spells good newsfor producers of basic commodities, such as agriculture,copper, and oil.Investors should remember that gold and silverwere the world’s first true money, and when papermoney starts depreciating, the precious metals tend toresume their historical role as currency. Freely floatingcurrencies are by default unstable, and since there areno reassurances in tangible assets, paper money isinherently prone to losing its value.In addition, both the world’s gold and silver suppliesare running out. So, those companies with large resourcesof both mined and in-ground precious metals will bethe big winners in the commodities bull market that isshaping up before us.The time seems to be right for picking preciousmetal stocks, as the renewed momentum of the bullishreign in commodities develops. Some observers go sofar as to claim that we could expect another 10 years of acommodity price boom.The simple truth is that gold is a trustworthy andrealistic investment instrument that should be in everyinvestor’s portfolio. Gold’s traditional role as a safehaven has made it the underdog in the world markets—an investment that people turn to only when the stock orbond markets aren’t performing well, or when monetarypolicies are running amok. It is high time to move goldfrom its apocalyptic pedestal, and accept it as a credibleand realistic investment vehicle.What do you want to look for in a gold mining stock?Look for companies with a strong management team, lotsof cash in the bank, growing production, and low cashcosts. With gold bullion currently trading near $1,350 perounce, the stock market still offers some good options forgold investments.We’ve found a profitable, fundamentally rock-solidgold mining stock with growing revenues, and a strongacquisition strategy; it’s one that pays a monthly dividend(2.1% annually). It’s also the gold mining company thatinvestment portfolio managers turn to.It’s the fastest-growing, lowest-cost senior goldproducer, with operations and development projects inpolitically stable regions throughout the Americas. And,the company’s strong project pipeline is positioned todrive long-term, sustainable growth.This company firmly believes in its product, and seesno need to hedge against the price of gold depreciating.It is growing internally, and by acquisition. Whichcompelling gold mining stock do we think you need tohave in your portfolio for the next 10 years?The company we are talking about is Goldcorp Inc.(NYSE/GG).About GoldcorpGoldcorp is one of the world’sfastest growing gold producers,with operations and developmentprojects located in safejurisdictions throughout theAmericas. As of December 31, 2012,Goldcorp had proven and probablegold reserves of 67.08 million ounces,along with major assets of silver and copper.3 Protectingyour investment, Goldcorp remains focused on five keyattributes: growth; low cash costs; maintaining a strongbalance sheet; operating in regions with low political risk;and conducting business in a responsible manner.Goldcorp’s operating assets include five mines inCanada and the U.S., three mines in Mexico, and fourin Central and South America. Goldcorp also has a solidpipeline of projects, including the Cerro Negro project inArgentina, the Éléonore gold project in Quebec, Canada,the Cochenour project in Ontario, Canada, and the ElMorro project (70% interest) in Chile. These valuableassets, along with several others, allow for significantgrowth in production for years to come.4Buy
4A Golden Opportunity for Stock Market InvestorsRatings IndexSpeculative Buy: A buy recommendation for a stock with high investment risk.Enthusiatic Hold: Keep holding your position in this stock; company and stock prospects look great; maintain amoving stop-loss limit.Hold: Keep holding this stock; maintain a moving stop-loss limit.Sell: A recommendation to sell or take profits from a stock.Radar Screen: A recommendation to begin watching the trading action in a particular stock.NYSE: New York Stock Exchange AMEX: American Stock ExchangeNASDAQ: NASDAQ Stock Market OTCBB: Over-The-Counter Bulletin BoardNASDAQ/SC: NASDAQ Small Cap Market TSX: Toronto Stock ExchangeTSXV: Toronto Stock Exchange Venture ExchangeThey have the track record to prove it. From2001 to 2011, an investment in Goldcorp would haveoutperformed the peer companies in the gold miningindustry, as well as physical gold.5Goldcorp’s track record of sustained growth can beattributed to its:• Industry-leading gold production growth;• Low production costs;• Focus on areas of the world with lowpolitical risk;• Conservatively managed strong balance sheetto fund growth internally; and• Policy of investing with discipline; returningvalue to shareholders through an activedividend policy.Goldcorp’s superior pipeline has positioned it forcontinued strong growth in the years ahead. By 2016, thecompany expects annual gold production to reach 4.2million ounces, an increase of 70% over 2011.Goldcorp’s balance sheet is among the strongest inthe sector: the company ended the first quarter of 2013with cash, cash equivalents, and marketable securities ofapproximately $2.0 billion.6Over time, Goldcorp investors have benefited fromgrowth in key financial measures, including: cash flowand earnings per share. Successful exploration andportfolio management has also resulted in steady growthin the number of gold reserves represented by each of thecompany’s common shares.Strategy for Growth• Low-cost gold producer• High-quality reserves in the Americas• Gold production 100% unhedged• Strong focus on organic growth• Experienced operating and project development teams• 2013 production estimated between 2.55 and 2.8 million ouncesSenior Executives• Charles Jeannes, President and Chief Executive Officer• Lindsay Hall, Executive Vice President & Chief Financial Officer• George R. Burns, Executive Vice President & Chief Operating OfficerDirectors• Ian Telfer• Charles Jeannes• John Bell• Larry Bell• Beverley Briscoe• Peter Dey• Douglas Holtby• Randy Reifel• Dan Rovig• Kenneth Williamson• Blanca Treviño de VegaHead OfficePark Place, 666 Burrard Street, Suite 3400Vancouver, BC, Canada V6C2X8Tel.: (604) 696-3000; Fax: (604) 696-3001
5A Golden Opportunity for Stock Market InvestorsGoldcorp’s Latest Results• Gold sales in the first quarter of 2013 consisted of 595,100 ounces on production of 614,600 ounces.• Total revenues were $1.02 billion, compared to $1.21 billion in the first quarter last year.• Silver production totaled 5.6 million ounces, compared to silver production of 6.6 million ounces in the prior year’s first quarter.• Operating costs were $1,135 per ounce of gold on an all-in sustaining cost basis, $565.00 per ounce on a by-product basis and $710.00 on a co-product basis.• Net earnings were $309 million compared to $479 million in the first quarter of 2012.• The average realized gold price for the quarter was $1,622 per ounce of gold sold during the quarter. This compared to $1,707 per ounce during the year-ago quarter.7Goldcorp—a Golden OpportunityPaper money has never maintained its original value—and it never will. Throughout history, paper currencieshave faced inflationary headwinds, making themworthless. For example, the purchasing power of theU.S. dollar has declined by 90% since 1950! The situationis the same for most currencies. When governments comeunder financial pressure, they print money out of thin airto pay for debts.8The U.S. greenback, the go-to currency for globaleconomic stability and growth, is imploding at anunprecedented rate. Since 2008, the Federal Reservehas forced three rounds of quantitative easing on theAmerican public, printing trillions of dollars in an effortto kick-start the economy. The extra dollars pumped intothe U.S. economy are supposed to spur growth. They alsohave the reverse effect, shrinking the buying power ofeach dollar…which is the driving force of inflation. SinceJuly of 2012, the U.S. dollar index has gone down morethan five percent.Where should investors turn? We are in favor ofgold stocks, because other commodity options come withstrings attached. For example, retail mark-ups on goldcoins and bars are out of step, while exchange-tradedbullion, even in rising markets, doesn’t appreciate inprice as fast as gold stocks do.While generally favoring gold stocks, we viewGoldcorp in particular as a Buy, because we believe thisstock will bring long-term value to your portfolio for yearsto come. We’ll go even so far as to say that this stock is theonly one you will need to own for the next decade!For those investors looking to hedge their portfolioswith gold exposure, Goldcorp deserves to be at the topof the list.Sources1. “Gold,” Wikipedia.org, last accessed June 12,2013.2. Ibid.3. “GOLDCORP Corporate Update,” Goldcorpweb site, May 2013, last accessed June 12, 2013;http://www.goldcorp.com/files/Goldcorp_Corporate%20Update_May_v001_o7p7yx.pdf.4. “Unrivalled Assets; Mines & Projects,”Goldcorp web site, last accessed June 12, 2013;http://www.goldcorp.com/English/Unrivalled-Assets/Mines-and-Projects/default.aspx.5. “Why Goldcorp?; Delivering Results,”Goldcorp web site, last accessed June 12,2013; http://www.goldcorp.com/English/Why-Goldcorp/Delivering-Results/default.aspx.6. “Goldcorp Reports 2013 First Quarter Results;Annual Guidance Reconfirmed,” Goldcorppress release, May 2, 2013, on the Goldcorpweb site, http://www.goldcorp.com/English/Investor-Resources/News/News-Details/2013/Goldcorp-Reports-2013-First-Quarter-Results-Annual-Guidance-Reconfirmed/default.aspx,last accessed June 12, 2013.7. Ibid.8. Radomski, P., “Currencies Don’t Make GoldLook Good,” Kitco Commentary, July 6, 2012,last accessed June 12, 2013; http://www.kitco.com/ind/Radomski/20120705.html.Chart courtesy of StockCharts.com