July 8, 2011
Goldcorp, Inc. (GG)
Written By Curtis Hesler
“Gold has finally cooled off a little, but my opinion remains unchanged. This is only a pause in the great 20-year precious metals bull market that began in 1999. The dollar is destined to fall much further. In fact, all fiat currencies are losing purchasing power, and gold may be the only way to protect your wealth, regardless of your national allegiance. Consequently, gold is no longer only for the rich.
“Everyone should hold some Goldcorp, Inc. (GG). First quarter results were fabulous. Revenues were up 69% over the first quarter of last year, and operating cash flow increased 108% over the first quarter of 2010. Earnings were up 150% quarter over quarter. This was all on an increase of realized gold prices of 26%, which reflects the leverage we expect as Goldcorp shareholders. As to the future, they have 10 drill rigs in operation, and exploration/ development results have been excellent. Emphasis is being focused on several locations, including Cerro Negro, where Goldcorp announced in February that proven and probable reserves at the property had doubled to 4.3 million ounces. This puts Goldcorp’s total current reserves at 62.3 million ounces of gold and 36.2 million ounces of silver. The future for the best miner on the planet looks bright indeed. Gold bullion has throttled back after hitting all-time highs at $1,550/oz., and those wishing to participate in solid capital gains over the next 24 months would do well to take advantage of this respite to nail down gold positions at advantageous prices. Gold looks like it could hit $1,800 by early next year on its way to $2,500. Goldcorp is an easy double.”
Curtis Hesler, Professional Timing Service, 6/11
Hi,
I have had this stock since it was Wheaton. Ended up at $11.50. Should I keep it or think about getting out. As you can see I am a hold type person but will be retiring next year.
Thanks,
Maureen Demgard
maureend@comcast.net
Maureen:
Good question. Curtis Hesler would clearly say hold. A lot of other advisors, particularly those focused on gold, would also advise you to hold in order to benefit from the ongoing bull market in gold.
Other advisors (probably a smaller number) would tell you that gold and gold stocks are all overvalued here, thanks to fear and end-of-the-world (or at least end-of-fiat currencies) hype.
I can’t tell you who’s right about gold.
I can tell you that, looking at Goldcorp’s chart, it still has pretty strong, if volatile, momentum here. And there’s the monthly dividend which, while not huge, is always a nice companion in retirement. Plus, it could grow.
It’s obviously your call, but, since you already have a very nice profit cushion, if you’d like to keep enjoying the dividend you could hold here and then reconsider selling if the stock develops significant weakness. It has good support at 45 and even stronger support at 40, so those are key levels to watch.
- Chloe Lutts
Editor of Dick Davis Investment Digest and Dividend Digest