Since gold is now back up to its high of $570 per ounce, clearly demonstrating its bull market, I thought it appropriate to address a couple of ways one can take advantage of this opportunity.
My personal preference is to acquire, first and foremost, a personal holding of gold bullion. This can be in the form of American Eagles, a coin minted by the U.S. government, Krugerrands, minted by South Afrrica, Helveticas, minted by Austria, Canadian Maple Leafs issued by Canada or a variety of pre-1933 gold coins issued by various European countries. All of these represent gold in hand and as such, is the safest form of savings.
After this is done, one can venture into the stock market where shares are available from companies who mine gold. Shares in gold stocks offer a leveraged opportunity because as the price of gold goes up the company's profitability increases exponentially.
I have included several links below for examples of solid companies that bear consideration for those interested in this play.
Bema Gold Corporation is an intermediate gold producer with mines and development projects in Russia, Chile and South Africa. Bema operates the Julietta Mine in Russia, the Petrex Mines in South Africa, and is 50% owner of the Refugio Mine in Chile, which recommenced commercial production during the fourth quarter of 2005. By developing its flag ship asset, Kupol in Russia, and continuing to advance the Cerro Casale Project in Chile, Bema is one of the world's fastest growing gold producers with potential production of one million ounces of gold annually by 2009.
Coeur d'Alene Mines Corporation is the world's largest primary silver producer and a growing, low-cost gold producer. In 2004, the Company produced 14.1 million ounces of silver and 129,000 ounces of gold.
Goldcorp is the world's lowest cost and fastest growing multimillion ounce gold producer with operations throughout the Americas and Australia. Goldcorp has agreed to acquire the Canadian assets of Placer Dome (TSX, NYSE: PDG) from Barrick Gold (TSX, NYSE: ABX) upon consummation of Barrick's friendly bid to take-over Placer. This transaction is expected to close April 1, 2006, making Goldcorp the third largest gold producer in North America. With the addition of the Placer assets, Goldcorp's gold production in 2006 is forecast to be approximately 2 million ounces, on an annualized basis, at a cash cost of approximately US$150 per ounce. 2007 gold production is expected to reach almost 2.4 million ounces at less than $175 per ounce
While the text for each of the companies was lifted from their websites and should probably be taken with a grain of salt, below I show their performance since the end of December 2005.
| BGO | BEMA GOLD CORP | 53.36% |
| CDE | COEUR D ALENE MINES CORP | 30.04% | GG | GOLDCORP | 28.26% |
Not a bad return on investment for 3 months.
