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Cramer's 'Mad Money' Recap: Going for the Gold

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

When market players are at odds with the market, they should often bet with it, Jim Cramer told viewers of his "Mad Money" TV show Friday.

That's because the short-term fund managers that make up the market don't care about what other people think, he said, adding that, "What they believe usually becomes true."

Investors are "defaulting" to gold because they are looking at the declining dollar and the long bond rally "as a sign that things are getting very bad in the economy," Cramer said. "They want to sell all of their stocks and buy gold."

The right time to buy gold is now, said Cramer, because these stocks are primed to go up. His favorite gold pick is Yamana Gold (AUY Quote).

As "yellow metal will always be the refuge when times are tough," the fund managers are running for the gold, he said.

Cramer believes this to be "wrong" and said he reads the dollar decline and the rally in the long bonds as a good thing.

"I believe it means the end of inflation and the beginning of the Fed rate-cutting cycle," he said. "But the market doesn't agree."

The gold stocks are working, so Cramer said people must join in. "Gold should be going lower based on the facts, but it will go higher because of what Wall Street believes," he said.

In this group, Yamana has been "on a roll," he said. Yamana hit its 52-week high even though gold hasn't, and should continue to go up. Cramer believes that it is better than both Barrick Gold (ABX Quote) and Newmont Mining (NEM Quote), as both of these stocks are the "old men" of the gold stocks and have "limited growth."

Also, he believes that Yamana is better than Compania de Minas (BVN Quote), as the latter is not a pure play. In addition, Yamana, which does most of its mining in Brazil, it is less risky politically than BVN, which mines in Peru.

"Gold's going high, and Yamana's the way to play it," Cramer said.

Taking Stock of the Year

Running a month ahead of schedule is the "only way to make money" in the market, said Cramer.

On Jan. 3, Cramer predicted that Allegheny Technologies (ATI Quote) would be one of the best-performing stocks of 2006, and he was right.

The stock started the year off trading at $36.05 and now it is at $88.06, an increase of 144%, he said. Allegheny Technologies wasn't just one of the best-performing stocks, it turned out to be the single best performing stock of the S&P 500.

While Cramer believes that people who have made money off this stock should take some gains, the fact that the stock has been going up is not a reason to sell it all, but "it's often a cue to buy," Cramer said.

Allegheny Tech is still worth owning because it makes stainless steel and titanium, markets which are still in bull-mode, he said. And, as its products are used in the aerospace sector, when Boeing (BA Quote) goes up, Allegheny should go up even more, Cramer said.

Moreover, Allegheny is not overvalued, and the titanium and stainless-steel markets are much less cyclical than the normal steel market, he said.

"You can go up 144%, just as with Allegheny Technologies, and still be undervalued," Cramer said. "Don't be scared -- be a buyer!"

Game Plan Ahead

In his next segment, Cramer not only gave next week's game plan, but also next month's.

Typically Cramer said he doesn't like relying on previous years to make present stock decisions because stocks tend to act differently from year to year. However, Cramer believes that he has found an exception.

From 1985 to 2005, the S&P index was up double digits going into December, and this trend has been growing stronger in the last three years, he said.

Therefore, "despite all the worry and fret" that people saw in the market today, Cramer urged them to take a look at the top five performers of index.

These stocks include Allegheny Tech, Nvidia (NVDA Quote), OfficeMax (OMX Quote), Big Lots (BIG Quote) and Nucor (NUE Quote).

Along with Allegheny Tech, Cramer said he believes that Nvidia, which is up 94% over the last year, is a buy. The company, which makes graphic processors for video-game consoles, has a trend relating to better video-game graphics that is "worth playing," he said.

OfficeMax is also a stock worth considering, Cramer said. Although it "suffers" because of Staples (SPLS Quote), OfficeMax is worth buying as a momentum trade.

On the other hand, Cramer said doesn't believe that Big Lots is as good a stock to get into as he is a little concerned about the low-end retailers. He said he'd rather see people in OfficeMax.

Also, even though Nucor is up 80% over the year, Cramer said he believes that Allegheny Tech is the better stock to own in this sector.

He advised people to put half their positions in Allegheny Tech, Nvidia and OfficeMax, and then wait for Friday's job numbers to come out.

If the numbers are down, he told his viewers to buy the second half of their position at a cheaper price and hold the stocks until at least the end of the month.

About North Face

While talking about a recent Morgan Stanley research report which discussed a possible bubble in apparel stocks, Cramer welcomed VF Corp's (VFC Quote) Chairman and CEO Mackey McDonald to the show and asked him to comment on the report.

"If you're marketing stronger brands with great new innovative products then there's a lot more room for improvement. And I'd put VF Corp into that category," McDonald said.

When Cramer asked who is buying the company's North Face brand, McDonald said it has a "broad" consumer acceptance and demand.

"People with outdoor interest are very interested in North Face," the CEO went on to say. "We think we will continue to gain against all of our competitors in this outdoor area, but do it in a subtle way."

When Cramer commented that it makes sense for VF Corp to buy Timberland (TBL Quote), McDonald said that while he doesn't comment on any specific acquisitions, the company will continue to look at the market and all its possibilities.

Cramer said VF Corp is two thumbs way up.

Lightning Round

Cramer was bullish on Devon Energy (DVN Quote), Sears (SHLD Quote), USG (USG Quote), Cisco (CSCO Quote), PetSmart (PETM Quote), Goldman Sachs (GS Quote), Coldwater Creek (CWTR Quote), Allegheny Technologies, Nucor (NUE Quote), Dynegy (DYN Quote), Level 3 Communications (LVLT Quote), CSX (CSX Quote), J.C. Penney (JCP Quote) and Johnson & Johnson (JNJ Quote).

Cramer was bearish on Swift Energy (SFY Quote), Abercrombie & Fitch (ANF Quote), JDS Uniphase (JDSU Quote), China Mobile (CHL Quote), TiVo (TIVO Quote), Select Comfort (SCSS Quote), Tempur Pedic (TPX Quote), Sealy (ZZ Quote), PetMed Express (PETS Quote), TD Ameritrade (AMTD Quote), Schnitzer Steel (SCHN Quote), Burlington Northern (BNI Quote) and Abbott Laboratories (ABT Quote).

For more of Cramer's insights during the Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting