Is It Safe? Goldcorp Could Beat Gold

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Gold prices are expected to remain stagnant for the next year as investors mull the direction of the economy. But Goldcorp(GG) shares could rise 18%.

Consumer confidence surged in April as more Americans expressed optimism about the job market, the Conference Board said. Still, home prices and business activity have continued to shrink, and unemployment is expected to rise in the world's richest nations, according to the Organization for Economic Cooperation and Development. The swine flu pandemic has further complicated the matter, dragging gold prices to less than $900 an ounce.

The conflicting data has made it hard for gold investors to predict whether prices will rise. Gold, which hit a record $1,032.70 last year, is viewed as a safe haven in times of economic uncertainty and market volatility. Gold futures for April 2010 are trading for only $7 more than contracts for this month.

Perhaps these investors should consider buying shares of mining firm Goldcorp. The company's stock closed at $27.78 Tuesday and could rise to $33 in the next 12 months, according to TheStreet.com Ratings. The "buy"-rated company's ample cash and aggressive mining plans could help it increase profits even if gold prices slip.

Goldcorp expects to mine 3.5 million ounces of gold a year by 2013, 52% more than last year. The company aims to generate $1 billion of cash a year during that time, which would easily fund its exploration plans. The firm has some of the industry's lowest extraction costs, producing 2.32 million ounces of gold for $305 an ounce last year.