1. Randgold Resources(GOLD - Get Report), GOLD, a large cap gold miner.
: I think if you're going to go with the number one you are going to go with something that's solid and not more speculative than gold itself....Randgold... is the strongest stock out there right now. If you look at the targets on it, it's trading at about $81. First buy range is probably about $70-$75 It could easily get back to the $60 level. GOLD has a habit of retracing very fast and very hard when it does. You want to pick at it as it comes back. At $70-$75 range there's some good support there. Probably should bounce from there at least and then you can evaluate how it comes into that in terms of how the volume expands.
What is your short and long term outlook for gold prices
: I think $2,000 is a good target, potentially it could be $3,000. Usually the way these things end is you get some sort of hyperbolic move and if you get that who knows what the target is.... Long term you got to be bullish. Short term you need to be a little careful.
How do you trade
: We have a core position [in gold] that we trade around, but mostly we try to hold the gold stocks and we hedge them with GDX (
Market Vectors Gold Miners
) and GDXJ (
Market Vectors Juniors
)....We use [them] to trade back and forth to try to capture some extra profits...while the market consolidates.
What is your core position versus what you trade around
: The core percentage is 80% and we only trade around about 20%. We mostly use the GDX as our trading vehicle. The core holdings are probably about 14% of our overall investment portfolio right now. That's heavily shorted right now about 70% on GDX.
Why not just go long with one of the mining ETFs instead of picking stocks
: The ETF is broadly based and you have to look at what's stocks are inside that in terms of largest holdings. The GDX is mostly the larger stocks like maybe
(NEM - Get Report)
...it's just a nice vehicle because of the liquidity. When you get a nice popup in gold...and the miners get pulled up it's an easy way to short against your long holdings and you simply play the spread that takes place. The GDX is not a long term core short position anything but that. What is it is an attempt to simply use the ebb and flow of the market to capture some gains.
Written by Alix Steel in New York