It's Not Too Late to Get Into Gold; This Yellow Metal Play Could Soar 60%
The gold bugs are wearing smug smiles these days. As the price of gold soars amid growing investor fears, the SPDR Gold Shares ETF (GLD) - Get Report is up 24.53% year to date, compared to 6.56% for the S&P 500 (SPY) - Get Report .
Conventional wisdom dictates that portfolios contain at least 5% to 10% of gold as protection against any downturns and fluctuations. This year, terrorist attacks, a disintegrating European Union, a circus-like U.S. presidential election, and a host of concerns about the global economy are prompting investors to embrace the yellow metal.
As this aging and volatile bull market enjoys its seventh year, investors will likely experience at least moderate corrections in the global equity markets in the coming months. Here are the best gold stock around.
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The market crash in June in the wake of Britain's vote to leave the European Union is the most salient example of the dangers lurking for investors. To be sure, stocks have regained their lost ground since "Brexit," but another similar shock, such as France voting to leave the EU (aka, "Frexit") could trigger yet another sharp decline. Whenever emotions are strong in global markets, investors turn to gold not only to profit but also as a safe haven.
So: which gold stock? Check out senior gold miner Goldcorp (GG) ; it's the best gold play available. The smart move is to buy Goldcorp ahead of its second-quarter earnings report, which is scheduled for July 27.
Headquartered in Vancouver, Canada, Goldcorp boasts operations and development projects throughout the Americas. Goldcorp enjoys many advantages over its more volatile rivals, including production growth combined with low cash costs, a strong balance sheet, and operating jurisdictions that are politically safe.
The company's existing assets, combined with several expansion projects in the pipeline, lay the groundwork for substantial but cost-effective production growth for the rest of the decade.
Goldcorp currently boasts one of the lowest all-in production costs of any primary gold producer in the world, at around $1,150 per ounce. As of this writing, the price of gold was hovering at $1,316/oz.
The average analyst consensus estimate is that Goldcorp will report second-quarter earnings-per-share (EPS) of 2 cents, compared to 8 cents a year ago. In the third quarter, earnings momentum really takes off as the company's investments in production expansion bear fruit.
Third quarter EPS is expected to hit 12 cents, compared to a loss of 4 cents in the same quarter a year ago. For the full year, EPS is estimated to come in at 40 cents, compared to a loss of 11 cents last year. For fiscal 2017, EPS is expected to reach 63 cents.
Goldcorp shares have enjoyed a huge run, with a year-to-date gain of 58.30%. But it's not too late to get aboard; there's still plenty of upside left. GG stock currently trades at about $18.00. Brokerage firm Jeffries on July 14 raised its 12-month price target for the stock to $20, but that's conservative. The average analyst target price is $28.73, for a gain of nearly 60%.
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John Persinos is an editorial manager and investment analyst at Investing Daily. At the time of publication, the author held no positions in the stocks mentioned.