NEW YORK ( TheStreet) --As the euphoria over Gold continues, so do the number of investment opportunities. Sprott Asset Management announced on Wednesday that it had raised $400 million from the initial public offering of Sprott Physical Gold Trust ( PHYS) at US$10 per unit. Sprott Physical Gold Trust (Canada) and Sprott Physical Gold Trust began trading last Friday on the Toronto Stock Exchange and NYSE Arca, respectively. Analysts expect that the recent emphatic run in gold prices is far from over and continue to hold a bullish view on the price of gold, attributing the optimism to various factors including a weak U.S. dollar, increasing U.S. deficit, and rising global gold demand. Recent economic developments have boosted investor sentiment for metals, particularly gold. The ADP unemployment report pegged private sector job losses at 20,000 during February, down from 60,000 in the previous month. Greece announced an austerity plan on Wednesday, pledging to implement cost saving measures of nearly 4.8 billion euros ($6.5 billion).
Stock picksMost gold miners are either ramping up production or taking control of other mines, suggesting a continuing bull-run. Goldcorp ( GG) , whose stock price touched a low of $27.52 in April 2009, zoomed to $42 in November 2009 and is currently trading at $40. Going forward, Goldcorp expects to increase production by roughly 10% to approximately 2.6 million ounces during 2010, up from 2.40 million in 2009. The stock has 12 "buy" recommendations, 7 "hold" ratings, and 1 "sell", according to TheStreet's analyst ratings guide. Barrick Gold ( ABX) , the largest gold miner in the world, acquired a 70% interest in the El Morro project from Xstrata Plc for $465 million in cash. According to company reports, Xstrata's total measured and indicated gold resources stand at approximately 8.3 million ounces. The company forecasts production to increase to 7.6-8.0 million ounces during 2010, up from 7.4 million ounces last year. It expects to lower costs by approximately 10% as well. According to analysts polled by Bloomberg, revenues are estimated at $9.9 billion during 2010 compared to $8.1 billion in 2009, while earnings are estimated to rebound to $2.39 per share as opposed to a loss of $4.73 posted in 2009. Kinross Gold ( KGC) is another company to have acquired a mining stake in recent times. In January 2010, Kinross spent $368 million to acquire the high-grade Dvoinoye deposit and the Vodorazdelnaya property near Kupol mine with gold reserves of approximately 1.6 million ounces. As of December 31, 2009, the company's gold reserves stood at 51 million ounces, up by 5.4 million ounces from 45.6 million ounces a year earlier. The stock has 11 "buy" recommendations, 8 "holds," and 1 "sell" rating, according to TheStreet's analyst ratings guide.
Golden OutlookAlthough overall returns have been lower than precious metals such as palladium or platinum, gold remained the least volatile of all metals and most commodities during 2009 on average. During the past one month or so, the price of gold hit a high of $1,153.00 per ounce on January 11 and a low of $1,058.00/oz on February 8 on the London spot market. Spot gold is currently trading at $1,136.50/oz.
According to a report published on Feb. 17 by the World Gold Council, the outlook for gold remains positive. The report states that even if the global economy falters, western investors will continue to look toward gold for diversification and portfolio insurance. Moreover, going forward, both industrial and jewelry demand are expected to strengthen in tandem with the improving economic environment, the report added. Gold demand by the world's top two consumers - China and India - has started strong in 2010, with the latter's jewelry industry buying regularly. Even the tighter monetary policy measures in China have not affected purchases, the World Gold Council said in an article dated February 25, 2010. Activist investor George Soros' recent move to double his investment in gold during the fourth quarter of 2009 was a stark example of the investor's trust in the yellow metal. At the end of 2009, Soros' investment vehicle Soros Fund Management owned 6.2 million shares worth $663 million in SPDR Gold Trust ( GLD) . According to various reports, the fund held only 2.5 million shares at the end of the third quarter. Recently, the International Monetary Fund revealed plans to sell 191.3 tons of gold. India, which is now the 10th largest gold holding country, has emerged a potential buyer, while China, the world's largest consumer of gold, seems an unlikely candidate. India's gold imports in February more than tripled to about 28 metric tons from 7.9 tons in February last year. These factors suggest that the rally still has a lot of steam left, despite the emphatic run during the past few months. The yellow precious metal remains an attractive investment tool and one to closely watch, even as some analysts suggest a bubble in prices.