gold prices

NEWMONT MINING $21.71 (New York symbol NEM; Shares outstanding: 498.9 million; Market cap: $11.0 billion; TSINetwork Rating: Average; Dividend yield: 0.5%; www.newmont.com) is the world’s second-biggest gold producer after Barrick Gold (symbol ABX on Toronto). Newmont has mines in North America, South America, Australia, New Zealand, Indonesia and Africa. The company’s cash flow per share fell 5.0% in 2014, to $3.45 from $3.63 in 2013. Aggressive cost-cutting failed to offset a 10% decline in realized gold prices....

In 2011, gold shot up to a high of $1,950 U.S. an ounce, and silver reached a high of $48.48. Gold prices then fell steadily and in late 2014 dropped below $1,200 for the first time since mid-2010. The metal now trades at $1,203. Silver also fell, hitting a five-year low of $15.35 an ounce in late 2014. It now trades at $16.21. In the longer term, gold and silver could well regain their 2011 highs. This will simply reflect the vast expansion in the U.S. money supply that has taken place since the financial crisis struck in 2008....

NEWMONT MINING CORP. $24 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 498.8 million; Market cap: $11.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.newmont.com) has started work on its 75%-owned Merian gold project in Suriname; the Suriname government owns the remaining 25%. The company will spend $600 million to $700 million on Merian. The new mine will supply 7% to 10% of Newmont’s total gold production when it starts up in 2017. The stock has jumped 36% from its December 2014 low of $17.60. That’s mainly because gold prices have strengthened in response to fears of deflation in Europe. However, the higher U.S. dollar will continue to weigh on gold....

Theme investing has natural appeal. It simplifies things. Investors like it because they feel it can put their investment returns into overdrive. Some also feel it adds fringe benefits to their investing, by letting them support social objectives. Brokers like it because it gives them a rationale to recommend a variety of stocks. If a client thinks gold prices are headed up, a broker can think of all sorts of gold-themed investment opportunities. They include established gold miners; junior gold companies that are working on a promising gold property; or penny golds that are outright speculations. Other possibilities are financial companies that sell gold-related merchandise like gold coins....

NEWMONT MINING CORP. $24 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 498.8 million; Market cap: $11.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.newmont.com) has started work on its 75%-owned Merian gold project in Suriname; the Suriname government owns the remaining 25%.

The company will spend $600 million to $700 million on Merian. The new mine will supply 7% to 10% of Newmont’s total gold production when it starts up in 2017.

The stock has jumped 36% from its December 2014 low of $17.60. That’s mainly because gold prices have strengthened in response to fears of deflation in Europe. However, the higher U.S. dollar will continue to weigh on gold.

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PLEASE NOTE: This is our last Hotline for 2014. Our next Hotline will go out on Friday, January 9, 2015. SHERRITT INTERNATIONAL, $3.23, symbol S on Toronto, has jumped over 42% this week after Cuba and the U.S. announced that they will re-establish diplomatic ties. The company has operated in Cuba for over 20 years and gets about 74% of its revenue from the country. Its Cuban operations include 50% of the Moa nickel and cobalt joint venture, as well as power plants and oil and gas projects. Sherritt is Cuba’s largest foreign investor....

The U.S. dollar hit a low below $0.95 Cdn. in October 2011, and has since risen above $1.16 Cdn., a gain of 22.1%. In the same period, the U.S. Standard & Poor’s 500 stock index has gained 88.1%, even after allowing for the setback of the past couple of weeks. Together these two factors mean that if you followed our advice and put around a quarter of your portfolio in high-quality U.S. stocks, you probably have substantial capital gains. If so, you may feel tempted to sell some of your U.S. stocks—“harvest” some of your capital gains, as brokers sometimes say. It’s generally a bad idea to sell high-quality stocks simply because their stock prices have gone up. When you do that, you risk selling your best selections when they are just starting to rise. But it’s a particularly bad idea to sell U.S. stocks right now....

BMTC GROUP, $16.00, symbol GBT.A on Toronto, is one of Quebec’s largest retailers of furniture, electronic goods and household appliances, with 36 stores. In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that had been Brault & Martineau liquidation centres. In 2013, BMTC opened four more EconoMax stores. It added another, in Joliette, in March 2014, and an additional one, in LaSalle, on October 24, 2014. BMTC is now considering purchasing land in Drummondville for a new store that would open in late 2015....

NEW GOLD $4.71 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 504.0 million; Market cap: $2.4 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C. New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project. In the three months ended September 30, 2014, New Gold’s cash flow per share rose 60.0%, to $0.16 from $0.10 a year earlier. Gold production fell slightly, to 93,367 ounces from 94,038. But an 8.2% rise in copper output from New Afton and lower overall costs increased New Gold’s cash flow....

NEW GOLD $4.71 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 504.0 million; Market cap: $2.4 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.

New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.

In the three months ended September 30, 2014, New Gold’s cash flow per share rose 60.0%, to $0.16 from $0.10 a year earlier. Gold production fell slightly, to 93,367 ounces from 94,038. But an 8.2% rise in copper output from New Afton and lower overall costs increased New Gold’s cash flow.

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