gold prices

Gold now trades at around $1,226.00 U.S. an ounce. That’s up 28.2% from $956 a year ago, but down from its all-time high of $1,261.00 U.S., where it closed on June 28, 2010. Gold’s recent gains have partly resulted from investor fears about the sovereign debts of European countries, especially Greece and Spain. That’s creating uncertainty about the strength of the euro. These fears are prompting more investors to buy gold and gold investments, because they believe investing in gold will provide them with additional security. We think gold could well move higher over the longer term, due to investor concern that low interest rates and large amounts of government stimulus spending will spur inflation. This could prompt even more investors to flock into gold —and drive prices up even higher....

WESTJET AIRLINES, $13.04, symbol WJA on Toronto, has reported higher revenue and earnings in the latest quarter. In the three months ended June 30, 2010, WestJet’s revenue rose 15.2%, to $612.1 million from $531.2 million a year earlier. Excluding one-time items, earnings jumped 154.3%, to $23.4 million, or $0.16 a share, from $9.2 million, or $0.07 a share. This was the company’s 21st consecutive quarter of profitability. The gains came mostly from improved demand for the company’s flights. WestJet has a new, fuel-efficient fleet and a low cost-structure. As well, it serves more cities than many of its competitors. It’s selectively adding to these destinations, and focusing on sunshine destinations where it can add to its earnings by selling customized vacation packages that include flights. These strengths put the company in a good position to profit from the economic recovery....

PLEASE NOTE: Our next Hotline will go out on Friday, July 9, 2010. ADOBE SYSTEMS INC., $29.85, Nasdaq symbol ADBE, reported better-than-expected earnings and revenue this week. Despite the improved results, the stock fell 14%. That’s partly because the company is spending more to market new products, such as Creative Suite 5, the latest version of its graphic-design software....

MAJOR DRILLING, $24.94, symbol MDI on Toronto, reports that its revenue rose 46.6% in the three months ended April 30, 2010, to $97.4 million from $66.4 million a year earlier. The company earned $3.2 million, or $0.14 a share. A year earlier, it lost $4.6 million, or $0.19 a share. Cash flow was $9.4 million, or $0.40 a share, in the latest quarter. Major expects to see a continued rebound during the rest of 2010. Gold prices are near all-time highs, base-metal prices are strengthening, and many mining companies have raised new funds for exploration....

Members of our Inner Circle service often ask for our portfolio investing advice on stocks they are thinking of buying that we don’t cover in our newsletters. These companies range from the most speculative penny mines to large multinational corporations.

Many of these stocks fall into a grey area....

Exchange traded funds (ETFs) have gained popularity among investors in recent years, mainly because they offer low management fees. However, you should always keep in mind that not all exchange traded funds are created equal. For example, there are a lot of ETFs that have been created to tap into popular, but risky, themes and fads. So you need to be very selective with your ETF holdings. Exchange traded funds are set up to mirror the performance of a stock-market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short....

INTERNATIONAL BUSINESS MACHINES CORP., $131.19, New York symbol IBM, aims to double its earnings to $20 a share by 2015. To achieve this goal, IBM will expand in developing markets like Russia, India, Brazil and China. These countries are attracting more business activity as their economies grow. That’s increasing the need for IBM’s mainframe computers and technical expertise. By 2015, IBM aims to get 25% of its revenue from these markets, up from 19% last year. The company will also continue to spur its growth by purchasing related companies and assets. It will probably spend $20 billion on these purchases through 2015. That’s equal to 12% of its $170.4-billion market cap....

Trelawney Mining and Exploration, $1.02, symbol TRR on Toronto (Shares outstanding: 84.1 million; Market cap: $85.8 million), owns three properties that are located halfway between the northern Ontario cities of Timmins and Sudbury. The properties centre on the Chester mine, which was nearly completed in the 1980s, but never went into production. Trelawney’s shares jumped in early March from $0.60 to as high as $1.35. That’s when the company reported results from its latest drilling at Chester, which it conducted to see how much gold is beyond the known deposits. The drilling results included 107.11 metres of a high 8.20 grams per tonne of gold, including 313.55 grams per tonne over 2.56 metres. Trelawney took advantage of the price rise to issue 14.2 million shares at $1.05 each. That raised $14.9 million, which the company will use to continue its exploration program at Chester....

Trelawney Mining and Exploration, $1.17, symbol TRR on Toronto (Shares outstanding: 69.8 million; Market cap: $81.7 million), owns three properties that are located halfway between the northern Ontario cities of Timmins and Sudbury. The properties centre on the Chester mine, which was nearly completed in the 1980s, but never went into production. Trelawney’s shares jumped in early March from $0.60 to as high as $1.35. That’s when the company reported results from its latest drilling at Chester, which it conducted to see how much gold is beyond the known deposits. The drilling results included 107.11 metres of a high 8.20 grams per tonne of gold, including 313.55 grams per tonne over 2.56 metres. Trelawney took advantage of the price rise to issue 14.2 million shares at $1.05 each. That raised $14.9 million, which the company will use to continue its exploration program at Chester....

NEWMONT MINING CORP. $50 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 491.0 million; Market cap: $24.6 billion; Price-to-sales ratio: 3.3; Dividend yield: 0.8%; WSSF Rating: Average) is one of the world’s largest gold-mining companies. It has major mines in the U.S., Australia and Peru. Gold accounts for about 85% of Newmont’s revenue. The remaining 15% comes from copper, zinc and other metals. Most of Newmont’s copper comes from its 35.4% stake in the large Batu Hijau mining complex in Indonesia. Average gold prices rose 248.4%, from $279 an ounce in 2000 to $972 in 2009. Gold has fallen from the all-time high of $1,214.80 an ounce that it reached in late 2009, and now trades around $1,093....