gold prices

NEWMONT MINING CORP. $39 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 454.3 million; Market cap: $17.7 billion; Price to- sales ratio: 3.4; WSSF Rating: Average) is one of the world’s largest gold mining companies, with major operating gold mines in the United States, Canada, Australia, Peru, Bolivia and Ghana. 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 45% stake in the large Batu Hijau mining complex in Indonesia. Newmont reached its current size mainly through its 2002 acquisitions of Canada’s Franco-Nevada Mining Corp. and Australia’s Normandy Mining Ltd. As part of these acquisitions, Newmont inherited their hedging contracts, which let them lock in future delivery prices. However, Newmont prefers to sell its gold at the floating price. The company maximizes profit by adjusting production based on the prevailing price....

Gold moved up from $300 an ounce in the early part of this decade to over $1,000 in 2008. It fell to $700 in November 2008 as the stock market bottomed out. Like the stock market, gold has regained some of its losses and now trades at around $900. We feel gold will eventually surpass its recent highs. We also feel that the best way to profit from rising gold is through Newmont Mining. Its high-quality mines should last decades, and its costs are coming down. As well, most of its production is in politically stable areas, such as North America and Australia. NEWMONT MINING CORP. $39 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 454.3 million; Market cap: $17.7 billion; Price to- sales ratio: 3.4; WSSF Rating: Average) is one of the world’s largest gold mining companies, with major operating gold mines in the United States, Canada, Australia, Peru, Bolivia and Ghana. 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 45% stake in the large Batu Hijau mining complex in Indonesia....

AASTRA TECHNOLOGIES, $10.84, symbol AAH on Toronto, plans to buy back roughly 2.5 million or 16.9% of its 14.8 million outstanding common shares through a Dutch auction. Stockholders who want to sell their Aastra shares under the plan must offer them at a price between $10 and $12.50 a share before January 27, 2009. The purchase price will be the lowest price in that range at which Aastra can buy 2.5 million shares. Aastra will pay that same price for all shares tendered at or below that price. If you tendered at a higher price, the company will return your stock. The transactions will be commission-free. If you are thinking about selling Aastra, you might tender at the top price of $12.50. You may get to sell some or all of any stock you tender at that price, without paying brokerage fees. If you simply want to get rid of a small lot of thin trading Aastra without paying commission, then tender at the market price just prior to the closing of the offer....

Gold stocks look attractive to many investors in a time of global turmoil in financial markets and stock markets. But our view all along has been that gold stocks are rarely if ever an attractive place to invest, compared to other resource-sector investments like oils and other mines, and there is no compelling reason to put up with the disadvantages of gold stocks today. Some enthusiasts of gold stocks feel it’s a travesty to lump gold in with mere industrial commodities. They put gold in a category of its own. Gold is different from other commodities, of course, due to its scarcity, its special physical characteristics like freedom from tarnishing and malleability, its unique suitability for use as a medium of exchange, and its place in the world’s financial history. But that specialness doesn’t make it an attractive investment. In fact, it detracts from gold’s investment appeal. Because of the strong attachment that gold enthusiasts feel to the metal, they bid up the price of gold stocks out of proportion to the profits those mines are likely to produce....

ALGONQUIN POWER INCOME FUND $2.88 (Toronto symbol APF.UN; Shares outstanding: 77.4 million; Market cap: $222.8 million; SI Rating: Extra Risk) dropped sharply in price recently after the fund cut its monthly distribution by 73.9%, to $0.02 from $0.0766. The units now yield 8.3%. Prior to the cut, the fund paid out around 100% of its cash flow in distributions. That payout ratio now drops to an estimated 30% for 2009. We advised against buying Algonquin last month on the possibility of a distribution cut. But while the fund’s expansion into alternative fuels such as landfill gas and wind power continues to add risk, it now looks more attractive....

THE BOEING CO. $52.42, New York symbol BA, has agreed to a new contract with its striking machinists union. The strike began in early September, and probably cost Boeing $100 million a day in lost revenue. The company hopes this new agreement will help it secure a new contract with its engineers and technical workers, whose current contract expires on December 1, 2008. Meanwhile, Boeing’s third-quarter earnings fell 34.3%, to $0.94 a share from $1.43 a year earlier. The decline was mostly due to the strike. Revenue fell just 7.4%, to $15.3 billion from $16.5 billion, as strong growth at its military products division helped offset lower sales of commercial planes. Boeing’s order backlog now stands at a record $349.4 billion, which is equal to over five times its annual revenue. The slowing economy could prompt some airlines to delay or cancel their orders. However, about 90% of the backlog for commercial jets comes from overseas airlines, many of which receive financial subsidies from their governments. Demand for new fuel-efficient planes, such as the 787 Dreamliner, also remains strong....

Gold hit a high of $850 an ounce in 1980, then worked its way downward for 25 years. It began rising again in 2002, and rose to a record high of $1,011 in March 2008. Gold moved down after that March high, to a recent low of $750. That, in turn, pushed gold mining stocks down. However, gold recently jumped $66 in one day, to $851, due to turmoil in financial market, This had a positive impact on gold mining stocks. We’re not convinced that gold prices will move significantly higher, or even hold their recent gains. However, some of the conditions that typically accompany higher gold prices are present. U.S. economic growth has slowed and stock markets have dropped. That’s keeping interest rates down. Those lower rates, plus still-high energy prices, could push inflation up....

Today’s rebound in the market is reassuring, but I expect stocks to remain highly volatile for a month or more. After that, we could see a six-month rebound in prices. The U.S. bailout of major financial institutions raises inflation risk over the next few years, but it heads off panic. Nobody can predict market bottoms, but I suspect we are much closer to the bottom than the top. BANK OF AMERICA CORP. $37.48, New York symbol BAC, has agreed to acquire troubled brokerage firm Merrill Lynch & Co., Inc. (New York symbol MER). Based on current prices, Bank of America will pay about $49 billion in stock. That’s equal to 29% of its market cap of $170.9 billion. The addition of Merrill will greatly expand Bank of America’s retail brokerage and wealth management operations. Including Merrill’s 16,000 brokers, the merged company will be the world’s largest brokerage firm, with 20,000 brokers and $2.5 trillion in assets under management. Bank of America will probably keep the Merrill Lynch brand, and operate it as a separate division....

NEWMONT MINING $41.39 (New York symbol NEM; SI Rating: Average) aims to start operations at its 66.7%-owned Boddington gold mine in Australia in early 2009. The $2 billion mine is now 77% complete. With forecast annual production of one million ounces of gold and 30,000 tonnes of copper for at least 15 years, Boddington should expand Newmont’s annual production by around 10%. The company is also evaluating the feasibility of recovering molybdenum (a mineral used to strengthen steel) from the Boddington mine. For aggressive investors who want to hedge against — or bet on — a renewed rise in gold prices, Newmont Mining is a buy.

NEWMONT MINING $50.99 (New York symbol NEM; SI Rating: Average), is one of the world’s largest gold producers, with major operations in the United States, Canada, Peru, Australia, Indonesia and Ghana. Newmont produced 5.3 million ounces of gold in 2007. It will probably produce the same amount of gold in 2008 as it continues to work out problems at certain mines. Higher costs for parts and labour will also push operating costs up this year. However, a new on-site power plant should cut costs at its operations in Nevada. The 2009 start-up of its new Boddington gold mine in western Australia should also expand Newmont’s long-term profits, making it attractive for gold investing. Newmont’s 2008 earnings should increase to $2.18 a share, for a p/e of 23.9. It also trades at 13.5 times its projected cash flow of $3.85 a share. That’s high, but golds always trade at a premium to the market. The $0.40 dividend yields 0.8%....