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Thursday, September 20, 2012

IAMGOLD (IAG) Poised to Soar

IAMGOLD (NYSE: IAG) is as strongly positioned as any gold miner to take advantage of the misguided move by the Federal Reserve and Ben Bernanke to institute an open-ended stimulus program, which will acquire $40 billion of mortgage-backed securities on a monthly basis.

And if that doesn't work in the short term, the Fed hinted its ready to spend even more. Whether we agree with the action or not, we must take into account the implications for gold miners and the overall gold sector, adjusting our portfolios accordingly.

One such company that everyone interested in gold needs to consider is IAMGOLD. A number of traders recently poured money into call options on the company, seeing a bull move by the stock. In the last month alone it has jumped about 40 percent, and that's only the first stage of a big move which should end up with a double for those entering into the stock very soon.

The reason for the big upward move, other than the actions of the Federal Reserve, is a closer look at the resources held by the company, which have been undervalued by the majority of potential investors. That appears to have changed now, and the company and its investors are being rewarded handsomely.

IAMGOLD has been expanding its existing operations in anticipation of more stimulus measures from central banks around the world, and is about to bring online its Westwood mine. Probably the most overlooked property of the gold miner is its niobium mine and the accompanying rare earth elements, which will, over time, page huge dividends for the company.

For the longer term, IAMGOLD is also positioned to take advantage of acquisition opportunities that arise, as it enlarged its note offering recently to $650 million, which along with its current credit facilities, brings its total liquidity position to about $2 billion.

That means there is very little competition for those upcoming available properties the company can acquire to grow its resource pipeline. IAMGOLD was trading at $15.95, down $0.20, or 1.27 percent, as of 11:40 AM EDT.

Thursday, September 13, 2012

Gold Prices in QE3 Environment

Now that Ben Bernanke and the FOMC have implemented another round of quantitative easing - one that could go on indefinitely with the promise to purchase $40 billion in mortgaged-backed securities on a monthly basis - gold and silver prices are about to go ballistic, as there's absolutely nothing in the way now to keep them from resuming their upward climb.

Gold shot up by over $38 an ounce on the news, while silver climbed over 4 percent in response to the highly anticipated move, which was more aggressive than thought by most.

The U.S. dollar is about to reverse directions, set to weaken in response to the stimulus move.

As for gold in general, there is nowhere for prices to go except up, at least until there is a reversal in job numbers in the U.S., which could take years to improve if we are to measure it by the prior response to QE1 and QE2 by the U.S. economy.

What has been a volatile and unsure economic environment because of there being no response from the Fed in the recent past concerning more stimulus, has now become much more stable in the sense of knowing what is coming from the central bank in the near and long term.

That will result in investors moving into commodities in droves as they seek to protect their assets from inflation and the falling value of the U.S. dollar.

In the short term we'll also see a big boost in the equity markets, but that has a lot more risk to it with stimulus than commodities do.

Barrick Gold jumped, trading at $1.50, up 3.78 percent, as of 2.51 PM EDT. Silver Wheaton was at $38.22, up 2.00, or 5.52 percent, as of 2:52 PM EDT. Goldcorp (GG) was trading at $45.17, up $2.11, or 4.90 percent. First Majestic Silver was at $21.91, up $0.87, or 4.13 percent.

Friday, September 7, 2012

Barrick (ABX) (GG) (NEM) Jump on Stimulus Expectations

Gold giants Newmont Mining (NEM), Goldcorp (GG) and Barrick Gold (ABX) jumped on Friday after the August nonfarm payrolls report revealed a dismal month, with an anemic 96,000 jobs created, far below the 125,000 analysts were looking for.

Other commodities and related companies jumped as well, as it pointed towards the likelihood that Ben Bernanke and the Federal Reserve will institute another round of quantitative easing in hopes of jump starting the economy.

As for gold itself, on the Comex division of the New York Mercantile Exchange, the most active contract for December deliver jumped $34.90, or 2.1 percent, to settle at $1,740.50. The last time gold settled that high was on February 28.

If Bernanke does pull the stimulus trigger, when coupled with the potentially unlimited bond-buying program launched by the ECB, gold, silver, and other commodities will soar again in response.

But even if the Fed decides to wait till later in the year, it appears a floor has been placed under the market for now. The longer nothing else is down though, the shakier that floor will become.

Bernanke and the Fed probably only have one real shot left at making it appear they can do something to help the economy recover, so while it's probable there will be some type of stimulus offered next week, it's also possible the decision will be made to wait a little longer.

That would put some downward pressure on gold and silver, along with other commodities in the near term, but it probably won't take long to recover once investors realize it's only a matter of when, and not if, the stimulus will come.

Stocks on the other hand will get crushed if nothing is done be Bernanke.

Barrick Gold closed Friday at $40.16, gaining $1.16, or 3.0 percent. GoldCorp ended the session at $43.00, up $0.86, or 2.0 percent. Newmont Mining closed at $51.69, rising $.79, or 1.6 percent.

Wednesday, September 5, 2012

Fed Awaits ECB and Payrolls Reports

The Thursday meeting of the European Central Bank (ECB) is vitally important to the Federal Reserve and Chairman Ben Bernanke, as the promised response to the ongoing debt crisis in Europe will be a large part of what the Federal Reserve may or may not do at its meeting on September 12 and 13.

Ever since ECB President Mario Draghi promised to taek whatever action was needed to attempt to solve the debt crisis, it has placed support under the markets, which have awaited to see exactly what it is Draghi will do.

Also of importance to the actions of the Fed will be the payrolls report due on Friday, which will surely have a major impact on the decision of the Federal Reserve and Ben Bernanke going forward.

Already one major element has ramped up the possibility of QE3, which was the disappointing manufacturing numbers recently released by the Institute of Supply Management, which showed manufacturing in the U.S. contracted by the most in over three years. Some think this could be enough for Bernanke to pull the trigger next week.

If payrolls drop below 125,000, which appears to be the targeted number for a decision to be made, then it's very likely Bernanke will implement another round of quantitative easing.

A secondary element in the mix is exactly what the ECB does decide to do. If it's significant and deep, Bernanke and the Fed may get some wiggle room to wait till later in the year to throw more money into the U.S. economy.

While the typical reporting that opposition in Europe could suppress some actions, the recent past has proven that to be more political posturing for the sake of constituents, especially in Germany.

In the end, of the ECB implements strong measures, it will without a doubt pass again, even while the press reports it as being opposed by some in the euro zone.