Gold Rushed: Investing in Gold

While we’re not going to give a buy recommendation on gold right now we do think it’s one to watch. Nearly $300 off it’s high of earlier in the year, an ounce of gold may be the place to put your money during this possible inflationary time.

But nobody is giving any recommendations lately.  Not on stocks, nor bonds, not even on currencies. There is just wordwide uncertainty in all markets.

However, if we don’t have deflation, and in fact have a period of inflation, investors may flock to silver and gold and start buying gold bars.  Most likely though, they will start buying ETF’s like GLD and SLV.  These ETFs start buying up gold which increases the demand for gold thus raising the price.

However, the demand worldwide for gold may be reduced by lower production of all goods and services in the world, including China and India.

Either way, buying gold now, at these low prices, may still prove to be a good idea.

The price of gold retreated today on the Feds announcement that they were most likely done cutting rates. This announcement came while oil continues to rise and the market remains shaky.

Gold, which is one of those safe havens for dollars, especially when the dollar is weak as it is now, may suffer at the hands no more rate cuts. However, this might only be temporary. Oil is continuing to rise sparking talk of a recession and everyone is feeling the pain of inflation and rising food prices. So why won’t gold follow suit.

Although this is a blog on gold, you have to look at as a commodity slice of the whole market. Prices are going up on all commodities because there is a rising demand for all commodities while there isn’t as much a supply. This means higher prices.

The FED may be trying to curb inflation but will they kill golds rise? I’m guessing not. Gold may be at great price to buy right now.

Gold prices are down, dollars per ounce. The price of gold is around $880 per ounce and has dropped off dramatically in the last two months. For investors who haven’t gotten in on this run-up yet that could spell a great buying time.

We’ve already seen the price of gold make huge strides toward $1000 per ounce and now with gas in the US creeping over $4 per gallon, the price of gold could follow up just the same. A new article, on the front page of money.com talks about .

Now may be the best time to buy into the gold rush before it happens. One of the easiest ways to get into that is to buy a gold etf like GLD. It’s easy and not as expensive as buying and storing gold bullion.

A great way to get into the precious metals craze going on right now is to look towards mining and producing companies dealing with precious metals such as gold. One of those gold mining stocks is Agnico-Eagle Mines Limited (NYSE:AEM) located out of Toronto, ON. At the time of this writing AEM was trading at just over $70 per share with a market capitalization of $10 billion.

AEM produces gold through it’s gold mining operations located in northwestern Quebec as well as mine construction projects in that same location. Agnico-Eagle is also mine construction projects located in Finland and Mexico with exploration operations in all of those countries as well as the United States.

Over the past year the companies stock as increased 86% fueled no doubt by the huge climb in gold prices. The company claims large potential for growth through press releases found on it’s website where Agnico-Eagle boasts that its largest mine is the 100% owned LaRonde mine. LaRonde is Canada’s largest gold deposit in terms of reserves. This has allowed AEM to have low operating costs and provide the company with other previous metals such as silver, zinc, and copper which are byproducts of the mine. Development at LaRonde is expected to keep the mine going through 2020.

Other gold mines the company is constructing hope to add to this growth and include Kittila in Finland and Meadowbank, Lapa, and Goldex in Canada. From 2006 to 2007 Agnico increased it’s gold reserves by 33% and looks to increase those reserves by 5 five over the next 2 years. They also are looking to produce over 350,000 more ounces of gold this year than they did in the previous year.

Their stock, however, appears to show this growth already factored into the price as it trades at a P/E ratio of 69. Is this a case of investors loving the stock because of it’s potential growth, or investors joining the bandwagon of buying gold in a bull precious metals market.