Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Randgold Resources, In Gold We Trust

Commodities / Gold & Silver Stocks Jan 02, 2009 - 05:04 AM GMT

By: Oxbury_Research

Commodities Best Financial Markets Analysis ArticleIn the closing weeks of 2008, Americans have once again been shocked by a massive Wall Street scandal. Former Nasdaq chairman, Bernie Madoff was arrested for masterminding a $50 billion fraud. The Bernie Mad(e)off with investors' money Ponzi scheme is just the latest Wall Street scandal to see the light of day.


I firmly believe that the Madoff $50 billion Ponzi scheme will be just the first of many Wall Street frauds that will be revealed in 2009. In the past, Americans trusted their hard-earned savings to Wall Street bankers, brokers, fund managers, and so-called professional money managers.

I seriously doubt that most Americans will do so in the future. Many Americans are now very understandably asking, “In whom can we trust?”

In Ben We Trust?

Americans should also be asking that same question with regard to the Federal Reserve's attempt to inflate its way out of massive US debt and a nasty downturn in the economy. This economic downturn is different in that it was born not just from excessive speculation but also of massive leverage and downright fraud. So there are an awful lot of excesses that need to be wrung out of the system.

The debts of the United States already stand at five times America's annual GDP and rising rapidly. Some Americans, such as us here at Oxbury Research , are now questioning how these huge loans will ever be repaid. Unfortunately, the answer is that the loans will be repaid by every current holder of US dollars and by future generations of Americans. It is sad that generations still unborn will be paying for the immense greed of a few.

Both President-elect Barrack Obama and Fed head Ben Bernanke are students of the Great Depression and FDR's economic policies. I only hope that they don't adopt all of FDR's policies, particularly what FDR did in 1934.

First, FDR confiscated all gold from American citizens. Then, more importantly, FDR devalued the US dollar by 75 per cent versus gold. Since the US was still on a gold standard, almost instantly, all Americans and all overseas holders of US dollars lost 75 per cent of all their monetary wealth. This was the easy way for the US government to wipe out 75 per cent of its national debt in one day!

Can something similar happen again? I believe it can. This time, however, the US government will be more subtle. The Federal Reserve will simply “print” so much money that the value of the US dollar will decline steadily which, in turn, will allow the US government to pay back their debt with much “cheaper” dollars.

Ben Bernanke is already rapidly going down that path and creating incredible amounts of “funny money” almost daily. The effect of his policy will be the same as FDR's policies were in 1934 – a drastically reduced lifestyle for most Americans.

In Gold We Trust

What can someone do to preserve their purchasing power and to preserve the wealth that they do have for their descendants? I believe the answer lies in something that has been a store of wealth for people for thousands of years – gold.

Gold is respected throughout the world for its value and rich history. Coins containing gold first appeared around 800 B.C., and the first pure gold coins were struck during the reign of King Croesus of Lydia about 300 years later.

There are myriad reasons to own gold. Some of the reasons would include: US dollar weakness, inflation, deflation, supply & demand, geopolitical risks, and diversification. A wonderful article titled E ight Reasons to Own Gold was written by yours truly and can be found at Investopedia.com, which is an online subsidiary of Forbes magazine.

There are, of course, numerous ways for investors to own gold – gold bars and bullion, gold coins, gold ETFs such as GLD, gold mutual funds, or individual gold stocks. Today I want to draw investors' attention to one specific gold stock – Randgold Resources.

Randgold Resources - GOLD

Randgold Resources is a gold mining company with major gold mines located in politically-stable areas of Western Africa. Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7+ million ounce Loulo deposit in western Mali, and the 4+ million ounce Tongon deposit in the Ivory Coast.

Gold production at the company's flagship Loulo mine in western Mali is being expanded. Higher output from the Loulo mine means that Randgold Resource's annual gold production will jump 50%, rising from 400,000 ounces in 2008 to more than 600,000 ounces in 2011.

Randgold Resources trades on the Nasdaq exchange under the symbol of GOLD. It is a very liquid stock with average daily volume in excess of 1 million shares. The company's market cap is in excess of $3 billion.

Randgold Resources is one of the few mining companies whose shares have actually risen in 2008! I believe that this is so because the company is extremely well-run. The company's CEO, Mark Bristow, has stuck to a “boring” long-term strategy and has eschewed deal-making and debt.

Mr. Bristow has instead focused on organic growth. He pursued only projects that would generate returns of at least 20 per cent, and repaid any debt incurred out of cash flows. As a result of Mr. Bristow's conservative strategy, the company is completely debt-free and has more than $250 million of cash sitting on its balance sheet!

Randgold Resources's stock price has ranged between $22.28 and $56.28 over the past 52 weeks. The stock is currently trading near $43. I believe that this price offers an excellent entry point for investors looking to own a high-quality, well-run gold company.

Tony D'Altorio

Analyst, Oxbury Research

Tony worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and as a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Tony was trading supervisor during the great crash of 1987 and was responsible for millions of dollars of customers' orders.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2008 Copyright Nick Thomas / Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oxbury Research Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in