-- Posted Thursday, 7 August 2008 | Digg This Article
| Source: GoldSeek.com
By: Peter J. Cooper
It is music to a precious metal investor’s ears to hear of a big bid in the sector. Xstrata is bidding $10 billion for rival Lonmin. The biggest and brightest are taking the opportunity of the summer lows to buy out rivals.
The bull market in precious metals is hardly over with many analysts seeing $1,200 an ounce for gold before the end of this year, and much higher in the following couple of years as the real cost of the current financial crisis weighs on the US dollar and global stocks and bonds.
Last summer at this time my favorite junior gold explorer’s shares were so bombed out I bought as many as I could with the money in my brokerage account. If only I had been bolder. The shares more than doubled within three months.
It will be the same this year, perhaps better. Xstrata knows that the summer doldrums is the best moment to buy precious metal stocks. But this is a logical move as in order to grow precious metal giants need to acquire their rivals. Organic growth is too slow to capitalize on the big surge in gold, silver and platinum prices.
Why not do the same thing as a private investor? The summer doldrums have shaken many junior gold stocks down to record lows by comparison to the metal price. They just have to be a good buy.
These companies are sat on the precious metal claims that just have to yield the reserves of the future. Eventually the Xstrata’s of this world will have to buy them, and long before that a consolidator is bound to make a fortune preparing for that day.
The great thing about buying precious metal stocks now - and all will benefit from the Xstrata bid - is that you have as near to a certainty as you are ever likely to find in investment. Inflation is in double digits in 50 out of 190 countries publishing statistics, and still rising thanks to easy monetary policy in the US.
As the economic crisis deepens in the US interest rates will be slashed from two to one per cent, as in the dot-com crash, and that will ensure higher inflation, and very, very much higher gold prices. Take heart and follow Xstrata.
Peter J. Cooper
http://arabianmoney.net/
-- Posted Thursday, 7 August 2008 | Digg This Article | Source: GoldSeek.com
