Update Goldcorp (GG)

After the market close yesterday, March 11, Goldcorp (GG) reported fourth quarter 2009 earnings of 25 cents a share (excluding one-time items). That was in line with the Wall Street consensus. Revenue climbed by 27.8% to $778 million. That was substantially above the $732 million Wall Street estimate.

For the quarter Goldcorp reported production of 601,300 ounces of gold.

The news was good enough so that investors can pardon CEO Chuck Jeannes if he sounded like he was crowing. “Achieving record gold production at the lowest cash costs of any major gold mining company while increasing gold reserves for a sixth consecutive year made 2009 a very successful year for Goldcorp,” he said in his company’s press release. “In addition, we brought one of our cornerstone mines, Penasquito, into operational production on time and on budget and repositioned another, the prolific Red Lake mine, for long term success. With Pueblo Viejo advancing on time toward first gold production in late 2011, the three major drivers of our five-year, 57% growth profile remain well on track. We also enhanced our outstanding project pipeline with the recent closing of two acquisitions that brought us the Camino Rojo project near Penasquito and the El Morro project in Chile.

Even the cost story was positive. Read more

Update Goldcorp (GG)

What you want in a gold stock is a company with rising reserves and falling costs. Goldcorp’s (GG) end of 2009 report on reserves shows that it’s still delivering rising reserves. We’ll see how the company is doing on costs when it reports after the market closes on March 11.

In 2009, the company said in February reserves grew by 5.3% to 48.8 million ounces from 46.3 million ounces at the end of 2008.

But that’s not all that Goldcorp mines. Read more

Sell Kinross Gold (KGC)

A rising tide lifts all ships, true. But not all to the same extent.

The huge rally in gold to new historic highs day after day has largely left Kinross Gold (KGC) behind. True, the stock is up 9% as of the close on November 11 from its recent low at $18. But in that same period shares of Goldcorp (GG), a Jubak’s Pick on November 5, is up 22%. (For my buy on Goldcorp see my post http://jubakpicks.com/2009/11/05/buy-goldcorp-gg-2/ )

Unfortunately, I don’t think the problems at Kinross Gold that have led to this under performance are easily fixed. So I’m going to take the gain from the rising tide, sell Kinross at an overall loss with this column, and look for a ship that’s better able to float with the tide.

What’s the problem at Kinross Gold? Read more

Buy Goldcorp (GG)

The Reserve Bank of India’s purchase of 200 metric tons of gold from the International Monetary Fund, announced on November 3, is a game changer for gold and investors.

It clearly signals that major sellers of gold over the last 20 years—the world’s central banks—have become buyers again. That switch introduces a new set of buyers that are capable of soaking up a significant portion of the world’s annual gold production. And it makes me recalibrate my end of 2010 target for gold from $1150 an ounce to $1350. (For more on this the Reserve Bank of India’s buy see my November 4 post http://jubakpicks.com/2009/11/04/is-gold-the-new-dollar/ .)

At $1150 an ounce it was too late to buy into the gold play with gold already trading near $1100. At $1350 an ounce there’s still time—especially if you make your play by buying shares of a gold miner that’s showing expanding production.

Which one would I pick? Read more