About the only part of the resource sector having a good time at the moment are gold companies. My return flight from Sydney was delayed so I only caught the last few minutes of the presentation from Castlemaine Goldfields (ASX:CGT), a developing gold company in Victoria.
The price of gold is rising fast on the back of the proposed “money-printing” by the European Central Bank.
The investment banks are already raising their gold price forecasts for this year. Goldman Sachs has just increased the upper range of its forecast band for the rest of this year from US$1,200 to US$1,300.
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James Turk, the founder of Gold Money, told investors at the 2010 World Mining Investment Conference yesterday that he is forecasting gold to hit US$2,000 by the end of this year (currently US$1,197), and silver to hit US$30 (currently US$18.22).
Turk's five year forecast is what stood out for me though. He is expecting gold to get closer to US$8,000 by 2015.
More than half of the current Diggers and Drillers portfolio is in precious metals (gold, silver and platinum) stocks, all of which are mining overseas thereby avoiding any potential exposure to the Rudd tax proposal. I plan to recommend another good gold stock soon, and I will be applying my usual analysis to select the best out of the five precious metals stocks that are currently ticking my boxes. Time will tell which it'll be.
But I can tell you one thing for sure right now.
I will be recommending a company that operates in an overseas country far from the government's clutches.
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