A few weeks ago, I bought four ounces of gold for $1,000.
I didn't go to a coin store, get some special deal, or use some
In fact, you can get the exact same deal I got.
Let me explain...
IFor the past several months, the U.S. dollar has been a safe
haven. Problems in Europe, sweeping uncertainty abroad and fears of
a global economic slowdown have pushed investors into the perceived
safety of the U.S.
But the U.S. debt crisis is still unresolved and there's been
extensive talk in Washington regarding further monetary easing. If
the government turns the printing presses back on, then get ready.
U.S. monetary policies could systematically erode the value of the
So despite the strength of the dollar as of late, the fact still
remains: Gold is the most reliable way to protect your purchasing
So as a
against growing uncertainty, I want to raise my gold
But instead of buying gold for more than $1,600 an ounce,
there's a different way to own gold... and for much cheaper.
It all rests with a gold miner that can make a huge
from digging the stuff up.
I recently added 100
New Gold (NYSE:
to my portfolio within my
Scarcity & Real Wealth
New Gold is a mid-sized intermediate precious metals producer
with roughly 7.9 million ounces of proved gold reserves, or 18.8
million ounces of the looser "measured and indicated
With only 470 million
, this equates to four ounces of gold in the ground for every 100
With a recent share price around $10 a pop, this means you can
essentially buy four ounces of gold for $1,000. -- or just $250 an
Right now, New Gold has a controlling interest in six gold
mines. Three of those mines are spitting out gold and generating
profits today. The other three are development stage projects that
stand ready to fuel future growth.
From its established mines, New Gold will bring a minimum of
400,000 ounces of gold to
this year -- more than 1,000 ounces per day.
But what's more, New Gold can bring that gold to market at a
fraction of the cost of its rivals.
On average, it costs gold miners roughly $643 to produce an
ounce of gold. But for New Gold, those production costs are only
$420 -- more than $200 below the industry average.
So, regardless of whether gold spikes to $2,000 per ounce or
retreats back to $1,000, New Gold will pocket more money per ounce
than its peers.
In other words, if you want to get the most out of every dollar
increase in the price of gold, then New Gold is an attractive
But what if gold levels off here? Well, I still think New Gold
is primed for explosive growth. In addition to the three producing
mines I mentioned above, the company's three mines under
construction that could double the firm's output within the next
Riscks to Consider:
Of course, gold prices might fall, expenses can rise and some
projects might not ever pan out.
Action to Take -->
Still, there's a comfortable
margin of safety
here, especially since the new mines are fully funded and
management has a proven track record of over-delivering.
In any case, this is a well-managed, low-cost producer whose
output could double over the next five years. So if you're looking
for exposure to gold with the possibility of some major upside, New
Gold looks like an appealing opportunity.
-- Nathan Slaughter
Nathan Slaughter does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.