Hats off to Barrick

I don’t believe in the health of the stock market at large. It has further to fall in my opinion. Nationally it seems we are being feed the idea that the worst is behind us in terms of this financial crisis, and that reassuring message seems to have gotten people back into the stock market. It’s a classic suckers rally that is only going to end badly for investors. Paradoxically, the modern investment mantra of “stocks for the long haul” and using diversity as a means of protection is just going to guarantee that the average investor will feel the full weight of this next leg downward. Gold, on the other hand, has a bright future.

I’ve made a great deal of money trading shares of Barrick Gold (ticker symbol ABX) over the past twelve months. It’s a company I follow quite closely. I feel its one of the few great investments available in the stock market as it allows for you to gain leveraged exposure to the rising gold price while at the same time holding a stock that is paying you dividends. While the oblivious investors of the world are foolishly plowing their money into stock market index funds without the slightest clue as to the fundamentals of their underlying investment, I believe, as Henry Ford did (and Warren Buffet does) that its perfectly alright to put all your eggs in one basket provided that you “watch that basket.” Barrick is my egg basket and I watch it quite closely.

Earlier in the year, I took apart their financial projections and put it into an Excel spreadsheet. My own estimate as to what the company would earn was Continue reading Hats off to Barrick