Lundin Mining and Moody's
How's this for a gutsy call? Today Moody's's (MCO) share price is almost 12 times the share price of Lundin Mining (LMC), but within the next two years, Lundin's share price will be 12 times Moody's's.
The simple fact is that silver and gold and those who mine and sell them are completely disrespected by default. They get respect (and high share prices) only when everybody recognizes that bad economic times, including inflation, are on their way.
Financials, on the other hand, get respect by default. Everybody, for instance David Gardner, thinks that financial companies like Moody's are good and honorable until proven guilty. Well, the fall of financials and the corresponding inflationary government rescue attempts and rise of gold and silver are just beginning. I don't see how Moody's can protect itself from the lawsuits as Bear, Lehman, AIG, and Merril all go under because of ABS's that Moody's incompetently rated investment grade. The same goes for Standard & Poor's, though that is a subsidiary of McGraw-Hill, a publishing company with other interests and positive equity. Moody's has nothing and even less than nothing, as their negative equity keeps getting more and more negative, even before the lawsuits start.
David Gardner said on his CAPS pitch for his outperform call on MCO that Moody's will always be around. With all due respect to David, Moody's shares will probably not be around in September of 2010, and the company will be nothing more than a bankrupt litigant appealing unfavorable decisions of the lawsuits against it.
Meanwhile, any silver and gold miners that survive the next two months (probably including Lundin) will be laughing all the way to the bankrupt bank, as stagflation drives the price of precious metals up faster than the cost of mining them.