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XMFSinchiruna (26.56)

TMFSinchiruna's pick for Best Stock for 2009



December 18, 2008 – Comments (10) | RELATED TICKERS: AEM

Well, Fools, I had to think long and hard about this one. Of course, anyone who knows me will not be surprised that I never considered anything other than a precious metals miner given everything I've been reporting throughout 2008, but even from among the gold and silver miners the decision was a tough one. I ended up with Agnico-Eagle Mines, and the article explains my reasons.

Yamana was a close second, and Silver Wheaton certainly crossed my mind. Goldcorp looks excellent to me at this stage with its zero-debt bonus, but Agnico's growth over the next 15 months will be explosive. To have production volumes and the value of your product rising sharply at the same time... that's what it's all about!

Please share your thoughts, and please pick the stock for your CAPS profiles ... since it's insanity to think the stock only gets 3 stars from our venerable community. :)

Fool on!

10 Comments – Post Your Own

#1) On December 19, 2008 at 2:53 AM, DemonDoug (31.13) wrote:

Sinchi, I don't think AEM is the best miner out there.  I don't quite believe all their numbers, p/e is too high, etc.

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#2) On December 19, 2008 at 7:20 AM, XMFSinchiruna (26.56) wrote:


What cause do you have to disbelieve their numbers?

Those P/E numbers are what look wrong to me ... I'll look into that, since last week when I made my selection the P/E was in the single digits. Yahoo data sometimes gets these weird glitches.

If you want to talk value, just refer to my Yawanna have Yamana article, which calculated the ratio of enterprise value to proven and probable reserves at 0.43, or about equivalent to Goldcorp.

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#3) On December 19, 2008 at 1:11 PM, FleaBagger (27.46) wrote:

AEM is down only about 10% over one year, versus about 60% for SLW. Also, silver still looks undervalued versus gold. So what gives?

Also, did Goldcorp let their hedges expire? They were so badly hedged this past summer that a continued drop in the dollar would have bankrupted them.

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#4) On December 19, 2008 at 3:20 PM, XMFSinchiruna (26.56) wrote:


Goldcorp is unhedged for gold, and has been for some time. You may be referring to some base metal hedges or other such instruments, but not their gold.

The reason AEM is only down 10% is because it's the best growth story in the industry, period. During times like these, we mustn't ignore relative strength like that, as it indicates quality investor loyalty that persisted even as the worst of the gold (and zinc) prices rained down. SLW may well outperform AEM for 2009, and I agree that silver has further to travel in its recovery than gold as we expect a normalizing of the ratio to at least back below 50 before too long... but silver often lags big moves in gold, and I can't be sure silver will cover that ground in 2009 as opposed to later. I would bet almost anything that silver ends 2009 substantially higher than where it sits today, but whether it enjoys an accelerated move relative to gold in 2009 I will not predict.The world is first and foremost focused upon gold as a safe haven right now, any many won't even look to silver until gold simply becomes too expensive to buy... which would be music to AEM.

Meanwhile, AEM will be busy raking in the cash as production ramps up. Imagine how sweet that company will be looking a year from now when gold is fetching more than $1,250 -- or possibly even $2,000 -- and their cost remains in the $325 range!

I have been following AEM very closely for 6 years now, and have owned it for 5. If it were not one of the singular best companies available in the sector, it would not have remained one of my core holdings.

My advice ... if the company isn't looking phenomenal to you, dig deeper. :) Check their presentations, see how far along their construction projects are, think about where their projects are located, and consider what they've accomplished to date from their humble roots under the present CEO. Sean Boyd has done well by me.

Anyway ... who can predict which gold miner will move the most in a given year? Certainly not me. :)  All that I feel I know for certain in my gut is that gold goes higher and buying interest in miners must overwhelm efforts to manipulate that market by the investment banks with their access to free money. Then again, that access to free money is a powerful toolbox indeed, and so I expect unprecedented volatility in the gold price this year.

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#5) On December 19, 2008 at 3:39 PM, FleaBagger (27.46) wrote:

You make some good points about gold moving before silver, I may have been thinking about some other company when it comes to GG, and AEM sounds really good.

(I like big buts and I cannot lie...) BUT Wheaton is magnificently oversold, as you yourself have observed and written. Even after a big move up from below 4, it's still less than $2 per oz of its silver. That makes for a small hurdle for investors.

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#6) On December 19, 2008 at 5:24 PM, XMFSinchiruna (26.56) wrote:

True... SLW is one of my top 3 favorite companies in the world to own right now, and it will remain a core holding for me for years to come.

In fact, in order of weighting within my portfolio, my top 4 holdings are:





While I still think I picked well with AEM, I remain comfortable holding more of the other three. Now you see how difficult it was to choose just one. :) I believe all four of these will excel.

Fool on!

Merry Christmas everybody!!

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#7) On December 20, 2008 at 8:01 PM, Bays (29.21) wrote:

Thanks Sinch,

Good work...  I used to own Cumberland, which was bought by AEM.  I sold tho around $70.

Do you think there is going to be some profit taking on AEM or AUY soon?   Im a little hesitant to buy in right now.  Maybe I'm being too pessimistic, but who isn't during times like these.

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#8) On December 20, 2008 at 8:03 PM, Bays (29.21) wrote:

Merry Christmas to you too!!

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#9) On December 22, 2008 at 12:14 AM, FleaBagger (27.46) wrote:

Merry Christmas!

I sold 300 (of 390) shares of SLW around 6.80 and bought most of them back a few days later in the low 5's. I was combining Sinch's value analysis with GMX's timing instincts. It was a lot of fun.

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#10) On December 22, 2008 at 2:16 PM, XMFSinchiruna (26.56) wrote:


Good for you, fleabagger! I trust you were trading around a core position, though, and not trading the entire holding in and out? GMX does continue to exhibit a solid sense for short-term timing, and I admire that, but I'm sure even he'll concede that with the complexity of issues surrounding us and the rapid-fire pace of developments around the world, almost anything can happen from day to day. Trading short-term swings in a volatile, crisis-ridden market can certainly bolster gains when calls are correct, but they can also sting pretty hard when a market moves unpredictably. If I had just one prediction for 2009, I would predict that 2009 will be the most unpredictable year in all of our lifetimes. I'm sure even GMX will concede an elevated exposure to risk by attempting to play the short-term.  I remain intently focused upon the long-term up-trend for gold and silver ... and eventually also energy and other commodities.

The dollar may very well find a manipulated short-term rally here as foreign currencies continue to exhibit a willingness to devalue their curencies in turn. Some have even argued that China's present devaluing bias is an effort to take advantage of more a more favorbale exodus from the USD and into cheaper commodities. I'm not going to call a mid-term trading channel for SLW, but continue to view shares as seriously undervalued. For the swing-trading Fools, though, I would keep an eye on the USDX for clues about SLW's trajectory. Once this dollar fall resumes below 80 and towards next support around 72.5... then an SLW could potentially gain quickly. I wouldn't want swing traders to miss the dollar's move to 72.5... which could potentially be abrupt indeed, IMO. Ultimately, and most unfortunately, I believe the dollar then continues far lower still.

Good luck playing the swings, but be careful please!!!

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