A Golden Opportunity for Stock Market Investors

There isn’t a precious metal that has fascinated humankind more than gold. There isn’t a precious metal that has infiltrated our everyday lives as much as gold. This rich metal has made its way into our language: “heart of gold,” “as good as gold,” and “all that glitters is not gold!” are just a few examples.

For centuries, gold has been at the heart of many societies. The Egyptians awarded the yellow metal godly powers and used the perfect shape of a circle to symbolize it in their hieroglyphic writings. To early Hindu philosophers, gold was the “mineral of light,” and to early Western philosophers, it was the light of the sun captured on Earth in a stone.

Remember hearing about the alchemists who searched for ways to turn ordinary base metals into gold? Their quest was so powerful in the eyes of ordinary people that they were believed to have powers that were otherworldly. The interesting part of this story is that, in theory, such an idea is not entirely impossible.

All metal atoms are made of the same building blocks of protons, neutrons and electrons, only in different quantities. So, if an alchemist could reconstruct a base metal’s building blocks to exactly mimic the structure of gold, the search would be over.

However, in reality, such reconstruction can be achieved only in nuclear reactions, where heavy radioactive metals decay into other lighter elements, including some isotopes of gold. Since a nuclear reaction is hardly a practical proposition, creating gold out of a base metal remains a dream! At least the alchemists’ efforts were not entirely futile, as it was their search for gold that gave us the rudiments of modern chemistry.

Throughout history and in mythology, gold has not been merely a philosophical fascination; it also lured men across oceans and continents, over cold mountain ranges, and into Arctic tundra and deadly jungles.

The wonderful glitter of gold sent Jason of Thessaly on his search for the Golden Fleece, while Alexander the Great had to conquer most of the Old World to satisfy Rome’s insatiable appetite for this precious metal. The

search for distant riches sent Columbus of Genoa on the path to the New World; Vasco da Gama of Portugal and Amerigo Vespucci of Italy to map their famous voyages; and Cortez and Pizzarro of Spain to conquer the Incas, Mayans, and Aztecs for the glory of Spain (and for the royal treasuries).

Gold has graced beautiful necks in European courts and pushed millions into slavery, wars, and death. No other metal has created so much beauty—and no other metal has caused so much misery.

Aside from its splendor and mythical fascination, gold also has an unparalleled combination of chemical and physical properties that make it invaluable to a wide range of everyday applications essential to modern life.

Thousands of everyday medical, industrial, and electrical appliances require gold for optimum performance. It is virtually indestructible, completely recyclable, and immune to the effects of air, water, and oxygen. The metal is benign in all natural and controlled environments. It is also among the most electrically conductive materials around.

Gold is the most ductile of all metals, as it can be drawn out into extremely tiny threads without breaking. For example, a single ounce of gold can be drawn out into a thread five miles long! In addition, its malleability is unparalleled, as it can be shaped into extraordinarily thin sheets and recycled back into something completely different, without losing any of its characteristics. It is truly wondrous that an ounce of gold can be stretched into a 100-square-foot sheet!1

Gold’s wide-range applicability has made it an important sector in any country’s economy. For decades, 75% or more of the gold needed by U.S. manufacturers was imported from other countries. However, from the 1980s on, U.S. gold production rose steadily—from one million to more than 11 million ounces per year, mainly due to advances in mining, exploration, and processing technologies. Today, the U.S. produces more gold than any other nation, except South Africa, and meets its domestic demand in addition to exporting roughly 23% of the metal it produces.2

A Golden Opportunity for Stock Market Investors

Information contained herein, while believed to be correct, is not guaranteed as accurate. A time lag exists between publication date and distribution date; hence, numerical figures may become outdated. Contents © 2013, Lombardi Financial, a division of Lombardi Publishing Corporation; in the U.S.: 350 5th Avenue, 59th Floor, New York, NY 10118; in Canada: P.O. Box 428, Kleinburg, ON, L0J 1C0; phone: 1-866-744-3579; web site: www.lombardipublishing.com. Occasionally, we make our list of customers available to carefully screened companies, outside of Lombardi Publishing Corporation, whose products and services might be of interest to you. If you prefer not to receive this information, please write to us. Stock charts courtesy of www.StockCharts.com. E-mail messages from e-newsletter@lombardipublishing.com are only sent to paid subscribers and are not intended to be sent to those who do not want to receive them. If you wish to stop receiving e-mail messages as part of your service, kindly reply to this e-mail with “unsubscribe” in the subject line. 0613

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A Golden Opportunity for Stock Market Investors

In addition, gold plays a key role in a number of rapidly developing technologies. Billions of gold-coated electrical connectors are used in the computer, telecommunications, and home-appliance industries.

Weather and communications satellites depend on gold-plated shields and reflective apparatuses for protection from solar heat and electrical interference while in space. Advanced laser technology used in industrial and medical applications also employs interior gold coatings to concentrate its powerful light energy.

The automotive industry depends on gold-coated contacts for sensors that activate automotive air-bag systems, while modern medicine relies on gold to monitor heart function or functions of the chemical procedures for diagnosis and treatment of cancer, viral and bacterial diseases, and allergies. It’s no wonder then that gold is critical to the global economy.

The Gold Market TodayAn investor is fortunate to experience one or two bull markets in his or her lifetime. Some bull markets last for long periods of time and many investors often enjoy the benefits of such rewarding periods, especially those who recognize the bull market early on and get on board before the stampede follows.

However, bull markets in their infancy are seldom immediately recognized. Usually, both investors and market observers are too busy focusing on the fallout from the previous bearish cycle to recognize the onset of the next bullish market. As economic data start pouring in, most investors are still deciphering what came first—the chicken or the egg.

Considering a number of economic indicators, a new bull market has been definitely happening in the commodities markets, especially in gold and silver since 2002–2003. This new bull market seems very similar to the last bull market for gold, which began in the 1970s. At the time, both physical gold and gold stocks were rallying, as they are today.

After the dollar was taken off the Bretton Woods system, gold and silver prices became deregulated. As a result, investors turned their focus to owning precious metals.

During the first phase of the bull market in the early 1970s, the only buyers of gold were investors seeking refuge from the weak dollar, along with some industry insiders who continuously kept gold on their radar.

This phase lasted until about the mid-1970s, at which point both the stock and precious metals markets went through a correction. The second phase started in 1976, when bigger players came into the game, such as high net-worth individuals and financial institutions.

During that second bullish period, monetary conditions were shaping up to be to gold bullion’s advantage on many levels. Arthur Burns, the former chairman of the Federal Reserve Board, tried to control interest rates through credit.

Burns strongly believed that the government should have the power to control the economy regardless of the external mechanisms that also must be factored in. He viewed monetary policies from a credit perspective, thinking that he could control the economy through credit markets. In addition, Burns thought that unions and monopoly pricings of large corporations caused inflation, referring to price spikes in oil and food prices.

The problem was that Burns viewed inflationary spikes as one-time events that were not intertwined with a number of other factors appearing within a business cycle, and he never attempted to deal with them through the policies of the central bank.

Only when the new chairman, Paul Volcker, took over the reins, did inflation and interest rates become real tools of real monetary policy. Volcker was also the one who put an end to the great bull market in commodities, when he recognized that too much money and too much credit were eating away at the very foundation of the U.S. financial system.

Dear Reader: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis. The opinions in this e-newsletter are just that, opinions of the authors. We are 100% independent in that we are not affiliated with any bank or brokerage house. Information contained herein, while believed to be correct, is not guaranteed as accurate. Warning: Investing often involves high risks and you can lose a lot of money. Please do not invest with money you cannot afford to lose. Nothing herein should be considered personalized investment advice. Before you make any investment, check with your investment professional (advisor). We urge our readers to review the financial statements and prospectus of any company they are interested in. We are not responsible for any damages or losses arising from the use of any information herein. We are a publishing company offering the opinions and commentary of our editors and analysts. Past performance is not a guarantee of future results.

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A Golden Opportunity for Stock Market Investors

However, before Volcker took over, a number of things shaped the great bull market for commodities in the 1970s. Burns’ monetary and fiscal policies were primary drivers of the gold bull market. However, supply and demand fundamentals were also out of shape, therefore helping precious metals prices.

History is repeating itself today. America is again having issues addressing its monetary policy, while most economists view the dollar as being weak and likely to get even weaker as a result of spiraling deficits and a slowing economy. In that sense, the price of gold is very often a result of psychological shifts.

For some people, gold is a material used for making jewelry. For others, it is the world’s original currency, and thus the only real protection against inflationary pressures, financial bubbles, and even global economic meltdowns. The most fervent gold bugs run to it every time the American economy teeters on its path to recovery or when foreign investors threaten to call in the United States’ massive loans.

For the first time since the 1980s, the world’s economies (particularly Western economies) are growing and faltering almost in tune with one another. There are indications that this positive correlation will continue well into the next decade. Generally, this spells good news for producers of basic commodities, such as agriculture, copper, and oil.

Investors should remember that gold and silver were the world’s first true money, and when paper money starts depreciating, the precious metals tend to resume their historical role as currency. Freely floating currencies are by default unstable, and since there are no reassurances in tangible assets, paper money is inherently prone to losing its value.

In addition, both the world’s gold and silver supplies are running out. So, those companies with large resources of both mined and in-ground precious metals will be the big winners in the commodities bull market that is shaping up before us.

The time seems to be right for picking precious metal stocks, as the renewed momentum of the bullish reign in commodities develops. Some observers go so far as to claim that we could expect another 10 years of a commodity price boom.

The simple truth is that gold is a trustworthy and realistic investment instrument that should be in every investor’s portfolio. Gold’s traditional role as a safe haven has made it the underdog in the world markets—an investment that people turn to only when the stock or bond markets aren’t performing well, or when monetary policies are running amok. It is high time to move gold

from its apocalyptic pedestal, and accept it as a credible and realistic investment vehicle.

What do you want to look for in a gold mining stock? Look for companies with a strong management team, lots of cash in the bank, growing production, and low cash costs. With gold bullion currently trading near $1,350 per ounce, the stock market still offers some good options for gold investments.

We’ve found a profitable, fundamentally rock-solid gold mining stock with growing revenues, and a strong acquisition strategy; it’s one that pays a monthly dividend (2.1% annually). It’s also the gold mining company that investment portfolio managers turn to.

It’s the fastest-growing, lowest-cost senior gold producer, with operations and development projects in politically stable regions throughout the Americas. And, the company’s strong project pipeline is positioned to drive long-term, sustainable growth.

This company firmly believes in its product, and sees no need to hedge against the price of gold depreciating. It is growing internally, and by acquisition. Which compelling gold mining stock do we think you need to have in your portfolio for the next 10 years?

The company we are talking about is Goldcorp Inc. (NYSE/GG).

About GoldcorpGoldcorp is one of the world’s fastest growing gold producers, with operations and development projects located in safe jurisdictions throughout the Americas. As of December 31, 2012, Goldcorp had proven and probable gold reserves of 67.08 million ounces, along with major assets of silver and copper.3 Protecting your investment, Goldcorp remains focused on five key attributes: growth; low cash costs; maintaining a strong balance sheet; operating in regions with low political risk; and conducting business in a responsible manner.

Goldcorp’s operating assets include five mines in Canada and the U.S., three mines in Mexico, and four in Central and South America. Goldcorp also has a solid pipeline of projects, including the Cerro Negro project in Argentina, the Éléonore gold project in Quebec, Canada, the Cochenour project in Ontario, Canada, and the El Morro project (70% interest) in Chile. These valuable assets, along with several others, allow for significant growth in production for years to come.4

Buy

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A Golden Opportunity for Stock Market Investors

Ratings Index

Speculative Buy: A buy recommendation for a stock with high investment risk.Enthusiatic Hold: Keep holding your position in this stock; company and stock prospects look great; maintain a moving stop-loss limit.Hold: Keep holding this stock; maintain a moving stop-loss limit.Sell: A recommendation to sell or take profits from a stock.Radar Screen: A recommendation to begin watching the trading action in a particular stock.

NYSE: New York Stock Exchange AMEX: American Stock Exchange

NASDAQ: NASDAQ Stock Market OTCBB: Over-The-Counter Bulletin Board

NASDAQ/SC: NASDAQ Small Cap Market TSX: Toronto Stock Exchange

TSXV: Toronto Stock Exchange Venture Exchange

They have the track record to prove it. From 2001 to 2011, an investment in Goldcorp would have outperformed the peer companies in the gold mining industry, as well as physical gold.5

Goldcorp’s track record of sustained growth can be attributed to its:

• Industry-leading gold production growth;• Low production costs;• Focus on areas of the world with low

political risk;• Conservatively managed strong balance sheet

to fund growth internally; and• Policy of investing with discipline; returning

value to shareholders through an active dividend policy.

Goldcorp’s superior pipeline has positioned it for continued strong growth in the years ahead. By 2016, the company expects annual gold production to reach 4.2 million ounces, an increase of 70% over 2011.

Goldcorp’s balance sheet is among the strongest in the sector: the company ended the first quarter of 2013 with cash, cash equivalents, and marketable securities of approximately $2.0 billion.6

Over time, Goldcorp investors have benefited from growth in key financial measures, including: cash flow and earnings per share. Successful exploration and portfolio management has also resulted in steady growth in the number of gold reserves represented by each of the company’s common shares.

Strategy for Growth

• Low-cost gold producer • High-quality reserves in the Americas• Gold production 100% unhedged

• Strong focus on organic growth• Experienced operating and project

development teams• 2013 production estimated between 2.55 and

2.8 million ounces

Senior Executives

• Charles Jeannes, President and Chief Executive Officer

• Lindsay Hall, Executive Vice President & Chief Financial Officer

• George R. Burns, Executive Vice President & Chief Operating Officer

Directors

• Ian Telfer• Charles Jeannes• John Bell• Larry Bell• Beverley Briscoe• Peter Dey• Douglas Holtby• Randy Reifel• Dan Rovig• Kenneth Williamson• Blanca Treviño de Vega

Head Office

Park Place, 666 Burrard Street, Suite 3400Vancouver, BC, Canada V6C2X8Tel.: (604) 696-3000; Fax: (604) 696-3001

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A Golden Opportunity for Stock Market Investors

Goldcorp’s Latest Results

• Gold sales in the first quarter of 2013 consisted of 595,100 ounces on production of 614,600 ounces.

• Total revenues were $1.02 billion, compared to $1.21 billion in the first quarter last year.

• Silver production totaled 5.6 million ounces, compared to silver production of 6.6 million ounces in the prior year’s first quarter.

• Operating costs were $1,135 per ounce of gold on an all-in sustaining cost basis, $565.00 per ounce on a by-product basis and $710.00 on a co-product basis.

• Net earnings were $309 million compared to $479 million in the first quarter of 2012.

• The average realized gold price for the quarter was $1,622 per ounce of gold sold during the quarter. This compared to $1,707 per ounce during the year-ago quarter.7

Goldcorp—a Golden OpportunityPaper money has never maintained its original value—and it never will. Throughout history, paper currencies have faced inflationary headwinds, making them worthless. For example, the purchasing power of the U.S. dollar has declined by 90% since 1950! The situation is the same for most currencies. When governments come under financial pressure, they print money out of thin air to pay for debts.8

The U.S. greenback, the go-to currency for global economic stability and growth, is imploding at an unprecedented rate. Since 2008, the Federal Reserve has forced three rounds of quantitative easing on the American public, printing trillions of dollars in an effort to kick-start the economy. The extra dollars pumped into the U.S. economy are supposed to spur growth. They also have the reverse effect, shrinking the buying power of each dollar…which is the driving force of inflation. Since July of 2012, the U.S. dollar index has gone down more than five percent.

Where should investors turn? We are in favor of gold stocks, because other commodity options come with strings attached. For example, retail mark-ups on gold coins and bars are out of step, while exchange-traded bullion, even in rising markets, doesn’t appreciate in price as fast as gold stocks do.

While generally favoring gold stocks, we view Goldcorp in particular as a Buy, because we believe this stock will bring long-term value to your portfolio for years to come. We’ll go even so far as to say that this stock is the only one you will need to own for the next decade!

For those investors looking to hedge their portfolios with gold exposure, Goldcorp deserves to be at the top of the list.

Sources1. “Gold,” Wikipedia.org, last accessed June 12,

2013.2. Ibid.3. “GOLDCORP Corporate Update,” Goldcorp

web site, May 2013, last accessed June 12, 2013; http://www.goldcorp.com/files/Goldcorp_Corporate%20Update_May_v001_o7p7yx.pdf.

4. “Unrivalled Assets; Mines & Projects,” Goldcorp web site, last accessed June 12, 2013; http://www.goldcorp.com/English/Unrivalled-Assets/Mines-and-Projects/default.aspx.

5. “Why Goldcorp?; Delivering Results,” Goldcorp web site, last accessed June 12, 2013; http://www.goldcorp.com/English/Why-Goldcorp/Delivering-Results/default.aspx.

6. “Goldcorp Reports 2013 First Quarter Results; Annual Guidance Reconfirmed,” Goldcorp press release, May 2, 2013, on the Goldcorp web site, http://www.goldcorp.com/English/Investor-Resources/News/News-Details/2013/Goldcorp-Reports-2013-First-Quarter-Results-Annual-Guidance-Reconfirmed/default.aspx, last accessed June 12, 2013.

7. Ibid.8. Radomski, P., “Currencies Don’t Make Gold

Look Good,” Kitco Commentary, July 6, 2012, last accessed June 12, 2013; http://www.kitco.com/ind/Radomski/20120705.html.

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