If You're Looking to Invest in Gold, Start Right Here
By Matt Badiali
October 12, 2007
"Rotor's up, skids are down... I guess we're okay." The pilot shot me a weathered grin.
I'm not generally a happy helicopter passenger, so the humor was lost on me as we soared over Grass Valley, Nevada. Of course, our pilot, Ted, was flying helicopters before I was born, and he turned out to be a Cracker Jack birdman.
Ted took us over some of the world's richest gold mines, located right here in the U.S., in Nevada's Cortez and Carlin Trends.
I'd visited the region before and toured several mines, both open pit and underground. This time I went get a feel for the rocks... Ironically, the best way to do this is from the air. I came away from that flight awed by what I had seen:
This area of the world is a giant mining complex. Actually, if the state of Nevada were its own country, it would be the world's fourth-largest gold producer. And after the recent spike in the price of gold, drill rigs have sprouted up like mushrooms after a rain on nearly every piece of open land left.
You can mine rock in open pits here that contains as much as two ounces of gold per ton (that's very rich). And Nevada's deeper deposits are sometimes much better. This is a land of giants.
In fact, I went to Nevada because of the frequency of giant gold deposits. I wanted to check out a prospect generator competing with the big guys for a piece of the pie. It's got a tiny market cap and very promising deposit; so one good drill hole could drive a 500% gain.
But the truth is, you don't need to shoot the moon to get in on gold. If you buy cheap, quality assets, you're going to make money. Despite a soaring gold price in the past year, many big-name gold producers are still below their 2006 highs.
Gold is up 28% in the past year, and has taken out its 2006 highs. If Ben Bernanke cuts interest rates again, gold miners will climb even higher. Lower interest rates make the dollar less and less attractive... which is great news for us. In fact, I'd say the day the Fed lowered interest rates was one of the best buy signals for gold in recent years.
So whether you're a gold bug or cautious investor, you need to own gold in some form, especially right now. The conservative way is to own gold coins or a gold ETF. I also love long-term bets on quality gold producers. And some of the richest gold deposits on earth are being uncovered right now in Nevada, so you might want to start there.
Good investing,
Matt Badiali
