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Gold Stocks: Your Last Defense vs. Stimulus-Dollar Bust?

Tuesday, 17 Feb 2009 | 12:28 PM ET

They're the only stocks on the market that are as good as gold, and that's why Frank Holmes of U.S. Global Investors likes gold stocks. (See his recommendations, below.)

"Do not buy gold to get rich," he cautioned CNBC viewers. "Buy it like you buy car insurance, to protect you from the debasement of currency and the volatility of markets."

In this atmosphere of frantic attempts to stimulate economies, he perceives a global race to print money: "Who's going to get the gold medal for printing the most money, that country will see the price of gold rise the highest," he said.

The price of gold itself has been outrunning the prices of gold stocks, but he sees that changing rapidly.

"The biggest cost to these gold-mining companies is oil, and oil is lagging, so their profit margins are going to expand, so I think gold stocks are going to become much more attractive in this cycle, as we get further along," he explained.

Recommendations:

"Royal Gold is a gold-royalty company," Holmes said. "They're clean, clean balance sheets and income statements, and have a profile for growth."

He also likes Yamana Gold.

Disclosures:

Disclosure information for Frank Holmes was not immediately available.

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