Is it a good time to enter gold mining stocks? The short answer is yes, particularly for the long-term as I see gold prices climbing higher due to inflationary pressures rising. Right now, inflation is at bay — however, it is only a matter of time before inflation picks up, in my opinion. Those holding gold, silver, and stocks in the sector as insurance against inflation will be rewarded in time.
Earlier in the year, an interesting change of heart was had by a major institution that was bearish on the metals for ages. Of all the places to turn bullish on select gold miners, JPMorgan (NYSE:JPM) has just done so. In a story that received little coverage several months ago, JPMorgan was out with a note that suggests there are huge opportunities in 2014 in silver and gold companies. In contrast, Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and Credit Suisse (NYSE:CS) are all predicting a lower average price of gold and silver in 2014, so the call is a bit of a surprise.
Nonetheless, I have been recommending accumulation of top names in the space on the way down since the first 20 percent drop in the sector began. The complete list of stocks they recommend as buys here at rock bottom prices for appreciation into 2014 can be found in table 1. In this article, I will focus on Goldcorp (NYSE:GG). Investors should consider getting into positions at current levels as I see a very favorable risk-reward ratio, validated by JPMorgan’s bullish stance.