Glittering Gold

I haven’t written much about gold recently although I am heavily invested in a batch of my favorite gold mining stocks. The price of spot gold has been steadily improving over the past few weeks. My belief is that the recent bullish activity is being driven by aggressive fund purchasing. The overall gold market is tiny in comparison to say the trillions managed by global hedge funds. A single large hedge fund has the ability to move the entire gold market. I doubt that normal physical demand can move gold in $10-$20 daily increments. I believe this to be especially true in light of the lack of recent news over the typical concerns of global terrorism or a type of pandemic like a wide spread avian flu. There are valid concerns over inflation that have driven many authors to write that gold is being pushed up as a hedge against inflation. While this may be true the mainstream media hasn’t picked up the correlation between inflation and gold in the same manner that it reported gold’s rise in conjunction with terrorism or a possible pandemic. Recently gold saw a large correction in a day only to recover the following day as shorts were forced to cover their positions. The news trend mixed with the subtly of the recent bull run in gold is leading me to believe that the hot money is currently chasing the metal. If this continues and the individual investor catches wind, that is when we will see a true gold fervor and rush not to miss the boat. My expectation of the next time individuals will hop on the bandwagon is when gold breaks $1,000.

Here are my current favorite picks for gold mining stocks:

Gold Fields Limited (GFI)
Newmont Mining Corporation (NEM)
Tanzanian Royalty Exploration Corporation (TRE)
Northgate Minerals Corporation (NXG)
Yamana Gold, Inc. (AUY)
**Coeur d’Alene Mines Corporation (CDE)

*Disclaimer: The author current owns 500 shares of GFI purchased at an average price of $16.94, 1000 shares of NEM purchased at an average price of $45.32, 5000 shares of TRE purchased at an average price of $5.50, 6000 shares of NXG purchased at an average price of $2.97 and 5000 shares of CDE purchased at an average price of $4.63.

**Coeur d’Alene Mines Corporation is primarily a silver miner with some minor exposure to gold.

Microsoft and Intel by default

Another way to have titled this article would have been: “Vista and the Core 2 Duo by default”. A quick cursory look at several brick and mortar stores reveals a quick phase out of Windows XP. In fact the phase out occurred much quicker than I had expected. Purchasers looking for a choice between discounted Windows XP PC’s and Windows Vista PC’s are likely only going to find one choice on the shelves just weeks after the Windows Vista launch. It appears the lengthy delay from Microsoft Corporation (MSFT) over delivering the retail version of Windows Vista has allowed manufacturers and retailers to properly plan out the logistics for phasing out Windows XP hardware. It’s a bit easier for online purchasers to find Windows XP hardware on sites like New Egg, a top online retailer of computer equipment.

It’s hard however for a purchaser to justify purchasing a Windows XP computer when the price difference between an XP model and a newer Vista model appears to be negligible. An obvious trend that I see is the Intel Corporation’s (INTC) Core 2 Duo powering a significant portion of the Windows Vista offerings from various manufacturers. An earlier cursory holiday look showed Advanced Micro Devices, Inc. (AMD) gaining quite a large number of design wins with manufacturers providing Windows XP offerings. I expect the current Microsoft and Intel trend to continue until the fourth quarter of 2007.

Again these are my cursory observations. We won’t know the actual details until Microsoft and Intel announce firm sales numbers for the first quarter of 2007. I am bullish on Microsoft and Intel for the remainder of 2007. I expect to see Intel outperform Microsoft in terms of percentage gain in the stock. Microsoft has steadily moved up as we approached the January 2007 launch date of Vista. Intel on the other hand has stalled over everything from jitters of a semiconductor glut to slow adoption rate. I suggest that Intel fans simply watch Intel’s pricing scheme closely to see if they will aggressively cut CPU prices throughout 2007. Without any aggressive price cuts I expect to see revenue and profit margin continue to improve throughout the year and that alone should increase investor confidence in the company. Watching Intel is an important strategy since the company is the 900lb. gorilla of the semiconductor industry. Watching the biggest player alone is enough to give you a general idea where the semiconductor market is headed. It’s no wonder that when Intel drops other semiconductor stocks like TSM and UMC tend to fall in suit. As an Intel investor, I watch much less what stocks like Taiwan Semiconductor Manufacturing Company Limited (TSM) and United Microelectronics Corporation (UMC) are doing and I decidedly focus purely on Intel’s sales performance. In reverse when I was invested in TSM and UMC I closely followed Intel’s stock price movements and the company’s sales.

My price target for Intel is $24 in the next 3-6 months and $28 in 6-12 months.

*Disclaimer: The author currently owns 5000 shares of INTC purchased at an average price of $20.55.

Seeking Alpha Certified

David Jackson of Seeking Alpha wrote in to tell me that Raw Greed has become Seeking Alpha Certified. I am excited to be a part of the new effort to improve the quality and transparency of blog posts.

Here is a quote about the new Seeking Alpha compliance program:

This sends a clear message to your readers that you adhere to objective standards of honesty and integrity, and have been selected by Seeking Alpha also due to your quality.

As always, I am enthusiastic to support anything that David and Seeking Alpha are working on. The new compliance program is another innovative effort on his part. Please visit Seeking Alpha to view other great financial blogs.