Yamana Gold Inc. (YRI.TO)

He would not own any gold stocks here. Gold used to be the safe haven, but now it is the US$.

It was a top pick 2 or 3 years ago and was the only stock he sold before returning to Market Call about a year later. There are better companies out there. The only gold people should own right now is bullion.

One of the better gold companies. If he were more bullish on gold as a commodity, he would be recommending this. However he is not bullish on gold.

(Market Call Minute) He doesn’t like gold here. He is underweight. This is one of three he owns, however. They have their eye on the ball and shut down some unprofitable mines.

Most gold stocks have not done well, given what the gold price has done, which dropped from $1900 about 1.5 years ago and is now at around $1260. Gold companies that don’t hedge are going to come off as the gold prices come off. Prefers Goldcorp (G-T).

Production growth is very good over the next few years. Have a number of issues ramping up with new mines in Brazil, but that should already be priced into the stock. Malartic is a great acquisition for both this company and Agnico Eagle. There will be more value over the next couple of months as they explain how they are going to grow production. This will be a big cash flow generator for them. Not his favourite right now as they are having problems hitting production guidance. The Brazil issue is still an overhang. Also, have assets in Argentina which is still a political issue.

We are in a strong seasonality part of the year for gold. It peaks in October. Thinks the risk/reward is really good. Stock had a bottom in May-June, followed by a nice uptrend. Was bumping into the 200 day back in August. It is now hugging the 50 day. Relative strength is right in the middle of the band and the MACD is just turning down, but close to the zero line. If it breaks that zero line, you get a bit of fall through and he would say the gold thesis is over. Risk/reward for gold is really good. (See Top Picks.)

The lower stock price is primarily because of the collapse of the price of gold. However, he believes the price is going to come back over the next year or 2.

Likes this because it is a laggard. This gives him a holding in Agnico Eagle (AEM-T), Osisko as well as this.

This has visible production growth and visible earnings growth. Also, there is visible financial flexibility to build out what they need to build out. Thinks the stock got ahead of itself. Had some operational issues that were overblown.

This company has gone through love and hate periods with analysts. For the last couple of years they loved them, but then had some issues with some of their new start up mines. Company just updated their guidance. Pays a nice dividend of 1.8%. Out of favour right now. Stock has been so beaten down that he continues to be a buyer. You can Buy at these levels, chipping away at it, but you have to be patient.

This is a management team that made a lot of mistakes in past cycles. Made some bad acquisitions. Over promised and under delivered. Nobody really liked them 5-7 years ago. They fixed that along with some of their production issues. Did better acquisitions. You now have a company that has very high leverage to the price of gold. Feels that GoldCorp (G-T) is the best senior, followed by Agnico (AEM-T) and then followed by this company. In the next gold cycle, it will do very well. You need the gold sector to move and right now it doesn’t seem to be doing a whole lot.

Gold: We had a substantial move on gold and it is trying to find support in the $1200 area so we probably need to re-test lower than where we are. Some gold stocks still have not come out of their negative period. FNV-T is an example. YRI is still below its 40 week moving average. This looks like it is starting to make a base, but don’t expect to have an immediate upward reaction on this stock.

We are entering the period of seasonal strength for gold. This one has been a little weaker. It is trying to break out of a downtrend line. It has been building a base recently. One of his tests is registering a buy signal. AEM-T, ABX-T or XGD-T would be a preference.

This is a key opportunity to buy a name that is cheap, before it re-rates when it communicates with its partner Agnico Eagle (AEM-T) on how they are going to plan to grow and showcase the Malartic Mine. Also, produces copper.