New Stock to Portfolio..GG

I know the addition of this stock to my portfolio is going to bring a bunch of e-mails and my need for a mea culpa.  But maybe not since I have always pushed copper as an alternative to gold in the belief the global economy is more important than gold as a barometer of safety. So with the addition of Goldcorp, symbol GG, to my portfolio for 2012 I am taking a different approach to future profits.

 

The erosion of the European economy and the growing concern of what a second Obama term would look like from the inflation point makes gold something that finally needs to be considered. No I have as yet not reached the point where I believe owning real gold in your household is something that needs to be addressed, but I have reached the point where I believe the odds of a downright collapse of both the US and European economy is now a possibility. The continuing massive overspending by Obama and the continuing massive printing of dollars by Bernanke make gold more interesting as source of making derivative profits. If QE3 comes in early 2012 as many now believe this also adds fuel to the gold fire. So with that pointed out let me make the case forGG as the stock to add.

 

Goldcorp has several trading values I like for profits. One it has single point options which are a plus for traders. The options are also highly liquid and have large prices due to the rapid up and down movement of gold prices. Two, GG has upped their dividend twice this year and finally have enough yield to make them interesting. Honestly the below 2% yield does not meet my criteria, but the monthly payout make the security worthwhile since sometimes the holding period might be no more than one month. Three, GG has decided in the past year to be more shareholder friendly in increasingly giving their cash flow to shareholders and if this continues going forward the dividend should continue to increase. Four, GG has stabilized in price just above the $45 level in the past six months and with the large option premiums this makes for opportunity for traders.

 

One other point on GG is that it is domiciled in Canada and I expect there is no longer any reason for me to tell my regular readers why I like Canadian stocks.

 

So with the soon addition of GG we enter the gold obsessed crowd and hopefully will find some profits. I am dropping MO to make room for this addition. 

 

I currently do not own GG as a long or option, but plan on taking a position shortly.