"Street Critique" -Hilary Kramer, Market Strategist
Wednesday, December 26, 2007PAUL KANGAS: With a weak dollar and worries about inflation heating up, tonight's "Street Critique" guest says gold is attracting a lot of attention. She's Hilary Kramer, market strategist and author of the book, "Ahead of the Curve." Hilary, welcome back to NIGHTLY BUSINESS REPORT.
HILARY KRAMER, MARKET STRATEGIST: Thank you, Paul.
KANGAS: Why do you think gold is so alluring right now?
KRAMER: Well what we have is, we have a falling U.S. dollar that's very weak. We have rising inflation. We have energy costs that are going skyrocketing. And so investors all around the world look for security, safety and they're fleeing into gold. That's why 2007 was the year for gold and 2008 could even be a bigger year.
KANGAS: I know that you're a stock person, but do you favor owning the actual metal itself here?
KRAMER: Yes. I know many investors, many very smart, experienced investors are actually buying gold itself. They're taking physical delivery of gold, but for the individual investor, there is another option, which is GLD. This is an ETF that trades and so there is liquidity and it actually mirrors and tracks the price of gold, not gold companies, so this is a better option for those that want the own the gold.
KANGAS: Very interesting. Now let's get to your gold stock plays. First up, you like Barrick Gold, ABX on the big board. Why is that?
KRAMER: OK. I love this company because this is the titan of natural resources. We're talking about a company that's the biggest in the world for gold production. It's a great opportunity to pick up a stock that I believe will hit $60 a share because, well, the market sold it off because of their hedging strategy, but they've done away with that and we're going to see Barrick Gold do very well in '08.
KANGAS: I'd like to see another selection.
KRAMER: Anglo-American. AAUK is the ticker. AAUK could easily go to $45 in 2008. This is a company that's nicely diversified, gold, silver, platinum, diamonds and coal and they have mines all over the world and you're going to see this company, which has a woman CEO, really, really do well, especially with gold prices rising.
KANGAS: We have time for one more selection, Hilary.
KRAMER: OK. Freeport McMoran, FCX is the ticker symbol. I love FCX because basically they've merged with Phelps Dodge so the stock sold off. Investors wanted to wait for the merger to be integrated and to enjoy the synergies. So now is the time to get in and buy a stock that could easily go to $155 a share in 2008 as they enjoy the economies of scale that are created by the merger.
KANGAS: Hilary, do you own any of the issues mentioned here tonight or have any other disclosures to make?
KRAMER: No, I don't own any of these stocks, but I expect in 2008 I'll be buying them.
KANGAS: OK. What is your goal for the price of gold during 2008? What's your target?
KRAMER: I think we could see $900 an ounce. I believe it could get there and very easily, especially if we have any kind of political instability or any kind of global crisis on top of the weakening U.S. dollar.
KANGAS: OK. Any other thoughts on the market in general?
KRAMER: I believe that investors need to be very careful in the first quarter of 2008. The problem is that there isn't a lot to make the market continue going up and there's really an issue with the consumer because the consumer doesn't have money anymore. So we have Wall Street saying there's no problem, don't worry about a recession, but this will be a consumer-led recession.
KANGAS: Your approach is a cautious one by the sound of it.
KRAMER: Absolutely. You can still make money in the stock market, Paul.
KANGAS: I know. Hilary, great to see you again. We'll see you again in the New Year.
KRAMER: Thank you.
KANGAS: My guest, Hilary Kramer, author of "Ahead of the Curve."
