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Please don't tell my wife, but I'm not always right.
I goofed pretty majorly back in July when I failed to predict the damage to Teck Cominco (NYSE: TCK ) shares from a most untimely acquisition. I also learned the hard way not to underestimate Korean steelmaker POSCO (NYSE: PKX ) . Thankfully, though, I've had my share of correct calls as well, but none more timely than my best stock tip in 2008.
As a long-term value investor, I generally pay little attention to the volatile peaks and valleys that seem to so entertain the investing masses. Since the equities markets in 2008 were characterized by bouts of forced liquidation and indiscriminate selling, valuations for many quality companies dove through bargain territory right into the realm of ridiculous.
Case in point: Trading below $3, Silver Wheaton (NYSE: SLW ) shares valued the company's silver streams at an unbelievable $1 per ounce. I knew the valuation was irrational and therefore unsustainable, but through some combination of blind luck and blind faith, I also nailed the timing to a tee.
Silver Wheaton's shares hit their 52-week low of $2.51 on Nov. 25, the same day that article appeared. Since that time, those shares have more than doubled to trade near $5.50 as we head into the holidays. For the swing trader who may have locked in some profits last week, the move could have produced gains of 175% in just a few weeks. Some Fools got downright emotional. (You're welcome.) For those with a longer-term focus, however, I believe that the 2008 low of $2.51 will stand as an all-time bottom.
Calling bottoms is inherently risky and often pointless, but I believe the widespread panic which painted that tape is unlikely to affect the precious metals sector in the same way again. To date, U.S. Treasuries have been among the most notable assets to which investors have fled, but I see gold and silver reasserting their roles as safe haven assets should any further panic selling grip the equities markets in 2009 and beyond.
My best stock for 2009, Agnico-Eagle Mines (NYSE: AEM ) , also enjoyed a quick double from its late-October low, while fellow gold producers Yamana Gold (NYSE: AUY ) and Kinross Gold (NYSE: KGC ) have moved sharply higher as well. Pan American Silver (Nasdaq: PAAS ) , meanwhile, has bounced only about 60%. (Only!)
Once more for the record, I believe these quality miners have seen their darkest hour. We'll just have to wait and see if I can claim the title of "Seer of Metal" or not.
Get your minimum daily minerals with this Foolishness:
- How about gold for $10 per ounce?
- POSCO is swimming against the current
- Are production cuts going too far?
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