Luke Burgess - Angel Publishing

US Closer to Losing AAA Rating

Moody’s Investors Service says the U.S. and the UK have moved "substantially" closer to losing their AAA credit rating due to unsustainable debt levels.

Under the ratings company’s baseline scenario, the United States will spend more to service its debt service as a percentage of revenue this year than any other top-rated country except the UK, and will be the biggest spender from 2011 to 2013.

The U.S. government will spend about 7% of its revenue servicing debt in 2010 and almost 11% in 2013, according to the baseline scenario of moderate economic recovery.

Under its adverse scenario, which assumes 0.5% lower growth each year, less fiscal adjustment, and a stronger interest-rate shock, the U.S. will be paying about 15% of revenue in interest payments — more than the 14% limit that would lead to a downgrade to AA, Moody’s said.

Luke Burgess
Editor, Wealth Daily

Australia is World's 2nd Largest Gold Producer

New data from Melbourne-based Surbiton Associates Pty shows Australian gold output increased 14% in the fourth quarter last year, securing the country's position as the world’s second-largest producer.

Australian gold production increased to 62 tonnes during the final quarter of 2009. Full-year output climbed 3% to 227 tonnes, Surbiton said.

"The increase in Australian gold output in the December quarter was assisted by the long-awaited opening of the giant, re-developed Boddington operation," said Sandra Close, a director of Surbiton Associates, which pulls the results from Australia’s gold-mining companies to produce its numbers.

China's output reached 314 tonnes last year, making it the world's biggest gold producer, the research group said. The U.S. produced 216 tonnes and South Africa 210 tonnes, Surbiton said.

Good Investing,

Luke Burgess
Editor, Wealth Daily

Lihir Gold Expects Increased Production

Mid-Tier gold producer Lihir Gold (NASDAQ: LIHR) reported production targets for the company's mines for the next decade, highlighting plans for significant increases in gold output.

Lihir is aiming to produce an average 1.45 million ounces of gold per year between 2012 to 2016, rising to an average of 1.5 million ounces per year for the following five, to 2021. This represents an increase of 50% from 2010 production levels, between 960,000 and 1.06 million ounces.

The increase in annual gold production is primarily driven by Lihir's current expansion projects at the company's Lihir Island and Bonikro mines.

A plant upgrade at Lihir Island is expected to lift production to more than 1 million ounces per year from 2012. With a budget of $940 million, this upgrade will raise ore processing capacity at the operation by approximately two-thirds. Construction for the upgrade is on track and within budget for completion by the end of next year.

At the Bonikro mine, an expansion of processing capacity and new higher grade satellite ore deposits are the subject of a feasibility study due for completion by the end of the third quarter of 2010. Production at Bonikro is anticipated to increase from 110,000 to 130,000 ounces per year in 2010 to an average of 250,000 ounces per year from 2012 to 2016. The capital cost of the expansion is expected to be below $100 million.

Good Investing,

Luke Burgess
Editor, Wealth Daily

Copper Prices Jump after Earthquake in Chile

Copper prices jumped and mining shares surged today as the market absorbed the weekend's 8.8 magnitude earthquake in Chile, the world’s largest producer.

Forward month copper prices spiked nearly 6% — the biggest gain since April on speculation the quake would disrupt shipments.

The earthquake and its aftershocks disrupted over a third of world copper production. In 2009, Chile mined 5.4 million metric tons of the metal last year, or about 34% of global output. Copper prices have more than doubled in the past 12 months as the world economy recovered from its worst postwar recession.

Luke Burgess
Editor, Wealth Daily

China Won't Buy IMF Gold

Contrary to much speculation, China may not be the buyer of the remaining 191.3 tons of gold that is up for sale from the International Monetary Fund (IMF).

Speaking on the condition of anonymity, a senior official from the China Gold Association was quoted in Reuters saying, “It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility.”

The unnamed official said China would continue to build its gold reserves by acquiring gold mines abroad rather than purchases on the international market.

Some analysts speculated that China would purchase the IMF gold in an effort to diversify its dollar asset-dominated foreign exchange reserves. According to estimates, China hold's over 70% of the country's $2.4 trillion foreign exchange reserves in US dollar assets. China holds approximately 1,054 tons of gold reserves. This gold is equal to only 1.2% of the nation's gross domestic product, far below the world average of 10%.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Peru Mining Stocks

A raging bull market in metals has sent mining companies on a frenzied hunt around the world seeking high-quality mineral investment opportunities.

Peru, in particular, has been a hotspot destination for these firms due to the country's vastly rich natural resource base, well-developed mining infrastructure, fair tax policy, and mining-friendly government.

Early investors have been able to leverage these benefits into profit by investing in Peruvian mining stocks.

Take for example Compañía de Minas Buenaventura S.A. (NYSE: BVN).

Buenaventura is Peru's largest publicly-traded mining company with seven operating mines in the country. With help from rising gold prices, shares of BVN have increased as much as 137% in the past 12 months. Take a look:

Investors in other companies have gained even more.

Peruvian precious and base metal junior explorers Andean American Mining (TSX-V: AAG) and Chariot Resources (TSX: CHD) have both returned as much as +500% in the past year. Check it out:

Andean American Mining	Chariot Resources

Many of the world's senior mining companies have operations in Peru. They've used the country's extensive natural resource base to build some of the world's largest and lowest cost precious and base metal mines, including Barrick Gold's (NYSE: ABX) Lagunas Norte and Newmont Mining's (NYSE: NEM) Yanacocha mines.

Other major mine developers and producers with operations in Peru include BHP Billiton (NYSE: BHP), Freeport-McMoRan Copper & Gold (NYSE: FCX), Pan American Silver (NASDAQ: PAAS), Southern Copper (NYSE: PCU), Hochschild Mining (LSE: HOC) and Teck Resources (NYSE: TCK).

These major producers have made Peru the world's largest silver producer, second in zinc, and sixth in gold production. Peruvian silver production totaled 135.8 million ounces in 2009. Meanwhile, zinc and gold production totaled 1.50 million tons and 6.42 million ounces, respectively.

The country also displaced the United States as the world's second largest copper producer. Domestic copper production was 1.273 million tonnes in 2009. Peru also produces molybdenum, tin, lead, iron ore, and a number of other industrial minerals.

Last year, investment in Peru's mining and energy sectors totaled $4.88 billion. And over the next five to seven years, Peru expects another $35 billion to be pumped into the country mining sector, creating extremely favorable conditions for growth.

As metal prices continue to heat up, shareholders of mining stocks with quality projects will be rewarded. And these rewards may be magnified with companies that have exposure to Peru's legendary mineral resource base.

To help get you started investing in the country's mineral sector today, here are...

Three Peruvian Mining Stocks You May Have Overlooked


Company	Bear Creek Mining
Exchange: Symbol	TSX-V: BCM
Share Price	$3.75
Market Cap	$258 million
Website	www.bearcreekmining.com

Bear Creek Mining is a Peruvian pure play with a large silver/zinc/lead resource base.

At its flagship Corani project, the company currently has NI 43-101 compliant proven and probable reserves of 258 million ounces of silver, 1.42 billion pounds of zinc, and 2.88 billion pounds of lead.

Bear Creek also has silver-equivalent measured, indicated, and inferred resources that total an additional 476 million ounces across its Corani and Santa Ana projects.

A positive pre-feasibility study for the Corani Project estimates average annual production of 10 million ounces of silver for the first six years of a 27-year mine life, with low cash costs and fast payback of capital costs.

Meanwhile, a scoping study for Santa Ana has examined a proposed, low-cost pure silver mine producing 5 million ounces annually in the first six years of an estimated 12-year mine life. Both projects are undergoing feasibility studies.


Company	Fortuna Silver Mines
Exchange: Symbol	TSX: FVI
Share Price	$2.65
Market Cap	$252 million
Website	www.fortunasilver.com

Fortuna Silver is a Canadian mid-tier mineral company with projects in Mexico and Peru.

In Peru, the company controls a 100% interest in the producing Caylloma silver/zinc/lead mine. Fortuna operates the mine at over 1,000 tonnes per day (tpd) and is working on the permitting to further increase throughput to 1,500 tpd.

Exploration activities include testing of high-grade silver and base metal targets within the Caylloma Mining District and evaluation of surrounding properties to identify opportunities warranting more advanced exploration and development.

The Caylloma Mine has proven and probable reserves of 22.5 million ounces of silver, 229 million pounds of zinc, and 151 million pounds of lead with gold credits. Caylloma also hosts measured, indicated, and inferred silver-equivalent resources of over 17.5 million ounces.


Company	Norsemont Mining
Exchange: Symbol	TSX: NOM
Share Price	$2.05
Market Cap	$164 million
Website	www.norsemont.com

Norsemont Mining is a mineral exploration and development company focused on its 100%-owned Constancia copper/molybdenum/silver property in Peru.

The company has completed a positive definitive feasibility study for the Constancia project and is currently completing an environmental and social impact assessment in preparation for permitting.

The Constancia project is currently home to indicated and inferred resources of 3.96 billion pounds of copper, 102 million pounds of molybdenum, and 57 million ounces of silver.

Norsemont’s primary goal is to continue expanding the Constancia global resource base through the exploration of additional discoveries within the immediate vicinity of Constancia deposit.

Here is a list of other pure Peruvian mining stocks:

Company	Target
Andean American Mining (TSX-V: AAG) www.andeanamerican.com	gold, silver, copper
Candente Copper (TSX: DNT) www.candentecopper.com	gold, silver, copper
Chariot Resources (TSX: CHD) www.chariotresources.com	copper
Cuervo Resources (CNQ: FE) www.cuervoresources.com	iron ore
Dorato Resources (TSX-V: DRI) www.doratoresources.com	gold, silver copper, zinc, lead
Duran Ventures (TSX-V: DRV) www.duranventuresinc.com	gold, silver, copper, zinc, lead, molybdenum
Dynacor Gold Mines (TSX: DNG) www.dynacorgold.com	gold, silver, copper, zinc, lead, molybdenum, bismuth
Gitennes Exploration (TSX-V: GIT) www.gitennes.com	gold, silver, copper, zinc
Grenville Gold (TSX-V: GVG) www.grenvillegold.com	gold, silver, copper, zinc, lead
Macusani Yellowcake (TSX-V: YEL) www.macusaniyellowcake.com	uranium
Panoro Minerals (TSX-V: PML) www.panoro.com	gold, copper
Rio Cristal Resources (TSX-V: RZC) www.riocristalresources.com	gold, copper, zinc
Sinchao Metals (TSX-V: SMZ) www.sinchaometals.com	gold, silver, copper
Solex Resources (TSX-V: SOX) www.solexresources.com	uranium
Straight Gold (TSX-V: SRD) www.straightgold.com	gold, silver, copper
Tinka Resources (TSX-V: TK) www.tinkaresources.com	gold, silver, zinc, lead
Trevali Resources (CNQ: TV) www.trevaliresources.com	silver, zinc, lead
Vena Resources (TSX: VEM) www.venaresources.com	uranium
Zincore Metals (TSX-V: ZN) www.zincoremetals.com	zinc, lead

To learn about Sam's Peruvian adventure — and two wind energy companies he believes will return expect upwards of 60% in short order — check out his latest report.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

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Investing in Land Stocks

It's a commodity more important than gold or oil... A resource that provides our most basic needs... An asset in very limited supply: land.

Over the years, I've allocated a portion of my portfolios to land-rich companies. Typically, these are not pure land plays; they have other operating businesses that may or may not be connected to their land holdings.

These include public companies in the timber, coal, mineral, and agricultural industry. With such businesses, investors are not dependent on the companies converting their land into cash for success, but still get the benefit of owning the land asset.

Investing in these land-rich stocks have some benefits over acquiring physical land itself. Shares of stock are much more liquid and brokerage commissions are a hell of a lot lower than insurance premiums and lawyer fees.

Introducing the "Negawatt Box"

We installed it in our Baltimore office a few months ago...

And immediately realized a 44% savings on our energy bill.

The best part: The company that makes the device trades for less than $1.00.

This report outlines why this stock will double as the entire world learns about the "Negawatt Box"... and the massive energy savings it produces.

Here are a few ideas to help get you started...

Investing in Land Stocks

Tejon Ranch Company
NYSE: TRC
Stock: $31
Market Cap: $523 Million
Land Asset: 270,000 acres
Location: California
Market Cap / Acres: $1,937
Website: www.tejonranch.com

Tejon Ranch was founded in 1843 as a Mexican land grant. In the decades that followed, the ranch grew in size as additional land grants were purchased by Tejon’s founder, General Edward Fitzgerald Beale, a historic figure in early California.

Today, Tejon is a diversified real estate development and agricultural company whose principal asset is its 270,000-acre land holding located approximately 60 miles north of Los Angeles and 25 miles south of Bakersfield.

The company generates operating revenue from land entitlement and development, commercial leases, marketing of real estate projects, oil and mineral production, utility easements, recreational activities, and filming locations. Tejon also generates revenue from farming almonds, pistachios, walnuts, and wine grapes.

Cresud, Inc.
NASDAQ: CRESY
Stock: $13
Market Cap: $651 Million
Land Asset: 1.2 million acres total, 800,000 acres undeveloped
Location: Argentina
Market Cap / Acres: $543 total, $814 undeveloped
Website: www.cresud.com.ar

Cresud is one of Argentina's largest agricultural companies. They raise beef and dairy cattle and grow corn, soybeans, sunflowers, and wheat.

The company is also one of the largest landowners in Argentina. Cresud has about 1.2 million acres of land, of which 400,000 acres are in productive use.

The company leases its land out to other agricultural companies including Tyson Foods. Cresud also owns stakes in a couple of other publicly traded companies, including a 60% stake in the Argentine land company IRSA and a 20% stake in Brasilagro.

PICO Holdings, Inc.
NASDAQ: PICO
Stock: $33
Market Cap: $740 Million
Land Asset: 440,000 acres
Location: Nevada
Market Cap / Acres: $1,681
Website: www.picoholdings.com

PICO Holdings is primarily engaged in the ownership and development of water resources and water storage operations in the southwestern United States.

The company currently owns about 440,000 acres of land in Nevada that were originally part of 1.2 million acres of former railroad land that PICO purchased in 1997. The company has strategically sold off nearly two-thirds of its original 1.2 million acres over the years, but it still owns water (and other rights) on more than 1 million acres.

The company also develops and sells real estate and related mineral and water rights, as well as leases properties for grazing and agricultural uses. PICO is additionally focused on the acquisition, ownership, and development of residential lots, primarily in California. The company owns or controls more than 500 finished lots and 3,100 in various stages of entitlement — plus 1,400 residential lots on 244 acres in Monterey. PICO also owns two insurance companies that are currently in run-off.

Plum Creek Timber Co, Inc.
NYSE: PCL
Stock: $37
Market Cap: $5.99 Billion
Land Asset: 7 million acres
Location: Diversified U.S.
Market Cap / Acres: $855
Website: www.plumcreek.com

Plum Creek Timber owns and manages timberlands in the United States. The company's products include lumber, plywood, medium density fiberboard, and related by-products like wood chips.

Plum Creek Timber is also the largest private landowner in the United States. The company controls over 7 million acres of timberland in 19 states with large land holdings in Florida, Maine, Montana, and Wisconsin.

The company also operates a wholly-owned residential development business that builds homesites.

TimberWest Forest Corp.
TSX: TWF.UN
Stock: $5
Market Cap: $397 Million
Land Asset: 796,000 acres
Location: Vancouver Island
Market Cap / Acres: $498
Website: www.timberwest.com

TimberWest is Canada's largest private timber and land management firm. The company manages its assets for long-term sustainability to assure a steady and continuing flow of high quality timber and cooperation with its neighboring communities. About 85% of TimberWest’s production of Douglas-fir and hemlock is second growth. The company also harvests a mixed inventory of wood including western red cedar and balsam.

TimberWest is also Western Canada's largest private land management company. The company owns 796,000 acres of timberland on Vancouver Island. TimberWest also has a residential real estate development subsidiary.

Texas Pacific Land Trust
NYSE: TPL
Stock: $28
Market Cap: $275 Million
Land Asset: 965,000 acres
Location: Texas
Market Cap / Acres: $285
Website: www.tpltrust.com

The Texas Pacific Land Trust was created in 1888 after the bankruptcy of the Texas and Pacific Railway Company. Holders of Texas and Pacific Railway Company bonds received 3.5 million acres of land in Texas which had been earned by the railroad and pledged as security against bonds. The bondholders created the Texas Pacific Land Trust and converted bonds to shares of proprietary interest in the Trust, which was created to manage and sell the land.

After 122 years, the job is still only 70% complete. The Trust is one of the largest landowners in Texas with around 965,000 acres located in twenty different counties. Texas Pacific Land Trust generates revenue from land sales, grazing leases, easements, as well as a perpetual oil and gas royalty interest in some 387,000 acres.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Search and Seizure, Canadian Style...

British Columbia is under siege...

Their newly formed "Green ATF" will stop at nothing to shut down the coal and oil power industry.

But for those who will take over, $30 billion in government funding is up for grabs.

Find out now which hydroelectric company stands to gain 171% as BC goes green.

Mining M&A to Double in 2010

International accounting major Ernst & Young LLP believes the value of mergers and acquisitions in the mining industry may more than double this year as China seeks to secure supplies of raw materials.

In 2009, mergers and acquisitions in the mineral sector fell to $60 billion following a peak of $210 billion in 2007. This year, Ernst & Young LLP forecasts the value of mining M&A will reach $175 billion.

Mining majors such as Anglo American (LSE: AAL) and Vale (NYSE: VALE) sold a record amount of bonds last year to raise funds for acquisitions, expansions, and buybacks.

Meanwhile, China — the world’s largest metal consumer — may add to last year’s record $32 billion spending on resource acquisitions. China was the world leader in mineral acquisitions last year, accounting for 24% of all deals (compared with 18% in 2008). There may be the same amount of interest from China this year as the country looks to secure natural resources for infrastructure development.

Luke Burgess
Editor, Wealth Daily

New Precious Metal ETF Planned

ETF Securities USA has filed for permission to launch a brand-new U.S.-based ETF backed by a basket of physical gold, silver, platinum, and palladium.

The company said it planned to register 18 million shares with a proposed maximum aggregate offering price of $1.058 billion.

The filing stated, “The investment objective of the trust is for the shares to reflect the performance of the prices of physical gold, silver, platinum and palladium, in the proportions held by the trust, less the trust's expenses.”

ETF Securities noted that, since the fund will take metals off the market, it could cause bullion prices to rise — especially for the relatively small markets for platinum and palladium, where supply and demand constraints exist that are generally not present for gold and silver.

“Purchasing activity associated with acquiring the bullion required for deposit into the trust in connection with the creation of baskets may temporarily increase the market price of gold, silver, platinum and palladium, which will result in higher prices for the shares,” the filing said.

If approved, the ETFS Physical PM Basket Shares would join the company’s four other U.S. physically backed precious metals ETFs. These include ETFS Physical Swiss Gold Shares (NYSE: SGOL), ETFS Physical Silver Shares (NYSE: SIVR), ETFS Physical Platinum Shares (NYSE: PPLT), and ETFS Physical Palladium Shares (NYSE:PALL).

Good Investing,

Luke Burgess
Investment Director, Hard Money Millionaire

Africa's Newest Gold Region

Officials from the Nigerian Ministry of Mines and Steel Development hope to begin developing the country's gold and other mineral resources as an alternative its oil and gas industry.

The renewed interest in minerals follows the discovery of 300,000 ounces of gold, with an estimated 2 million ounces contained in Western Nigeria.

The Ministry of Mines believes Nigeria has gold belts in the western half of the country that are very similar to those of Ghana — the world’s second largest producer — which accounts for about 10% of the world’s gold reserves.

Nigerian officials will also focus on the development of oil sands with estimated reserves of 27 billion barrels of oil equivalent, coal (2.7 billion tonnes), iron ores (3 billion tonnes), limestone (2.23 billion tonnes), barytes (14 million tonnes), and lead/zinc sulphides (1 million tonnes).

One company investing in Nigeria gold right now is CGA Mining (TSX: CGA). CGA owns the Segilola project, where the company recently proved the existence of 620,000 ounces of gold at a grade of 4.3 grams per tonne.

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

The Definitive Guide to 2010 Gold Stocks

There's no doubt about it... Everything points to higher gold prices this year:

Weakness in the U.S. dollar: The value of the dollar has fallen 35% since 2002 and 9% in the past 12 months. Meanwhile, the national debt is approaching $12.5 trillion and the 2010 budget deficit is projected to hit a new record: $1.56 trillion.
Economic uncertainty: Investment markets worldwide continue to be on shaky ground. Gold is considered the most respected store of value. It is the ultimate safe haven and the least risky of all investments.
Supply constraints: World gold production has fallen every year since 2001. Meanwhile, central banks have now become net buyers of gold after over 30 years of selling.
Growing investment demand: Global investment demand has more than tripled in the past few years and continues to spike higher.
Cyclical bull market: Gold prices are in a long-term cyclical bull market that will continue to push prices higher. The price of gold has increased over 150% while the Dow Jones has remained flat in the past five years.

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Gold bugs are buying the physical metal in the form of bars, coins, and ETFs. Meanwhile, more speculative investors are tapping into gold stocks where the rewards are much higher.

Investors buy gold stocks because they have leverage. That means small changes in the price of gold can greatly affect share prices of gold stocks. For example, over the past 12 months gold has increased 23%. But at the same time, AngloGold Ashanti (NYSE: AU) has increased 40%; Randgold Resources (NASDAQ: GOLD) is up 68%; and IAMGOLD (NYSE: IAG) has returned a 112% gain.

Of course, the leverage effect goes both ways. And gold companies with falling production — or forecasts of falling production, like DRDGold (NASDAQ: DROOY) and Kinross Gold (NYSE: KGC) — have underperformed the underlying metal. While gold has gained 23% in the past year, DRDGold pulled back 21% and Kinross lost about 4%.

In 2010, things will be no different. Gold companies with steady and rising production will most likely be this year's success stories. And those with falling production will be the year's flops.

To get you started investing in gold stocks for 2010, here are...

Three Large-Cap Gold Stocks Increasing Production

Barrick Gold (NYSE: ABX)

Share Price:	~$36
Market Capitalization:	~$35 billion
2009 Gold Production:	7.2 - 7.6 million ounces
2010 Gold Production Guidance:	7.7 - 8.1 million ounces
Change:	+7%

Barrick Gold is the world's largest gold producer. The company retains a portfolio of 26 operating mines and a pipeline of projects located across five continents, as well as large land positions on some of the most prolific mineral districts.

The company estimates to have produced 7.2 to 7.6 million ounces of gold in 2009 at total cash costs of $450-$475 per ounce. This year, Barrick expects to lower production costs and increase gold output to 7.7-8.1 million ounces with the startup of Cortez Hills operation in Nevada.

Goldcorp (NYSE: GG)

Share Price:	~$35
Market Capitalization:	~$26 billion
2009 Gold Production:	2.4 million ounces
2010 Gold Production Guidance:	2.6 million ounces
Change:	+8%

Goldcorp is the lowest-cost and fastest growing senior gold producer, boasting 14 operations and development projects throughout North and South America.

The company reported record gold production for the 2009 year of over 2.4 million ounces at a total cash cost of approximately $295 per ounce on a by-product basis and $390 per ounce on a co-product basis. In 2010, Goldcorp expects to produce 2.6 million ounces of gold with an increase of approximately 17% to total cash costs.

The overall forecast production increase in 2010 is broad-based, featuring increases at nearly every mine in the portfolio. Going forward, Goldcorp aims to lift gold production to 3.8 million ounces by 2014.

Newmont Mining (NYSE: NEM)

Share Price:	~$46
Market Capitalization:	~$23 billion
2009 Gold Production:	5.2 million ounces
2010 Gold Production Guidance:	5.5 - 5.7 million ounces
Change:	+5% - +10%

Newmont Mining is a leader in the mining industry, with operations on five continents.

The company estimates 2009 gold equity sales of approximately 5.2 million ounces at a total cash cost of $400–$425 per ounce, reflecting ongoing cost reduction efforts and favorable by-product credits. For 2010, Newmont expects to produce between 5.5–5.7 million ounces, primarily as a result of higher production from its Boddington mine in Australia and Batu Hijau operation in Indonesia.

With gold demand on the rebound and prices holding record levels, these are just a few stocks that are positioned for growth this year.

Here's one last...

2010 Gold Stock Doubling Production

Agnico-Eagle Mines (NYSE: AEM)

Share Price:	~$54
Market Capitalization:	~$9 billion
2009 Gold Production:	500,000 ounces
2010 Gold Production Guidance:	1.0 - 1.1 million ounces
Change:	+100% - +120%

Agnico-Eagle Mines is a mid-tier gold company with operations in Quebec and Finland, and exploration and development activities in Canada, Finland, Mexico, and the United States.

The company expects to produce 500,000 ounces of gold in 2009 at a total cash cost of $340 an ounce. This year, Agnico-Eagle is looking to more than double gold production to 1.0–1.1 million ounces at a slightly higher cash cost. Going forward, the company expects gold production to average 1.4 million ounces annually from 2011 to 2014.

I expect sizable gains from these and other mid- to large-cap gold companies that will be increasing production in 2010. Larger gains, however, will be returned by...

Investing in Junior Gold Stocks in 2010

Don't be fooled... Mining for gold is a risky business.

Not only are mining companies subject to volatility in the price of gold, but they must also bear the burden of geological, operational, and geopolitical risks. But it is this risk that allows gold stocks to outperform their underlying commodity, as I discussed earlier.

Junior gold stocks are even more speculative. But their risk/reward tradeoff amplifies potential gains even further. And when junior gold stocks are in favor, they can quickly return legendary gains...

One good example is Ventana Gold (TSX: VEN), which increased 3,589% in the first 11 months of 2009 as the company explored their Colombian gold projects and made mineral discoveries. A $5k investment turned into $180,000. Check it out:

Junior gold stocks, like Ventana, give investors spectacular opportunities to make a lot of money. But the problem for average investors is choosing the right junior gold stock.

There are over 1,000 junior mining companies that are listed on the TSX Venture exchange alone. And it's very difficult to sort through all the promotions and scams to find solid junior gold stocks.

My job as a newsletter writer is to sort through all the garbage to find the real opportunities that can deliver the big returns. For example, I waded through around 70 junior gold stocks to find my latest recommendation; a small $32 million company with a $727 million gold resource. With a resource worth over 22 times its market capitalization, strong management, geopolitically safe projects, and near-term production, I expect this $0.50 stock to be trading over $4.50 in short order, for a +900% gain.

Going through all those companies was a very time-consuming and nerve-racking ordeal. If you don't have the time or patience to spend pouring over junior gold stocks, I recommend taking a look at the Market Vectors Junior Miners ETF (NYSE: GDXJ).

The Market Vectors' Junior Miners ETF just started trading a few weeks ago. The ETF is composed of 56 mineral companies of small-and medium-capitalization. To be eligible to be listed in the ETF, companies must have a market capitalization of greater than $150 million and a three-month average daily trading volume of at least $1 million. Here is a list of the top ten holdings in GDXJ:

Company	Symbol	GDXJ Holdings
New Gold	NGD	5.24%
Alamos Gold	AGI.TO	4.07%
Gammon Gold	GRS	4.00%
Helcla Mining	HL	3.78%
Silver Standard Resources	SSRI	3.60%
Couer d'Alene Mines	CDE	3.50%
SEMAFO	SMF.TO	3.48%
Silvercorp Metals	SVM	3.42%
Allied Nevada Gold	ANV	2.72%
San Gold	SGR.V	2.65%

If and index ETF isn't for you, then I invite you to check out the profits you could be making right now by joining my Hard Money Millionaire advisory service.

In 2009, the Hard Money Millionaire portfolio delivered 22 winning investment recommendations out of 23 ventures — a 95.7% success rate.

At its best, my portfolio returned members seven (7) winning investments that each returned a +100% gain.

In fact, the gains from my Hard Money Millionaire portfolio are on par with $100 million hedge funds!

For the year, the Hard Money Millionaire portfolio returned an average of 21.3%. The Barclay Hedge Fund Index, which uses data from 1,658 hedge funds around the world, calculates that hedge funds returned an average of 24.1% for 2009 — only slightly higher than my average return.

The difference between the hedge fund gains and Hard Money Millionaire? You don't need a million dollars to join. (Check out my latest recommendation here.)

Whether you join my team of investors or not, I strongly urge you to take some time to explore junior gold stocks.

I believe that 2010 is the year gold bugs have been waiting for. There's no doubt that gold will breach the $1,500 level this year. As it does, junior gold stocks are going to be in play.

Only through diligent research is it possible to thresh out the good from the bad. But with time, patience, and maybe some aspirin, you can make a lot of money in gold stocks in 2010.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Largest Gas Find in U.S. History Sparks "Louisiana Land Rush"

This is big... real big. In the swampy outskirts of Red River Parish, Louisiana -- 271 miles northwest of New Orleans -- a group of scientists made the discovery of a lifetime...

What they found more than 1,000 feet beneath the surface is the single largest natural gas deposit in U.S. History... and so far, the fourth largest deposit ever found on earth!

The four companies at the forefront are already up 51%, 80%, 41% and 66% -- since March 2009. And they're poised to run even more.

Isn't it time you made similar gains?

China Remains World's #1 Gold Producer

The China Gold Association reported that domestic gold output increased 11.3% to a record of 312 tonnes last year, clinching the county's position as world's largest gold producer for the third year in a row.

China's booming gold industry reported 138 billion yuan (US$20 billion) of gross industrial output value in 2009 — an increase of 19%, compared to the previous year.

Nearly 60% of China's gold output last year came from the five producing province: Shandong, Henan, Jiangxi, Fujian, and Yunnan.

The ten largest gold firms produced 149 tonnes — 47.3% — of the country's total output. China had more than 700 gold producers in 2009, down from more than 1,200 firms in 2002 as the industry consolidated.

The China Gold Association gave no figures for domestic gold demand. However, metals consultancy group GFMS said last month that it expects China to overtake India as the world's largest gold consumer in 2009. Total Chinese demand is forecast to reach 432 tonnes as investors defy record bullion prices.

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Peru Remains World's Top Silver Producer

Production of gold, silver, and copper in Peru increased during 2009, while output of other base metals declined, according to Peru’s Ministry of Energy and Mines.

Gold production in Peru increased 1.41% to 6.4 million ounces. Meanwhile, Peruvian silver production increased 4.56% to 136 million ounces, and copper output rose 0.54% to 45 million pounds.

Peru is the world's top producer of silver and ranks as the third largest copper producer and sixth largest gold producer. Other base metal production fell in Peru last year. Below is a table with annual metal production data from Peru:

Metal	2009 Production	Change from 2008
Gold	6.4 million ounces	+1.41%
Silver	136 million ounces	+4.56%
Copper	2.8 billion pounds	+0.54%
Zinc	3.3 billion pounds	-5.85%
Lead	667 million pounds	-12.37%
Tin	83 million pounds	-3.93%
Iron	9.7 billion pounds	-14.38%
Molybdenum	27 million pounds	-26.47%

As the Peruvian mining industry continues to expand, there will be a growing need for more energy. My colleague, Sam Hopkins, recently returned from the country where he got a first hand look at Peru's growing wind energy projects. To learn about Sam's Peruvian adventure — and two wind energy companies he believes will return expect upwards of 60% in short order — check out his latest report.

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Lihir Gold Joins the 1 Million Ounce Club

Mid-tier gold producer Lihir Gold (NASDAQ: LIHR) wrapped up a fourth consecutive year of record gold output in 2009, with production exceeding one million ounces for the first time in the company’s history.

The company reported production of 1.12 million ounces of gold at a total cash cost of $397 per ounce last year — up 27% from the previous year.

In 2010, Lihir is forecasting slightly lower gold production. The company expects to produce between 960,000 and 1.06 million ounces this year from its three producing operations in Papua New Guinea, West Africa, and Australia.

Going forward, Lihir expects to ramp up gold production to 1.3 million ounces in 2012 as expansion projects boost output at Lihir Island and Bonikro.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Platinum, Palladium Surge to 18-Month Highs

Platinum and palladium prices climbed to 18-month highs this week, boosted by demand from two newly launched ETFs.

The ETFS Platinum Trust (NYSE: PPLT) and ETFS Palladium Trust (NYSE: PALL) began trading on January 8 with much fanfare. And in the three weeks since their NYSE listing, both ETFs have witnessed large investments.

These ETFs — like many others — are backed by the physical metals. The platinum ETF currently holds 195,000 ounces; the palladium ETF holds 400,000 ounces. The metal currently held in the platinum ETF is worth over $300 million and is equal to over 11 times the world's daily platinum output.

Platinum for immediate delivery rose as much as $1,629 an ounce this week, while palladium peaked at $466 an ounce.

Platinum and palladium are mainly used in catalytic converters that lower pollution from combustion engines. Support for platinum and palladium demand is expected to be boosted by China, where up to 17.2 million cars are forecast to hit the road this year — a 26% increase from 2009.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

Shares of Junior Miner Explode After Rare Earth Discovery

Share prices of First Gold Exploration Inc. (TSX-V: EFG) skyrocketed as much as 180% after the company announced a new high-grade discovery of rare earth elements and lithium at its Éléonore Property in Northern Québec.

The company reported that recent grab samples from an area between two of First Gold's previous lithium and rare earth element discoveries - contained very high grades of lithium, rubidium, tantalum, beryllium, niobium, and gallium.

The announcement of the new discovery sent the stock soaring from $0.34 to a high of $0.95. Share prices cooled off by the end of the day to close at $0.68 - a 113% gain.

The news even sparked near-panic buying. Investors traded 9.3 million EFG shares by the end of the day - a whopping 4,000% increase over the stock's 3-month average daily volume.

First Gold's press release stated the company was compiling the results of the drill hole that should be released in the coming days.

As the price for rare earth elements and lithium continues to march higher, new discoveries — like those being made First Gold's Québec property or the $273 billion in rare earth elements found in Greenland — will continue to pay off for investors

Luke Burgess
Investment Director, Hard Money Millionaire

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Investing in U.S. Gold Stocks

The world's most precious metal is probably right in your own backyard.

Data from the U.S. Geological Survey shows remaining natural resources of over 1 billion ounces of gold here in the United States.

In fact, the USGS believes $700 billion worth of U.S. gold is still completely undiscovered. And that's exactly why billions are spent every year...

Investing in U.S. Gold

In the mid-1980s, U.S. gold production levels spiked as a result of two major factors:

The astonishing investment profits made from gold during the great precious metal bull market of the 1970s;
Advancements in a production process called heap leaching, which allowed miners to begin recovering gold from low-grade deposits in Nevada and other states.

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Gold production in the United States jumped over 600% in the decade between 1983 and 1993. Take a look:

The United States remains one of the world's most important gold producers. In 2008, the country produced approximately 230 tonnes of gold, making it the third-largest gold-producing nation behind only China and South Africa.

America is actually a net exporter of gold. In 2008, the U.S. exported nearly 21 million ounces of gold. Approximately two-thirds of this gold was exported to the United Kingdom, Australia, and Switzerland.

Over 70% of the gold produced in the United States today comes from large, open-pit heap leach mines in Nevada. Nevada's gold mines have produced nearly 3% of all the above ground gold in existence. And it's exactly where you'll find what I reckon as the...

Top 2 U.S. Gold Stocks

Barrick Gold (NYSE: ABX)
Share Price: $41
Market Cap: $40 billion

Barrick Gold is the largest gold company in the world. And nearly a third of the company's total gold production comes from Nevada.

In 2008, Barrick's seven Nevada gold mines produced over 2.5 million ounces and were estimated to host nearly 35 million ounces of gold reserves.

Newmont Mining (NYSE: NEM)
Share Price: $49
Market Cap: $24 billion

Newmont Mining has been pouring gold in Nevada for nearly 50 years. The company's operations include 14 open-pit and four underground mines and 14 processing facilities.

In 2008, Newmont's gold operations in Nevada produced 2.2 million ounces — 43% of the company's total production for the year.

The West Is the Best

Nevada has the highest concentration of gold mining claims of any state in the U.S. But there are more lucrative investment opportunities in some of the surrounding states...

About 60% of all the gold mining claims in the U.S. are located in the states that encircle Nevada.

The map below — rarely seen by anyone outside of the gold mining industry — shows the hundreds of thousands of gold mining claims that dot the Western United States:

There are over 200,000 gold mining claims located in eleven Western states that surround Nevada.

Geologists are specifically staking gold targets in Wyoming, Arizona, and Idaho, where some of today's most prospective gold investments are currently being made in the Boise Basin.

Mining professionals know that this region is one of the best places in the world to discover and mine for gold.

The Western United States is home to some of the richest gold deposits on earth. And the country as a whole is extremely mining friendly boasting:

political stability
a skilled labor force
social stability
terrific infrastructure
manageable environmental regulations
fair taxation laws

Based on these important factors, investors are encouraged to invest with confidence in gold stocks with quality projects in the Western United States.

I will be sending you an article this weekend which features yet another gold investment idea. This tiny $0.34 stock has a gold resource just north of Nevada that's worth over 60 times the company's market value.

The company is preparing to start production of this sizable resource. And as a result, I think shares could make their first move to $2.50 in short order.

Be on the lookout for my next piece, as I continue to bring you profit opportunity with gold and other precious metals...

Until this weekend,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

An Investment... Better Than Gold?

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Mexico's $150 Billion Gold State

The sudden clamor for gold properties in Central Mexico is handing triple-digit gains to investors.

A recent bidding war over a mid-sized gold deposit in the Mexican state of Zacatecas has already yielded a +100% return for investors since the beginning of the holidays.

Long-term investors have seen much higher gains, however, with two recent discoveries in Zacatecas. These discoveries have uncovered approximately $150 billion worth of precious and base metals. It was all found in...

Mexico's Golden State

Zacatecas is a landlocked state in Central Mexico, best known for its historic gold and silver mines.

The state's incredibly rich silver deposits were first discovered by colonial Spanish explorers during the 16th century. One hundred years later, the mines of Zacatecas were producing nearly a third of Spain's silver and a fifth of the world's supply.

But despite having already produced the equivalent of about $2.5 trillion worth of precious metals for the Spanish, geologists are using modern exploration techniques to find new gold and silver deposits in Zacatecas today.

Recent discoveries at the Peñasquito and Camino Rojo projects — both located in northeastern Zacatecas — have revealed a total resource of 40 million ounces of gold and the equivalent of 5.6 billion ounces of silver.

China's Loss is Your Gain

On January 1, 2010, a tiny mining company took legal control of a natural resource that today threatens the world's fastest growing economy.

And thanks to some timely reporting, our readers took early triple-digit gains in the days that followed.

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But by the time you hear about it in the Wall Street Journal, our readers will be depositing their gains in their savings accounts. Click here to learn more.

Peñasquito

The Peñasquito project is 100% owned by Goldcorp (NYSE: GG). It is home over 35 million ounces of gold, 2.4 billion ounces of silver, and $50 billion worth of zinc and lead. The Peñasquito mine will be Mexico's largest open pit mine once it is completed and commissioned in early 2011. The mine is expected to produce 500,000 ounces of gold, 30 million ounces of silver, and over 400 million pounds of zinc over its estimated 22-year mine life.

Camino Rojo

A half-hour drive to the southeast of Peñasquito is Canplats Resources' (TSX-V: CPQ) Camino Rojo project. The Camino Rojo ("Red Road") project is much smaller than Peñasquito, hosting almost 4 million ounces of gold and 70 million ounces of silver. A mine at Camino Rojo is expected to produce 122,300 ounces of gold and 902,100 ounces of silver over a 10-year mine life.

To gain control of the Camino Rojo project and expand operations in Zacatecas, Goldcorp made an offer to buy Canplats for ~$230 million back in mid-November.

Under the terms of the agreement, Canplats shareholders would receive 0.074 of a Goldcorp share and one share valued at C$0.18 in a new exploration company, representing a combined value of approximately C$3.60 per share.

Shares of CPQ instantly jumped 40%. And many investors walked away quite happy.

But the action in CPQ wasn't finished...

Last Tuesday, Canplats received the first of two higher offers from Minera Penmont, S. de R.L. de C.V., a company jointly-owned by Fresnillo PLC (LON: FRES) and Newmont Mining Corp. (NYSE: NEM).

Minera Penmont initially offered C$4.20 in cash and shares of a new exploration company.

And again, shares of CPQ jumped instantly... this time by another 50%.

Goldcorp exercised a prearranged right to match the offer on Christmas Eve. But over the weekend, Minera Penmont increased their offer to C$4.60, which Goldcorp matched again on Wednesday.

The offer for Canplats now still stands at C$4.60 in cash and shares of a new exploration company. And with a bidding war still underway, shares of CPQ have already increased as much as 102% since Goldcorp's initial offer.

With such a frenzy of interest in Canplats, I decided to take a look at other companies that have gold projects in Zacatecas. Here are...

Two Mexican 'Gold State' Stocks

Our ability to get investment exposure to gold projects in Zacatecas is actually quite limited. Goldcorp and Canplats have the most substantial projects in the state. And Goldcorp has already made moves to secure other mining interests in Zacatecas, leaving them with partial interests. Here are two companies with gold properties in Zacatecas that Goldcorp has made agreements with...

Corex Gold (TSX-V: CGE)

Corex Gold's 40,000 hectare Zuloaga property is located less than 10 miles from Peñasquito. The company has mapped the property and collected a few samples, but the project remains under-explored. Despite the limited exploration, Goldcorp has already reserved the right to earn a 70% interest in Zuloaga by spending $4,000,000 on the property over a five-year period. Goldcorp can gain another 10% interest in the Zuloaga property by funding the full construction of a mine.

Quaterra Resources (AMEX: QMM)

Quaterra Resources controls five 100%-owned concessions totaling 69,034 hectares in Zacatecas and San Louis Potosi. These concessions are even less explored than those held by Corex. Nevertheless, Goldcorp recently acquired the right to earn a 65% interest in Quaterra's Zacatecas properties by funding a $10 million exploration program.

Conclusion

Investment access to gold projects in Zacatecas is limited. But geology does not abide by political borders. There are many other gold and silver projects in the surrounding states of Durango, Coahuila, Nuevo Leon, and San Louis Potosi.

As always, I recommend looking for companies with quality projects and strong management with experience in the full development of mineral projects.

And with the New Year right around the corner, smart investors will widen their vernacular to include not just precious metals like gold and silver, but rare earth metals, as well.

With a new decade comes new technology... And today, Jan. 1, Denmark relinquishes its control over a $273 billion rare earth metals resource — the same metals essential for nearly all modern electronic devices. We reveal how you can get in on massive profits from these technology metals in our new report.

Enjoy the rest of your holiday,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

One of the Most Profitable Plays of 2010

Congress and the Obama Administration are giddy about giving out green tax credits...

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You need to read this report.

Because there's one company that could double - or triple - your money as they receive massive gov't incentives and their sales begin to soar.

Gold Mining Production Costs

Even at $1,200 an ounce, gold is still one of the safest investments you can make.

That's because, unlike 99.9% of other investment vehicles, gold has an intrinsic and universal value that has supported a strong market price throughout human history.

And now we have even more reason to remain confident in gold as a safe investment, thanks to a surge in mining production costs that may help buoy gold prices for decades to come. It all starts with the...

Rising Production Costs of Gold

Mining for gold is often romanticized as an adventurous, sometimes dangerous, way to get rich real quick. But as a business, it's very difficult to make a profit. And the real danger is financial.

Gold production is a very energy- and labor-intensive process, making it very expensive to operate a gold mine... especially now. Over the past few years, rising energy and labor prices have forced global gold production costs to increase quite dramatically.

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In 2000, Barrick Gold (NYSE: ABX) was producing gold for $145 an ounce (inflation adjusted = $185/oz). During the first three quarters of 2009, the company's total cash cost were $463 an ounce — a 215% increase.

According to GFMS, a world authority on gold markets, Barrick's current production costs are about average. Data from GFMS shows world gold production costs for the first half of 2009 averaged $457/oz. This average cost is down from $623/ounce in the third quarter of 2008.

Gold production costs swelled over 150% in five years between 2003 and 2008. And due to recent increases in energy and labor prices in the second half of 2009, experts estimate global gold production costs may average up to $500 an ounce for the year. Take a look:

In the long-run, the average gold production cost must increase.

The most easily accessible and cheapest gold resources will always be developed and exploited first. As these resources are diminished, producers will be forced to develop the next cheapest gold resources in line.

The ever-increasing nature of the cost of production may help support a growing valuation floor above $500 for gold prices. And it's one of the reasons that I think...

Gold Has the Best Worst-Case Scenario

The price of gold should always find price support near the average global cost of mine production.

That's because if the cost of production significantly exceeds the value of the yield, operators will likely halt output until market conditions improve. It's simply a matter of economics.

This halt will decrease the total supply of new mine production. And this decrease may ultimately help buoy gold prices to varying degrees depending on demand.

So if the average global cost to produce gold is $500 an ounce, I think gold's ultimate valuation floor may be near that level.

Conclusion

Indeed, a near 60% decline to $500 could be considered the worst-case scenario for gold. However, the worst-case scenario for currency-denominated asset classes like stocks and bonds is a 100% decline. So gold is still one of the safest assets to own.

Aside from being the safest investment, I also believe gold will be one of the easiest ways to profit over the next 12 to 24 months. The bottom line: I don't believe that we've seen the biggest moves this gold bull market has to offer. And the time for gold to build up a head of steam and tackle is inflation-adjusted high of $2,500 has never been better.

In order to leverage gold's huge investment upside potential for members of my Hard Money Millionaire advisory service, I am currently building a brand-new portfolio of junior mining stocks. So far, I've recommended three stocks in the portfolio (with a fourth to be added sometime next week), but have already done quite well. In fact, you can take a peek at my junior mining portfolio just by clicking here.

If you're also interested in gold stocks, you might want to check out these...

Three Low-Cost Gold Producing Stocks

In doing research for this article, I learned gold production costs currently average about $450 an ounce for companies, including Agnico-Eagle (NYSE: AEM) and Newmont Mining (NYSE: NEM).

As I looked through the financial statements of the individual companies, I noted those with the lowest gold production costs. Below I've list the three companies with low-cost gold production within the three major financial classes.

Goldcorp (NYSE: GG)

Financial Class:	Senior Gold Producer
Share Price:	$44.50
Market Cap:	$32.5 billion
3Q Gold Production:	620,000 ounces
3Q Gold Production Costs:	$295/oz.
2009 Gold Production Guidance:	2.3 million ounces
2009 Gold Production Costs Guidance:	$365/oz.

Goldcorp is one of the largest gold mining companies in the world. With 14 operations and development projects, Goldcorp expects to produce 2.3 million ounces this year at a total cash cost of $365 an ounce. During the third quarter of 2009, the company produced over 620,000 ounces for total cash cost of $295 an ounce.

Eldorado Gold (NYSE: EGO)

Financial Class:	Mid-Tier Gold Producer
Share Price:	$13.75
Market Cap:	$5.5 billion
3Q Gold Production:	89,000
3Q Gold Production Costs:	$297/oz.
2009 Gold Production Guidance:	550,000
2009 Gold Production Costs Guidance:	$340/oz.

Eldorado Gold is a mid-tier gold producer active in exploration and development in Brazil, China, Greece, Turkey, and surrounding regions. The company plans to produce a total of about 550,000 ounces of gold this year at a total cash cost of $340 an ounce. During the third quarter, Eldorado produced 89,000 ounces at $297 an ounce.

Minera Andes (TSX: MAI)

Financial Class:	Small-Cap Gold Producer
Share Price:	$0.75
Market Cap:	$200 million
3Q Gold Production:	22,000 ounces
3Q Gold Production Costs:	$313/oz.
2009 Gold Production Guidance:	undisclosed
2009 Gold Production Costs Guidance:	undisclosed

Minera Andes is a small but successful gold and silver miner. The company producers almost an equal amount of gold and silver by value, but is worth mentioning here because it is currently one of the lowest-cost small-cap gold producers around.

Minera will produce over 75,000 ounces of gold this year at an estimated $330 an ounce, although there is no official guidance. During the third quarter, the company produced 22,000 ounces of gold at $313 an ounce.

Enjoy the rest of your holiday,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

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Peak Gold is a Myth

Since the mid-1950s, researchers have been concerned that peak oil will send petroleum prices spiraling out of control.

Today, a growing faction of gold bugs has recently been discussing their own "peak" theory for the future:

Peak Gold.

They believe the world's total production of gold may have already peaked. And now gold production will fall drastically, helping push gold prices over the inflation-adjusted high of $2,500 an ounce.

Some are even making predictions of over $5,000/oz.

And I think they may be right — but for the wrong reason.

Peak Oil vs. Peak Gold

Peak oil is simply the maximum rate of global oil extraction.

According to their models, peak oil theorists maintain the total rate of world oil production will grow exponentially over time until reaching a pinnacle, and then fall into a terminal decline. That pinnacle is peak oil.

The resulting timeline of global petroleum output would follow a basic bell curve shape. Something like this...

The concept of a peak in world oil extraction is based on production rates over the lifetime of individual oil wells, fields, regions, and countries. A prime example is the production life of the Cantarell Oil Complex.

Located just 50 miles offshore, Cantarell is the largest oil field in Mexico and was once one of the top five largest producing petroleum fields in the world.

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Cantarell more than doubled oil output between 1995 and 2005, topping out at 2.1 million barrels per day. But in the four years that have followed, oil production from Cantarell has plunged almost 75%. A 15-year chart of petroleum extraction from Cantarell mimics the classic model of peak oil theory. Take a look...

Production rates at other major oil fields around the world are starting to look similar. In fact, as many as 6 out of the world's top 10 largest oil fields may have already peaked like Cantarell.

The exact date when oil will peak is debated. Experts estimate the date of the global production peak to range between the years 1990 and 2020 — after which oil becomes less available and more expensive.

So it's suiting that speculators are tailoring their portfolios to take advantage of a rapid increase in prices. My colleague Ian Cooper is one such speculator, and he knows commodities can translate into big dollars in this market...

Other investors have noticed a recent decline is gold mine production and have applied ideas from peak oil theory to create a new paradigm for the future, aptly called "peak gold."

What is Peak Gold?

Peak gold is basically the gold mining equivalent of the peak oil theory, as I explained it above.

Proponents of peak gold point to the fact that global gold production reached an all-time high of about 83 million ounces per year in 2000 and has since fallen to about 72 million ounces. This accounts for a 13% decline in 9 years.

They also contend that rising demand will send gold prices mushrooming higher due to sharp supply/demand imbalance.

But there are a few important factors to consider when comparing peak oil to peak gold.

First (and maybe most important), is that oil is a perishable commodity. Its energy can only be used once.

Gold, on the other hand, is virtually indestructible. And its use as a store of value is everlasting.

Gold can be recycled and reused. And unlike barrels of oil, every ounce of gold that has ever been mined is still around.

Therefore, the demand for gold will forever be able to be met.

Moreover, gold production has been gradually rising and falling for over 6,000 years.

During the 20^th century, there were three decade-long periods when world gold production fell by an average of 30%. Nevertheless, global gold production reached another record high in by the end of the century. Take a look...

I believe the real reason for the drop in world gold production since 2000 was the commodity bear market of the 1980s and 1990s.

During this period, companies lacked the financial incentive to explore for gold, resulting in limited capital for exploration and development of new mines that would go on to produce gold today.

Peak Gold Conclusion

There is simply less evidence to support the case for peak gold right now. And I don't think it should have any serious impact on the gold market in the near-term.

However, perception is everything...

And if a broad enough audience of investors begins to believe that the world's capacity to produce gold really has peaked, speculative mania buying could rapidly drive up gold prices well past their inflation-adjusted highs.

I remain, of course, bullish on gold over the long-term due to rising investment demand. Members of my Hard Money Millionaire have already had the opportunity to make almost 60% in three physical gold investments listed in our portfolio. (You can take a look at my portfolio here.) But I expect even bigger gains over the next several months, as gold continues to surpass record prices.

In the meantime, we just need to hang on for the ride.

Good Investing,

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

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