A gold investment you can still make

Agnico-Eagle is a high-quality stock that's well off its high -- unlike the metal it mines -- with plenty of gold in stable regions of the world.

By Jim Cramer Sep 15, 2010 8:23AM

jim cramer of thestreet.comBy Jim Cramer, TheStreet

 

Gold did exactly what it is supposed to Tuesday. In fact, it should have done it Monday. As soon as we saw the numbers out of China showing a more robust economy, it was a natural that gold would spike. The locus of the gold demand remains China, and as long as the consumer is healthy there -- something confirmed, by the way, in the great Best Buy (BBY) conference call -- gold has to be held.

 

I feel compelled to recommend Agnico-Eagle Mines (AEM), because the stock is still well off its high --$67 vs. $74 -- even as it has invested fortunes in readying new mines to take advantage of gold's price increase.

 

Agnico's Sean Boyd is the most bullish CEO I know in the gold group. He is using $2,000 as a reasonable target for gold over the next couple of years, and I think he is right.

 

It is not just that Agnico has already spent the money to expand its gold production. It's that Agnico's gold is in good, safe, unlikely-to-be-hijacked places. And unlike many other companies, it is not running out of gold, so it does not have to go into the open market and buy gold companies -- something that even my other favorite gold play, Eldorado Gold (EGO), had to do.

It's odd that a gold stock is well off its high because of some overruns in production costs that happened two quarters ago.

 

This one remains the highest-quality large-cap growth gold stock. Just wait until it throws off so much cash that it begins to pay a sizable dividend!

 

At the time of publication, Cramer had no positions in stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Click here to learn how to follow Jim Cramer's trades for his Charitable Trust.

 

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