Whiskey & Gunpowder Special Report: Precious Metals
In this special report the Whiskey and Gunpowder team looks at 4 precious metal stock picks and offers detailed information on companies along with recommended actions.

Its stock currently trades at about $27.25 per share, down from its 52-week high of $48.16. Silver Standard has a market capitalization of $1.7 billion, and its foward price-to-earnings (P/E) ratio is a manageable 21.5. It pays no dividend.

Basically, silver prices are as high as they have been in more than 25 years, and mining companies are riding a boom in demand for the white metal. Silver is used in computers, cell phones and other electronics, plus jewelry and photography, and is one of the hottest commodities in the world. The worldwide price for silver is more than $16.50 an ounce, the highest since the metal reached $20 in 1980. Before 2006, silver hadn't been in double digits since 1983. So the pricing environment is good. Absent a major worldwide economic contraction, silver pricing should remain strong.

Thus, owning shares in Silver Standard offers investors a high leverage to silver price increases, with additional exploration upside. This is a pure silver play.

Action to take: Accumulate Silver Standard Resources Inc. (SSRI: NASDAQ), anticipating a continuing rise in the price of silver. Buy on dips in the price of silver.

Precious Metal Pick #2: StreetTRACKS Gold Shares (GLD: NYSE)
StreetTRACKS Gold Shares is an investment trust. Its shares reflect the performance of the price of gold bullion, less the trust expenses. The trust holds gold, and issues what are called “baskets” in exchange for deposits of gold. The trust also distributes gold in connection with redemptions of baskets. The gold held by the trust is supposed to be sold only on an as-needed basis to pay trust expenses, or in the event the trust terminates and liquidates its assets.

Its stock currently trades at about $86.00 per share, and has risen and fallen this past year in a range between $63-100. StreetTRACKS Gold Shares has a listed total asset base of $19.2 billion and an expense ratio of 0.40%. Because of its nature as a trust, it has no earnings or P/E ratio and pays no dividend. The trust is not managed like an active investment vehicle. Basically, by owning StreetTRACKS Gold Shares, you own a direct interest in gold without owning the actual metal in your name. You pay the trust a small management fee to cover expenses.

Action to take: Accumulate StreetTRACKS Gold Shares (GLD: NYSE), anticipating a continuing, if intermittent, rise in the price of gold. Buy on dips in the price of gold.

Precious Metal Pick #3: Van Eck Intl. Gold (INIVX):
The Van Eck International Investors Gold Fund is a mutual fund that owns gold mining companies and looks for long-term growth of capital by investing in common stocks of these gold mining companies. The top five countries in which the shares of this fund are located are Canada (59%), Australia, the U.K., South Africa and the U.S. However, the companies that it owns have operations all over the world. Hence despite any appearances to the contrary, the stocks in this fund’s portfolio are exposed to varying degrees of political risk. Still, if you want to own a piece of the rock, particularly the piece with gold in it, you have to buy the right rock.

Its shares currently trade at $15.03 and have generally risen, with the price of gold. The net expense ratio of the fund is reported as 1.46%. The top 10 holdings of this fund, comprising about 49.3% of its assets, are the following well-known companies:

These are all players in the gold mining business, and going forward will in all likelihood either make money on their own or get bought out by some larger mining concern that is looking to add reserves by acquisition. The fund is designed to seek “long-term capital appreciation by investing in common stocks of gold mining companies.” The fund may take current income into consideration when choosing investments. In 2005, total return was in excess of 35%, in 2006 the total return was in excess of 45%, and the fund returned 27.2% in 2007.

So if you are bearish on the future of the U.S. dollar, or bullish on the future price of gold, then the Van Eck fund is a good place to park some money while we go through the current run-up in the gold markets.

Action to take: Accumulate Van Eck Intl. Gold (INIVX), anticipating a continuing, if intermittent, rise in the price of gold. Buy on dips in the price of gold.

Precious Metal Pick #4: Yamana Gold Inc. (AUY: NYSE)
Yamana Gold is a Canadian company that engages in the acquisition, financing, exploration, development and operation of precious metal mining properties in Brazil, Argentina, Honduras and Nicaragua. It primarily produces gold from both gold and copper mines. It owns five operating mines in Brazil, as well as gold development-stage properties, exploration properties and land positions in all three major mineral areas in Brazil. Yamana also owns an operating mine in Honduras, a development-stage project in Argentina and significant exploration concessions in Nicaragua.

Its stock currently trades at about $11.00 per share, down almost 50% from its 52-week high. Yamana has a market capitalization of $7.4 billion, and recently reported earnings of $.37 per share. Yamana's P/E ratio is 29.5, and it does pay a small dividend equal to about 0.4% of its share value. Of interest, about 57% of Yamana’s stock is held by institutions.

In terms of market capitalization, at $7.4 billion, Yamana is in the same range as other large gold miners like Agnico-Eagle Mines ($7 billion market cap) and Kinross Gold ($10.4 billion market cap). Yamana has also overcome some recent troubles and is now displaying solid earnings and revenue growth.

Yamana continues to explore and develop its prospects. The lure of Yamana is that it is producing gold at intermediate company production levels and is targeting 3.2 million ounces of gold production in 2012, just a few years away. Thus, the attractive investment potential of Yamana is that it holds a significant exploration portfolio in Brazil and Central America, with a respectable budget to uncover reserves and additional resources

Action to take: Accumulate Yamana Gold Inc. (AUY: NYSE), anticipating a continuing, if intermittent, rise in the price of gold. Buy on dips in the price of gold.

 SPECIAL BONUS REPORT: "4 New Ways to Play the Gold Trend"

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All rights reserved. Information contained herein is obtained from
sources believed to be reliable, but its accuracy cannot be guaranteed.