For those interested in the FCX.B that I metnioned some time back, here is a blurb from Mark Skousen's Forecast and Strategies newsletter issued today:
forecasts-strategies.com
How to Make 47% in Two Years!
The one gold investment that has stayed constant during this bear market is Freeport McMoRan gold convertible B (FCX-B, $19.65), my favorite gold investment right now. It matures at $26 a share (10% of the gold price) in mid-2003 (a little over two years), and pays $1 a year in dividends. This means that in 2003, your $19 investment will be worth $28 (including dividends), assuming gold stays at this low price. That’s a 47% gain in two years! And if gold recovers at all, you will earn even more.
What are the risks? First, gold could drop further, but I seriously doubt if it will fall to breakeven ($190 an ounce). Second, Freeport might renege on its convertible due to turmoil in Indonesia (its only gold mine is on an island in Indonesia). Because of the political turmoil, Freeport convertibles are rated “below” investment grade. Still, earnings were up 40% in the last quarter and Merrill Lynch has a strong buy on the parent company, Freeport McMoRan (FCX, $13.15). I say the potential returns are worth the risk.
By the way, the other Freeport convertibles in gold and silver (FCX-C and FCX-D) have not fared as well because their maturity date is further into the future. But the silver convertible, FCX-D, at $8.85, looks like an incredible bargain. |
