GoldCorp (GG): 'Our favorite major'

"People want to own more gold when there’s a perception of growing global economic and political turmoil," explain resource experts Roger Conrad and Yiannis Mostrous.

In their industry-leading Vital Resource Investor, the advisor offer their long-term bullish assessment for gold as well their favorite gold mining stock: GoldCorp (NYSE: GG).

"To be sure, we’ve seen demand in the US drop for many vital resources as the economy has slowed. Demand from developing nations, however, remains entrenched by necessity, as these suddenly more affluent nations struggle to upgrade their vital infrastructure. 

"And although we may see Chinese economic growth slow from its current off-the-chart 10% rate, that country will still face critical needs to build out its cities to meet the millions of new migrants that come every year. And that’s a huge call on raw materials.

"The bottom line is the key long-term drivers of gold’s run this decade are still very much in place. And the metal remains a cornerstone investment. And while the market is spectacularly volatile, we expect much higher gold prices over the next few years.

"Goldcorp is our favorite major gold company. It was the acquisition of Glamis Gold in late 2006 that vaulted Goldcorp to the forefront of global gold producers.

"The company now has growing gold production, low cash costs, solid earnings generating ability, large reserves, strong balance sheet and one of the most respected management teams in the industry.

"Overall, Goldcorp has been doing an excellent job of controlling costs, and we expect that this will continue in coming quarters. Costs will rise in line with the industry’s norm, but we believe the company will keep a lid on them.

"Goldcorp has also announced a friendly offer of $1.5 billion cash and stock for Gold Eagle Mines. Management has calculated a purchase price of less than $650 per ounce and that the mine has close to 7 million ounces of gold to mine. Development time will be between four and five years.

"Elsewhere, the company is on time and on budget with its expansion projects and should increase gold output from 2.4 million ounces this year to 4 million in 2012. Its strong balance sheet will allow for easy project financing, which will add straight to the bottom line."