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Cramer Talks Gold, Newmont-Goldcorp Deal

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Cramer Talks Gold, Newmont-Goldcorp Deal

Gold is becoming more attractive amid global uncertainty ranging from central bank interest rate policies to the U.S.-China trade dispute, CNBC's Jim Cramer said Friday.

What Happened

Gold should be considered an "insurance policy" for investors to hedge their portfolio against economic uncertainty and market volatility, Cramer said during his daily "Mad Money" show.

Exposure to gold at a time when the Federal Reserve hinted it will be more patient with interest rate raises is the whole point of diversification, to "be prepared in case something goes wrong ... and your thesis doesn't pan out," he said. 

Investors with sufficient cash on hand to buy and store physical gold bars at around $1,255 per ounce should do so, Cramer said. Those with less cash on hand should avoid gold coins, which are sold at a steep markup at coin dealers, he said. Rather, investors can gain exposure to swings in gold prices through the exchange traded fund SPDR Gold Trust (NYSE: GLD).

Gold is typically a "winner in times of chaos and uncertainty," so investors who are concerned with their exposure to other asset classes should own "at least a little" to hedge "against the unknown."

Cramer On Newmont-Goldcorp Deal

Gold and copper producer Newmont Mining Corp (NYSE: NEM) reached an agreement to acquire all of the outstanding shares of Goldcorp Inc. (NYSE: GG), a senior gold producer that oversees several high-quality mines. As part of the agreement, Newmont will acquire each Goldcorp share for 0.3280 shares of its own stock, which implies a 17-percent premium based on the two companies' 20-day volume weighted average share prices.

Monday's merger announcement comes just a few days after Barrick Gold Corp (NYSE: GOLD) finalized and absorbed its acquisition of Randgold Resources. From an investor point of view, Cramer said Monday that he likes the Barrick-Randgold tie-up "much more," as Randgold was both a growth company and dividend-oriented.

Goldcorp was a "tremendously horrible stock to own" ahead of Monday's merger announcement and reflected the underappreciated risk in owning a gold company vs. a gold-focused ETF, Cramer said. Newmont Mining is at best "consistent," but has had a hard time keeping its costs down, much like other gold companies, the CNBC host said. 

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Posted-In: CNBC Gold Gold Merger Jim CramerM&A News Federal Reserve Media Best of Benzinga

 

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