• OfficeMax (NYSE:OMX) posted third quarter earnings of 8 cents, 6 cents below Zacks estimates on inline revenues of $1.83 billion, down 12.6%. The firm issued cautious guidance, anticipating macro employment trends will not turn positive well into 2010

• Nintendo (NASDAQ:NTDOY) posted first half profits off 52% to $768 million, while sales dropped 34.5%. The company slashed its dividend for the first half by 37%

• Newmont Mining (NYSE:NEM) reported third quarter earnings of 79 cents a share, 24 cents above Zacks estimates, as revenues of $2.05 billion, up 49.5%, bested Zacks estimates of $1.78 billion

• Royal Dutch Shell (NYSE:RDS.A) reported a 73% drop in net profit, with earnings ex-items of $2.62 billion slightly ahead of estimates of $2.55 billion. The company noted, "We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain and we are not expecting a quick recovery"

• Motorola (NYSE:MOT) reported third quarter results of one penny on better-than-expected revenues of $5.45 billion. The company expects fourth quarter earnings from continuing operations of 7-9 cents

• Colgate-Palmolive (NYSE:CL) reported third quarter results of $1.12, one penny above Zacks estimates, of inline revenues of $4 billion, up 0.3%

• Moody's (NYSE:MCO) reported third quarter earnings of 43 cents a share, a nickel above Zacks expectations, on better-than-expected revenues of $452 million, up 4.2%

• Procter & Gamble (NYSE:PG) posted fiscal first quarter earnings of $1.06, 9 cents above Zacks estimates, on inline revenues of $19.8 billion, down 6%

The Dow Jones industrial average added 37 points, or 0.4%, and closed at its highest point since November 4.  The broad S&P 500 index added 7 points, or 0.7%, and closed at its highest level since October 6.  The tech-heavy Nasdaq gained 10.63 points, or 0.5%, ending at its highest point since October 1.  On the New York Stock Exchange 776 million shares exchanged hands and advancing stocks outpaced those that fell two to one.  The Vix "fear factor" index, fell 2.9% to 24.71.

Treasury prices rose after an auction of $15 billion 30-year bonds met with strong demand.  The 30-year rose 1 20/32 in price and its yield declined to 4.432%; the 10-year was up 30/32 in price as its yield declined to 3.604%. This week the government issued a total of $75 billion of debt. 

Financials led the gainers yesterday on news that John Paulson’s hedge fund bought stakes in Bank of America (NYSE:BAC).  Bank of America shares surged 6.7% to $17 and were the leading gainers on the DJIA.  Basic material shares rose 2.7%.  On the DJIA Alcoa (NYSE:AA) shares gained 5.8%.  An increase in metal prices sent shares of Freeport McMoran (NYSE:FCX) up 4.9% and Newmont Mining (NYSE:NEM) 2.5%.  Ford (NYSE:F) shares increased 2.6% on its announced plans to increase current quarter production by 100,000 vehicles, with additions to the fourth quarter as well.

Technology shares advanced 1%.  Barclay's (NYSE:BCS) raised its price target on Apple (NASDAQ:APPL) shares to $208, citing its product pipeline. JP Morgan (NYSE:JPM) raised its price targets for Dell (NASDAQ:DELL) to $13 from $10 and Hewlett-Packard (NYSE:HPQ) to $49.50 from $40.

Nevertheless, consumer spending, which accounts for a whopping 70% of the US economy, remains a concern.  Yesterday’s report which showed a surprise 0.1% fall in retail sales, versus estimates of a 0.8% growth, did raise some doubts on demand side growth assumptions from the consumer sector.  The drop indicated that the "cash for clunkers" program may have stolen from alternative purchases and perhaps from future purchases as well.

Investors can find such funds by checking out the entire list of the Zacks #1 Rank Precious Metals Equity Funds.

3 Funds that are as Good as Gold 

OCM Gold (OCMGX), which was founded in February 1988, seeks long-term growth of capital by investing primarily in equity securities of domestic and foreign companies engaged in activities related to gold and precious metals.

Company-specific factors, and not general economic conditions, provide the basis for this fund's buy and sell decisions. Its portfolio turnover was 5% at the end of February 2009.

Shareholders have a minimum initial investment of $1,000 to enter this Zacks #1 Rank ("Strong Buy") fund. It has topped the total returns of its benchmark index in the last 1-, 3- and 5-year periods.

U.S. Global Investors Gold and Precious Metals (USERX) invests in equity securitiet that deal in valuable metals, in order to obtain capital appreciation while protecting against inflation and monetary instability.

The non-diversified fund selects companies with established producing mines and also diversified mining companies, which produce a meaningful amount of gold.

Frank Holmes has been lead manager at the fund since June 1999. Holmes has 30 years of investment experience. The fund distributes dividends and capital gains, if any, annually in December.

Tocqueville Gold (TGLDX) seeks long-term capital appreciation. It is designed for investors who want to diversify their portfolio through exposure to gold stocks and hedge against inflation or currency devaluation.

The fund may also invest in other precious metals.

Top holdings include Randgold Resources Ltd. (GOLD), Goldcorp Inc. (GG) and Newmont Mining (NEM).

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward.

THE FORMULA FOR HIGH PROBABILITY TRADING: BIG CHARTS + CROSSHAIRS = QUICK PROFITS

1. HIGH PROBABILITY TRADING IN THE CROSSHAIRS
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3. CAN MISSING A STOCK TRADE BUILD CONFIDENCE?

Financials were once again the leading gainers, with a 3.5% advance. JP Morgan (NYSE:JPM) shares jumped 4.4%, Bank of America (NYSE:BAC) added 2.7%, and Citigroup (NYSE:C) was up 4.1%. Wells Fargo (NYSE:WFC), fresh from its $8.6 billion stock sale, jumped 6.2% after Moody's (NYSE:MCO) raised its ratings on the company's preferred shares, saying there is an improved likelihood of maintaining the dividend payout. The rating agency put Bank of America (NYSE:BAC) on review for an upgrade on consideration of its financial strength. Fortress Investment Group (NYSE:FIG), however, lost 5.3% after the company said an offering of its 40 million shares was priced at $5 each.  The 3-month LIBOR witnessed its biggest drop in three months, declining to a record low of 0.85%.

On Thursday, basic material shares jumped 2.2% and technology stocks were up 1.5%.  Among material stocks, Dow Chemical (NYSE:DOW) surged 6.0%, AK Steel (NYSE:AKS) was up 2.9% and Newmont Mining (NYSE:NEM) added 1.7%.  CA's (NYSE:CA) better-than-expected results helped technology firms register a 1.5% advance.  Reflecting improved Chinese demand for commodities, such as iron ore, coal and grains, the Baltic Dry Index jumped to its highest level this year.

Consumer spending nevertheless remained a core area of interest as several better-than-expected returns boosted sentiment yesterday, after Wednesday's 0.4% drop in April retail sales disappointed investors.  Although Wal-Mart (NYSE:WMT) reported inline earnings, its revenues came in below expectations.  Whole Foods (NASDAQ:WFMI) shares, however, added 2.8% after the company's cost controls measures helped it post better-than-expected earnings. Nike (NYSE:NKE) announced plans to lay off 1,750 jobs.  Nordstrom (NYSE:JWN), up 3.4% Thursday, posted better-than-expected first quarter earnings on inline revenues, and raised its full-year guidance.

Today's consumer price report is expected to have shown no change in April, with a 0.1% increase in core prices. NY Empire Manufacturing data is expected to come in at a negative 15.00.  Industrial production is expected to show a 0.6% m/m drop, with capacity utilization coming in at 68.9% from 69.3% prior.

Chicago, IL - May 14, 2009 - Zacks.com announces the latest Industry Outlook. Today's outlook from Zacks Equity Research analyst Paul Raman discusses the Metals & Mining sector. Highlighted stocks include: Newmont Mining (NEM), Kinross Gold Corp. (KGC), DRD Gold (DROOY) and Harmony Gold (HMY).

Here is the latest on the Metals & Mining sector:

Both Newmont Mining (NEM) and Kinross Gold Corp. (KGC) have announced sizable stock offerings in recent days. They know when the gold market and their stocks have peaked. Gold has no value and has spiked recently - It is just another metal like copper and lead. Its luster is in name only. It is economically sensitive. Most, if not all, other commodities have collapsed in recent months.

That said, DRD Gold (DROOY) is a Buy due to high gold prices, strong free cash flow and an improving balance sheet. Harmony Gold (HMY) is a Buy due to high gold prices, closing high cost mines and lowering its debt level.

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After yesterday’s dismal earnings announcement, it would not be surprising to see shares of Newmont Mining (NYSE:NEM) deep into negative territory today. After all, the company announced a decline of net earnings of over 51%.

Even worse was the statement made yesterday by the company’s CEO, Richard O’Brien.

“Our company and our industry are currently operating in an unprecedented macro-business environment consisting of extreme commodity price volatility, uncertainty, mass portfolio liquidation, global inflation, and limited, if any, access to capital,”…

Silver’s peak occurred an hour or so later. The boyz weren’t going to allow a runaway gold price after the Fed’s interest rate decision. To give you an idea of how hard they’ve been sitting on the gold market, consider this…in the last 36 hours (as of midnight last night)…the US dollar was down almost four full cents, the US Fed Funds rate was cut by a third…and gold was only up $30-40.…

Should you be investing in it?

Investors around the world are flocking to the yellow metal. The South African Rand Refinery which manufactures the popular Krugerrand coin, is now operating its plant 7 days a week to keep up with demand for its gold coins. Similarly, the Austrian mint has added weekend production.

In Perth, Australia, the Perth Mint has hired more staff and has doubled its coin production. About 80% of its business is done outside of Australia in North America, Europe and Asia.

The U.S. Mint recently announced it was temporarily suspending all sales of the 24-karat American Buffalo gold coins due to increasing demand as the Mint's inventories were depleted.

A few weeks ago, it also suspended sales of the American Eagle coins, also due to strong demand. American Eagle sales resumed, but only to a select group of designated dealers. The Mint will also resume sales of the Buffalo coins shortly.

But buying coins is different from buying shares in gold mining companies. The price of gold does not always correlate with earnings of mining companies. Stocks of gold mining producers sometimes decline even when gold prices are soaring.

Should You Buy Gold Mining Stocks Now?

The price of gold has been volatile, with big swings in the last two weeks. Gold stocks have also seen big moves up and down. Neither is for the faint of heart.

There are two categories of gold mining stocks: the junior miners and the large miners. The large miners have a longer history of earnings and are usually believed to be less volatile. The junior miners are riskier but that risk can pay off big if gold prices soar.

I did a screen on Research Wizard to find gold mining stocks that were at least a Zacks Rank #3 and had earnings growth.

Barrick Gold (ABX) is one of the world's largest gold producers with 27 mines on five continents. ABX, headquartered in Toronto, is a Zacks #3 Rank stock. It has surprised on estimates 2 out of 4 quarters by an average of 1.45%. Analysts expect earnings growth of 10%.

Newmont Mining (NEM) is also one of the world's largest gold producers with mines on 5 continents. Newmont was founded in 1921 and is headquartered in Denver. The company is a Zacks #3 Rank stock. Analysts expect earnings growth of 14.3%.

Drdgold Limited (DROOY) is a South African medium-sized gold producer with mines in South Africa. Drdgold is a Zacks #1 Rank (Strong Buy) stock. Analysts expect earnings growth of 42.15%.

Gold Stocks Not the Only Bet

Individual gold stocks may be too risky for your investing style. You can invest directly into gold itself through an exchange traded fund, SPDR Gold Shares (GLD), which was launched in 2004. This ETF tracks gold prices as determined by the London PM fix and actually holds gold as a custodian.

Investors flocked to GLD in September, pouring in an additional $4 billion, on top of the $17.4 billion in assets the ETF had at the end of August.

Don't Get Blinded by Gold's Shine

A gold-focused investment may be a way to diversify a portfolio, but that's all it should be: diversification. Don't place all your bets on one sector or asset class. It was that singular emphasis, on real estate and before that on technology stocks, that has tripped up investors in the past.

Gold has shone brightly during dark times before but as quickly as it soared, it also lost its luster.

Look at gold, and gold stocks, for what they are, a safer haven in a time of uncertainty. Invest accordingly.

Additional Ways to Find Gold Stocks

Zacks Custom Screener - This is the place to start to create your own free screens where you can search by sector.

Zacks Equity Research - Find out detailed stock information from Zacks analysts.

Research Wizard - Create your own customized portfolios.

[The author of this article owns shares of SPDR Gold Shares.]
"ABXF" Free Stock Analysis: Buy? Sell? Hold?
"NEM" Free Stock Analysis: Buy? Sell? Hold?
"DURO" Free Stock Analysis: Buy? Sell? Hold?
"GLD3" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

For example, AIG (AIG) is paying a very steep interest rate for its bridge loan and for the privileged taxpayers who get most of the equity in the firm. However, the decision was made that they had to get ahead of the whole problem and deal with it on a systemic basis after the markets started to seriously unravel.

The credit market comes to a screeching halt.  So a week before Congress is set to adjourn, he recognizes the crisis and comes out with a bare-bones proposal (2 ½ pages), which pretty much says, "Give me $700 billion to buy just about any asset from anybody I choose, at any price I choose (assuming the seller is willing) and then sell it off to anybody I choose at any price I choose.  Oh and there shall be no oversight of this by any other agency or court of law." 

Congress is outraged and the public is overwhelmingly against the proposal.  Chris Dodd makes very substantial revisions to the plan, including lots of oversight proposals, equity participation for the taxpayers for firms that participate in the program, caps on CEO pay to ensure that the capital being supplied to these institutions is not siphoned off to their bank accounts, and doing the deal in installments so Congress has a chance to evaluate how things are going before the whole wad is blown.  The Administration was very receptive to most of these changes, and it looked like a bi-partisan agreement was about to be reached.  Within the first hour of the first Senate Hearing it was clear that the Paulson plan was dead and the discussion was really about the Dodd Plan. 

The Dodd plan was far from perfect.  It looked like the deal was going to leave out changes to the bankruptcy law that would allow homeowners some relief if they were willing to go through the very onerous procedure of declaring bankruptcy.  It was also flawed in that it overly focused on addressing the problem of too much leverage from the asset side of the equation rather than the equity side. 

However, it is clear that something had to be done.  There was a meeting at the White House to try to hammer out some of the final details.  The meeting quickly broke down after the head of the House GOP, John Boehner, announces that he is going to oppose the deal, and at the last minute drops a brand new proposal on the table.  These proposals were not mentioned at all in any of the hearings that have been going on this week.  The Boehner plan, as best I understand it, calls for the elimination of even more regulations, cutting capital gains taxes and insuring these assets rather than buying them. 

We got into this mess because of a lack of regulation.  Insurance is available on these assets privately in the form of the ABX indices.  They are one of the canaries in the coal mines that have been warning about the problem.  The cost to insure has gone through the roof as risks have risen. 

Hank Paulson is right on this -- the Boehner plan will not work.  We need to act quickly and we need to get it right.  Congress needs to be kept in session to hammer out a plan, and it should be based on modifying the existing Dodd plan, most notable by directing more of the money into the equity side of the equation.  The House GOP has just made sure that nothing will be done soon. 

The end of the quarter is coming up, and that will allow people to withdraw cash from hedge funds, causing them to have to sell and deleverage.  That has been exacerbated since in the middle of all this, the SEC has made the fundamental investment strategy of almost every "true hedge fund" illegal by banning short-selling.  After all, they are called hedge funds because they hedge overall market risk by buying some stocks and selling short others.

The market is going to tank today, but do not try to bottom-fish it.  Right now, TIPS look like a safe place to hide.  High grade Muni bonds look good, but make sure that the credit rating is based on the underlying credit, not because it is insured -- insurers MBIA (MBI) and Ambac (ABK) could be strained further.  On a tax-adjusted basis they look very cheap. 

On the equity side, look at the gold miners.  There is a very good chance that the only card left to play is monetization of debt by the Fed, which will lead to much higher inflation.  Gold miners like Barrick Gold (ABX), Harmony Gold (HMY) Kinross Gold (KGC) and Newmont Mining (NEM) would be the natural beneficiaries of this.

Read the full analyst report on MBI

Read the full analyst report on ABK

Read the full analyst report on ABX

Read the full analyst report on HMY

Read the full analyst report on KGC

Read the full analyst report on NEM