On October 23, 2009 we endorsed a position in the Peruvian gold mining firm Beunaventura Mines (BVN) in the article titled Profiting From Volatile Crude Oil Prices and Safe Guarding Your Dollars.

Since October 23, BVN has moved from $36.97 to the Friday December 4, 2009 closing price of $39.84, capturing a 7.8% gain. Continuous spot prices for gold are near 1145 this morning, while S&P 500 futures are also down 5 points at 1102, suggesting that BVN will open lower as the December 7, 2009 trading day begins.

We like the company for a long term investment strategy of 5 or more years at these prices, given their promising new La Zanja and Tantahuatay mines. La Zanja is set to come on line in early 2010 and is projected to put out 100,000 ounces of gold per year, while Tantahuatay will come on line in 2011 and should also tack on an additional 100,000 ounces of production. BVN does not hedge their gold prices, so any changes in the price of gold directly effect the bottom line of the firm. The firm is located in Peru, where labor is cheap and the currency is highly tied to the price of precious metals, making the firm an attractive company to own in a high U.S. inflationary environment.

All said we see a shifting sentiment concerning U.S. interest rate policy (markets are beginning to anticipate earlier than expected quantitative tightening by the Fed) and a separately high technical probability that global equities will pull back from current levels.

We suspect there will be a short term pullback of the stock along with the price of gold as the dollar strengthens temporarily, yet we endorse the company as a good investment for medium and long term investors.

Diamond Slice is acting on these signals and closing BVN positions for a profit. The stock will continue to be followed and any positions regarding the stock on our behalf will be fully disclosed to our readers.