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Gold was the darling trade for commodity investors and those seeking safe harbors as central banks printed money and promised to dilute their currencies for the future.  The first trading day of the year initially looked higher, but a slight retreat took gold to $1415.66 an ounce.  Now, this morning we show gold down about 2%, or $28.31, to $1,387.35 an ounce.  The SPDR Gold Shares (NYSE: GLD) is down 1.9% at $135.36 and the iShares Gold Trust (NYSE: IAU) is down 2% at $13.54.

Our intent is not to make the biggest bullish case nor the biggest bearish call for gold (the commodity) in 2011.  Goldman Sachs recently noted a level of $1,690.00 per ounce as the next target for 2011 and peaking at $1,750.00 per ounce beyond.  We are seeking the best gold investments for 2011 now that the major have been seen to see which offer either the best upside or even the best protection for 2011.  We are taking a look at Newmont Mining Corp. (NYSE: NEM), Goldcorp Inc. (NYSE: GG), Barrick Gold Corporation (NYSE: ABX), Kinross Gold Corporation (NYSE: KGC), Market Vectors Gold Miners ETF (NYSE: GDX), and even The Gabelli Global Gold, Natural Resources & Income Trust (NYSE: GGN).

The reality is that gold itself, including the ETFs of gold, is just not as likely to perform as well as some of the miners and some of the royalty players out there if the trend continues.  The caveat to that is of course stable gold or rising gold. If gold falls considerably, the leveraged nature of investing in stocks of most of the large gold miners could imply that gold miners and producers could fall more than gold itself if the price were to head further south.

We are taking a look at each issue below with 2010 closing prices, the most recent price after the drop, 52-week ranges, consensus analyst targets from Thomson Reuters, production costs, and adding color on each.

Newmont Mining Corp. (NYSE: NEM) has long been one of our go-to gold mining companies with low costs, but it noted in November that costs would be $485 and $500 per ounce ahead.  Newmont closed 2010 out at $61.43 and Thomson Reuters has a mean target of $71.53 against a 52-week trading range of $42.80 to $65.50.  If the analysts are correct, that implies upside in 2011 of about 16.4%.  Newmont was trading at $59.00 on Tuesday morning.

Goldcorp Inc. (NYSE: GG) listed its costs in November as being roughly $260 per ounce on a by-product basis and roughly $429.00 per ounce on a co-product basis.  Goldcorp closed 2010 out at $45.98 and Thomson Reuters has a mean target of $55.96 against a 52-week trading range of $32.84 to $48.94. If the analysts are correct, that implies upside in 2011 of about 21%. Goldcorp was trading at $44.60 on Tuesday morning.

Barrick Gold Corporation (NYSE: ABX) is one where we last penciled in costs of gold as being $425 to $455 per ounce or net cash costs of $345 to $375 per ounce. Barrick Gold closed 2010 out at $53.18 and Thomson Reuters has a mean target of $61.52 against a 52-week trading range of $33.65 to $55.72.  If the analysts are correct, that implies upside in 2011 of about 15.6%.  Barrick was trading at $51.25 on Tuesday morning.

Kinross Gold Corporation (NYSE: KGC) is another interesting name, and its shares took a beating in much of 2010 due to its acquisition of Red Back Mining Inc.  The company gave a consolidated report in November showing that the combined companies as being $517 per gold equivalent ounce, and it noted that cost of sales on a by-product basis including West Africa was $477 per ounce.  Kinross closed out 2010 at $18.96 and Thomson Reuters has a mean analyst target of $23.47 against a 52-week trading range of $14.84 to $21.12. If the analysts are correct, that implies upside in 2011 of almost 24%.  Kinross was trading at $18.10 on Tuesday morning.

The biggest problem in selecting any single company is mining risks, natural disasters like Australian floods or earthquakes, geopolitical risks that many miners have to consider when operating in great Hell Holes of the world where governments allow the companies to operate.  That being said, the ‘chicken bullish trade’ for investors who want gold gains from miners is via Market Vectors Gold Miners ETF (NYSE: GDX).  This at least smooths out the individual company risks.  There are obviously no riskless trades as the GDX closed 2010 at $61.47 but was as low as about $59.00 on Tuesday.  Our four large targets here also account for almost 50% of the total weighting in the GDX due to their size.

There is another income-oriented investment surrounding gold in the Gabelli Global Gold, Natural Resources & Income Trust (NYSE: GGN).  Be advised that this is a closed-end fund, and it high dividend rate of 8.8% is from appreciation and from writing covered call options. This one also invests in other commodity-oriented companies but is generally considered about 80% or higher in gold.  The “GGN” fund closed out 2010 at $19.27, has a 52-week range of $14.83 to $19.77, and its was as low as $18.70 on Tuesday morning.

Analysts expect the biggest upside of the four we covered in Kinross Gold Corporation (NYSE: KGC) with implied upside of about 24% and then 21% implied upside in Goldcorp Inc. (NYSE: GG).  We generally won’t look at the Junior-miners due to greater exposure in a general sense.

Picking the true gold winner for 2011 would be easy, assuming you knew exactly where gold prices would be at the end of the year.  Gold companies are much like oil companies when it comes to price action…  They run up with the commodity often with a leveraged move, but there is always some play between the reports and the price of the commodity on any given day.  After large moves as we have seen, they also tend to fall sharply when the underlying commodity pulls back.

Kinross appears to be the largest opportunity of our major miners for now.  Anyone investing in the name might want to consider hedging with put options in the GDX or in the GLD exchange-traded products.  Maybe the lesson should be that buying acquirers after they fall from large acquisition dilution is the real gift when it comes to gold investing.

JON C. OGG