With our view that increased volatility is on the horizon, here are our updated recommendations for all current positions, including comments on recent developments where appropriate.

[You’ll see dual recommendations for many of our positions; which one applies to you depends on how much profit you’re sitting on and your cash balance. We list Buy Under prices in the event we get a sell-off this month. If those prices are hit, remember we could see even lower prices this summer, so buy only one tranche. “Take Profits” simply refers to selling some portion of your shares for a gain, which may be less than a full Casey Free Ride. Calculations are as of April 28.]

We’ll start with silver since it’s more vulnerable to a sell-off. As noted above, silver has now recorded its biggest non-stop surge in a decade. Further, the metal is up an incredible 448% since its 2008 low and gained 81% last year. Caution is in order.

Silver Wheaton: Take Casey Free Ride/Buy One Tranche Under $33. Our go-to silver stock and a long-term holding, but the stock has risen an incredible 1,485% since its 2008 low. And though range-trading for the past two months, it’s still up 40.4% since January 25. We recommend taking a full Casey Free Ride. We intend on buying again but wouldn’t be interested this month unless it dropped below $33.

Silvercorp: Take Casey Free Ride/Buy One Tranche Under $11. One of the most profitable silver producers in the industry and a stock we fully intend on riding to the end, but it’s up 1,323% since its 2008 low and 41.4% since January 24. The stock is also the most expensive in our portfolio and sports a P/E ratio over 35, higher than most of its peers. We recommend taking a full Casey Free Ride. We wouldn’t consider buying this month unless it dropped below $11.

Pan American Silver: Buy One Tranche At or Under $33. If you’ve read our comments on the portfolio page, Pan American Silver remains a buy despite the recent political scare in Bolivia (we encourage you to review those comments if unfamiliar with the developments). Basically, Bolivian president Evo Morales threatened to nationalize the silver mines in the country, including Pan American’s San Vicente mine. San Vicente was 10.6% of the company’s silver production last year, so it’s not insignificant.

However, not only has the Bolivian government backed off those threats, the company is well diversified, with six other mines in three other countries. PAAS will still be highly profitable, and don’t forget that if the giant Navidad project in Argentina gets permitted, production will double in three years (see last month’s write-up for our thoughts on the likelihood of that).

Morales is scheduled to announce his final decision on May 1, which is after we go to press, so see the portfolio page for our latest comments. [Allow us 24-48 hours to post comments after company news is released.] What we think is likely at this point is that he won’t nationalize the mines but will raise taxes and/or increase control over other parts of the industry. If his decision is onerous, the stock will drop; likewise, it could pop if he takes no action. Either way, we want to own the stock.

Some of you may have been filled last week if you had a bid at $35; for new or second tranches, we suggest bids at or below $33. [For tracking purposes, our portfolio table will reflect the first close below our recommended price level.]

Agnico Eagle: Take Profits/Buy One Tranche At or Under $60. Pull up a chart of AEM since December and you’ll see a determined downtrend. This is largely due to a fire that destroyed the kitchen facilities at Meadowbank, the company’s largest producing mine. As a result, management estimated that companywide production will drop by about 5% this year, which the market didn’t like. Full operations have already resumed, though, so this was only a temporary setback for the company.BIG GOLD MAY 2011 8

Long-term readers are sitting on a 27.6% gain, and we’d suggest taking some profits. However, the prospects of the company remain strong, and we’d buy one tranche if it dropped below $60 this month.

Alamos: Buy One Tranche At or Under $14. We’re underwater since entering positions, but the important thing to note is that there’s nothing wrong with the company. Their growth trajectory remains on track: production will increase roughly 85% next year and 115% by 2013, with cash costs remaining below $400/ ounce (the industry average is $544/oz). Keep this outlook in mind if you bought AGI and are in the red. Don’t go overweight, but bids below $14 we think will work out very nicely over the next couple years.

Barrick: Closing Position. As we outlined on April 27, we were surprised and unimpressed by the offer the company made to buy Equinox Minerals (T.EQN), a large copper producer. We’re closing out our position, in part because copper will now represent almost 20% of company revenue (from 10%), but more due to what this signals about management’s thinking. You’ll recall they spent billions of dollars paying off their hedges in late 2009 to benefit from rising gold prices – but instead of pursuing a gold asset they sought out a base metal one.

The acquisition might be smart if there were no attractive gold assets to pursue, but that’s simply not the case. There are plenty of appealing targets for a company that wants gold assets and has money to spend, including several companies in the International Speculator portfolio. It’s clear that if this were management’s goal, it could’ve been easily realized.

You also might think the deal wise if you have a rosy outlook for the economy. But if you share our concerns, the next few years aren’t likely to be an environment conducive to robust copper demand. It is gold prices that will be stronger in the climate we see ahead.

The deal is also expensive (despite management’s claim), as they’re paying a 30% premium for the company, one normally seen with gold deposits and not base metals. Minmetals, whom Barrick outbid for Equinox, stated “the price offered by Barrick is above our most optimistic assessment of value.” Further, while the terms of the financing are attractive, company debt will double at the closing, already at high levels. This all might be worth it for a large, high-grade gold deposit, but not for copper.

It’s true the acquisition will generate big cash flow, with management estimating as much as a billion dollars annually. And the deposits aren’t unattractive; they’re high grade, and Lumwana is one of world’s top 20 copper mines. Copper mines also have the advantage of being longer lasting than gold ones. And Yamana gets roughly 28% of their revenue from copper, though it comes from one project and all growth is gold-oriented. (The next highest in our portfolio, by the way, is Goldcorp, with 11% of revenue from copper.)

It’s possible Barrick may pursue a gold acquisition next to stave off the criticism they’re receiving from this move, but the CEO’s statement about the acquisition is telling: “This is consistent with our strategy of increasing gold and copper reserves.” This sounds like something a diversified miner would say – and perhaps that’s Barrick’s goal.

The bottom line for us is that we’re uncomfortable with the direction management has taken. Over the next few years, our focus will remain on the gold and silver bull market and the producers most likely to profit from it. If you agree with our analysis, we recommend exiting on days the stock is rising. We’re currently up 20.7% and will begin selling after giving you the opportunity to do so first.

Eldorado: Take Profits/Buy One Tranche At or Under $16. Eldorado was one of my top picks at last year’s Casey Summit, and even though the stock has been stuck in a trading range for almost a year, the company’s prospects haven’t changed. Production will grow at least 15% this year from a total of six mines, as Efemçukuru and Eastern Dragon come online – and then hit over a million ounces by 2013 and 1.5 million by 2015. And cash costs will stay well below the industry average, keeping margins high. BIG GOLD MAY 2011 9

We’re up 51.1% since our recommendation 17 months ago. So why not take a full Casey Free Ride? You certainly can, but with one of the strongest growth trajectories of any gold producer, the risk with the stock is lower than many others. Even if they miss their target, production will still more than double in four years. Reaching their goal would make them the 8th largest primary gold producer in the world, about the same size as Newcrest, currently a $45 stock. Further, even at current prices the stock is deeply undervalued; you can see by the valuation ratio that it’s relatively cheap. That said, we still recommend taking profits, especially if you’re not at one-third cash.

Franco-Nevada: Buy One Tranche At or Under $36. There’s no denying it; the stock took off and left us behind. We hate chasing something, and we do think a correction is coming, but this is a stock we definitely want in our portfolio, as substantial royalty growth is dead ahead. Let’s adjust our bid for one tranche at or under $36.

A few readers have asked about the divergence between the price of the Canadian stock and the pink sheet version. Essentially, FNNVF is underperforming T.FNV – the gap is now at US$1.99/share, which is about 12% greater than the currency differential. Although the precise cause of this is difficult to nail down, it’s likely due to the pink sheet’s poor liquidity. The low volume can make it harder to keep up with company developments simply because there are fewer investors; the greater liquidity found on the Canadian exchange won’t have this problem. This increases your risk, so we reiterate our recommendation to buy the stock only on the Toronto exchange.

[Not set up to buy Canadian stocks? It’s easier than you think, and we have a special report devoted to the topic. Check out The Casey Research Guide to Investing in Canadian Stocks here.]

Goldcorp: Take Profits/Buy One Tranche Under $50. We’re up 20% since getting filled on March 15. That may not seem like a sufficient gain to take a profit, but in the bigger context the stock has risen 38.6% just since January 24, an impressive run in such a short period of time for a major, making it vulnerable to a healthy pullback. We suggest grabbing some of your profit. As we outlined in the March Issue, we consider Goldcorp a great long-term hold, but we’d avoid buying this month unless it fell below $50.

Kinross: Hold. Calling the stock an “underperformer” is putting it mildly – it’s down 17.2% YTD while gold is up 14.1%. This is likely due to the fact that costs are rising substantially this year, about 15%, to as high as $610/ounce. Further, drill results from Tasiast, one of the company’s biggest growth projects, won’t come until this fall, so this “push” is absent.

Given the stock’s poor performance, our view of a pending correction, and that production won’t grow much this year, we’re not buyers for now. Longtime readers have accumulated several tranches by now, and there is no rush to add more at this point. This isn’t code for “sell”; big jumps in production are due beginning late 2012/early 2013.

[See our Knowledgebase entry here regarding the U.S. ambassador being asked to leave Ecuador, where the company’s huge Fruta Del Norte deposit is located.]

Minefinders: Take Casey Free Ride/Hold. The stock has been on a one-way moon shot since mid-March. Investors have bid it up due to management’s projection of tripling silver production this year, as well as cost estimates dropping by 15%. These are the reasons we reentered positions, but the stock won’t go vertical forever.

If you bought on our recommendation in March, you’re already up about 67%. Long-term holders have a cost basis near ours of $12.03 and are up about 39% (or more if you averaged down). You can remove all risk from this stock, increase your cash balance, and be ready to buy again by taking a Casey Free Ride. Hold the remaining shares; we’re not buyers until we see the stock cool off. BIG GOLD MAY 2011 10

Randgold: Hold. If you’ve followed our comments on the portfolio page, former Côte d’Ivoire president Laurent Gbagbo, who lost the election last year but caused a war in the country when he refused to step down, was arrested last month along with 120 of his supporters. This has greatly reduced the violence in the country, where the company’s new Tongon mine is located. Recent reports indicate calm is gradually returning to the region, as efforts are now focused on getting humanitarian aid to the country. The situation remains fluid, though, and given our theme this month of looking for a near-term correction, we’re going to leave the stock on hold and look to hopefully reenter this summer.

Royal Gold: Take Profits/Buy One Tranche At or Under $54. RGLD is about to see a serious jump in royalty revenue over the next couple years, helped by the four major royalties they added in 2010. In fact, royalty income should double by 2013 – and that’s at current gold prices.

Meanwhile, the stock went vertical in mid-April (likely helped by a competitor’s write-up), so we would definitely take some profits. But given the serious growth on tap, we’d be interested in buying more if it dropped to $54 this month.

Yamana: Buy One Tranche At or Under $11. While AUY has clearly been a disappointing performer, giving us little ability to take profit at this point, there are very good reasons to own the stock. Production will increase as much as 60% by 2013; costs will stay comparatively low; the stock has a very attractive valuation; and all mines are located in relatively safe political jurisdictions.

The message here is simple: the stock is cheap, but the catalysts to move it substantially higher are a year or two away.

Gold and Silver Bullion and Metals Funds (GLD, SGOL, SLV, SIVR, CEF): Accumulate. Buy in tranches over time until you reach your desired allocation, with a bias toward physical metal. Buying at regular intervals will smooth out your cost basis. Don’t forget to increase your holdings as your assets and income grow. If you’ve reached your target, hold. For physical metal, see “Bullion Store” in last month’s issue for our recommended dealers.

[See our Knowledgebase entry here to learn how premiums work on CEF and other closed-end funds.]

Gold Stock Funds (TGLDX, USERX, UNWPX, GDX): Accumulate. Our recommendation with funds is to buy and hold for the duration of the bull market. Consider an automatic purchase plan where you can buy on a regular basis (ask your broker or check the website of the mutual funds). We wouldn’t take profits on funds unless you’re low on cash. If you’re looking to purchase now, buy only one tranche