A titan in the gold and copper mining world, Freeport-McMoRan Copper and Gold Inc. (NYSE:FCX) closed at a three-and-half month low after dropping 3.5 percent yesterday (Jan. 26, 2010). While calling the bottom on any stock isn’t easy, there are a number of reasons to consider moving into FCX on an uptick in price.

The stock’s gotten pummeled since distributing a 15 cent dividend on Jan. 13 falling 18 percent in eight trading days. That’s too far to drop in too short a time; particularly as gold prices have stabilized. Here’s three reasons then to give Freeport-McMoRan a look:

1) Profit-to-earning ratio. Freeport-McMoRan’s the third-biggest gold mining stock on the major exchanges with a market cap of $31 billion. The only mining companies with bigger market caps are Rio Tinto Plc. (NYSE:RTP) at $96.4 billion and Barrick Gold Corporation (NYSE:ABX) at $35 billion. Freeport-McMoRan is currently the only profitable company among them, though. And they’re trading at a P/E of 12.62.

2) Earnings Report. On Jan. 21, Freeport-McMoRan reported profits of $2.15 per share. That smashed analyst estimates of $1.73. That’s great news after FCX underwent an enormous restructuring last year at a cost of $11.3 billion. Tighter belts and well-lubed wheels mean they’ll likely outperform their peers in the years to come.

3) Copper showing signs of life. As several economies around the world rebounded last year, industrial demand for copper started climbing. A report released yesterday showed that orders for the metal rose 2.7 percent in Europe in November, and analysts are predicting it may hit record prices this year on that demand. More importantly, demand from China has shown little sign of diminishing. Copper prices doubled in 2009, and FCX is the world’s lowest-cost copper producer. The company’s positioned perfectly then if things truly due turn around.

Shares in Tanzanian Royalty Exploration Corp. (AMEX:TRE and TSE:TNX) surged after an injection of capital in late December, and they rose another 9.5 percent yesterday. All told the stock’s up 39 percent over the past month, and the chart is starting to look scarily steep:

Even if you think the TRE’s due for long-term gains, that steep uptick presents a great time to sell out and buy back in later.

Why the jump in price?

Investors started salivating over Tanzanian Royalty when the company announced they’d raised $3.14 million by selling 1,155,835 shares of stock on Dec. 22. The plan? Use the money to finance the equipment to do bulk sampling of the Kigosi Gold Project in the Lake Victoria Goldfields of Tanzania.

That could be a major step forward toward capitalizing on TRE’s outsize holdings in Tanzania. Indeed, TRE controls more than half of all the gold projects in the entire country, and they’ve got a 60 percent stake in the Lake Victoria region (Barrick Gold – NYSE: ABX – has the rest, and that’s a sign in itself that the mines there should be taken seriously).

Still, investors are fickle people. They might be interested in Tanzanian Royalty for a few months, but they’ll tire before the results of samples come in. And that’s when you can buy again. Still, if the results of the samples are positive, the stocks recent gains will pale in comparison to their future spikes and Tanzanian Royalty just might become profitable.

Update: The day after writing this story, stock in Tanzanian Royalty plunged 14 percent making it the biggest loser among gold and silver stocks on the day. Support seems to have clustered around $4.

Analysts at Swiss banking giant Credit Suisse Group AG (NYSE:CS) released a report revising down their forecast for gold prices. “Our analysis of the gold market leads us to take a bearish stance with regard to the gold price in 2010.”

Specifically, in a report posted on Zerohedge, they argue that gold will hit $990 per ounce in the second quarter of 2010. That’s a drop of $135 an ounce from current levels. They also forecast gold prices dropping further in Q3 to $980 before rebounding back above $1040 in Q4.

Why all the bearishness? “In 2009 we reasoned that the main drivers of the gold price were significantly linked to the trade weighted dollar, increased investment demand, central bank purchases and market sentiment. The increase in investment demand for gold ETFs, in our view, had an ‘accelerating and reinforcing effect’ on market sentiment and the safe haven status of gold which resulted in upward pressure on the gold price which rose 24.6% during 2009. We do not expect the 2009 rate of investment in ETFs to continue at the same pace in 2010.”

Of course, others (myself included) would argue that we’re not out of the water yet. All we need is one black swan to swoop in and suck the air out of the hyped-up, government-fueled rally we’re in. A major bank collapse, perhaps, or continued losses across multiple sectors in Q1 2010 would do the trick.

More likely than a black swan, though, is a series of gray swans – a gradual and steady accumulation of bad news that skirts along the edge of the mainstream media. Perhaps we’re already there. See, yesterday’s article at AmericanBankingNews.com: “Bank Closures in 2010 Begin in Earnest: Three More Closed, One with No Buyer.”

An economy can’t keep losing a net number of jobs and expect to grow. Jobs drive the economy.

Since there aren’t any jobs, though, its been the government’s job to provide growth. And that’s ballooning the federal deficit. So long as the trend continues, inflation is going to be a very real threat – more so than it was last year. And that’s what leads me to disagree with Credit Suisse.

The threat of inflation drove the rally in gold last year, and it’s going to keep driving it this year. It might be slow and riddled with sell-offs, but it’ll keep going (unless, of course, we meet another black swan).

All that said, why then might Credit Suisse publish a report that’s bullish on the economy and negative on gold. The writers at Zerohedge have one theory: self-interest.

“Such optimism, even as the global economy is poised on the edge of the double-dip?” they write. “We wonder who Credit Suisse recommends its clients sell their gold to? Could it be… Credit Suisse?”

I wouldn’t go that far, but I would argue that Credit Suisse’s analysis comes with an enormous glittering caveat: if there aren’t any disruptive events, bank collapses, inflation, bond defaults, bank runs, massive layoffs or housing crises, then, perhaps, gold prices will take a tumble.

Definition of the day

Black Swan: An event that is highly improbable (and unforeseen and therefore omitted from models) that nonetheless occurs and has a significant impact (Source: moneyterms.co.uk)

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Gold starts the second week of trading in 2010 on a powerful upward rally. The yellow metal crossed $1,150 per ounce for the first time since early December, as the Fed doesn’t appear to be moving toward a rate hike any time soon.

Low interest rates mean investors want to hold anything but cash, and, with an inflationary threat looming over much of the world, gold will likely stay a hot commodity.

“The fact that the dollar has weakened has obviously helped to sustain its rally. We are going to be looking towards the $1,200 level again,” Darren Heathcote, of Investec Australia in Sydney told Reuters late last night.

High gold and silver prices mean even higher returns for gold and silver mining companies, and we’re likely to see some powerful movements in some miners this week. Indeed, they were active in Australian trading early Monday.

As the NYSE warms up Monday morning, look for the following stocks in particular to break out:

Harmony Gold Mining Co. (NYSE:HMY). Harmony is currently the third-largest gold producer in Africa, and their stock has gotten crushed in recent months. On Thursday of last week, that prompted UBS AG to upgrade the stock to “neutral” from “sell.”

IAMGOLD Corp. (NYSE:IAG). IAMGOLD was one of the few gold and silver mining stocks last week to show higher-than-volume on Friday. The stock was up nearly 6.5 percent in the wake of the news that the company’s current CEO, Joseph Conway, would step down on Jan. 15, 2010.

DRDGOLD Ltd. (NASDAQ:DROOY). DRDGOLD showed strength on Friday rising 1.85 percent, one a day when most gold and silver stocks didn’t move much more than 1 percent in either direction.

Nevsun Resources (AMEX:NSU). At least one writer predicts Nevsun Resources will soon be over $6 after breaking out of an inverted head-and-shoulders pattern in 2009. Time will tell, but if there is a sustained uptrend in gold prices, the smallest gold and silver mining stocks will likely perform the best.

“Gold has once again proven the perma bears wrong and continues to march to a different drummer,” metals writer at Agoracom.com, Peter Grandich, told Marketwatch. “For almost a decade now, strong physical buying enters on a meaningful pullback and this time is no different.”