Gold

  • 03 Aug
    This Is What To Watch For When Thinking About Investing In Junior Gold Miners

    This Is What To Watch For When Thinking About Investing In Junior Gold Miners

    • There are many risks—ranging from political risks to meteorological—to keep in mind with junior gold miners. I’ll describe some of them to give you a better picture of what can happen.
    • However, the negative attitude towards junior miners also provides excellent investing opportunities.
    • We’ll look at what makes the stock price of a gold miner move and how to recognize the pattern.

    Introduction

    The VanEck Vectors Junior Gold Miners UCITS ETF (NYSEARCA: GDXJ) has gone through some significant restructuring in the last few months because it was getting too big. The ETF simply had too much in the way of funds to continue buying stocks of junior gold miners (market capitalization below $2 billion), and had to increase the threshold by including gold miners that have a higher market cap. More →

  • 12 Jun
    Stocks, Bonds, & Gold, Oh My! What’s The Safest Asset Class Today?

    Stocks, Bonds, & Gold, Oh My! What’s The Safest Asset Class Today?

    • In his search for safety, the average investor usually does it all wrong.
    • Stocks, bonds, real estate, gold, and cash will all probably drop more than 70% once in your lifetime.
    • However, there is an asset class that is much safer and will lead to huge returns, Buffett would call it a “bet on America.”

    Introduction

    When I talk to people that aren’t as obsessed about investments as I am, a word that I constantly hear is “safety.” Everybody wants to do something with their capital without risk and they are in a constant inner fight related to their money and what to do with it. More →

  • 31 May
    An Analysis Of The Top 10 Gold Miners

    An Analysis Of The Top 10 Gold Miners

    • Each gold miner is different, so you have to carefully pick the right one for your portfolio.
    • Debt levels, gold reserves, mining costs, political and environmental risks, all have to be put into a perspective related to your risk appetite, strategy, and investment horizon.

    Introduction

    Yesterday, we discussed the reasons it’s a good idea to have gold miners in your portfolio now. The goal of today’s article is to show you just how different gold miners are and how carefully you have to chose those to include in your portfolio.

    Just as every mine is different, each miner is even more different. There are huge differences in potential future output, mining costs, debt structures, political risks, etc. All of these factors have to be assessed to provide you with the best hedging option for your portfolio according to your risk appetite and portfolio orientation.

    In this article, I’ll discuss the top 10 holdings of the iShares MSCI Global Gold Miners ETF (NYSEARCA: RING) to give you insights into what to watch for and how that affects the risks and potential rewards for your portfolio. More →

  • 30 May
    Why You Want Gold Miners In Your Portfolio Now

    Why You Want Gold Miners In Your Portfolio Now

    • Investing 5% of your portfolio in gold miners offers you the potential for a twenty-fold upside while the downside is just the invested 5%.
    • A macroeconomic analysis shows that there is a high chance that the FED won’t be able to significantly increase interest rates or trim its balance sheet.
    • More quantitative easing—similar to what is still going on in Europe and Japan—would easily bring gold above $2,000 per ounce. In that case, I wouldn’t exclude 1,000% jumps for miners.

    Introduction

    Lately I’ve been mentioning in a few articles how gold, especially gold miners, are a good hedge for a portfolio. My idea is that if you own gold miners with 5% of your portfolio, you are relatively well protected against whatever surprises we might see coming from the economy. More →

  • 25 May
    Building The Best Portfolio For The Upcoming Recession

    Building The Best Portfolio For The Upcoming Recession

    • Stocks will be hit badly. Low price earnings and high book values can provide some safety.
    • Bonds look much better than last year.
    • Alternative investments can be a jack-pot for your portfolio.

    Introduction

    Yesterday we discussed how a recession is imminent, especially if the trending down credit growth turns negative.

    The most important thing now for investors is to prepare for such an event. Today, we’re going to dig deeper into the recession-related investing risks as different asset classes will be affected differently. More →

  • 04 May
    Here’s What Happens When An ETF Gets Too Big

    Here’s What Happens When An ETF Gets Too Big

    • When an ETF owns more than 10% of a company, any kind of rebalancing can be very dangerous for the stock.
    • The VanEck Vectors Junior Gold Miners ETF is becoming too big for its index, and has been forced to look beyond junior miners and to sell up to 50% of some of its positions in order to rebalance.
    • The main danger coming from ETFs is the lack of underlying liquidity, especially when there is no one to buy the assets sold in a fire sale.

    Introduction

    ETFs are potential vehicles of mass destruction. There is a high chance that in a few years from now, we’ll be talking about the 2000 dot-com bubble, the 2009 subprime crisis, and the 201X ETF liquidity crisis.

    After ETFs took the investment stage, there weren’t many issues with them as they remained relatively small. However, the continuous inflow of capital has already made some ETFs too big.

    In today’s article, we’ll describe the issue with the VanEck Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ) and how it’s affecting index constituents. More →

  • 12 Apr
    How To Prepare For Anything The Economy Throws At You

    How To Prepare For Anything The Economy Throws At You

    • All stocks will rise with a rising tide, therefore it’s wise to buy those stocks that won’t fall off a cliff in a recession.
    • The usual suspects—like consumer staples, utilities, and healthcare—are good ideas, but not at any price.
    • Bonds are close to becoming a win win situation.

    Introduction

    Yesterday we analyzed the FED’s latest meeting minutes, and saw how when the FED applies historical probability calculations to their own estimations, the result is that anything can happen.

    The FED itself stated that, in the next few years, economic growth could be anywhere between -0.5% and 4%, unemployment between 2% and 7%, and inflation between 1% and 3% with a 70% confidence interval. A 70% confidence interval means that there is a 30% chance economic indicators end up outside the above mentioned ranges. More →

  • 10 Feb
    How A Hedge Fund Manager Researches A Stock

    How A Hedge Fund Manager Researches A Stock

    • Researching stocks is simple: you have to leave no stone (stock) unturned, meticulously assess risks, calculate present values of future cash flows, compare the stock price, and if your estimated value is much higher, assess how much of your portfolio to put into a stock.
    • Unfortunately, this is more than a full-time job. You have to love it and more than a decade of experience helps. For those that don’t have the time, we’ll provide a solution.
    • This article also includes a detailed example of an investigation on a stock that didn’t turn out as an investment. Usually, only one of 20 thoroughly researched stocks turn out as a potential investment. In the end, it boils down to the fact that only 1 out of more than a 1,000 researched stocks is a good investment.

    Introduction

    I was a spear fisher for many years. It was my passion, and I went fishing more than 150 times per year. You can watch a video of what I was doing here.

    If you are or know fellow fishermen, you know that we live for the big catch. However, catching the fish of the year takes thousands of hours gaining experience, patient searching for the best spot and the best time, and analyzing many variables that can increase your odds at catching the big one with billions of small fish swimming around.

    After a few years of diving, I learned that it all boils down to pure statistics. The more time I spent at sea, dives I made, and the more times I came home empty handed, the higher the probability became for a big catch. More →

  • 05 Jan
    If You Don’t Own Gold, You Know Neither History Nor Economics

    If You Don’t Own Gold, You Know Neither History Nor Economics

    • The bull case for gold is getting stronger for monetary, fundamental, and technical reasons.
    • Gold miners offer a positive asymmetric risk reward opportunity.
    • However, in the short term, anything is possible.

    Introduction

    I’ve borrowed the title of today’s article from Ray Dalio, the manager of the $150 billion Bridgewater hedge fund.

    Historically I have been against owning gold as it is not a yielding asset. However, after seeing how the global monetary base expands and will probably expand further when the next recession comes along, it’s a good time to contemplate an investment in gold as a hedge against human stupidity and greed.

    Today, I’ll elaborate on the bull case for gold, the risks, investment options, and why I think some of those options have extremely positive asymmetric risks. More →

  • 02 Dec
    The Crazy World Of Mining Costs

    The Crazy World Of Mining Costs

    • Don’t take a description of costs for granted as they vary from miner to miner.
    • Mining costs aren’t an accounting metric, but most miners should follow the World Gold Council’s guidelines.
    • Apart from disclosure metrics, there is a metric that doesn’t deceive.

    Introduction

    As gold is getting more interesting as a buying opportunity, it’s important to identify the miners that offer the highest reward for the lowest risk. More →

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