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Frank Holmes
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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
My company:
U.S. Global Investors
My blog:
Frank Talk: Insights for Investors
My book:
Goldwatcher: Demystifying Gold Investing
  • Gold's Unique Agility 0 comments
    Jan 12, 2012 9:38 AM | about stocks: GOLD, RGLD, FNV

    After 11 years of positive returns, can gold continue to shine? That’s the question put to me last week by my friend and Bloomberg TV host Pimm Fox.

    My answer? Yes, because the Fear Trade and Love Trade remain firmly in place.

    Regarding gold stocks, I explained that we look for miners who can demonstrate high margins and possess an exceptional growth profile. From a bottom-up perspective, we look at cash flow (essential for funding growth, capital expenditure and dividends), production growth (percentage change from previous quarter/year), and reserves per share (how much proven reserves does the company have?).

    I highlighted Randgold Resources and two gold royalty companies, Royal Gold and Franco Nevada, as examples of companies which compare favorably on these metrics.

    The show’s other guest, Tom Russo from Gardner, Russo & Gardner, made some interesting points regarding the agility of gold as an investment. Russo said, “What I find so amazing about gold over the past three years is how flexible [gold] has been as an asset class. It answers every investor’s question. If someone looks for a political risk investment, it’s gold because you can carry it with you, you can flee with it. If someone wants protection against inflation, it’s gold because it will hold value against inflation.”

    It’s this agility that should continue to attract attention from gold investors around the world.

    Important Update: The 2012 edition of our popular Periodic Table of Commodities is now available. Click here to download the pdf. We’ll dive into further detail on the table next week.

    Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.

    The following securities mentioned in the interview were held by one or more of U.S. Global Investors Fund as of December 31, 2011: Randgold Resources, Franco Nevada, Royal Gold.

    All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

     



    Disclosure: I am long RGLD, GOLD, FNV.
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