Silver linings for a strong portfolio
This U.S. advisory has been urging investors to buy gold for years, but it likes platinum and silver, too — and has a number of Canadian buys.
All that glitters is not gold. We’re not making this up.
Certainly, when markets tremble and the economy staggers, gold is the preferred safe haven for many investors.
But it’s not the only precious metal that will add weight to a well-fortified portfolio.
The other precious metals may actually do better than gold in the uncertain times ahead, says one prominent U.S. advisory. You should give very serious consideration to adding silver and platinum to your portfolio.
And this advisory has been trumpeting the virtues of gold for years.
Indeed, The Complete Investor has a slew of Canadian gold stocks it recommends, and we will get to those in a moment.
But as worthy as gold is, says Mr. Stephen Leeb, the advisory’s editor, its two counterparts will also be “must-have” investments in the years to come.
One of those other “must-have” investments is Canadian as well. But we’ll start with the glitter of gold.
A store of value
“Gold’s intrinsic beauty is unique,” says Mr. Leeb. It doesn’t tarnish, and its malleability gives it many uses in the decorative arts.
It is not just a utilitarian metal, it is a store of value.
“We have been urging investors to buy gold for years,” adds the editor, “and no one should be disappointed with the results.” Gold should remain one of your top investments, he asserts, protecting against inflation and deflation alike.
The fact that this advisory recommends a number of Canadian gold stocks can only be encouraging for investors on this side of the border.
Leading the list alphabetically is Agnico-Eagle Mines (TSX/NYSE-AEM) now trading at $63.95 and yielding 0.3 per cent on a dividend of $0.19. The biggest gold firm of them all, Barrick Gold (TSX/NYSE-ABX) is now at $42.38, and its $0.42 dividend yields 1 per cent.
Franco-Nevada Mining (TSX-FNV; OTC-FNNVF), which was folded into Newmont Mining eight years ago and then spun back out three years ago, is trading at $27.68 and also yields 1 per cent, on a dividend of $0.28. Another senior, Goldcorp (TSX-G; NYSE-GG), trades at $42.06 and yields 0.5 per cent on a dividend of $0.19.
Two small caps round out the group — Gammon Gold (TSX-GAM; NYSE-GRS), trading at $12.31, and NovaGold (TSX/ASX-NG), which trades at $5.76. Neither pays a dividend.
Shining brighter
Gold is good, but under certain circumstances platinum and silver will shine brighter, says Mr. Leeb. “In fact, because of their critical industrial applications, during periods of global growth and rising inflation they will likely outperform gold — while gold will star during the deflationary bouts that almost surely lie ahead.”
All three metals are “precious” thanks to their scarcity — far less is mined than is the case with their baser cousins like copper and zinc. And demand for precious metals rises when people lose faith in currency.
The total estimated value of gold above and below ground is $6 trillion. This is a pittance compared to the notional value of money in circulation. And the ratio of the value of money to gold has been rising steadily. The weaker money is, the stronger gold looks.
The value of the other two metals is of a somewhat different character. They may not match gold for beauty, but they have important chemical properties that make them irreplaceable in certain industrial applications.
This can cut both ways. The more valuable they are in industry, the less likely these metals are to be held by banks as a reserve currency, since they might be called away for industrial duty.
Without the risks of mining
Among precious metals, platinum is the most expensive and most rare. But it is a working metal, chiefly as a catalyst. In fact, it has a role to play in a greener world, since it is essential in catalytic converters and fuel cells, clean alternatives for the internal combustion engine.
Silver is the best conductor of heat and electricity — and it’s a strong antibacterial agent. So it can serve in solar energy, batteries and water purification, as well as in jewelry and as an investment.
You have more investment choices with silver, Mr. Leeb informs his readers. One of those is a Canadian stock that has just been added to the advisory’s Growth Portfolio.
Silver Wheaton (TSX/NYSE-SLW) “trades like an aggressive miner, though it mines not an ounce.” This Vancouver firm buys silver at fixed prices from mines that extract it as a byproduct, like those of Barrick and Goldcorp (it can also come as a byproduct of copper or zinc).
Thus it has a steady flow of silver at a fixed price, making it “a leveraged miner without the risks of mining,” says the editor. This can make it risky — it fell precipitously in 2008 — but this advisory expects it to outperform the price of silver by at least 10 per cent a year. It is trading at $16.70 and pays no dividend.
The advisory also likes another “pure play” in silver, iShares Silver Trust (NYSE-SLV). This ETF trades at $17.36.
Peru’s Buenaventura (NYSE-BVN) derives only about 10 per cent of its revenue from silver, but deserves a look, says Mr. Leeb, because “it has one of the best growth profiles of any precious metals mining company around.” It’s trading at $33.81 and yields 0.8 per cent on a 28¢ dividend.
South Africa mines most of the world’s platinum and two of its biggest companies get this advisory’s vote. Impala Platinum (OTC-IMPUY) of South Africa is the safest, thanks to its low cost structure. It trades at $25.48 and yields 1.9 per cent on a 49¢ dividend. Anglo Platinum (OTC-AGPPY) has higher costs, higher upside and higher risk. It trades at $105 and pays no dividend.
In short, glitter is good. In this advisory’s opinion, your portfolio should be paved with gold and lined with silver, with a pinch of platinum thrown in for good measure.
|
E-mail this article
Printer-Friendly
