 | COMMODITIES CORNER The recent 15% drop in gold allegedly was due to the Japanese Market selling short in order to meet huge margin calls. I can buy that a tremendous volume shift could tank a global price point but we experienced the biggest crash in 30 years within a two day period! This sounds like a complete market manipulation by some seriously deep pocketed characters. What better way to continue to corner the market by making the acquisitions more affordable. |
Well everyone has heard by now that Gold is over-bought, gold stocks are in the toilet and may even drop further, etc. The price of the commodity was grossly inflated in my opinion especially compared to platinum and other precious metals but the reality remains that it highly valued and sought after. As long as they keep mining it, somebody will keep buying it. I don’t see luxury jewelers Like Tiffany’s cutting back on selling gold jewelry. Tiffany’s has been expanding in various regions even in this economy.
That just proves my point that those who can afford certain luxury items will buy them regardless of the market conditions or price. With that being said, I concur with a lot of the experts and analysts out there that are encouraging us to stay clear of gold stocks. The words “gold stocks” typically refer to gold mining stocks. Let me be clear on this…I never liked them, nor do I like gold ETFs. I do however like gold royalty stocks. What is the difference you ask?
Gold royalty companies provide money to gold mining operations in exchange for a portion of revenues (the royalty) for some multi-annual duration. I have seen some companies have a 99 year royalty agreement in exchange for $2 million in operating capital. That’s not a bad deal for the royalty company if the mining operations hit a huge deposit.
Gold royalty companies have outperformed the actual bullion especially towards the latter of the third quarter last year, ironically right before gold started to drop. Certain gold royalty companies finished out the year with over 450% returns. The insane price of gold ($1700+ oz.) at that time of course affected the dividend payment. By compounding or reinvesting the dividends over the duration of ownership of these types of stocks, you would finish out the year with a bottle of Dom Perignon. Now that’s my kind of investment and it is for that very reason I am very bullish on gold royalty companies while they are seriously undervalued and at bargain basement prices.
I positioned both my own and our clients’ portfolios with a hedged strategy that included both equity stakes and options on gold royalty companies. We took a beating on April 15th thru the 19th due to that incredible market decline. Precious metals took an exceptional beating. From copper to platinum, everything metallic or that looked metallic tanked. We saw months of profits go right out the window in a matter of days. We finished out the week taking possession of all those option positions.
Most people would be ready to jump out the nearest window but not us. Yeah, we took a beating but we ended up owning a lot more of what we like to own anyway and at a hefty discount. Yeah, we are in a hold pattern for a while on all our precious metals but that gives us more time to enjoy those compounded dividends and really cash out when it’s time to close the positions.
In the interim, if you have the means buy...buy...buy silver and gold royalty stocks NOW!!! Analysts are saying that they haven't bottom yet. So what, keep buying because within a four year period I anticipate a 400% gain and that's being very conservative.
That just proves my point that those who can afford certain luxury items will buy them regardless of the market conditions or price. With that being said, I concur with a lot of the experts and analysts out there that are encouraging us to stay clear of gold stocks. The words “gold stocks” typically refer to gold mining stocks. Let me be clear on this…I never liked them, nor do I like gold ETFs. I do however like gold royalty stocks. What is the difference you ask?
Gold royalty companies provide money to gold mining operations in exchange for a portion of revenues (the royalty) for some multi-annual duration. I have seen some companies have a 99 year royalty agreement in exchange for $2 million in operating capital. That’s not a bad deal for the royalty company if the mining operations hit a huge deposit.
Gold royalty companies have outperformed the actual bullion especially towards the latter of the third quarter last year, ironically right before gold started to drop. Certain gold royalty companies finished out the year with over 450% returns. The insane price of gold ($1700+ oz.) at that time of course affected the dividend payment. By compounding or reinvesting the dividends over the duration of ownership of these types of stocks, you would finish out the year with a bottle of Dom Perignon. Now that’s my kind of investment and it is for that very reason I am very bullish on gold royalty companies while they are seriously undervalued and at bargain basement prices.
I positioned both my own and our clients’ portfolios with a hedged strategy that included both equity stakes and options on gold royalty companies. We took a beating on April 15th thru the 19th due to that incredible market decline. Precious metals took an exceptional beating. From copper to platinum, everything metallic or that looked metallic tanked. We saw months of profits go right out the window in a matter of days. We finished out the week taking possession of all those option positions.
Most people would be ready to jump out the nearest window but not us. Yeah, we took a beating but we ended up owning a lot more of what we like to own anyway and at a hefty discount. Yeah, we are in a hold pattern for a while on all our precious metals but that gives us more time to enjoy those compounded dividends and really cash out when it’s time to close the positions.
In the interim, if you have the means buy...buy...buy silver and gold royalty stocks NOW!!! Analysts are saying that they haven't bottom yet. So what, keep buying because within a four year period I anticipate a 400% gain and that's being very conservative.
GOLD / SILVER COMPANIES MARKET CAP
  | I am definitely in a hold it and forget it for the next four years pattern on some of these and a few others. I recommend an equity position in any of these coupled with some naked puts and covered calls to not only hedge the equities and generate income but to boost the overall ROI. Do your research on which companies offer the highest dividends with a consistent annual dividend growth rate. |
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