Gold Stocks for All Risk Appetites

Money manager Adrian Day reviews recent developments at a handful of gold companies, both juniors and seniors.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE,NY 62.58), already one of most diversified of royalty companies, is expecting further commodity diversification ahead, with CEO David Harquail saying the company will do more deals in non-precious metals, particularly oil and gas. The company's mandate allows for up to 20% of the portfolio outside precious metals—currently it's at 94% precious metals—and Harquail said he would like to get to that level soon. Franco currently has availability liquidity (cash and credit lines) over $1 billion.

The reason for the diversification is that the gold industry is essentially "ex-growth," according to Harquail, who says companies are investing in new projects to maintain production, but "none of these projects are really great."

Company Can Take Its Time

Harquail also noted that Franco does not need to be in a rush to invest. It has growth built in for the next five years from royalties on advanced-stage projects, while it could maintain its dividend for the next 32 years even if it did nothing else.

Franco is also appealing more and more as an investment to long-term conservative institutions, including generalist funds who want a small exposure to gold and resources without the extreme volatility from mining companies. Franco remains a foundational investment for us. If you don't own it, it's a good buy here. Continue reading "Gold Stocks for All Risk Appetites"

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Brexit Leads To Uncertainty, But It's Good For Gold

The Brexit vote adds uncertainty to an already turbulent global environment, says money manager Adrian Day, and has helped gold resume its rally.

Brexit Wall

The decision of the British people to leave the European Union in the face of extreme fear-mongering shook the markets initially, but they turned up at quarter end. The vote does not end the uncertainty, of course: the negotiations on Britain's exit, increased agitation against membership in other countries, the change of political leadership in Britain, as well as the potential break-up of the United Kingdom, all add uncertainty to an already turbulent global environment, and markets do not like uncertainty. Brexit also provides yet another reason excuse for the Federal Reserve and other central banks to keep interest rates excessively low for longer. Continue reading "Brexit Leads To Uncertainty, But It's Good For Gold"

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