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"→
While Donald Trump's election has altered a number of aspects of the economy, investors cannot ignore economic trends that were in place before the election, says Joe McAlinden, founder of McAlinden Research Partners and former chief global strategist with Morgan Stanley Investment Management. In this interview with The Gold Report, he discusses those trends and how they may be changed by Trump's election, why he is bullish on gold and which sectors he expects to thrive in the Trump era.
Technical analyst Clive Maund says liquidity issues with banks could lead to restrictions on cash and precious metals.
The global financial system continues to groan under the strain of the accumulated weight of trillions of dollars worth of debt and derivatives, which have built up to even more fantastic levels than those that precipitated the near collapse in 2008, thanks to the policy of solving liquidity problems near term by creating even more debt and derivatives, Quantitative Easing being the most obvious example. However, while the majority considers the situation to be hopeless, there is actually "light at the end of the tunnel."
If only a way could be found to freely tap the funds of savers at will, by imposing duties or taxes on bank accounts, with the additional option to appropriate savers' funds on occasion as required, then the systemic liquidity problems will be solved. Banks need never fear solvency problems again and they can simply fall back on the account holder's funds to meet any obligations. There are in fact already names for these restorative operations, they are called "bails-ins" and NIRP (Negative Interest Rate Policy). Continue reading "The War on Cash and Then on Gold"→
Due to drug pricing controversies, there has been much concern about how the outcome of the upcoming election will affect pharmaceutical stocks. Dr. Len Yaffe of Stoc*Doc Partners sheds light on the issues in this analysis of drug price negotiation policy, and focuses in on one California ballot proposition that aims to rein in costs.
Gold fell below $1,300 yesterday for the first time since the Brexit vote in June, as the dollar index rose to a two-month high.
The dollar rose amid increasing speculation that the Federal Reserve will raise interest rates by December. Both Federal Reserve Bank of Cleveland President Loretta Mester and Federal Reserve Bank of Richmond President Jeffrey Lacker have come out in favor of higher interest rates. Manufacturing data released Monday was stronger than expected.
Also pushing down gold is the U.S. dollar's rise against the British pound, which fell to a 31-year low against the dollar after the release of a timeline for Britain's exit from the European Union. Aiding gold's woes is a rise in Deutsche Bank shares today, signaling at least a temporary easing of worries over the bank's liquidity, and lessening gold's role as a safe haven. Continue reading "Gold Falls on Rate-Hike Fears"→