Thursday, March 22, 2012

The Weekly Update 3-23-2012

Two items:
2) There will be no update on 3-30-2012 (spring break) :-)

Gold closed at $1,644 per oz. today. Gold has seen weakness in the price. So, why does it make sense for a small portion our a portfolio?

The vehicle we have chosen to have exposure with ( call me for the name as I am legally bound from "name dropping" in this venue) owns more than just gold. We own many of the metals including silver and copper. BUT,....most of all we own, via this vehicle, the mining companies.

Gold bullion represents about 30% of the investment and that is good news. Why? For starters, The Bank of International Settlements bought 6 metric tons of gold bullion last week. Total investment was about $300 million. These are the big buyers and there are plenty more waiting for weakness to add to their own positions.

Most of all the mining stocks are selling at nearly a 20% discount to the historic norm of valuation versus the metal that each happens to mine. This is a sign that investors don't want to own businesses in this space regardless of fair value, i.e. they are scared. As the old saying goes "scared money never wins".

There is still plenty of uncertainty in our world. That uncertainty suggests it is reasonable to have a suitable amount of exposure to this investment space. When combined with who is buying bullion now (noted above) and who is scared, I would suggest exposure is also smart and timely.

Let me know what you think!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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