Tremendous profits have been realized recently with precious metals. It's all about the theme of "safe haven" in the face of Brexit, turmoil in the oil and gas sector, an underlying sense the things are not well in the Middle East, and a belief that low interest rates will be with us for a few years yet.
Recently, I have invested fairly heavily in silver stocks. Why?
- a belief that production has declined as a result of a lower demand for base metals - silver is a byproduct of many base metal mines
- a sense that the silver to gold ratio will gradually revert to the norm over time (to the benefit of a disproportionate increase in silver prices relative to gold)
- a sense that the investment world in awakening to the potential for gain by investing in silver (my experience has been that gold leads during the initial run-up in precious metals prices and that silver coat-tails once the trend has been established and that it outperforms gold thereafter)
- experienced management with a proven track record (note that many "duds" in the mining industry whose idiotic decisions brought their former companies to their knees have found employment in the same industry after being dismissed for subpar performance .... it literally pays to Google the executives of mining companies ... and if you see recycled duds on the executive roster of prospective "buys", run - don't walk away as history has a habit of repeating itself
- operations in stable countries with the rule of law
- active production with the potential for expansion at low cost
- great balance sheets
- listings on both Canadian and American stock exchanges (Retail investors in the US are wont to stay close to home. I figure that dual listings give companies a potential for greater gain than would be the case if listings were restricted to Canada)
In a future post I'll list some interesting companies.
