Gold - Long Term Performance - Abitibi Royalties

Gold has been disparaged as an investment, especially by North American financial commentators.  Why?

• Some contend that investing in gold is nothing more than speculation.  To that I say, this remark applies to all investment activity.  Gold speculators employ metrics which differ from say, investors in equities. 
• Some commentators are associated with organizations that don't make much in the way of commissions from dealing in gold (ALWAYS check their affiliations as part of your due diligence).
• Many contend that gold does not pay interest or dividends (this is changing as some mining companies now pay slight dividends).
• Some say that gold has no inherent "store of value" and is only subject to the whims of the market ... so what?
• Some say that gold is very volatile ... so this is bad?
• Others scoff at the "survivalist" arguments and the ardor of some "gold bugs" who promote gold as an investment (many of them are a bit over the top) ... there is merit to this.  
• Other cite examples where investors have been scammed in fraudulent mining schemes ... it's not restricted to the mining sector but always remember that mining promoters always try to guild their reports

The truth is that gold is like most other investments:

• subject to the whims of the market place
• very liquid as it is traded very widely via a number of vehicles

A more considered perspective is warranted.  For example, take a look at the long term performance of gold.  

Consider also, that North American commentators have never experienced a melt down in the social and economic fabrics of their societies.  This is at variance with the experience of most other people in the world.  Many have been subject to major dislocations and discovered that gold was one of the few vehicles that could see them through the night.  Consider that many people live in countries with rampant corruption, rigged banking systems, and volatile economies.  With growing economic prosperity, much of the world now has the wherewithall  to purchase gold.

Further, it could be argued that we are reaching "peak gold" - that the rate of new economic discoveries is declining and that the cost of replacing depleted resources is increasing significantly.

In a few weeks, I will provide an update of the Financial Log Book.  I have gone largely to cash while retaining a few stalwart performers - well managed companies with little debt and resilient markets.  A significant part of the portfolio is also invested in precious metals:  Abitibi Royalties, Silver Wheaton, a bullion fund and a few small gold mining companies that are in production.

A short note about Abitibi Royalties.  The company will be listed on the NASDAQ on October 11, 2018.  In contrast to many gold mining enterprises, this company has maintained its share price .... a reflection of market sentiment about the quality of management and the relevance of its business model in the current business environment faced by the mining industry.  To my mind, the company is well positioned:

• has no debt
• has cash available to exploit opportunities
• earns a steady income flow from smelter royalties and other sources (see company financials) with minimal production risk
• has interests in a series of properties surrounding large mines ... if companies such as Canadian Malartic expand their operations, Abitibi will gain new sources of income for a very low outlay  
• if gold rises in price, Abitibi will profit nicely as well