I would like to introduce a friend and contributing author, Amaury.
Amaury is a personal friend and head trader at an investment management firm. He likes to focus on the commodity sectors within the markets, but more specifically gold and gold mining stocks.
Here is his latest insight:
The market weakness and uncertainty over the last month has created some interesting opportunities in the resources sector, especially in the Canadian junior sector. Those stocks have suffered from tax loss selling, project disappointments (i.e.: NG and the Galore Creek project), and risk-aversion selling from investors preferring large cap, less volatile names or cash. While there are over 3,000 juniors, I really like selling my GLD over $80 and using that cash to add or buy a few beaten down juniors. Of course, stick with the 'best' names- strong management team, good balance sheet, adequate cash, and advanced projects (gold-silver-copper projects in Mexico are my favorite). The fundamentals remain strong for gold and other metals, but the best trade I see right now is to look for companies that are unfairly trading at new lows and hold them over the next 12 months. Investors that can ride the volatility will be better rewarded than owing GLD outright.
Newmont (NEM), which makes up 10% of Gold Miners ETF (GDX), has agreed to sell its royalty assets and other non-core investments to Franco Nevada (FNV on Toronto) a few days ago. I like selling NEM over $50 and using that cash to buy smaller US and Canadian names that have advanced gold exploration projects. I feel this transaction opens the door for an interesting m&a period over the next 12 months.
Amaury
Contributing Author, ETF Updater
http://etfupdater.com/
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