I almost exclusively cover gold stocks in my three paid portfolios. I believe gold has a unique position both as a monetary metal, and it’s also the case that there are many gold stocks to pore through. We have an advantage because many of these stocks are too small or difficult for large investors to analyze.
So I don’t have any kind of vendetta against other metals besides gold – it’s just the metal that best fits the criteria I use to find compelling stocks in the precious metals space.
I also cover a handful of silver companies – and silver can be like an even more exciting (aka: volatile) version of gold. There are dozens of publicly traded silver companies, but as I’ve said frequently: most of these companies are run very poorly and only seem to be designed to make money for company insiders, not shareholders.
Most of them actually don’t have very much silver to mine, and the ones that do, only a handful of companies are geared towards shareholder success. The rest will dilute their shareholders endlessly – especially when silver is hot, as it is right now.
Silver jumped 20% this summer, and it is showing no signs of slowing down. But silver can give up gains even faster, as you might recall when it soared to nearly $50 back in 2011, and back down to $33 within 2 weeks.
But there are other metals I sometimes get questions about – like platinum. It’s frequently framed as the rarer and more valuable version of gold.
There’s an investment thesis for buying platinum right now – because historically, platinum tends to be more expensive than gold, but periodically it sells at a discount. Right now is one of those periods, and it’s selling well below gold’s price, at about $1,400/oz, compared to gold at $3,650.
This gap between platinum and gold is currently at one of the biggest it’s ever been. And intelligent precious metals investors (like the folks who read this letter) frequently notice these kinds of patterns. It’s a good instinct.
The problem is: there are almost no companies that mine it as their primary resource, so there’s no point in focusing on platinum in my services. Almost all platinum is mined by a handful of companies located in South Africa.
They’re not especially compelling as investments for a variety of reasons – one of which is that platinum is just one of the metals they mine. These same companies also tend to mine palladium, iridium, rhodium, osmium and even gold, copper, and silver.
You’re not really getting pure play on platinum with any of these companies.
Every now and then, you’ll see some new hype train started about precious metals further down the periodic table, like iridium, rhodium, etc.
I’m not interested in those metals either – for the same reasons I don’t cover platinum. My thesis is simple: gold is the chief monetary metal.
Those other metals may have important industrial or technological roles to play, but they don’t fit into the monetary metal thesis. They also don’t have a large world of stocks to analyze.
And look: if you’re a savvy trader and you have some kind of methodology for market timing or sentiment – then I think you could probably trade almost anything with enough practice and a little luck.
Plenty of people do well noticing these kinds of market patterns. I urge caution. These other metals are all very thinly traded and can bust much faster than they boom.
And we don’t need to search in the crevices of the market to find value that people are overlooking. Gold (and silver) are still occupying that niche in my portfolios.
You don’t need to make it more complicated for yourself. Stick to what you know. Stick to the simple idea of gold as money and buy undervalued gold stocks.
It’s what I’m doing.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio