Our precious metals portfolio is at a low level. It’s now just a net 16% of our total portfolio (down from 50% earlier this year), suggests Omar Ayales, commodities expert and editor of Gold Charts R Us.
When the time comes, I'll be buying gold, silver and the miners more aggressively, increasing exposure 2 or 3 times. The gold miners we have, I’ll keep through weakness. I believe in their growth stories and allow for some exposure as weakness plays out.
Take Nova Gold (NG) for example. It’s been great. A solid junior miner with world class assets in North America with top notch management. NG has held up stronger than most.
It’s very bullish above the March uptrend near $9.50. It's formed a double top at $12, which is becoming a strong resistance. If NG fails to break above resistance, it could re-test the March uptrend. I’m ready to buy more below $10. We’ve done great with NG overall this year, having recently taken profits.
Another one of my favorites is Hecla Mining (HL). It’s also done great for us this year. It’s been having great success since increasing gold production and paying off debt with excess cash flow generated over the past 2+ years.
It too has been declining steadily since the August highs (when we last took profits). However, HL’s technicals are showing weakness suggesting more downside is likely.
Resources and base metals are poised to outperform precious metals in the foreseeable future. And it makes sense within a global economic recovery. Governments globally will continue to spend money, looking to stimulate their economies.
Demand for resources across the board are poised to rise. I’ve been out of resources, for the most part and we’re only holding BHP Billiton (BHP). BHP is a great company, involved in the production of copper and other resources including oil.
It’s one of the largest in the world and it's Australian based. BHP has a solid record of keeping a handsome dividend and it's poised to continue benefiting from rising commodity prices.
But I’ve also started to look into other resource companies that could bolster our anemic resource portfolio. Ivanhoe Mines (Toronto: IVN), a Canadian company.
Ivanhoe is developing one of the largest copper mines in the world at the Kamoa Kakula site in Central Africa and it’s online to start production next year. I bought some shares CA$5.22 to have some exposure but I’m waiting for further weakness below $5 to buy more.
