Today — 14 months later — I’m taking another look. 

Greatland Gold: a lucky punt?

Now, let’s be clear from the outset — there was an awful lot of luck in my call. Investing in any miner, let alone a minnow, is fraught with risk.

First, there’s no guarantee it’ll find what it’s looking for, or be able to extract sufficient quantities of what it does find to make the business profitable. Second, mining can be an expensive business. Many companies go bust before they’ve a chance to make their mark. Third, miners have no control over the prices of the commodities they extract. Fourth, mining shares have a tendency to ‘pop and drop’, catching unwary investors on the price spike.

All that said, Greatland Gold has certainly done all it can to put itself in a great position to continue rewarding investors. Recent news has only served to boost the investment case further.

Good progress

In August, the company announced it has commenced drilling at its delightfully-named Scallywag prospect in the Paterson region of northern Western Australia.

As CEO Gervaise Heddle commented, many of the targets in this region “display similar geophysical characteristics” to Greatland’s stunning Havieron gold-copper discovery “where ongoing drilling under a Farm-in with Newcrest has returned a series of outstanding results.” This certainly bodes well. 

Speaking of Havieron, the company has also announced it had secured a mining lease relating to the project. Assuming GGP is able to get it into production, this could eventually become one of the most valuable gold mines in the world.

On top of this progress, Greatland Gold has benefited hugely from the surge in the price of the precious metal since the coronavirus struck. Despite coming off the boil in recent months, the value of gold has still soared around 25% since the beginning of 2020!

Sell or hold?

Regardless of whether the GGP share price would be where it is in the absence of the pandemic, the fact remains that a lot of early holders will be sitting on big profits. What now? 

For me, an optimum strategy for existing owners might be to bank some profit and keep the rest invested.  After all, such an incredible return over such a short period shouldn’t be taken for granted. Greatland Gold remains a company in its infancy and a lot could still go wrong. Notwithstanding, keeping some money invested will allow holders to benefit from any further positive news on drilling. 

Naturally, no one knows where the gold price will go in the short term either. Since there are simply too many factors that could impact sentiment, one potentially great destination for GGP profits, in my opinion, would be VanEck Vectors Junior Gold Miners ETF.

Diversified across 80 small- and mid-cap miners, this fund ensures investors have exposure to the gold price without the risk the comes from owning just one stock. The ongoing charge is a reasonable 0.55%. 

The post The Greatland Gold share price is up 1,200%! My call was right, so what would I do now? appeared first on The Twelfth Magpie.

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Having said this, I think there are far better passive fund options for those wanting to really grow their wealth over time. 

FTSE 100 beater

We’ve known for some time that populations across the world are ageing and the demand for healthcare will only increase as a result. The coronavirus pandemic has merely served as a further shot in the arm for the sector. One way of tapping into this is through the iShares Healthcare Innovation UCITS ETF.

With almost two-thirds of the portfolio made up of US stocks, performance at the fund has been excellent. By the end of last month, it had gained 69% since launch in 2016. That return becomes even more impressive when you consider the low 0.4% ongoing charge. For comparison, the FTSE 100 is down 13% over the same period. 

Considering the defensive qualities of the industry, I think this 137-stock fund looks a solid long-term buy for anyone averse to actively picking stocks. 

Look overseas

It’s understandable that many UK investors like to invest their money in their (highly regulated) home market. The problem with this approach, however, is that your capital isn’t as well diversified as it could be. With Brexit likely to rattle on for some time to come, this could compromise returns.  

One way around this is to buy shares in passive funds tracking markets in other parts of the world. For me, the iShares Emerging Markets Core UCITS ETF is one that stands out.

The fund has exposure to 2,700 stocks, including mid- and small-cap companies. As experienced Fools will know, it’s often these firms that can turbocharge performance. The ongoing charge is just 0.18% — not much more than a FTSE 100 tracker. 

By far the biggest draw for me, however, is the fact that some of these markets trade on even cheaper valuations than the UK! When you consider how much the economies of India, Vietnam and South Africa could evolve over the next few decades, now looks like a great time to get involved. 

Get some gold

The gold price has lost some of its shimmer in recent weeks but I think Fools should still have some exposure to the precious metal. After all, its tendency to rise when shares fall may come in handy as the full economic impact of the coronavirus is felt across the world. Despite already performing superbly in 2020, some in the market are suggesting the gold price could rise as high as $3000 per ounce.

A simple fund that tracks the gold price will likely be suitable for most investors. Those with far greater risk tolerance, however, could buy the VanEck Vectors Junior Gold Miners ETF. Its 81-stock portfolio may end up being a lot more volatile than a typical FTSE 100 tracker but it’s arguably a far safer way of betting on the shiny stuff than holding shares in a single company.

Since launch in 2015, the fund has returned a little over 18% annually. The management fee is 0.55%.

The post Forget the FTSE 100. I think these ISA-ready passive funds are begging to be bought! appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Buffett buys gold

On Friday, it was revealed that the greatest investor since the Second World War had bought gold. To be precise, the Sage of Omaha has added the world’s second-largest miner of the shiny stuff — Canada-based Barrick Gold Corp — to Berkshire Hathaway’s portfolio in Q2.

In all, Buffett bought 20.9m shares, or 1.2% of the company. Based on the closing price at the end of last week, this amounts to a stake worth $564m.

That may be a drop in the ocean for Berkshire Hathaway (market value: $500bn) but it still represents a significant development.

Why significant?

Buffett’s purchase of Barrick matters because the master investor has previously never rated gold. The precious metal, he once said, “doesn’t do anything,” thereby violating his rule to only invest in stuff that’s actually useful.

The fact he’s now willing to invest in a company like Barrick when its shares are already at a seven-year high shows just how much the pandemic has impacted his strategy and where he now sees value. 

And who can blame him? With more money-printing likely in the US (further devaluing the dollar), investors will be looking for ways to hedge against inflation. This will likely push the price of gold even higher (beyond the record high hit earlier this month), which also increases the profit margins of those who mine it.

In addition to this, the shiny stuff also tends to rise in value when stocks crash, which could still happen in the event of a second Covid-19 wave later in 2020. We’re certainly not in the clear yet!

Should I buy Barrick too?

Following Buffett into Barrick is certainly an option. Just know that you’ll probably end up paying a far higher price than he did.

Unsurprisingly, Friday’s news sent the miner’s share price rocketing in after-hours trading. As word of Buffett’s deal continues to spread, I wouldn’t bet against it going even higher this week. 

Another thing worth mentioning is that any UK investors wanting to buy US shares must first complete a form with their broker before doing so. 

An alternative way of getting exposure to the miner is via a fund. The iShares Gold Producers UCITS ETF is one example.

Despite having 55 stocks in its portfolio, just over 9% of this passive fund’s assets are tied up in Barrick.

The only company it has more exposure to is Newmont — the world’s biggest producer of the precious metal. The fund has an annual charge of 0.55%. It’s up 37% year to date.

Other stocks to consider

If you’d rather stick to large, London-listed stocks however, there’s always the option to buy stakes in FTSE 100 miners Polymetal International and/or Fresnillo instead.

Polymetal has nine gold- and silver-producing mines across Russia and Kazakhstan. Fresnillo is the world’s largest producer of silver but also the second biggest gold miner in Mexico. If you’d bought either stock during the market crash in mid-March, you’re probably very close to doubling your cash by now. 

If you agree with Buffett that demand for gold is likely to rise for the foreseeable future, there could be even more gains on the way.

The post Warren Buffett buys gold! Should you? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers owns shares in iShares Gold Producers UCITS ETF. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So, can the gold boom continue? Here’s one reason why it might, and why you might want to invest in it.

Gold is REAL money

Gold has intrinsic value. It’s a great metal for jewellery of course, but it also has applications in computer hardware and other tech. The reason it’s not used more is because it’s expensive. Why is it expensive? Because it’s rare.

The most annoying thing about gold for Jerome Powell (chairman of The Federal Reserve in the US) is that he can’t print it. Dollars on the other hand – no problem. The actual method of money printing via quantitative easing (QE) is complicated, but the end result is more dollars and thus the money supply increases. This sneaky bit of financial engineering is allowing the US government to borrow dollars that didn’t exist yesterday and the Bank of England is doing the same thing. Gold supply, on the other hand, is far more constrained. Only a certain amount can be mined per year in practice – and that number’s pretty stable. So as paper notes increase in supply exponentially, but gold supply remains fixed, more and more paper notes will be needed to buy it. This is inflation which, incidentally, the Fed is expected to commit to ramping up.

How you can invest

The savvy investor will want to profit from this, and here’s how:

• You can buy gold itself. The Royal Mint Bullion offers the opportunity to buy and sell physical gold. Alternatively, investors can consider physical gold exchange-traded funds (ETFs), such as the WisdomTree Physical Gold ETF or the Invesco Physical Gold ETC. The only concern is gold’s volatile price. You shouldn’t put a big chunk of your portfolio in any commodity.
• You can buy gold-mining companies’ stocks. Within the FTSE 100 and FTSE 250, companies that mine gold include Chile’s Antofagasta, Mexico-based Fresnillo, Russian mining operation Polymetal International, and Centamin, which focuses on the Arabian-Nubian Shield. Gold-mining stocks tend to be more stable than the underlying commodity and they pay dividends.

If you have some money set aside for investing — like £1k, for instance — my top pick in the gold sector is FTSE 250 firm Centamin, which produces gold from its Sukari mine in Egypt. Like most gold-miners, Centamin has benefited from the run-up in the price of gold over the last five years. With gold prices rising and potentially rising even faster soon, profits could be set to shoot up. And with a dividend yield of 4.35% and a P/E of 18, a share price of 221p doesn’t look too pricey to me, even if it’s not as good a bargain as at its 149p low in June.

The post Can the gold boom continue? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Toby Aston has no position in any shares mentioned. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why might gold keep rising?

Last week, the US Federal Reserve implied that it was ready to inject further stimulus into its economy via another bout of money-printing. This ‘whatever it takes’ strategy, and the possibility of other central banks following suit, increases the risk of inflation picking up. 

Inflation isn’t known as the ‘silent killer’ for nothing. The rise in the cost of things means the spending power of any money you have is reduced. Investors try to counter this by moving into assets that tend to hold their value.

Another, related reason that gold might continue to soar is the possibility that we’ll get a second wave of the coronavirus, perhaps coinciding with seasonal flu. This could bring forth another bout of volatility in stocks, making it more likely that investors will seek solace in things that are negatively correlated with equities.

On top of all this, you have growing tension between China and US and the forthcoming election across the pond.

With these hurdles and no definite vaccine in sight, demand for the shiny stuff is unlikely to fall away any time soon.

How to play the gold rush

There are plenty of ways for Foolish investors to get involved. That said, the most appropriate option will depend on your financial goals, investment horizon and risk tolerance. 

Perhaps the least ‘dangerous’ way of tapping into gold’s popularity is via a fund that tracks its price. The iShares Physical Gold ETC is one of the most popular options available. 

For those looking for bigger gains, a diversified fund specialising in gold miners could be the way to go. The iShares Gold Producers UCITS ETF is one I hold.

For the brave…

If you really want to a leveraged play on the gold price however, you’ll need to buy single company stocks. You could buy a large, established miner like Polymetal or Centamin. You could also look for promising minnows.

A quick glance at the share price graph of a company like Greatland Gold shows just how profitable the latter strategy can sometimes be. Those who invested around the time that I first wrote about the company last August would have made a killing. Its shares are up 700% since then!

With recent talk of “exceptional” results from its ongoing drilling programme in Western Africa, IronRidge Resources could be next to jump. So too could be Hummingbird Resources, which has operations in Mali and Liberia. It wouldn’t surprise me if either were bid for at some point. 

As always, those tempted to invest in stocks like these need to be aware of what they’re getting into. Expect regular double-digit percentage share price moves in both directions due to their lack of liquidity. A large bid-offer spread (the difference between what you can buy and sell a stock for) means you’ll also need to make a decent gain after buying just to get back to break-even. 

Mining stocks are also no place for impatient investors. Many don’t make it into production because of the costs involved. For those that can sit on their hands, however, the wait could be worth it. 

The post The gold price is on a tear. I think those buying now could still strike it rich appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers owns shares in iShares Physical Gold ETC and iShares Gold Producers UCITS ETF. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Plenty of industry experts think the yellow metal can rise much higher. For example, analysts at Goldman Sachs recently raised their target for gold to $2,300, citing concerns over the longevity of the US dollar as a reserve currency.

Meanwhile, Tawhid Abdullah, chairman of Dubai Gold and Jewellery Group, recently said he thinks the gold price could hit $2,500 per ounce in the not-too-distant future.

If you’re bullish on gold, and expect it to keep rising, there are a number of ways you can potentially profit. Here’s a look at three simple ways to take advantage of a rising gold price.

The easiest way to invest in gold

Without doubt, the most straightforward way is through exchange-traded products (ETPs). These are securities listed on the stock market and designed to track the price of gold.

Gold ETPs offer investors a number of advantages. Firstly, you can buy and sell them just like regular stocks, meaning they offer a very easy way to gain exposure to the gold price. Secondly, you can hold them within an ISA or SIPP, meaning all gains can be tax-free. Third, they’re very cost effective. Fees on gold ETPs tend to be very low.

Some examples of gold ETPs include WisdomTree Physical Gold and iShares Physical Gold.

Own physical gold

Another approach to investing is to buy physical gold from a dealer. You can buy gold bullion bars and coins online, or through high street dealers.

On the downside, however, you’ll have to find somewhere to store your gold securely. Transactions costs are also high.

Mining stocks: a leveraged bet on the gold price

Finally, you could also consider investing in UK gold mining stocks, companies that are involved in gold production and trade on the stock market.

The advantage here is that they can actually outperform the gold price when it’s rising. This is because a rise in the gold price can have a dramatic affect on the profitability of gold companies. If the gold price rises significantly above the cost of production, the increase tends to go straight to the company’s bottom line. That drives the company’s share price higher.

Of course, if the gold price falls significantly, profits can be wiped out. This means gold stocks can fall heavily too.

There are many gold mining stocks listed on the London Stock Exchange. These range from FTSE 100 giants, such as Polymetal International, which is a top-10 global gold producer, to small-cap stocks such as Greatland Gold, which is focused on mining in Australia.

Generally speaking, the smaller the company, the higher the potential rewards. But that also means there’s a higher potential risk too.

My advice, if you’re interested in investing in gold mining stocks, is to spread your money over a few different stocks. This will help minimise your stock-specific risk.

The post Think the gold price will rise to $2,500? Here are 3 ways to potentially profit appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Some analysts believe the gold price can go much higher though. According to analysts at Bank of America, the price of the yellow metal could potentially rise to $3,000 over the next 18 months. “As central banks and governments double their balance sheets and fiscal deficits, respectively, we have also decided to up our 18-month gold target from $2,000 to $3,000/oz”, they wrote recently.

If you’re bullish on gold and expect the price to keep rising, there are a number of ways to gain exposure to the commodity. Here’s a look at three options.

Gold bullion

One is to simply buy gold bullion (physical gold). You can buy through high street gold dealers (this may be challenging in the current environment) and online gold dealers.

The advantage of this approach is that you can take possession of your gold. However, on the downside, costs can be high, and you’ll also need to store it securely.

ETFs: an easy way to profit from a rise in the gold price

Another option is to invest in a gold exchange-traded fund (ETFs). These are securities listed on the stock market and designed to track the gold price. On investment platforms such as Hargreaves Lansdown, you’ll find plenty of gold ETFs and you can hold them within an ISA or SIPP.

The main advantage of gold ETFs is that they’re a very convenient way of investing in gold. You can literally invest within minutes. You also don’t need to worry about storage. On the downside, you can’t take physical possession of the commodity.

Gold stocks

Finally, a third way is by investing in gold stocks. These often rise when the price of gold is rising. This is because a higher gold price generally translates to higher revenues and profits for the underlying company.

In the UK, there are many gold-producing companies listed on the London Stock Exchange. One example is FTSE 100 company Polymetal International. It’s a top-10 global gold producer with assets in Russia and Kazakhstan. Year to date, Polymetal shares are up over 40%.

Another example is FTSE 250 gold miner Centamin. It’s a company focused mainly on mining gold in Egypt. This year, it’s up about 27%. Other UK gold stocks that have performed well in 2020 include Petropavlovsk, Highland Gold Mining, and Greatland Gold.

A word of caution, however. Gold stocks can be volatile. While they can deliver fantastic returns when the gold price is rising, they can also fall sharply when gold falls. It’s also worth noting that related stocks don’t always rise when the price is rising. Gold mining is a complex business and there are many things that can go wrong.

So, if you’re thinking about investing in gold stocks in order to profit from the gold price, it’s a smart idea to focus on risk, as well as reward.

The post The gold price could rise to $3,000 say analysts. Here’s how I’d aim to profit appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Can the gold price keep rising in 2020? Some analysts believe it can. In fact, a number of experts believe it could hit $2,000. 

$2,000 this year?

One expert who is bullish on gold is Fawad Razaqzada, technical analyst at City Index. Razaqzada believes that gold’s technical outlook remains strong given the breakout last summer. He expects looser monetary policy this year to push bond yields further into negative territory, boosting the appeal of gold, and says that a stock market correction could see gold’s price surge higher.

“If US stocks were to correct themselves in 2020, then this surely could lead to elevated levels of safe-haven demand for gold,” said Razaqzada. “As the US equity market bubble finally bursts, safe-haven demand could nudge gold past its 2011 peak of $1,920, before tagging the $2,000 psychological hurdle.”

And Razaqzada isn’t the only analyst who believes gold can reach $2,000 in 2020. For example, last year, David Roche, president and global strategist at London-based research firm Independent Strategy, told CNBC that gold could hit $2,000 this year on the back of “vilification of fiat currencies by central bankers.”

Meanwhile, a number of Wall Street analysts see it hitting $2,000 in the next few years. For example, Citigroup’s Aakash Doshi recently said that gold could potentially hit $2,000 an ounce “at some point in the next year or two,” while Daniel Ghali of TD Securities said: “Over the coming years as the likelihood of the unconventional policy becomes more of a reality, I could see a case for gold at $2,000.”

Time to load up on gold?

Should we all load up on gold, given these gold price forecasts that suggest it could have upside of more than 25%?

My view is that having a little bit of exposure to gold, as a diversification play, could be a sensible move. If economic uncertainty increases and stock markets take a hit, gold could potentially provide an element of portfolio protection.

That said, I wouldn’t want to have too much exposure (more than 5% of my portfolio) to the precious metal. The reason I say this is that gold generates no earnings or income. As Warren Buffett says, gold “doesn’t do anything but sit there and look at you.” 

To my mind, a diversified portfolio of high-quality stocks that has the potential to generate both capital gains and dividends is a much safer long-term play than an investment in gold. 

One huge advantage that stocks have over gold is that they can provide passive income through dividends. Build up a solid portfolio of high-quality dividend-paying businesses, and you could potentially retire on your dividends (tax-free if your stocks are in an ISA), without having to worry about selling a proportion of your investments every time you require income. 

Combine this advantage with the long-term track record of the stock market (since 1984, the FTSE 100 has delivered a return of around 9% per year vs around 4% per year for gold) and you have an asset class that is far superior to gold, in my view. 

All things considered, compared to gold, I see stocks as a far better long-term investment. 

The post The gold price could rise to $2k in 2020 say analysts, but does it beat shares? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.