Augusta Gold (G.TO)

Historically, this stock tends to bottom around this time of year and tends to move slightly higher. That is not happening this year. It has broken to a new low during the last couple of days. This indicates the technicals are not supporting the seasonality.

Gold is the flipside to the US$. With the strength in the US$, gold has come under a lot of pressure. In the gold space, he would prefer Franco Nevada (FNV-T), which has royalties off other people’s mines, giving it a much more diversified revenue base.

It has been a tough road for gold in the last couple of years. This is his only gold position. Views this as a portfolio diversifier, but not a great long-term wealth creation vehicle. Feels this company is the best of the majors in gold.

If you believe in gold and want it as a hedge, this is a good blue chip way to participate in gold. He owns no gold stocks. Gold is challenged right now so he would avoid it.

He is not bullish on gold in any way. As the US$ continues to rise, commodities are going to have a hard time, and gold is one of them. Gold companies took on too much debt to fund acquisitions and to fund their growth. He would prefer Franco Nevada (FNV-T).

It is in a downtrend. There may be some support coming in soon around $16. He would want to see that level hold and if not, then get out.

He holds gold only as an inverse correlation to the equity markets. Technically it should mitigate risks and should do well as equity markets do badly. This is one of the largest producers and has the best costs. Volatility is very high, so he sells Covered Calls on his holdings. His holdings on this company are very small.

We get these small glimpses of gold starting to rally and move up. Many investors who have exposure to that space get renewed hope that it will run up and get disappointed when it fails to. No one is fleeing to gold. It is difficult for G-T to make money with gold prices down here. It was a surprise today that they missed earnings expectations. At some point you can’t make any more cost cuts. He would move on.

Gold can actually do okay at this time, but not really outperform the market, so it is not something he is interested in from a seasonal perspective. Gold stocks are really underpriced relative to gold bullion. Technically, this is actually looking fairly good. The chart shows a basing pattern along with a little bit of a break out.

This is the hardest place in this market. He owns a few golds. He bought some last week. They are cheap, but from day to day the market just pounds this group. He told us to sell G-T years ago. He sees a bottoming, but this is a hard group to own. These are cyclical. The market is telling you that it is trying to bottom. Buy these stocks when the analyst community does not like them. We had a positive transit a couple of weeks ago.

He has not owned gold. He could never get his head around the various arguments for gold. It has a roller coaster price and is not that great a hedge. G-T is his favourite gold holding, however, if he was forced to buy one.

Now may be a good time to have some gold in your portfolio. He has pushed his clients up to about a 10% weighting fairly recently. This is probably as good a gold company as any. Trading at a nice discount to its BV and even has a tiny yield. (See Top Picks.)

We had a bit of a crisis in the markets in terms of a sell off, but gold lost some of its flight to safety. The gold ETFs are not seeing net redemptions now. This is probably a longer term floor for gold. He does not see a catalyst for gold in the near future.

It broke the down trend. There is the bottom around $16. He thinks it will continue to resistance at about $23. We will probably see this Macro tailwind help this sector. $1225 would be the next spot in gold prices. G-T should punch through the $23 level if the US dollar does not strengthen.

Gold had a bit of a resurgence in the last week or 2, partially because the US$ has been weak in the wake of the Fed decision not to raise interest rates in September. He is not overly bullish on gold. Thinks it goes lower in a meaningful way, below $1000 over the next year or so. If you want to have exposure in order to diversify and have a bit of a hedge, those are all valid reasons. This one is probably the best choice you could make.