Opinions
Larry Berman CFA, CMT, CTA
Wheaton Precious Metals
WPM-T
SELL
Mar 10, 2014
Stock price when the opinion was issued
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From a trade perspective, a bit overbought. He's a trader at heart, and buys into dips. If you're a bull, by all means keep holding. But he took some $$ off the table.
Likes both gold and silver here. Gold and silver equities and exposure to them are very undervalued relative to long-term trends; analysts tell him it's likely going to stay that way for a while. The market just doesn't believe that gold and silver prices are going to remain elevated.
Gold is almost like an insurance policy. Good diversifier. Should be a good, long-term hedge. Deposits have become harder to find.
He prefers the business model of the royalty companies like FNV or WPM. As well, they operate counter-cyclically -- give money when gold prices are low and harvest when prices are high. Always looks expensive, but it's expensive for a reason.
This pick is for the person who doesn't currently own anything in the space, or who is a more conservative long-term investor. By far the strongest theme in the market. He believes we're the first year into a multi-year bull market in gold, with pullbacks.
In safe jurisdictions, collecting royalty fees. Great dividend growth. About 60% gold, 40% silver. No debt. Yield is 0.82%.
Gold and silver had a decent bounce off the lows last year. Doesn’t think that either gold or silver are going to take off in a big way. Maybe there is scope for gold to pop above $1400 if the markets come unglued over the next 6 months. However, he still thinks we are range bound and you want to take a profit and sell into that rally. If we get a pullback in gold in the next month or 2 of $1300 or less, you want to nibble at it.