Gold is soaring due to the banking crisis.
Precious metals -and gold in particular- are considered a flight to quality move for investors.
Given the pain is not over…
Here’s your “Gold Investing 101” to help you get started:
I believe gold has a place in every portfolio, whether in explorers, miners, ETFs, bullion or derivatives.
In times of uncertainty, it just makes sense.
(lately a lot)
Anyway, today I’ll talk about gold stocks.
Before you buy a single share of a gold-focused miner or explorer, these 5 concepts will set the stage for you.
These are the very basics that any experienced investor knows and uses to evaluate companies.
You’ll be “in the know” if you start here.
So, let’s get to it.
1) Grade is king
Executives always talk about grade.
Normally, anything above 2g/t is great for vein systems.
Values above 20g/t or more, ‘bonanza grades’, could make the deposit highly profitable.
1-2g/t can still contribute, most typically as a by-product.
2) Track record
If you want dividends soon(er), consider choosing companies that have built a mine before (or executives).
Transitioning from explorer to producer is not an easy feat.
You can reduce your risk by choosing those that have already done it.
Typical mineralization will include other minerals alongside gold; usually silver and/or copper, but there are others.
These byproducts can boost the economics of the project substantially.
Will be processed and sold once the company reaches production.
4) Bigger = better
Gold projects are classified in relation to their resources (inferred, indicated, measured) or reserves (probable or proven) in ounces.
A small mine can have reserves of 400-800koz, and a medium to large, several million.
Most investors prefer min 1Moz.
5) High-value cargo
Logistics of a gold producer are different to miners producing concentrate.
Security is paramount, and a big part of its operating costs.
Air transport and armoured trucks transport doré bars from the mine site to refineries for further processing.
That’s a wrap!
Gold stocks are my favourite way to gain exposure to gold, while earning dividends (if you invest in producers) plus capital appreciation (that blue sky we all love) .
-Grade is king
-Track record matters
If this was interesting or useful to you, please retweet the start of the thread.
Follow me @paola_rojas for commentary on the energy transition and the metals and minerals that are making it possible.
Originally tweeted by Paola Rojas 🐝 (@paola_rojas) on March 17, 2023.
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