Burgess' Bets: Large Caps in Gold
12/22/2016 10:00 am EST
The U.S. dollar is insanely overvalued right now. And there's absolutely no way these levels can be sustained for much longer, cautions Luke Burgess, editor of Energy & Capital.
The strength of the greenback over the past several months has been based on nothing more than foreign currency hedging.
The greenback is flying high right now on both fears of other fiat currencies and hopes of a better U.S. bond market. But it won't last long. And you need to own gold and precious metals as a hedge now.
On top of all this is the global shift to cashless economies. As physical paper cash is phased out, hard assets like gold will be at a premium.
Moreover, the U.S. national debt is approaching $20 trillion, and Trump plans to add another $5 trillion to the tab. All signs point to gold and precious metals.
The yellow metal is a screaming buy at around $1,130 an ounce. And I recommend owning physical gold and large international gold miners and royalty companies. Here are my three favorite large gold stocks:
Barrick Gold (ABX) is the largest gold mining company in the world with operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, the United States, and Zambia.
The company produces over 6 million ounces of gold annually. When gold prices are hot, Barrick gets a lot of media and investment attention.
Goldcorp (GG) is a very well known senior gold producer with one of the lowest production costs in the industry.
The company has an impressive portfolio of high-quality assets located in geopolitically stable jurisdictions in North and South America.
Goldcorp produces about 3.5 million ounces of gold annually with all-in sustaining costs (AISC) under $900 an ounce.
Royal Gold (RGLD) is the most well known gold royalty company in the world. It owns interests nearly 200 properties on six continents, including interests in almost 40 producing mines and 25 development-stage projects.
The major upside for gold royalty and streaming is less exposure to risk. Projects with high risk can be managed out of the portfolio.