After a pleasant week away form the markets (well nearly), I’m starting to think about how I want my portfolio positioned for the remainder of the year.
I’ll be honest and say I haven’t had anything less than a 50% cash position last three months as I haven’t quite believed the recovery, arguably that might have been the wrong decision but the way I manage my portfolio is very much with a focus on risk and I am happy to miss gains but still see steady growth.
The markets last month or so have been great but any seasoned small cap investor knows things can turn pretty quickly.
I’ve seen a number of articles over the weekend discussing the potential for a short squeeze in gold. This is basically driven by the physical demand for gold. Bloomberg reports that there may be a growing trend for gold futures contracts to exercise delivery at expiry rather than roll the contract, this is interesting and says a hell of a lot about where the market could be heading. My interpretation of this is the market wants ‘gold in hand’ as it seems do the central banks – hence a possible and credible squeeze!
I’ve discussed the demand drivers for gold in recent blogs and gold has been pushing on for an attack on $2k oz a few times now. But many pundits reckon we could be seeing a gold price anywhere between $3-15k oz if a squeeze plays out and though gold is not yielding its better than negative yields!
I think perhaps we may see gold break $2k and then perhaps a correction and pullback to follow but I think weighing things up we really could see a strong bull market ensue. If the weakness of the dollar continues too then we could also see base metals start putting in real gains too, some have started already i.e. copper for one
There are lots of reasons why I think Q4 could be extremely tricky so I have and have been making preparations for this. Basically I have increased cash position, extended gold and some silver positions and trimmed gains on other resource stocks whilst maintaining a position for those with near-term catalysts where I also believe the commodity back-drop is positive. I’m still liking some pharma in the PF too so continue to hold FAB (see my research note here) and looking at another.
Frankly its been a market where stocks I wouldn’t touch have also seen gains – often merely for the mention of gold or whatever flavour of the month is but I suggest be very careful, a lot of the small caps with gold interests are too far behind the curve regardless of what the twiterrati tell you!
Gold wise I remain focused on near-term producers such as PUR and GRL. I recently published an interview with Goldstone (GRL) CEO Emma Priestley where she discussed how the company are transitioning to a producer this year (timing couldn’t be better) and drilling too to increase the mineable resource at Homase along with exploration drilling. It remains the most exciting gold hold in my portfolio I have to say and I think they’ll up the 600k oz resource to over 1m oz in due course with potential to achieve a multi-million oz resource.
It should be an interesting week one in which we may see indices pull back and gold continue it’s ascent – we shall see!
Research Notes and Blogs prepared by @TheMoneySponge. These should not be taken as investment advice and accuracy in statements cannot be guaranteed. These are to assist other researchers who may wish to research further and serve as a starting point. I may hold a position in the company
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