Bob Moriarty of 321 Gold discusses recent precious metal price movements and Osisko Gold Royalties’ leverage to the gold price.
I am firmly on record as saying we started a new gold and silver bull market, actually an all commodities bull market, last winter. The bull was two weeks into a most remarkable climb before even I recognized it. But the rest of the world finally got it and by August the bull was getting tired and long in the tooth. I said we were going to have a serious correction. On the 4th of October I said that a bottom was approaching and I was looking for gold to bottom from $1150-$1200 and silver at $15-$16 soon. I managed to nail gold but silver didn’t quite come down as far as I hoped. On the 14th of November I commented that there was more opportunity in buying shares today than any time in history.
Anyone who claims to get it dead right all of the time is either a liar or a crook. Nobody gets it 100% correct and those who claim Guruhood are most often charlatans. To err is a sign that you are human. After all, we are just stating our opinion. None of us are reading from tablets that we dragged down the mountain. It’s only when your eraser runs out before your pencil that someone is trying to tell you something.
That said, I’ve gotten it right a lot this year and those who understand contrarian thinking have made a lot of money as a result both up and down. Those who don’t, need to spend $13 on Amazon to go buy Nobody Knows Anything. Those who have read the book were not surprised at a new gold bull market that few saw. Brexit hardly came as a shock and the U.S. election was quite predictable. Others now are realizing that the gurus and experts are mostly fools following a hollow god.
The boat is getting lopsided again with the mob of prognosticators calling for lower metals and shares. It’s always that way. Experts are trend followers; they buy at tops and want to sell at bottoms. I love it when the masses believe we are going to have lower prices. I could be dead wrong. If I am, it will be the first time this year but who knows, maybe I am wrong.
I believe we are in a new bull market that was predictable and predicted. We had a correction that was predictable and predicted. The correction ended and that was predictable and predicted. If you want to wait until everyone gets it, you are burning daylight and opportunity at both ends.
At every given point in markets, there is some stock or way of investing that makes the most sense for that moment. Two weeks ago the spread between platinum and gold got up to $330 again. That’s touching a record with gold holding a premium to platinum. Platinum still has value so an investor with both dollars and “sense” would be buying platinum and selling gold.
The spread has moved to $269 as I write so our savvy investor (one who pinched the idea from Nobody Knows Anything) has picked up $61 an ounce without betting on anything other than the spread. Both gold and platinum have gone down in the past two weeks but gold went down more. Now that’s a safe investment or at least a lot safer than trying to guess market direction.
If you like the future of gold, a great stock for this moment would be Osisko Gold Royalties Ltd. (OR:TSX). Don’t confuse the company with Osisko Mining; that’s a different company. Osisko Gold Royalties collects a 5% NSR on the Canadian Malartic mine and a 2% to 3.5% NSR on the Eleonore gold mine. In addition they have over 50 royalties on other mines in Canada that are either in production or hoping to produce soon. If gold goes up, OR is leveraged to the price of gold and will go up even more.
Better yet, given the mauling that the junior mining companies took between 2011 and the end of 2015, a royalty company cannot drop 90%. It will go down with gold but not suffer the carnage that the penny dreadfuls go through in a bear market.
Osisko has just short of $400 million in cash or cash equivalents in the bank and is looking at just over $65 million in revenue for the year. The company pays a dividend that obviously will vary with the price of gold and income but never the less is still a return on capital.
If you like a dividend, relative safety yet still want leverage to gold, I’m hard pressed to think of a better alternative than Osisko Gold Royalties.
The company is an advertiser so I am biased. I do not own any shares and have not participated in any private placements. Their website is excellent and informative so please before considering an investment do your own due diligence.
Osisko Gold Royalties
OR-T $13.14 (Nov 29, 2016)
OR-NYSE $9.76 106.3 million shares
Osisko Gold website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.
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1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. The following companies are advertisers on 321 Gold: Osisko Gold Royalties. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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( Companies Mentioned: OR:TSX, )