Hi Antagonist members,
Welcome to our December monthly deep dive and Blend Portfolio update. Here’s what we’ll cover:
Contents:
Investing in Gold and Gold Companies
The Gold Market: A Beacon in Uncertain Times
Our New Blend Portfolio Position
Blend Portfolio Review
As a reminder, free subscribers will be able to read my macro, sector, and/or industry commentary, but Blend Portfolio updates will be behind a paywall reserved for premium members.
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1. Investing in Gold and Gold Companies
In an era marked by economic turbulence and market volatility, the allure of gold as a stable investment has only intensified. If you’re a regular Antagonist reader, you know that I’ve been bullish on gold for quite some time.
We already hold the metal in multiple ways in our Blend Portfolio. Today, I’m going to highlight a unique player in the gold mining industry that’s known for its innovative business strategy and focus on shareholder value.
Before we do that, however, let’s quickly cover why gold—and the right gold stock—is so appealing right now.
2. The Gold Market: A Beacon in Uncertain Times
Gold's Historical Role as a Safe Haven
Throughout history, gold has been a refuge for investors during periods of economic distress. Notable instances include
The 1970s’ Inflation: Gold prices skyrocketed in response to global inflation.
The Great Depression: Gold was one of the few assets that maintained value.
The 2008 Financial Crisis: Gold’s price surged over 25%, showcasing its stability and role as a “crisis hedge.”
The COVID-19 Pandemic: Gold prices soared, reaffirming its role as a financial safety net.
In short, gold’s ability to provide security in unpredictable economic climates makes it a crucial component of a well-diversified investment portfolio.
Current Market Dynamics and Central Banks
Our present economic landscape, characterized by inflation concerns and geopolitical tensions, has reignited interest in gold.
Central banks across the world are increasing their gold reserves, reflecting confidence in gold’s value. This was especially evident in 2022 when they bought the most gold on record.
The spending spree has continued this year too. Bloomberg reported that “central banks have loaded up on more gold than previously thought this year, offering crucial support to prices that have faced pressure from global monetary tightening.”
As I wrote in our August deep dive, central banks’ demand for gold is likely to continue as they buy the metal for not only historical reasons but also as they seek alternatives to U.S. treasuries.
If you combine all of the above factors, you have a compelling case for investing in gold and gold-related assets.
Investing in the metal itself is fairly easy thanks to ETFs that track the price of gold. In fact, if this is all you did, you should do just fine.
If, however, you want the chance for even greater returns, consider investing in gold companies. Their stock prices tend to move more than the metal itself. This means when gold prices rise, gold stocks usually perform even better…and often multiple times better.
Of course, the opposite is true. If the price of gold falls, gold stocks can drop even farther.
Therefore, before you invest in a specific gold company, it’s essential to conduct thorough research. This is time consuming, but the potential rewards are worth it.
That’s also what I do for you. When you upgrade to a premium membership, you’re not simply purchasing research. You’re buying time (since I do the work for you) and the potential to make significant profits.
With that said, here’s the latest addition to the Blend Portfolio:
3. Our New Blend Portfolio Position
Unique Business Model: Addressing Share Dilution
One of the warts of the gold mining industry is the unfortunate—and common—practice of share dilution. This occurs when companies issue more shares to raise capital, which diminishes the value of existing shares.
Our new position, however, is unique in that it focuses on maximizing gold reserves while limiting share issuance. This approach ensures that the intrinsic value of each share increases with the company’s gold resources. That’s more than a pithy tagline too. The company’s strategy results in outsized profits for its investors.
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