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- How snow is like oil
- Playing a +2 round of
golf - What’s your favorite
gold investment?
Fellow Resource Prospector,
It’s
hard to believe, but after a lackluster winter season here in Vermont, we’re currently experiencing
blizzard-like conditions. It’s been snowing non-stop for over 24
hours. I just took this shot out of my office window, and as you can see,
we have 10+ inches on the ground.
I’m always on the lookout
for parables in the investing world – and a snowstorm in late April is a great
metaphor for unexpected phenomenon in the markets.
Many
investors view each unexpected action in the market as an opportunity to learn
and adjust – which is fine if you’re a day-trader, but disastrous if you’re a
long-term investor. I don’t plan on giving my shorts and t-shirts to the
Salvation Army after one rogue snow storm. That would be foolish.
And it would be equally foolish to sell all of my oil positions just because
crude oil dropped $2.50 a barrel yesterday.
The
long-term trend for oil – a trend that’s obvious even to school children and Congressmen
– is for prices to increase. A dip in oil prices is an opportunity to buy
more shares of oil companies, not sell. Just like a mid-spring snow storm
is an opportunity to go sledding or cross-country skiing not ditch the charcoal
grill and golf clubs. The point is: seize opportunities as they come, but
don’t change your long-term plans because of short-term abnormalities.
Speaking
of opportunities, one of my favorite oil and gas companies is about to pay out
a quarterly installment of their 7.7% dividend yield. This company has
raised its dividend an average of about once a year – and they’ve never lowered
it or missed a payment. You can click here to request a free report all about this
company.
In the mailbag I got
letter from Ed P. who had some things to say about gold and golf.
"Sorry, you can’t interest me in buying gold! That is, any
more gold. I’ve been buying it way back when it was close to $100 an ounce.
As for your golf game I can only tell you how I cured MY slice…
even though it may not work for you.
Reading golf magazines was my first mistake. After doing that for
the first ten years and not getting better I finally tried something new and in
the next few months I started to improve. I blame it all on Ben Hogans 5
Lessons. Worked very hard on each lesson and was still ready to quit the game
after three months of struggling to incorporate changes Then one day,
playing my 9 holes every afternoon, I shot a two over par… my game had, after
wasting ten years reading and not learning, come together. Now, instead of
shooting up to 110 or more for 18 holes I was consistently in the mid eighties.
The nice part? I no longer spent most of my game in the woods or
fishing my ball out of ponds."
Thanks for
writing in Ed. I’ll definitely look up Ben Hogan’s 5 Lessons and give
them a try. If anyone has any other tips, please send them along to editorial@resourceprospector.
Ed had the
foresight to buy gold when it was super-cheap – but that doesn’t necessarily
mean he shouldn’t buy more. After all, gold could easily double in the
coming months. That would put it at about $2,300 – right near its
inflation adjusted highs. I buy gold and gold stocks whenever I’m able to
do so because I believe the price is headed much higher in the future. I
don’t much mind if I "hurt" my average gain by diluting my holdings
with higher priced gold. I’d rather double some smaller part of my
portfolio than not. In other words, just because my upside is smaller
than Ed’s, doesn’t mean I’m not investing in gold securities.
I’m partial
to gold juniors for their ability to multiply gains in gold many, many times
over. But they also tend to be riskier. I also like gold royalty
companies like Royal Gold (Nasdaq: RGLD) because they pay a small
dividend on top of some pretty substantial capital gains when gold rises in
price.
Right now
we have a good mix of "blue-chip" gold companies as well as junior
gold companies in the Global Commodity Investing portfolio. Our subscribers
are up an average of 59% on these stocks, two of which are still a buy.
Do you have
a favorite gold vehicle? I’d love to hear about it. Email me here: editorial@resourceprospector.
Good
investing,
Kevin
McElroy
Editor
Resource Prospector