written by reader Golden queen mining

By kathy123, September 4, 2012

I bought Gqm when I subscribed to John doodys newsletter but I gave up on him and Gqm doesn’t seem to do anything , what do others think , should I sell?

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rrogers3
rrogers3
8 years ago

John Doody matched the performance of Berkshire Hathaway during a decade long bull market in gold. The pullback in gold hurt Doody’s performance just as the market collapse of 2008 hurt Berkshire Hathaway. If you want the returns of higher risk, each is near the top of their field.
Doody recommends getting 10 different stocks because single stocks are highly risky, due to political uncertainty, accidents, management missteps, resource anomalies, costs to get metals to market, and market pricing risks. Doody shows GQM at higher risk and higher potential payback. It is an individual choice what risk you want to take. I find the cratered share price of miners with lots of both cash and resources more attractive.

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Robert
8 years ago

I subscribe to John’s newsletter, and he explains his rather thorough and complicated investment strategy in the monthly newsletters. He not only handicaps the field of 60 gold miners (and I think 25 silver miners now also?), but gives you the ones that have the most potential to double within a year or two.

One the one hand, that may seem like a risky bet since he is asking for such high growth in his portfolio, which to his credit, he has been able to deliver. On the other, he basis it on many factors which significantly narrows down the risk in the gold stock sector. I think he does an excellent job. As a writer, I have found his insights help in my own investments and articles.

Gold miners are down, but their profits are still fat. As a result, they are by some estimates 35% undervalued, while usually trading in a +-10% range. Participants have been waiting for stocks to pop but even though earnings are there, the big players aren’t jumping in.

The question is: how long will it be until the money flows into this undervalued sector looking for above average returns? Have ETF’s made investing in the actual resource companies obsolete?

At the end of the day I don’t think so. ETFs are supposed to be backed by actual bullion, and there is only so much of that around. My thinking is that since gold is being considered as a Tier I asset, is being used as collateral in banking deals, and is being considered as a monetary competitor to the dollar, eventually enough money will move into gold and the miners will benefits as having the profits and reserves to invest in.

We have to wait for the next leg of the gold cycle to kick in for this to happen. Less than a percent of investors in the US have gold or silver in any form, so any sort of economic panic, or just the continued malaise of debt-based economies will push money into the gold and silver markets.

As you can tell, I am bullish in this sector.

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