While fund manager Adrian Day believes investors should tread cautiously in the market right now, he is upbeat on some gold stocks.
Given our caution on the broad stock market, resulting from relatively high prices across the board, we have relatively few “buy” recommendations. Most of our buys are concentrated on the gold stocks, and even there, many of our limits are below current prices. I do not think one needs to be aggressive in the current environment.
Of course, so much depends on your personal circumstances—all the “financial planning” circumstances such as age, future financial obligations and so forth—as well as what your current portfolio looks like.
If, for example, you do not own very much in the gold space, I should certainly step up to the plate now; start with two major gold royalty companies, Franco-Nevada Corp. (FNV:TSX; FNV:NYSE; 61.27) and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX; 65.51), top buys on our current list. Both are solid buys now, particularly if you do not already own them. We could see both at lower prices in coming weeks, given the sharp runs they have both experienced over the past three weeks, Franco from $54.77 and Royal from $61.37. Prices half way between recent lows and the current price would be a fair target (i.e., $58.81 for Franco and $63.40 for Royal).
American Capital, Yamana and Sunridge Redux
The acquisition of American Capital Ltd. by another of our recommendations, Ares Capital Corp. (ARCC:NASDAQ), has now been completed. Shareholders received $10.13 cash plus 0.483 of a share of Ares. Most definitely, hold your Ares shares.
To add insult to injury, investors had a Canadian tax withholding taken on the receipt of the Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) purchase rights recently distributed. …read more