How should I get exposure to gold?

What kinds of gold to hold and in what proportions

Don’t hold real gold unless you have more than $5m USD in assets 

Holding gold in practice: 101

Don’t bother to hold any physical gold unless you have more than $5m (US) in investable capital.

In short, keep approximately 10% of those assets in gold, and rebalance to 10% every year or so, or when the portfolio weight moves considerably intra-year (enough to change the weight to 5-6% or 14-15% intra-year and hence before you get to your periodic rebalancing).

Sometimes I’m tempted to recommend the upper limit of the weight to move to 20% before rebalancing, since the upside moves tend to be so explosive at times, that you really don’t want to sell too early exactly when gold is performing its crisis protection role.

Put half of your total gold exposure [5 percentage points] in a safe gold [price] ETF like GLD or 4GLD (Xetra ETC). Put half of the last half [2.5 percentage points] in a quality streamer like Franco Nevada, and the last 2.5pp in a junior streamer with massive upside, like EMX (US or Canada listing doesn’t matter) or perhaps the GDXJ fund. You could consider something even more explosive for a part of that last gold tranche of 2.5 percentage points, something super-junior like Canagold that doesn’t even have a mining permit yet.

IMPORTANT DISCLAIMER: DO NOT TAKE THIS (CONSTRUE) AS A FINANCIAL RECOMMENDATION TO INVEST ACTUAL MONEY WITHOUT CONSULTING A PROFESSIONAL FINANCIAL ADVISER FIRST. THIS IS NOT A RECOMMENDATION. I TAKE NO RESPONSIBILITY FOR YOUR INVESTMENT DECISIONS AND THEIR OUTCOME. DO YOUR OWN RESEARCH.

How would I personally invest in gold if I had $100 000 in investable capital?

Ten per cent of $100 000 means $10 000 that I would put into various forms of gold exposure. It might be a more opportune time to hold gold over stocks right now (2024), but not by a big margin, so let’s go for 10% of the portfolio. This is how I would hold my gold right now:

  • 5% of my assets in a gold ETF, GLD: 26 units x $192.89 => $5015
  • (or 75 units of Xetra-Gold ETC =>  61.75 EUR x 75 x 1.08 EURUSD => $5002)
  • 2.5% in Franco Nevada: 24 shares x $106.99 => $2568
  • 2.0% in EMX: 1225 shares x $1.63 => $1997
  • 0.5% in Canagold: 3500 shares x 0.20 CAD [=0.15 USD/share] => $515 


Total investment: $10 095 (USD)

As a side note, I think all four above have excellent entry prices as of this writing.

If you feel extra speculative, you could consider increasing your allocation to EMX or Canagold a little more than above

The new owners and management of Canagold clearly have a plan, and have made a lot of progress in bringing it to fruition over the last two years. Key people controlling the vote/permitting process have also expressed their support: “First Nation is leading the way with mining company relationships. Consent agreements are beginning with our nation and our people
 
The timing could be good in the first half of 2024; news flow is likely to be quite supportive the coming 6-18 months, and a strong gold price just adds fuel to the fire. The share price could increase by about 2x per year for 4 years to four years from now reach around 15x the current price, right about when the first gold might be coming out of the ground early 2028, thus finally proving the value case – if they ever were to get there, through votes, weather and permits.
 
Timeline:
 
  • Feasibility study clearly demonstrating the net present value of the project in 2024
  • A positive vote outcome by summer 2024 (July?)
  • Progress in the permitting process toward the end of 2024, and hopefully a definitive Yes by early 2025. Beware however of disappointments and lengthy processes in the mining industry. Junior shares could underperform the gold price instead of the hoped for spectacular outperformance if they ever get to actual gold production
  • Construction might actually start as early as during summer 2025 if everything goes smoothly, but summer of 2027 is more probable. I expect the first serious gold production in 2028, still just* 4 years from now. [in mining, 4 years is nothing]

You May Also Want to Read:

The Investing Course

A 6 Week Online Course in Stock Investing

Learn how to find, analyze, and invest in stocks

Taught by Mikael Syding, who was the managing director and partner at Futuris Asset Management (European Hedge Fund of the Decade 2000-2010)

We are contacting applicants Between 24-31 March.
Apply before April to be guaranteed a spot.

:
:
Enrollment between April 1-8 by payment on website. Course starts April 8th.