The Finance Ghost on lessons in investing diversity.
You can also listen to this podcast on iono.fm here. ADVERTISEMENT CONTINUE READING BELOW Gold: Buying stocks may be better
Of course, it then started rallying like crazy to the levels we are seeing today. I’ve now put gold in the ‘dark arts’ bucket, and I’ve accepted that it’s not for me. This doesn’t mean that I don’t find the old debate of ‘the commodity vs the mine’ very interesting. Now let’s look at Harmony Gold, which is a wonderful example of a mining house that is really getting things right at the moment. Year-to-date performance is 47%, and the one-year performance is 75%, so that’s way higher than the commodity ETF.
Another lesson is that gold is very much a buy and forget and hence the mining stocks should be treated the same way. Bulls are focusing on the future, with the potential for Renergen to add some much-needed diversity to what comes out of the ground in the Free State by producing helium, a valuable gas with many applications beyond just the balloons at your kid’s party. It’s not easy to get to that point, and Renergen has the unenviable task of building in public.
Hype stocks attract punters who don’t understand what they are truly buying into, particularly in junior energy stocks, where the only real guarantee is that there will be vast dilution along the way due to capital requirements. This is more like venture capital than anything else, with various funding rounds along the way and a volatile valuation path.
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