Our outlook on gold and silver and two precious metals ETFs

Most precious metals stocks dropped when gold fell to $1,200 U.S. an ounce and silver declined to $18.50 U.S. an ounce in June 2013. Both metals have rebounded somewhat lately, with gold now at $1,371 and silver at $22.92. Here are two low-fee exchange traded funds that offer global gold and silver miners. ISHARES S&P/TSX GLOBAL GOLD INDEX FUND (Toronto symbol XGD; ca.ishares.com; buy or sell through brokers) aims to mirror the performance of the S&P/TSX Global Gold Index. This index is made up of 49 gold stocks from Canada and around the world. The fund’s MER is 0.60%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001. The fund’s top 10 holdings are Goldcorp at 16.7%; Barrick Gold, 13.3%; Newmont Mining, 11.0%; Yamana Gold, 6.0%; Randgold Resources (ADR), 5.0%; Franco Nevada, 4.7%; Kinross, 4.4%; Eldorado Gold, 4.2%; Agnico-Eagle Mines, 3.6%; and AngloGold Ashanti (ADR), 3.6%. GLOBAL X SILVER MINERS ETF (New York symbol SIL; www.globalxfunds.com; buy or sell through brokers) tracks the Solactive Global Silver Miners Index. This index includes 30 international companies that mine, refine or explore for silver. Germany-based Structured Solutions AG developed the Global X Silver Miners Index. Canadian companies make up 56.2% of the fund’s holdings, but it also includes miners based in the U.S. (16.2%) and Mexico (10.4%). The fund’s MER is 0.65%. The ETF’s top holdings are Fresnillo plc at 12.9%; followed by Silver Wheaton at 12.0%; Industrias Penoles, 8.1%; McEwen Mining, 5.6%; Tahoe Resources, 4.4%; First Majestic Silver, 5.3%; Silver Standard Resources, 5.3%; Silvercorp Minerals, 5.1%; Hecla Mining, 4.7%; and Hochschild Mining plc, 4.6%. (Note: If you are a current subscriber to Canadian Wealth Advisor, please click here to view Pat’s recommendation. Be sure to log in first.) In the latest issue of Canadian Wealth Advisor, we look at the outlook for gold and silver and whether prices are ever likely to regain their 2011 highs. We conclude with our clear buy-hold-sell advice on both of these exchange-traded funds. COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Does a rise or fall in the price of precious metals affect your personal investment strategy in any way? If you invest in gold or silver, do you buy individual stocks, funds of precious metal stocks or some form of the metal itself?

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Pat McKeough

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Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund.. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

AI Investing

Artificial intelligence (AI) is essentially the merging of today’s big computing with big data. This has resulted in breakthroughs in everything from creating machines to recognize faces with more accuracy than a human, to the development of chatbots able to collect, organize and simplify all the Internet has to say on any topic.

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.