Rob McEwen's Gold Stock Investment Philosophy
Source: Mineweb, Geoff Candy (4/5/10)
". . . take a portfolio approach to buying gold stocks."
McEwen said it is best to take a portfolio approach to buying gold stocks, especially if one is a novice investor.
"One should have exposure to gold bullion in a portfolio, and then you want some equities. If you're very risk averse, I would suggest. . .you go into the seniors and you might get a double or a triple before the gold cycle is over. And it's the juniors where you get multiples of those returns—I would recommend that you take a portfolio approach and buy 5 or 10."
But, he says, when investing, be it in seniors or juniors, there are a number of considerations to take into account.
Where the property is located. McEwen has always been cautious about the geographical locations of gold projects he's been involved in. "What are the prospects of someone taking the property title away from the company or the advent of an imposition of major taxes—large taxes on it so that after you've built it you can't take much of a profit out."
Management. McEwen also says to look at how much of an investment management has in the company. "If they have a very low investment and they're taking out large salaries and giving themselves lots of options, then you probably don't want to be too long in that stock. . ."
Timing. "I like to buy when there's been a market correction or the sector has just fallen—it's no longer as in demand," says McEwen. "I like to buy in areas where there's a chance of finding a large discovery, because there are other large discoveries in the area or you have a bit of technology that's changed the game."