The rising price of gold has created a significant increase in investor interest in a sector that has long been written off by many in the financial community in recent decades. Gold has generally been viewed as an unproductive asset to be viewed in favour of businesses that grow over time.
However, with central bank’s largess around the globe likely to devalue currencies broadly, and interest rates at historic lows in many parts of the world, gold has become a much more attractive asset class to hold as a hedge or otherwise.
In this context, picking a company to participate in the rising price of gold can be the tricky part. One stock I think holds excellent value in this environment is Wheaton Precious Metals (TSX:WPM). Wheaton is a processor of buillon and receives a royalty off the value of what it's processing. This means the company is very levered to the price of gold. Because it's a processor and not a miner, Wheaton has no mining or operational risk. This factor has increased in importance, given the mining closures we’ve seen of late, due to the coronavirus.
If you’re bullish on the price of gold, as I am, then picking a company like Wheaton as a core portfolio holding right now could turn out to be a very lucrative investment five or 10 years out, given where real yields are and where they’re expected to stay for quite some time.
Invest wisely, my friends.
