Should 5% of Your Investment Portfolio Be Gold & Gold Mining Stocks? CDE, HL, NGD, PZG
The University of Texas and Texas A&M has 5% of their investment portfolio parked in gold bar and gold bullion investments.
It was recently reported that the University of Texas Investment Management Co. has approximately 5% of its $19.9 billion endowment (including that of Texas A&M) in the form of actual bars of gold bullion that sit in a New York City bank vault owned by HSBC Holdings (NYSE: HSB). In other words, their gold investments are not in the form of a gold ETF or individual gold mining stocks or in gold futures.
For me, owning physical gold (unless its collectible coins) is the equivalent of keeping my money buried in a coffee can under the front tree in my yard. Sure, it’s a great hedge should the end of the world happen but otherwise the owning physical gold has few other attractions. Remember: The University of Texas and Texas A&M will also be incurring storage costs to keep their gold at the HSBC vaults and they will not be receiving any interest or dividend income from their gold bar investment.
On the other hand, keeping your 5% of your portfolio in gold ETFs such as the SPDR Gold Shares (PCX: GLD) or the iShares Comex Gold Trust (PCX: IAU) or in gold mining stocks (or even silver mining stocks given that silver is considered a “poor man’s gold”) is an idea that could make sense as the US continues to print more money to finance its spending binge and as the dollar continues to fall.
Hence, small cap investors may want to take a closer look at the following small cap gold mining stocks (some of which also double as small cap silver mining stocks):
- Coeur d'Alene Mines (NYSE: CDE) operates both gold and silver mines on four continents and is considered to be one of the largest silver mining companies in the US. Coeur d'Alene Mines’ CEO recently predicted that silver prices would rise even further due to tight supply and strong demand.
- Hecla Mining (NYSE: HL) operates silver and gold mines in the USA and Mexico. Hecla Mining also considered to be one of the largest and lowest cost silver mining companies in the US.
- New Gold (AMEX: NGD) has gold, silver and copper mines in North America, South America and Australia. For the past year, New Gold has managed to outperform the price of gold itself as measured by the SPDR Gold Trust.
- Royal Gold (NasdaqGS: RGLD) is a gold, silver, copper, lead and zinc mining company with mining operations around the world. It recently closed just below $61 while its 52 week range is $42 to $62.
Other small cap gold and silver mining stocks worth looking at may include Paramount Gold and Silver (Amex: PZG), US Gold Corporation (NYSE: UXG) and Richmont Mines (AMEX: RIC).
I should note though that I am not particularly a gold bug or a fan of gold investments in general (along with silver) given the wild ride upward and downward that both gold and silver had in the late 1970s and early 1980s. However and should more investors or their investment advisors follow the lead of the University of Texas and Texas A&M, gold prices and gold mining stocks (perhaps along with silver and silver mining stocks) like CDE, HL, NGD, RGLD, PZG, UXG and RIC could have more room to rise further.
John Udovich is a paid contributor of the SmallCap Network. John Udovich's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
