Gold Investing: Why Value Investors Are Still Buying Gold
Gold bullion is a valuable portfolio hedge, according to Charles de Vaulx, value investor and manager of the top-performing First Eagle Global Fund. His fund has placed over 7% of its assets in gold bullion, according to an interview with Fortune.
Gold recently hit a nominal high of $1,900 per ounce, and it's expected to continue rising. While whispers of a "gold bubble" should not be ignored, bubbles can last a long time, and more value may still be priced in before it deflates.
De Vaulx explains the skyrocketing price in another way -- gold prices have always adjusted for rational reasons relative to the market. That gold prices have been so volatile and growing so rapidly does not surprise him considering the state of the markets and growing cynicism toward government. From his perspective buying gold serves as a hedge and protects purchasing power.
In his words, "owning gold is a way to express our mistrust of policymakers, be they in the U.S., Europe, Japan, or even China. Over the past few months, when you see the idiotic political debates in America regarding the debt ceiling, when you see the cacophony in Europe -- it makes you want to own gold.
Even though de Vaulx prefers investing in gold directly (via bullion) as opposed to investing in gold miners, we still wanted to take a closer look at this group...
After starting with a universe of 50 or so gold miners, we collected data on the transactions of insider executives, and identified a list of three gold mining companies seeing significant levels of insider buying.
These gold executives think there's potential upside to their employer's stock -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)
1. US Gold (NYS: UXG) : Engages in the exploration for, development of, production, and sale of gold, silver, and other precious metals. Over the last six months, insiders were net buyers of 3,067,000 shares, which represents about 2.85% of the company's 107.61M share float.
2. Vista Gold (NYS: VGZ) : Engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in Australia, North America, and Indonesia. Over the last six months, insiders were net buyers of 29,500 shares, which represents about 0.05% of the company's 62.44M share float.
3. Midway Gold (NYS: MDW) : Engages in the acquisition, exploration, and development of mineral properties in North America. Over the last six months, insiders were net buyers of 100,000 shares, which represents about 0.13% of the company's 76.11M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman and Eben Esterhuizen do not own any of the shares mentioned above. Insider data sourced from Yahoo! Finance.
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