Adrian Day: Gold Stocks are Priced Like They Were in 2001
“When you consider that gold has gone from $250 to $1,300 we should not be having the same stock prices today,” says Adrian Day of Adrian Day Asset Management.
Contrarianism is popular among resource investors, but as with all investment strategies it’s important to use common sense and not go overboard.
Speaking at the recent New Orleans Investment Conference, Adrian Day of Adrian Day Asset Management reminded market participants not to be contrarian just for the sake of it.
“Frequently you can have a market or a sector or a stock that goes down sharply, and a contrarian naturally looks at that. The mistake is to assume that every time something is out of favor and cheap to assume that it’s a good buy — which of course sometimes it isn’t.”
Day has said in the past that gold stocks are cheap right now, and in his opinion some of them are a good buy. “The timing is uncertain — so the timing is unclear. But in terms of valuation or price you’re looking at prices on gold stocks that are back where they were in 2001.”
He continued, “you’re looking at valuations that are very close, that are in the bottom quartile, and are very close to those 20-year lows. When you consider that gold has gone from $250 to $1,300 we should not be having the same stock prices today.”
In terms of when to jump into the market, Day suggested that investors watch tax-loss selling dates.
“I suspect we’re going to see some more heavy tax-loss selling in the juniors in particular. So I would draw up a shopping list and I would look for opportunities at the end of November, beginning of December, which is normally when the tax-loss selling peaks,” he said.
Listen to the interview for more insight from Day, including his best investments so far this year. You can also click here to see the full New Orleans Investment Conference playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.