Top Stories This Week: Gold Back Below US$1,900, How to Make Money in Copper

Gold had a bumpy time this week, starting the period above the US$1,900 per ounce mark, but dropping to around the US$1,870 level on Thursday (June 3).

The yellow metal’s decline was blamed on factors such as US jobless claims, which fell below 400,000 this week, and a record high for the country’s service sector index.

Gold was back up to around US$1,890 by Friday (June 4) afternoon. Looking forward to the future, I heard this week from Gwen Preston of Resource Maven. She has a positive outlook for the precious metal, and is also optimistic about gold stocks, which she said are still historically cheap relative to gold. 

“Whenever you have a multi-metal market, that’s a far stronger phenomenon than a gold-only market” — Gwen Preston, Resource Maven

When asked where investors should focus, Gwen said it’s up to each individual investor to determine what works best for them. For example, she pointed out that high-risk mining stocks aren’t for everyone, and there’s still plenty of opportunity in lower-risk entities. 

“I really emphasize that there’s a huge amount of opportunity ahead in this market across the risk spectrum. You can do very well with the lower-risk entities as well” — Gwen Preston, Resource Maven

With that in mind, this week we asked gold investors on Twitter if their portfolios contain mostly high- or low-risk stocks, or a mix of both. In total, 43 percent of respondents said they focus on a mix, while another 43 percent said they’ve placed their attention mainly on high-risk stocks. Only 14 percent are focused mostly on low-risk stocks.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

We’ve been talking a little bit more about copper lately as it continues to experience price momentum. It’s of course important to be aware of the supply and demand fundamentals driving the market, but what’s the best way to get involved? I recently asked Byron King that question.

King, who writes the Whiskey & Gunpowder newsletter for St. Paul Research, which is part of Agora Financial, said that those who want to make money off the current copper price need to put money into the large players in the space, such as Freeport-McMoRan (NYSE:FCX), BHP (ASX:BHP,NYSE:BHP,LSE:BHP), Glencore (LSE:GLEN) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO).

“If you want to make money off of the current copper price … then you need to be in the really big companies” — Byron King, Whiskey & Gunpowder

Byron didn’t discount the potential for smaller copper companies to make gains, but he emphasized the length of time it can take for a project to go into production — 15 years would be fast, and a timeframe of 20 to 25 years would be more normal. That means a smaller copper company might surge if it makes a discovery, but is unlikely to produce during this cycle. 

“If you want to invest in juniors … you’re not going to catch this cycle. What you might catch is sort of an upswing of the early days of excitement of discovery.

(So) don’t forget to sell along the way, because it takes years to turn an incredibly good discovery into a working mine” — Byron King, Whiskey & Gunpowder

Finally, INN’s Bryan Mc Govern recently attended a cannabis talk at the latest Prohibition Partners LIVE event. Reporting back on the takeaways, he said the message from the panelists was clear: Cannabis investors need to be looking at the US market right now. 

We’ve heard this sentiment from many market watchers before. Overall there’s a sense of disappointment surrounding Canadian cannabis companies — they had an early lead when the country legalized the drug, but since then have disappointed with their financial performances.

As Thomas Carroll of Stansberry Research told the audience, those who wait until the US puts new cannabis legislation in place will be late to the party.

“I’ve been telling people for the past six months, you have to be invested in US cannabis stocks starting right now, and that’s really where we should be focused as investors today” — Thomas Carroll, Stansberry Research

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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.