Investor Education: Gold and Silver Portfolio Building with Expert Don Hansen

Private investor Don Hansen has honed his resource sector investment approach for more than 20 years.

Speaking to the Investing News Network, he gave an overview of his latest research on gold and silver stocks; he also shared his tips on how risk-averse investors may want to build a gold and silver portfolio.

Among other points, Hansen highlighted the outsized opportunity associated with royalty companies, noting that the major players perform well even when gold producers are struggling. An example he gave was the 2008 to 2016 period, when shares of gold producers were down 50 percent. Franco-Nevada (NYSE:FNV) was up 200 percent in that same time.

"I knew the royalty companies were good — I didn't know they were that good," he said.

This research ties in with Hansen's approach to building a low-risk gold and silver portfolio. He suggested allocating 30 percent to royalty companies, along with a further 20 percent each to gold bullion and silver bullion. The remaining 30 percent is assigned to mid-tier producers — Hansen's suggestion was 7.5 percent each for Alamos Gold (TSX:AGI,NYSE:AGI), K92 Mining (TSX:KNT,OTCQX:KNTNF), Aya Gold and Silver (TSX:AYA,OTCQX:AYASF) and SilverCrest Metals (TSX:SIL,NYSEAMERICAN:SILV).

"What I've just suggested is for people who don't want to take the time or have the interest to dig in," he explained during the interview. "If you're going to be selective, that means you have to do some research and really study it."

When asked what advice he has for investors who may be frustrated to see the gold price sliding back after the big run seen earlier this year, Hansen said he's lived long enough to know that fundamentals always win.

"So then you have to have really a clear idea of what the fundamentals are and what they're telling you," he said. "And if you do that, and you believe as I do that the macroeconomic scene is such that gold and silver are going to do well because gold is inversely related to people's confidence in the financial system … the fundamentals are that gold and silver are going to go up

Watch the interview above for more of Hansen's thoughts on gold and silver stocks, as well as low-risk gold and silver portfolio construction. You can also click the the timestamps below to view specific parts of the interview:

• 0:00 — Intro
• 0:31 — Gold price vs. AISC vs. gross margin
• 7:35 — AISC stability to benefit gold miners
• 12:07 — Royalty companies' outsized potential
• 17:03 — Be wary of indexes and ETFs
• 19:33 — Portfolio for risk-averse investors
• 24:14 — How can investors stay focused?
• 29:03 — Outro

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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.