Gold, despite its recent run-up, has the potential to move up even more no matter which direction the world economy takes, says Adrian Day's Investment Analyst.

"There's little doubt that a new bull market in gold has started. All the fundamentals are there: decline in worldwide production, depletion of Russian stockpiles, strong jewelry demand, rise in Far East investment, and the persistent underweighting of gold in global investment portfolios."Adrian Day also believes that the continuing decline in global interest rates, particularly in Germany, increases the relative attractiveness of gold vs. other investments.

"All investors should have some gold in their portfolios, as a hedge against both inflation and bear markets in other sectors. Very conservative investors should buy bullion or bullion coins (U.S. Gold Eagles, Krugerrands, British Sovereigns, etc.). These can be bought at low commissions, and their prices will move up, or down, with the spot price of gold."

For slightly more aggressive investors, ADIA recommends five specific gold stocks, which it believes will outperform bullion and at the same time provide considerably more protection on the downside. These will not be among the best-performing vehicles if gold again goes to the moon, cautions the newsletter. But they won't sink out of sight if gold prices reverse, either.

Here are Adrian Day's five "aggressively conservative" gold picks:

FRANCO NEVADA, which trades on the Toronto stock exchange, has been Adrian Day's favorite gold stock for several years, for both conservative and aggressive investors. It acquires royalties on gold properties owned by others, giving it a share in gold's upside potential without the costs and risks of an operating company.

FREEPORT COPPER & GOLD PREFERRED B, which trades on the NYSE, offers what gold investors have long sought, gold with a yield. "This issue will be redeemed in the year 2000 at the prevailing price of gold, with each share being worth one-tenth of an ounce," says ADIA. "The yield, recently 3.5 percent, will increase as the price of gold increases."

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BANK FOR INTERNATIONAL SETTLEMENTS, which recently traded on the Basel (Switzerland) exchange for a whopping $6,400 per share, is arguably the world's bluest blue chip, says Adrian Day. "It's called the central banker to the central banks and as such holds an enormous amount of gold. Despite its high valuation, it still sells for considerably less than its book value."

MINORCO, an OTC U.S. issue, is one of a small handful of true value plays in the resource stock universe, says ADIA. "Liquidation value of this asset-rich resource conglomerate is probably 30 percent to 40 percent higher than its recent $18 stock price."

RTZ, a British stock trading on the NYSE, not only owns some of the world's most promising gold properties, but it's also among the world's lowest-cost copper producers, concludes Adrian Day. "The stock yields around 5 percent and earnings could double this year."

(Adrian Day's Investment Analyst, 824 E. Baltimore St., Baltimore, Md. 21202; monthly, $87 annually.)

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