I couldn't agree more! All the best.

Gold equities opportunities better-than-ever - Embry

While he has followed the gold market since the 1970s, Sprott Asset Management's John Embry says the opportunities offered by gold equities are better than he has ever seen.

GRONINGEN (MINEWEB) -

Gold equities have never presented investors with a better opportunity than they do today, says Sprott Asset Management's John Embry.

Speaking on Mineweb.com's Gold Weekly podcast, the asset manager's chief investment strategist, said that this view is based on his view of where the price of gold is likely to go in the future.

Adding that, while all gold equities are likely to move, junior gold stocks have been beaten down significantly and are "much cheaper" relative to their senior counterparts.

"If you have the right quality junior (and you've got to be selective because there's a lot of junk in this sector as you know), but if you've got the right quality junior, I think you are talking five to 10 baggers easy."

But, that does not mean he is negative on the majors. These he likes too "for the simple reason that I think they will be really good dividend paying stocks. I think that when this moves forward these people will spend a lot of money and they will become major dividend payers."

However, even in a rising market, choosing the right stocks to back is a difficult thing to do, Embry says and they shouldn't form the entirety of one's portfolio.

"I have always told people that the safest thing is the bullion. If you don't have physical bullion in your possession at least own a paper vehicle where there is full allocation and it can be documented - that has to be the core of your portfolio. Then I think you should own some large seniors ... and then for the real pizzazz in the portfolio I think you should have liberal exposure to some good quality juniors."

But, he adds, "For the average person he should be buying a really well managed fund that specialises in juniors because to tried to rifle shoot these things individually, unless you are an expert is difficult because as I said there's a lot of bad behaviour in the sector and a lot of stuff isn't what it appears to be. So you best leave the selection of the securities often to professionals."

What to look for in a junior?

If you do want to look for yourself, Embry says the first thing to focus on is management "because there are a lot of charlatans in the business."

The second thing is that the project, the ore body must be valid, thirdly it must be in a geopolitically safe area and, finally, the company must be able to raise finance because as a junior "You don't have earnings or anything, basically you are developing ore bodies from scratch and so you have to have the capacity to appeal to the public so they will support you and give you money.

"But," he says, "If you put those four things together successfully I think the sky is the limit at this point."