Kevin O'Leary: Stay Away From Gold Miners, Hold Bullion
(Kitco News) - It's a battle of the Shark Tank stars when itcomes to gold.
While Mark Cuban sees more value in a holding a “pet rock” thanthe yellow metal, Kevin O’Leary said it’s a definite part of his portfolio.
It’s a battle of the Shark Tank stars when itcomes to gold.
While Mark Cuban sees more value in a holding a“pet rock” than the yellow metal, Kevin O’Leary said it’s a definite part ofhis portfolio.
O’Leary said gold is the only asset he ownsthat doesn’t pay a dividend, but he sees the metal’s role in his portfolio is an inflation hedge and a“buffer.”
His comments come as gold has been range-boundsince the start of the year. Comex June gold futures lasttraded at $1,341.10 an ounce, up almost 3% since January. The yellow metal hasfound recent support after the Federal Reserve announcedlast month that it only sees three rate hikes in 2018.
O’Leary’s comments are also a sharp contrast tohis guest at the “Three Sharks in a Castle,” symposium, Mark Cuban, who seesvery little value in owning gold as an investment.
“I would buy a pet rock before I buy gold,” thebillionaire owner of the Dallas Mavericks told Kitco News ahead of the event inToronto.
But O’Leary’s fondness for the physical metaldoes not translate to mining equities, noting that investors are better off holdingphysical gold rather than the mining stocks.
Gold miners have had a track record of badmanagement and poor cost control that have led to underperformance relative tophysical gold, the chairman of O’Leary ETFs told Kitco News on the sidelines ofthe symposium. The Shark Tank investor himself maintains 5% of hisportfolio in physical gold, using a combination of bullion and SPDR Gold Shares(NYSE: GLD), the world’slargest gold-backed exchange-traded fund.
“The history of mining has been abysmal,” hesaid. “The value of the commodity is whatever it is every day. I don’t need tohave a manager in the middle screwing up his capital cost allowance, notcontrolling his costs,” he said.
Gold miners lagged behind physical gold in2017, with the VanEck Vectors Gold Miners ETF (NYSE:GDX) up only 7.7% on the yearwhile GLD climbed 12% in the same period.
Mining stocks were depressed last year despitemany companies having reported lower all-in sustaining costs and more efficientproduction.
“I say to the [miners] you do what you have todo to get [gold] out of the ground. I’m not going to invest in that. When itarrives, I’ll buy it, and that’s served me very, very well over time,” O’Learyexplained.
Some analysts speculate that there is a current lack ofinvestor demand for the precious metals space, and that a breakout abovecurrent resistance levels is needed before investors rush back into the space.For many analysts an important resistance level gold needs to break is around$1,360 an ounce.
By David LinFor Kitco News
Follow @davidlinMTL
dlin@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.