Portofolio: Goldcorp Inc., Yamana Gold Inc., Minefinders Corp. Ltd., Northgate Minerals Corp., Pan American Silver Corp., Franco-Nevada Corp., Rubicon Minerals Corp., Premier Gold Mines Ltd., Jaguar Mining Inc., ATAC Resources Ltd.
Lawrence Hunt is largely a long-term buy and hold investor, meaning, "My portfolio has varied dramatically in market value over time," says the psychologist, who lives just outside Kenora, Ont. Consider that the market valuation of his portfolio declined over 65 per cent in the fall of 2008, and it has since recovered 130 per cent since the November lows.
Mr. Hunt moved heavily into precious metals in 2003 for macro-economic reasons. "Governments around the world were inflating the money supply and, historically, gold is the place to go when they manage money supply loosely." He adds: "I think we're in a long-term commodity cycle, and they can go for decades."
His largest positions are in big companies for the security and stability. "As John Maynard Keynes said, the market can remain irrational longer than you can stay solvent." He's a follower of the newsletter "Gold Stock Analyst" put out by John Doody. Says Mr. Hunt, "He's an accountant, and basically just looks at cost per ounce of production and cost per ounce of proven and probable reserves, and picks companies he thinks are undervalued."
The sector is very volatile, Mr. Hunt says, noting that his small-cap holdings lost some 90 per cent of their value in the fall of 2008. One of his favourites is Alexco Resource Corp., which is active in the Yukon. Part of the company's business is cleaning up old mines, and that often involves assessing the future potential of a property. For instance, the company's flagship program is Keno Hill, a high-grade silver district, but production ended there in 1989 due to the fallout from the manipulation of the price of silver. "The company got the contract to clean it up, looked around, liked it, staked it, and now they're looking at over 200 million ounces of silver."
Six months ago, Mr. Hunt and his wife, Susan, were buying ATAC Resources from under 10 cents a share. The company has property some 60 kilometres northeast of Keno Hill. The property is difficult to access, but last winter, the company took in a big drill and had dramatic results. The stock last closed at tk. Mr. Hunt thinks it may make it much higher, "But I have no idea when."
There are so many, it's hard to pick, says Mr. Hunt, before pointing his finger at Benton Resources Corp., run by brothers Stephen and Michael Stares. In the spring of 2007, they won the Prospectors and Developers Association's Prospector of the Year award, and the stock soared from under 40 cents to just shy of $2. Within a year, it was back from whence it came, and last closed at tk. "I wasn't at all surprised the larger market crashed, but didn't think precious metals companies would go down with it."
"Look at the long term and disregard the noise. Look beneath the surface to the secular trends, large trends that span decades. Study history to view these trends in perspective."
Special to The Globe and Mail
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