The appeal of gold as an insurance policy against potential increases in inflation is to have a 5% to 10% allocation of liquid assets in the precious metal or mining company stocks as an investment for a five-year run to higher levels, says Kenneth Gerbino, Chief Investment Officer and Head of Kenneth J. Gerbino & Company.
“I think gold is popular still and will become more popular, not only in the United States, but also in the European countries, as well as Japan and China and India, where money-supply increases are continuing at a very rapid pace. The appeal of gold is not to have all your money in gold,” he said.
Gerbino likes Yamana Gold, Inc., (AUY), a company that’s producing gold for less than $300 an ounce. He says AUY is growing at about 25% compounded. Gerbino also believes gold and silver mining companies with known deposits in the ground are the best bets for investors in the sector.
“They have a very strong portfolio and their cash flow growth for the next four years will increase by about 38% a year. So Yamana is a good, solid low-cost company. They have a million-ounce-plus production status and will be producing 1.7 million ounces by 2014,” he said.