Greg Orrell, President and Portfolio Manager of the OCM Gold Fund, says in in a broad-based precious metals portfolio, it is worth the risk to include AngloGold Ashanti Limited (ADR) (AU).
“When we are looking at geopolitical risk in the portfolio, we break down our country exposure by looking through each company and at each asset and its country location,” Orrell says. “AngloGold is a South African-domiciled company with an international business that produces gold in Australia, Latin America and West Africa, with only 28% of its gold in South Africa, yet its South African headline risk dominates its valuation.”
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Orrell says AngloGold has a long history of managing its South African risks, and he is comfortable that the value of the stock outweighs them.
“However, the last thing investors want is to wake up and hear about a labor strike, union violence or nationalization talk. It is a risk we feel we can take in a broad-based precious metals portfolio that limits and dilutes out geopolitical risk. For investors looking to own one or two gold shares it probably is not acceptable risk,” Orrell says.
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