Investors should use the volatility in the markets to their advantage when investing in gold over time, particularly retail investors, by not panicking when stock prices drop, but equally not to assume that because stocks go up, it’s time to sell, says Adrian Day, Chairman and Chief Executive Officer of Adrian Day Asset Management.
“And we can think of many examples, particularly with the juniors, that tend to be more rapidly developing stories, when a stock with higher price might even be better value at the higher price, because of more things in the company,” he said. “So if you invest in the juniors, you really need to follow them.”
Day likes Virginia Mines Inc. (VGQ.TO), a prospect generator with a $300 million market cap. He says the beauty of that model is that it enables the company to retain its balance sheet. Virginia Mines has $44 million in cash, 20 joint venture properties, of which about six are active, and they’ve got about 3 million ounces in gold resources of various sites, Day said.
“You look at Virginia, and it’s gone from $4.50 to $9, to $2.50 to $8, to $5 to $9, $9.30. That’s a pretty volatile ride. But if you would have panicked when it was declining from $8 down to $2.50, I’m not sure when you would have got back in. That’s the problem,” he said.
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