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VIDEO: Should You Be Buying Or Selling Gold?

Richard Hemming

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The stock market has rebounded aggressively, but remains 15% off its February high, should ASX investors be buying or selling?

The main thing for ASX investors is to keep calm and carry on: don’t panic and fall victim to FOMO. Second, look out for buying opportunities. We’re finding that there are ASX stocks that have missed out, but of course you have to be careful buying before a reporting season where even the companies themselves are somewhat in the dark.

Perspective is key

  • Inflation – put possibility at less than 1%

  • Deflation – didn’t happen in the financial crisis. Probability 20%

  • Fiscal Cliff – electoral interests to keep economy ticking along.

  • End to bank loan deferrals – banks are in a good position capital wise.

It is always good to think about risk, but it’s not productive to overstate the importance of one in a hundred year events when you are looking to build wealth for the long-term. Hope is an ASX investors’ friend too.
What it boils down to is that we’re very much in a ASX stock picking environment and the need to analyse the financial statements and management’s words is more important than ever.

What about gold bursting through US$2000 an ounce? Should ASX investors be buying or selling?

Over the long-term we’ve proven that gold is a valuable addition to a ASX share portfolio and we’ve had a few duds over the years, but this has been more than made up for with our support of Australian based diversified producers, Northern Star (NST) and Evolution Mining (EVN).
 
Gold is valuable because it has been a store of wealth for a millennia and is not an obligation of the US government, hence it’s a good hedge against the unparalleled money printing. Other and related conditions also favour gold: low interest rates, US dollar weakness and economic uncertainty due to COVID-19.
 
But what you pay for assets dictates your ability to profit from them over differing time frames. When uni and high school students start telling me which gold ASX tocks to buy, there is too much heat.
 
Now is the time to be taking profits or holding on, not buying. When the gold price goes south and gold is out of favour, that’s when we’re interested.

What has Under the Radar Report been doing?

Under the Radar Report has been tipping ASX stocks recently, but for every one of those ASX stocks, we’ve kissed a lot of frogs. Last week’s stock report highlighted the seven criteria we look at, which basically starts with cash and then looks at growth, combined with profitability. Along the way we’re looking at what management says and how that reflects reality. Dividends are also important and we’ll be expanding more on that in coming weeks.
 
ASX stocks we’ve had a look at include those mentioned by subscribers and sound genuinely interesting; others we’ve been asked to look at for media.
 
These include:
ReadCloud (RCL) – education technology
Archer Minerals (AXE) – materials technology
Digital Wine Ventures (DW8) – wine distribution platform focused on China
 
I could go on. The point I come back to is that quality is hard to find. We put a lot of effort into finding ASX stocks where there isn’t much optimism in the price and we focus on maintainable earnings.
 
Many ASX Small Caps have a good story, but that is a long way from being worthy of your hard earned dollars.
 
When you go to buy anything, you do your homework. Under the Radar’s success is based on helping you to do your homework so that you don’t waste your money. To uncover the best ASX Small Caps to buy now, click here

What’s in the upcoming stock report? 

This week we focus on 10 ASX stocks that we cover and what the expectations are for their upcoming results and how they rate on our seven criteria. The ASX stocks we’re covering also include those that have reported.

These ASX stocks include:

  • Alliance Aviation (AQZ)

  • Nick Scali (NCK)

  • Boom Logistics (BOL)

  • BSA (BSA)

  • Countplus (CUP)

Click here for 14-day free trial.  

About the Author

Richard Hemming

Richard Hemming (r.hemming@undertheradarreport.com.au) is an independent analyst who edits www.undertheradarreport.com.au, which provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (AFSL: 409518). The author does not own shares in any of the stocks mentioned.

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