Gold, which we have avoided in the past, now is in our portfolio via a low cost producer GG. Goldcorp being based in Canada is also a plus. What we find another plus is not the implied safety of gold, but the fundamental fact that people have begun to buy and stockpile gold for reasons of concern for their future. We expect this is in conjunction to the huge increases in gun sales. Investors and now non-investors have begun to worry about where Washington DC is taking the country and gold is a natural store of value. What this has done is increase demand for owning the actual metal to a point suppliers can not keep up with demand. Once this info becomes more mainstream I would expect investors to move into gold stocks to take advantage of the increasing profits of gold producers. GG is our pick here due to it's nice cash flow and the prospect of increasing dividends.
Small banks still continue to intrigue us with investment possibilities. Banks are returning to their natural place in the investment and economic world of being lending institutions and basically utilities as an investment. The only holdback is Dodd Frank which is killing all banks and putting some serious costs onto small banks. However if one considers Obama gone in 2013 and Romney president things could indeed change with some important alterations to Dodd Frank and the reduction of costs for small banks. If this occurs the relationship factor with customers will again become the bank standard and no one does this like small and some regional banks. Lending money for cars and homes purchases, seeding money for small business startups and home improvements would be made locally and the loans would be kept locally. If the economy picks up small banks could again be good payoffs for investors. Now this is not a place to gain serious capital appreciation, but the prospect is there for 3% plus steady and growing dividends. Our CPA talked with us on this last week and got us to thinking about where one would place bets now for a bank future as painted above. How about BB&T, a small regional which stuck to it's knitting during the recent downturn and still has a nice bank dividend. A couple of smaller ones which trade with some liquidity would be ECBE, East Carolina Bank, that has some solid financial's and is all but begging the FDIC to let it take over some of the problem banks. How about FBNC, which also has solid financial's and good political ties too. One could buy a thousand shares of these and sit back and see what happens. The last two offers decent dividends as well. Investing in banks is a true contrarian play so be careful.
If you own municipal bonds you know valuations have moved upward quite rapidly lately. Take a look at MUB, the muni bond ETF, and you will see a steady graph upward since Meredith Whitney made her comments about coming defaults in munis. Needless to say she was wrong big time and investors seeing nice tax free interest have piled back into these bonds. Our portfolio of bonds have increased in value over 5 % in the last six months and adding the over 5% interest we earn you are talking serious money. Add in that if one had been smart and bought munis back when Ms. Whitney did her prediction one could have bought good quality bonds on the cheap for sometimes 85 cents on the dollar. Buying bonds when things are good or the market is saying trouble has always been smart. Buying bonds when the economy is in the tank, like right now, has always been not smart. Even with that said there are still some decent values in munis if you do your homework. Credit here to our many evenings of listening to Louis Rukeyser on bond buying for understanding bonds and our bond guru noted back in salting money away posting.
Natural gas vehicles are not currently being pushed by the Obama administration since they still hate anything that might be considered fossil fuel. God bless him but Boone Pickens has tried and tried to get Obama to listen to no avail. Mr. Pickens started a company to move long haul trucking to natural gas and it has not taken off due to the fact Obama could care less. So in the end Mr. Pickens company, CLNE, has not done well despite huge injections of cash. Now that does not mean there are opportunities for stock gains in CLNE, I just expect it is down the road a bit. Obama and extreme environmentalists only see electric as the way to go with transportation, never mind the environmental dangers from spent batteries and increased pollution from more power production. Stupid is stupid we suppose. Anyway there is a company that has stepped into the void, which seems to be doing all the smart things while we continue doing hopey changey. WPRT, a Canadian company (there's that Canada thing again) has more than doubled in two years, might be the leader in the natural gas transportation field. They have yet to make a profit, but they have a bunch of patents and have alliances with GM, Ford, and Cummins. So for a long term view of this industry and a chance to make some real money WPRT might be a good bet.
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