Buy bullion in preference to Northern Star Resources

John Robertson

PortfolioDirect

Buy bullion in preference to Northern Star Resources. NST made its name by getting more from an asset than its previous owner. Its first purchase got a big boost from higher gold prices after the vendor (Intrepid Mines) had stopped trying once it thought it had something better elsewhere. Now, NST is buying properties far older and managed by some of the best in the business. The market is fully valuing the NST business plan outlined by the company MD last week. On present plans, the underlying value is already near its peak and set to decline for the foreseeable future. The company would have to buy more highly profitable assets cheaply to keep the value where it is now. As always, long term (i.e. 7-10 years) investors should ask whether they are better off buying gold bullion than an equity proxy.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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