Wednesday 6 November 2013

All That Glisters... (Portfolio Sale)


...Is Not Gold.

Gold mines in Tanzania - what was I thinking?

Not exactly Fool's Gold - more like a distant African mirage of untold wealth. Like Stewart Granger (as Allan Quartermain) searching for the lost diamond mines of King Solomon, I ventured into the steamy forests of the 'Dark Continent', looking to make my fortune.

I bought African Barrick Gold (LSE:ABG) on a whim in April 2013, mainly for its chunky dividend (and, yes, to own a bit of a gold mine). Given the downward price trend, this was a bit early. Since I bought it the price has bounced around in sympathy with the price of its main product, initially with a further downward slide as investors looked at this high-cost gold miner with increased skepticism.

The price did gradually recover as investors gained confidence from the measures being taken by management to cut costs and increase production. However, the forecast dividend has now fallen substantially (to 1.6%) - I must have missed some corporate announcements - meaning that this no longer qualifies as an 'income' share.

I was beginning to feel more and more uneasy about this investment - clearly something dissimilar to the usual DIY Income Investor portfolio candidate. It has ended up being more of a commodity play on the price of gold.

With the current recovery in the price looking shaky, I decided to exit, with a slim profit of 11%. Of course, if the price of gold goes up, so will this share price. But I am not a speculator by nature. Or an African explorer.

[Sale price: £1.99]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

1 comment:

  1. Ah, well. On the other hand, if you like going to the races, I bought some of these on 30.10.13 (yes, a week ago)and they are currently showing me a gross profit of 12.51 %. . Mind you, it is awfully boring sitting in front of the screen poised to sell them on a wobble. ... Keep up the good work!