Gold offers the “most reliable inflation hedge” among the various metals, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. Carlson, who also leads the Retirement Watch investment newsletter, counseled that he recommends having a base inflation-hedge in gold through exchange-traded funds (ETFs). “An investment in a metals and mining company often will result in more than an investment in a metal, Carlson continued. The companies usually have debt that can be used as leverage to ramp up returns, he added.
“Investors who want to seek these leveraged gains should invest in a diversified mutual fund or ETF,” Carlson said. “Those who want an inflation hedge should choose a fund focused on gold mining companies. A good choice is iShares MSCI Global Gold Miners (RING).” For investors who want a broader portfolio that will benefit from both inflation and global growth, check out iShares MSCI Global Metals & Mining Producers (PICK), Carlson counseled. For investors who would consider a non-dividend-paying ETF, Carlson favors iShares Gold Trust (NYSE:IAU). It has shown quite a bit of volatility in the past year. BHP Group Ltd. (NYSE:BHP) is the biggest miner on the planet across many metrics. A metals stock that has been on a run in the past year with no signs of sliding is Nucor Corp. (NYSE:NUE), a Charlotte, North Carolina based producer of steel and related metals. Reliance Steel & Aluminum (NYSE:RS), a Los Angeles-based metal solutions provider and the biggest metals service center company in North America. BoA gave Reliance Steel a price target of $185 per and praised its cash return to shareholders, as well as support for the share price through buybacks. Plus, Reliance Steel has a track record of free cash flow generation. Fort Wayne, Indiana-based Steel Dynamics, Inc. (NASDAQ/GS: STLD) is one of the largest U.S. steel producers and metals recyclers in the United States.
Source: Dividend Investor
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