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Diary of a Dumb Investor: going for broke on Spanish gold

I'm taking a 'strategic gamble', as I'll call it, as I think I can afford to take more risk in my portfolio.

 
Diary of a Dumb Investor: going for broke on Spanish gold

Sensible, I’d call it, dull even. My portfolio is diversified well in terms of assets (bonds, investment trusts, shares, funds, cash etc) and geographically – nothing that you couldn’t show your grandma in there.

I certainly don’t feel I have any particularly edgy investments. My recently-purchased shares in Hutchison China Meditech (HCM.L) seem a bit wacky at the moment, but maybe that’s just because they’re down.

My portfolio: Click to enlarge

I’m even increasingly confident that my long-suffering holding in BP (BP.L) will soon break even – let’s see what happens at the company’s results in a week or so.

I’m happy with my soaring emerging market funds, confident that the outlook is still generally good for countries in emerging regions including Asia and South America.

I’ve also been won over by the personalised service from my bond fund manager Stewart Cowley. Do all investors in his funds receive a personal email whenever they express any doubts? I certainly did, top service S! I’m going to hold onto this fund a little longer.

Dear Dumb Investor,

We love you and your thoughtful comments but can I point out one thing; the Old Mutual Global Strategic Bond Fund can short the government bond markets (and we are right now) so we can make money for clients when yields are falling and when yields are rising. Also we use currencies, corporate bonds and latterly have put some 50% of the fund into inflation-linked bonds. Since the beginning of the year your unit price has risen 2.7% which is a gain of 7.3% year-on-year.

Unlike long-only funds we aren’t there for you only in the good times for bonds…

All the best,

S

But I reckon I can afford to take on a bit more risk; take a gamble among all the investing. I need a wildcard in my portfolio and I think I’ve found just the thing: Aurum Mining (AURU.L), a rehabilitated AIM-listed mining company recovering from a failed attempt in the Kyrgz Republic, now attempting to get gold and tungsten out of the ground in Spain.

Analysts at WH Ireland introduced me to the shares, by way of some comments published on Citywire: ‘Aurum is effectively a new company and we do not believe the market fully appreciates that it has come out of its shell status and become an operating company with tangible projects,’ they said, adding that results from the company’s joint gold venture in Spain have been ‘very encouraging’.

Since then, the company has announced upbeat drilling results, not that they’ve been noticed by the market. It feels a bit like hearsay, but convincing and exciting nonetheless. And unlike the rest of my portfolio, this is a gamble, I fully admit. Aurum, I’m on standby with my last 1k.

6 comments so far. Why not have your say?

sgjhaghsdg

Jan 28, 2013 at 14:27

I hold that Old Mutual bond fund in both my SIPP and my wife's as I like its long term performance.

I do hold other bonds (mainly corporate bond ETFs) but feel the need to keep an eye on those as fixed interest strikes me as being far from an efficient market right now.

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snoekie

Jan 28, 2013 at 18:18

A real gamble for sure, and a small company to boot. Hope your shirt is made of sturdy stuff!

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snoekie

Jan 28, 2013 at 18:38

I would add a PS, 10+% of your fund is a real risk. The golden rule, never take a punt with more than 5% of your fund, and then only if you can afford the loss. You are young enough, but too much for your small fund.

I accept that I have a few punts, and by your standards big money, but small for me taking into account my overall portfolio and in companies with a far larger market capitalisation. This company has a market capitalisation of £4.95 mil, a real minnow operating in a perhaps not so stable part of the world.

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Anthony Tinslay

Jan 28, 2013 at 18:54

With such a small company and especially in the mining or exploration fields the biggest risk is possibly future success if any. Should something special be found then capital investment will be essential and your investment could be diluted substantially with the new and bigger investor demanding more than a fair share of the action. Best of luck

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sgjhaghsdg

Jan 28, 2013 at 19:23

What will interest me with this one is when DI chooses to exit. Small caps are volatile, and small caps in this field (sorry!) even more so. Will he bail on the first jump upwards or the first lurch downwards?

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wayne roberts

Jan 29, 2013 at 00:45

At last, something interesting in your portfolio..

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  • Aurum Mining PLC (AURU.L)
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