"Founded in 1958, ASA Ltd. (NYSE: ASA) is a boutique investment management firm that specializes in precious metals stocks," notes Nathan Slaughter.
The editor of The ETF Authority explains, "Among actively-managed funds in this niche, ASA has earned a best-in-class reputation." Here's his review.
"The portfolio only holds about 20 stocks, but shareholders will have a stake in most of the industry's heaviest hitters. The list represents major players from South Africa to Latin America.
"As opposed to risky 'junior gold' explorers with shaky balance sheets and unpredictable revenues, these deep-pocketed giants are far more stable and have greater resources at their disposal.
"And if you're looking to amplify your exposure to rising gold prices, why not go right to the source?
"Most producers have a largely fixed cost structure, so any incremental uptick in selling prices drops straight to the bottom line. Therefore, a modest increase in gold can lead to a disproportionate jump in earnings -- and share prices.
"Gold prices and gold stocks have been on divergent paths -- bullion outperformed every other investment in 2008, but the Philadelphia Gold and Silver Index dropped almost 28%. This disconnect spells opportunity.
"On on hand, if gold continues to strengthen, then producers should see a windfall of cash -- and investors will only ignore rising profits for so long.
"But let's flip the coin and assume prices fall back to say $700 per ounce. In that scenario, investors holding bullion or futures contracts will have nowhere to hide. However, most of ASA's portfolio holdings will remain profitable.
"All in all, there are plenty of reasons why ASA is an excellent option for investors looking to profit from a continued rally in gold prices. On top of everything else, any appreciation in the shares is taxed at favorable capital gains rates -- bullion investors aren't so lucky.
"The the long-tenured management team has delivered sparkling annual gains of +15.2% over the past decade.
"With a double-digit discount, an experienced management team, a superior long-term track record, and an undervalued portfolio of the world's most dominant miners, I am adding ASA to my 'Sector Trading Portfolio'."
