Methodology for Incorporating Gold Stocks into a Risk-Tolerant Portfolio: Exclusive Interview with Fidelity Management & Research Company Gold and Precious Metals Portfolio Manager

Wall Street Transcript

67 WALL STREET, New York - January 2, 2014 - The Wall Street Transcript has just published its Gold and Precious Metals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Precious Metals - Lower Gold Price Environment - Precious Metals Exploration and Production - Increasing Capital Expenditures - Emerging Markets Silver Consumption - Mining Safety and Environmental Concerns - Gold Production Cost Structures - Gold Price Stabilization

Companies include: Gold and Precious Metals Mining Sector

In the following excerpt from the Gold and Precious Metals Report, an experienced portfolio manager discusses his outlook for Gold and Precious Metals stocks:

TWST: Would you please start with a snapshot of the portfolio you manage in terms of net assets, a sense of asset allocation and whatnot?

Mr. Wickwire: The Fidelity Select Gold Portfolio, FSAGX, or the Fidelity Advisor Gold Fund, FGDAX, is a portfolio that as of the end of October was approximately $1.4 billion in assets. The fund is run to give investors who are seeking a gold asset class exposure a means of hopefully getting the most effective way to get asset class exposure, by blending gold bullion and gold equities - the producers or the companies exploring or searching for gold - in one actively managed portfolio. So instead of getting just one aspect of gold asset class, either by trying to get the bullion exposure or the equities, we put them together, actively manage and try to get a more efficient blend of asset class exposure for those risk-tolerant portfolios that are looking to have something in the portfolio which can act as a financial asset insurance policy.

TWST: What is your view on gold today in terms of what it's doing now and where you think it's going? Obviously it has had a couple of years of declines.

Mr. Wickwire: I think once you embrace the concept that the gold asset class serves as a financial asset insurance policy, then I think risk-tolerant portfolios really have the appropriate framing backdrop to figure out what's an appropriate amount in a risk-tolerant portfolio. What the gold asset class can do for you is, when stocks, bonds and currencies disappoint relative to historic performance or disappoint relative to current expectations, gold can have a payoff profile that comes into play that can help you against a compromising of the real return of other financial assets.

It's not an asset class that I would say you want to buy it, you want to sell it; again, within the context of a risk-tolerant portfolio, it's a small portion of a diversified portfolio where you come up with a designed weight, and then you let market volatility help you tactically rebalance that portion of your portfolio as you would be tactically rebalancing other portions of your portfolio as your investment horizon either elongates or truncates based on each individual's circumstances.

The gold asset class has really been, over the last two years, quite out of favor. My experience has been, when an asset class that's part of an overall risk-tolerant diversified portfolio underperforms for a couple of years, largely against a backdrop of stocks doing well, bonds doing OK and the dollar hanging in there, you have to ask yourself...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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