Back on October 21, 2014 I ran the following article on my website by Adrian Ash, who runs the bullionvault.com site on behalf of The World Gold Council, a mining group. Gold is up nearly 20% year to date. Back then, Adrian wrote:

The Case for Gold

“As the stock market slumps, gold's unique appeal stands out again, Gold has risen nearly 4% so far this month. Major world stock markets have dropped up to 10%. Hot-money hedge funds pile back into gold futures and options. Headline writers proclaim the return of 'safe haven' gold.

“If you want insurance against wars, plagues, or financial woes, a lump of metal won't work. But if you want to insure your own savings, reducing losses, and boosting long-term return history says gold really can help.

“Over the past 4 ½ decades, gold has risen in each of the 5 years when the S&P has lost 10% or more, averaging 34% gains. Adding gold to a standard portfolio split between equities and bonds would have reduced your risk and boosted your returns.

“Short term gold often leaves pundits and hacks scratching their heads. When the US stock market tanked, in short order gold often went with it.

“The S&P 500 index on 8 occasions since 1969 [sank] 10% or more in one month. Gold has fallen alongside it 4 times, including the Lehman's crash of October 2008, and lost a monthly average of 4.5% overall.

“Longer term, beyond the horizon of newspaper headlines, gold has helped smooth losses and boost returns.

“Start with a simplified model of 60% in US shares and 40% in Treasury bonds. Since 1969, that has earn[ed] 9.7% annualized with a maximum 1-yr loss of 14.2%.

“Switching 1/10th of your money into gold and holding 55% stocks, 35% bonds, and 10% gold would have earned 10% annualized with a maximum 1-yr loss of 12.8%. Equity dividends and bond interest are included but [not transaction costs or ] taxes. You rebalance to keep your target allocation each new year.

“Or go plumb crazy and put 20% of your savings into gold. Your split of 50% stocks, 30% bonds, and 20% gold would have earn[ed] 10.1% annualized since 1969, with a maximum 1-yr loss of 11.6%."

In my view, gold is a useful ballast against stock, bond, and currency risks, and easier and cheaper to buy than hedges linked to currency or volatility. Country ETFs spend heavily to remove currency movement risks. Adrian's outfit advertises on our Global Investing website but we accept its ad because we believe in what he is peddling. It is all legal and taxable of course.

• Thursday was purchasing manager index data day for April. The PMI is a measure to determine the future demand for goods, and ultimately gross national product. Europe, led by Germany, beat forecasts with a level of 53, meaning the level was nicely up from March. China's PMI index fell short. The Caixin PMI, which Beijing is known to manipulate, failed to do as well, up only to 51.8, vs 52.2 in March, showing contraction over the month despite measures taken to boost the economy. It targets small and medium companies.

• The Rossio railway station in Lisbon is a world heritage site, built in the 19^th century to celebrate technology in a kind of art nouveau-Byzantine style. Between the open arches at its entrance there used to be a tiny platform bearing a tiny statue of Don Sebastião, who was killed in North Africa fighting the Moors in 1578. Because his body was never found, the Portuguese myth is that Don Sebastião is not dead and will return to save the country one day. This week a man taking a selfie climbed onto the Don Sebastião platform and knocked the statue to the ground, shattering it. He was arrested. Luckily our late friend, the Portuguese artist Lima de Freitas, created several ceramic tile panels in the Rossio station which survive, also featuring Don Sebastião.

• Every cloud has a silver lining. The inferno at Fort McMurray has cut the route for taking oil sands southward, boosting the price of oil. This also added appeal to stocks. The loonie is weaker against the greenback.

More from Canada, Colombia, Brazil, Australia, Guadaloupe and Kenya via Nevada, and Australia today, with news of heavy industry, pharma, and funds. We also have results from a stock we like and one which is a bonus pick for our readers.

Heavy Industry

• Veresen, VSN-TSX, reported  and its Q1 was good in operations and mixed in earnings. It also said it will apply for a rehearing with the US Federal Energy Regulatory Commission which denied its application for connectors and a liquefaction plant at Jordan Cove, Oregon now that it has lined up Japanese customers for at least half the output or 3 mn metric tonnes of liquefaction capacity. Fee for service will finance this major project if the US FERC allows it to go ahead despite NIMBY pressures. In addition Veresen (FCGYF in the US) spent C$40 mn on the site in Q1 so it clearly expects to win a green light.

In Q1 VSN adjusted earnings came to C$18 mn or 6 loonie cents/sh both down by a third from last year's Q1. Net income fell harder, to C$ 7 mn from over 7x as much last year, to 2 loony cents from 17 because of higher payments to preferred shareholders and capex.

In Q1 its lead source of sales, the Alliance pipeline serving the US Midwest, won more throughput while its No 2 Ruby line lost traction. However, the while the midstream Saturn processing and compressor stations beat estimated demand prices were down along with cash flow. Veresen facilities use take-or-pay billing which means VSN can deliver profits if demand picks up. But imposing the new billing model hurt in Q1.

In Q1 thanks to the pipeline demand and lower taxes, distributable cash hit C$18 mn or 27 loony cents/sh.

In Q1 the Cutback Ridge partners agreed to invest $930 mn in the Saturn Phase 2 processing facility to come on in late 2018 while three other midstream plants, Sunrise, Tower, and Saturn 1, are on schedule and under budget. Veresen midstream is adding a C$25 mn 50 mn cubic ft/day refrigeration expansion at Hythe, half financed by VSN, while the Burstall ethane storage site is on track to come into service in 2018 after VSN spends about C$55-65 mn on it this year. VSN is heavily leveraged with total debt at Mar 31 of C$3.49 bn.

• The main gainer from the cut link with the Athabasca tar-sands is another producer of heavy oil, Ecopetrol, whose shares rose 3.62% at the opening after rising 1.4% here yesterday. After its Q1 report, the analyst fraternity predicted that EC would lose 1.5 US cents in the current quarter. They will now have to factor in the Canadian disaster.

• Cameco's IR assistant Stephanie responded to my email inquiry by writing that its sites have been unaffected by the fire. But she notes that CCJ hopes rain clouds head their way because they need the help. CCJ mines and refines uranium in Alberta (Canada) and Kazakhstan.

• The 3.5% rise in share price for Vale in Sao Paulo today reflects local skepticism on the litigation risk from the Brasilia environment enforcement body over the Sanmarco disaster. VALE is up because Brazilians think the huge bill is merely a negotiating tactic, suggested also by the Financial Times gossip columnist “Lex”. The sum would bankrupt Vale, a national iron ore champion, and wipe out BHP-Billiton Down Under. The stream of anonymous attacks on Vale at SeekingAlpha focus on the rise in debt levels, which would be worrying except for the fact that they result from the complicated but definitely lower average exchange rate of the real which I explained when Vale reported on Q1. Despite repayments, its dollar-denominated debt rose about 11% year/year, which is likely to be reversed now that the Brazilian currency is rising against ours. Vale at over $5/sh is a bargain.

• The consensus estimate in US dollars for BP plc (BP) in the current quarter today rose 5.5 cents to 14.1 cents reflecting the impact of various disasters cutting oil supplies, including the 3-day week in Venezuela, the further bankruptcy of US shale companies, civil war resuming in Libya blocking tankers, and the coming driving season in the northern hemisphere.

Drugs & IT

• Nokia is gaining traction. NOK consensus is now that it will earn NOK 1.16 this quarter, up from earlier forecasts of NOK 1.09.

• That someone as clean-living as Prince was apparently addicted to painkillers after prescriptions were handed out without controls by his careless doctors indicates the importance of Indivior's alternative way to deliver opioids. While INVVY has issues filling its pipeline with new drugs to move from its current sub-lingual (under tongue) delivery system, crafted to keep its meds off the street, the current product is desperately needed.

• Fear of Trump-Clinton took down almost all drug major stocks midweek. The Financial Times yesterday wrote approvingly of the changes made by Glaxo CEO Sir Andrew Witty who is due to step down in a year's time. The pink paper praised his finding a new source of income in vaccines and OTC drugstore products like toothpaste and headache pills rather than risking GSK's future on drug research. It cited the 7% rise in GSK's UK share price, the improving margins, the 6% dividend yield as reasons to support Witty's reputation despite a lot of UK fund dissatisfaction.

More importantly, with the US election now likely to pit Trump vs Hillary Clinton, there is a lot of agita here about high drug prices, normally the result of the heavy cost of R&D. GSK has elected to cut that spending perhaps because it was already under political pressure in its homeland when Witty was promoted to CEO.

And as for the drug pipeline, by maintaining control of its AIDS jv, GSK wound up with a potential blockbuster in dolutegravir, which chalked up sales of £500 mn in Q1.

• Wednesday Bavarian Nordic shares fell nearly 11.7%. The Danish vaccine firm recently published in The Journal of the American Medical Association results from phase I trials of its jab against Ebola in healthy volunteers. After a single AdVac injection 97% of them generated antibodies to Ebola within 4 weeks. A booster MVA-BVN does took the level to 100% within the following 21 days. The T-cell response was 79% to 100% depending on the dose, also very positive news. The Ebola-specific antibodies remained in place for 100% of those injected for 8 months. BAVA in Denmark or BVNRY (for now for its still unissued ADR).

• Benitec Biopharma rose 12.39% today in Australia trading of over 3000 sthares, to the equivalent of $1.90 US. This follows a statement to the ASX on its hepatitis B gene treatment. BNTC is still looking for a CEO, preferably American. I nominate Mike Pearson, just removed at Valeant (VRX).

Finance

• Barclays sold down its South Africa banking sub to 51% of total cap but it is still on the hook for Basel 4 capital for the sub until its stake falls to 20%. Nonetheless, the part exit for former CEO Bob Diamond and partners boosted the share of the BCS series 4 and series 5 non-cumulative preferred shares we own by a nickel or 0.19% each yesterday. The movement of the prefs is usually not correlated but when it is, it means a higher target for the underlying common is the cause. Other BCS series also rose.

• Meanwhile prefs from Royal Bank of Scotland and NatWest fell moderately by up to 10 cents showing institutions were shifting their bets.

Funds

• Closed end Canadian General Fund is moving its portfolio into more financials, consumer discretionary, and gold shares. Its top 3 holdings at end-April were Dollarama Inc, 5.6%; gold miner Franco-Nevada, 4.2%; and Bank of Montreal 3.4%.

• In Singapore trading today, Ascendas India Trust rose to 96 Singapore cents, a sign of increasing optimism about India. The US ACNDF share doesn't trade every day but is also inching up at 72 US cents.

• ESD distributed a dividend of 0.105 cents for April of which only 0.0213 was earned investment income. The rest was return of capital, which is not taxed.

Bonus Stock

• Ormat Technologies, the Nevada-incorporated geothermal energy firm owned by an Israeli family, (NYSE: ORA), had revenues up over 26% in Q1 from last year at $151.6 mn. Its net income came in at $29.3 mn or 59 cents/sh vs a mere $10 mn or 21 cents last year. Apart from building facilities in Guadaloupe (a French Caribbean island) and near the Obama Luo homeland in Kenya, ORA is also diversifying into a joint venture developing technology for storing solar or wind energy for when it is needed even if the sun is not shining or the wind is not blowing.