Last month Gold closed at $731 and the HUI hit 400, which made the job of writing an update more of a pleasure. This month we have gold at $763.60 and the HUI at 404. Gold has gained 4.3% and the HUI has gained 1%. We took the view that it was time to take some money off the table as both gold and gold stocks looked over bought to us. We post every time we make an investment or take a profit so regular readers will be up to speed. However we have recorded against each stock where and when we have made changes. None of the cash will be used for any other purpose; it will remain on the sidelines until a suitable re-entry point presents itself. If your strategy has been to hold on through this period of euphoria then that’s fine too, as any pullback will be short lived. Be prepared for some volatility though as the ‘dead in the water’ US Dollar could well spring a surprise.
Overall, as we have said right through the summer this gold train is now unstoppable despite the bumps and the setbacks these gold stocks will look cheap by Christmas. And by next Christmas they will be the talking point at one or two dinner parties.
The number of readers that we have is growing significantly on a daily basis so this paragraph is a repeat of what we said last month for their benefit. Please remember that as gold bugs we tend to see the world through gold tinted glasses with nothing but blue-sky scenarios ahead of us. From what we can glean searching the web there are a number of well-respected analysts shouting from the rooftops to buy. However if we take a hard cold look at the charts they are in the sell zone. So as investors we need to assess the possibility of a snap back, and if so just how severe will it be and what if anything should we do about it? If you are invested in this sector for the long term then you can sit through the turbulence comfortable in the knowledge that this up trend remains intact and will continue to rise despite any short-term pull back. If you are a trader and the situation appears to be a little over bought then by all means take some money off the table.
We are not recommending any buying at this point. We will hold the gold stocks that we have and we have taken some money off the table, which we anticipate being re-invested shortly.
Going forward we intend to make the occasional short-term trade as we did with silver.
If you have any comments regarding our little adventure then please feel free to add them whether you agree with our strategy or not.
Here is a summary of our investments and their progress so far:
Agnico Eagle (AEM) we paid $30.88 and it now stands at $53.69, showing a profit of 73.8%. On the 13th September we sold 50% of this stock at $48.78, thus banking a 58% profit, as we believed it was over bought. We are comfortable with this move as we were up to our ears in stocks and now we have some cash, which will be re-invested on the next pullback.
Kinross Gold (KGC) we acquired at $10.08 and this stock now stands at $16.92, for a gain of 67.85%. Kinross went through a bit of a pullback so we signalled to our readers to “Add To Holdings” at those discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On the 24th September we decided to sell 50% of Kinross Gold for an average price of $15.36, again banking the profit and generating cash for future trades.
Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.07. The green fuel side of the business is continuing to make progress with the announcement that Silverado has contracted with Pickering, Inc. of Jackson, Mississippi, to provide complete architectural and engineering plans for construction of Silverado’s lignite water fuel (LWF) demonstration facility of their first project, the $29 million coal to oil operating plant, nothing new to add at the moment.
The Nolan Heights project continues to make good progress where the company has said that a “High grade trend appears to be developing” and we will hold and watch as Gerry Anselmo and his team try to locate the Mother Lode. We had expected this stock to move up with the gold price however it does appear to have a mind of its own and will no catch us by surprise with the next positive news release.
Yamana Gold Inc (AUY: NYSE) we paid $9.37 on 27 September 2006, it is now trading at $13.93 for a gain of 48.66%. Yamana had been making good progress in both production and in the area of acquisitions, so the market capitalisation of this company is now $4.95 billion. The question now is whether to stick with it or look for junior gold mining stocks with more upside potential. (Feel free to comment)
Canarc Resource Corporation (CCM: TSX) we added Canarc to our list although we are still mere observers. The stock has recently dropped from $0.72 to $0.43 and then rose to $0.46 and is now back to $0.43. We are still monitoring its progress but have no plans to make a purchase as yet.
Staccato Gold Resource Limited (CAT: TSX) this is a speculative buy and we made a small purchase on 5th April at $0.62, the stock is very volatile and currently stands at $0.33 having been as low as $0.25.
High River Gold Mines: (HRG: TSX) We bought this at $2.49 and it is now trading at $2.79 for a gain of 12.04% for a reasonable start. We still have confidence that High River will go a lot further in the coming months, particularly with their gold mine in Russia coming into production.
Fronteer Developments Group (FRG: TSX) Fronteer was originally bought as both a uranium and gold play and has resided in our portfolio of uranium stocks until now. We now consider this stock to be more of a gold play than a uranium play. FRG owns the lion’s share of Aurora Energy Resources making it a gold/uranium play.
Fronteer is currently trading at US$11.62. Our original purchase was made on the 15 July 2006 at around the $4.70 level for a gain of 147.23%. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. Should there be a decent pullback in the price of this stock we will become buyers once again, otherwise the cash will be re-invested in this sector of the market when the opportune moment presents itself.
We continue to research a number of gold miners which we hope to add to the ‘Buy’ list in the near future however it is not our intention to own hundreds of speculative stocks on the chance that one of them may be the next big one.
We will continue to make adjustments depending upon the performance of each stock.
Good luck with your selections and if you have unearthed a real gem our readers would love to know about it.
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A month ago we signalled a BUY on silver predicting a short term move up of $1 which has materialised returning a profit of 100% in 30 days and we also flashed a BUY on a number of silver stocks including Silver Standard, a silver stock that is currently on our silver portfolio and up roughly 30.32% since our additional BUY signal just over 60 days ago.
Please be warned that we are suffering from a severe distraction today as England prepare to meet South Africa in the Rugby World Cup Final tonight.
Enjoy this Bull market!