Portfolio Update 21 September 2007
Sunday, September 23, 2007 at 05:50AM
Gold Prices in Gold Portfolio
What a difference a month makes! Gold closed at $731 and the HUI hit 400, which makes the job of writing this update more of a pleasure. We will start with both the chart of the HUI and the chart of gold. Both have moved to higher ground aided by the Federal Reserve who pitched in with a 50 basis points rate cut. The US dollar weakens and gold strengthens as their inverse relationship continues.

As we can see from the HUI, the largely un-hedged gold mining stocks have put on a spurt and added around 100 points to this index lifting this index from 300 to 400. Gold has also performed stupendously with the price hitting over $731/oz.

Now 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 assess the possibility of a snap back, 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 uptrend 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 may take some money off the table in the near term.

Chart One the HUI:

HUI Chart 23 09 07

Chart Two Gold:

Gold Chart 22sep07

Last month we wrote about disappointment as we watched our profits being eroded but made the decision to hang on in there and as our profits are slowly being returned we will allow ourselves a little smile.

Going forward we intend to make the occasional short-term trade as we did with silver and we will be constantly on the look out to accumulate more of what we have and to add new stocks to our portfolio.

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 $49.81, showing a profit of 61.3%. On the 13th September we sold 50% of this stock at $48.78, as we believed it was over bought. Well helicopter Ben threw a spanner into that idea however we will wait patiently for a cheaper re-entry level.

Kinross Gold (KGC) we acquired at $10.08 and this stock now stands at $15.48, a gain of 53.57%. 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, so far so good.

Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.08 back to evens. 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.
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 doubt jump when are not watching it.

Yamana Gold Inc (AUY: NYSE) we paid $9.37 on 27 September 2006, it is now trading at $12.61 for a gain of 34.57%. Yamana had been making good progress but its on/off bid for Meridian Gold, which now stands at C$3.52 billion, should be resolved shortly.

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 now to $0.46. 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 purchase on 5th April at $0.62, the stock is very volatile and currently stands at $0.36 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 $2.87 for a gain of 15.26% turning a losing position into a positive one. 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.

We continues 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 real gem our readers would love to know about it.

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For those reader who are also interest in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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 20% since our additional BUY signal just over 30 days ago.
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