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« High River Gold Acquires Chaya Nickel Deposit | Main | Gold and Gold Stocks: What No Leverage! »
Feb252008 Portfolio Update 24 February 2008

Gold has just opened in Asia and is trading at $947/oz, up $2.40/oz as we prepare this update, which should put a smile on the face of all gold bugs.
We have recently expressed our concerns about a pull back in the precious metals markets as it has been quit a run up and a breather maybe be due before resuming the march onwards and upwards. As always though, the decision to invest is yours and yours alone. The strategy that we use suits us and we are relaxed and comfortable with it, but we are aware that it may not suit you as everyone is unique and so we wish you every success with your investment plans and trades. Whether you agree with us or not we do appreciate your comments so keep them coming as it adds balance to the precious metals debate and hopefully we will all make better investment decisions.

For new comers to this site this is snippet of what we wrote in the last update;

“We felt that gold was due for a “major rally” at the end of the summer and we gave multiple BUY signals on gold stocks throughout the summer, at the height of the “credit crunch” drama when gold stocks hit a low. More recently we felt that gold was simmering and ready to take off to new levels once it broke up out of a symmetrical triangle formation.”

Well gold prices have broken out in an upwards direction and have put in a splendid performance starting the year at $840/oz and moving to $950/oz in just less than two months. This month alone gold has gained about $40/oz.

We have updated our portfolio to show where we stand on the various gold stocks that we follow and the trades that we have made.

Agnico Eagle (AEM) we paid $30.88 and it now stands at $65.25, showing a gain of 111.30%. On 31st January 2008 we reduced our exposure to this stock an sold about 50% of our holding for an average price of $63.27, locking in a profit of 104.8%.

Kinross Gold (KGC) we acquired Kinross at $10.08 and this stock now stands at $23.12, for a gain of 129.4%. Kinross went through a bit of a pull back 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 the stock has roughly doubled in the six months since our last BUY signal. The average price works out to $23.46. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%.

Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.06. Silverado Gold Mines has announced that it has finalized its funding, and Strategic Planning for the exploration of the Nolan Creek Lode Gold Project, for the 2008 season. It would appear to have been overlooked by investors, the lack of price improvement comes as a disappointment.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, it is now trading at $16.96 for a gain of 81.00%. Yamana had been making good progress in both production and in the area of acquisitions, so the market capitalisation of this company is now $6.03 billion. We bought again at $12.89 on the 7th December 2007 and so our average price is now $11.13. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $16.50 locking in a profit of about 49.41%.

Staccato Gold Resource Limited (CAT: TSX.V) 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 $0.22, having been as low as $0.16.

High River Gold Mines: (HRG: TSX) We bought this at $2.49 and it is now trading at $3.17 for a 27.3% paper gain. We recently increased our position in the company on December 7th, 2007 when we wrote;
“Just a quick note that we have bought additional shares in High River Gold for an average cost of $2.57 in the past few days and we are signalling an additional BUY at these levels.” We strongly believe in the company’s long term fundamentals, especially with rising gold prices.

Fronteer Developments Group (FRG) Fronteer was originally bought as both a uranium and gold play as FRG owns the lion’s share of Aurora Energy Resources making it a gold/uranium play.
Fronteer is currently trading at US$8.68. Our original purchase was made on the 15 July 2006 at around the $4.70 level for a gain of 84.68%. 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 pull back 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. Since we sold FRG it has fallen about $2.00 so it looks like the opportunity to re-purchase the stock we sold is getting closer.

We can only re-iterate that we are very pleased with the progress of our gold stocks in recent months and despite our view that gold and gold stocks are looking overbought, we are confident that in the longer term these stocks are heading much higher as gold heads towards (and beyond) our target of $1000 for 2008.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Reader Comments (2)

Hello, and thanks for the input on your portfolio activity.

So it appears that when you sell 50% of your position in a stock we can conclude that you are taking back your cost and operating on the remaining profit position in the issue?

How do you feel about the possibility of having to buy the same stock back at a price higher than your original cost basis? That is the thing that bothers me, and something that I have to overcome when I believe that the stock is worth being in. It is important to remind myself that we should not be married to a certain stock. Your comments, please.

February 25, 2008 | Unregistered CommenterJohn Ell


How do we feel? Well our strategy is to retain a core holding in PMs but also to make the occasional trade when we think the market has run ahead of itself. We recently did this same trade with Hecla Mining on silver-prices when we sold and bought back for a 18% discount.

It wont work ever time and when we get it wrong we will have to live it. Hopefully we can get right more often then we get it wrong.

If you have bought quality stocks and intend to hold all the way to the top, well thats fine too and we have said this many times in the past.

A question for you: If you have bought and you are comfortable with what you have, then what is your exit strategy?

February 25, 2008 | Unregistered CommenterGold Prices

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