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« High River Gold: Acquire! | Main | Yamana Gold: BUY »
Apr062008 Portfolio Update 05 April 2008

Gold closed at $913.70 on Friday night and the yellow metal has taken quite a beating since peaking at over $1033 per ounce.

We expressed our concerns about a correction in gold and we took profits on some of our gold stocks that were showing great gains from our multiple BUY signals over the summer.

It is always difficult to sell your stocks when they are generating great gains day after day and for us, so it was a difficult decision to take profits back in February. It is true that gold stocks continued to rise after we sold, but they have now dropped back. One of the gold stocks that was hit the hardest was Yamana Gold. We sold 50% of our position in AUY at $16.50 as part of our February profit taking but we bought it back recently at $14.43 in anticipation of a bounce creating a short term trading opportunity.

Aside from this short term move on Yamana Gold, we will be very selective regarding future purchases of gold stocks at the moment. Gold is still a fair way above its 200 day moving average and we do not think that this is correction is by any means over.

(Please click image below to enlarge)

Gold Prices Chart 050408

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 $69.49 , showing a gain of 125%. 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 $23.36, for a gain of 130%. 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 this stock has roughly doubled in the six months since our last BUY signal. 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 $0.048. We are disappointed in the poor performance of this stock, despite the rise in gold prices. However this stock can be very volatile, so it is more than capable of bouncing back very quickly.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, it is now trading at $14.93 for a gain of 60%. 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%. Then just days ago, we bought our Yamana position back at $14.43 in expectation of a bounce which we intend to trade for a small profit.

Staccato Gold Resource Limited (CAT: TSX.V) this was a speculative buy and we made a small purchase on 5th April at $0.62. However the stock is not moving as much with the gold price as we would like, so we are removing this company from our portfolio list and selling our position. We are taking a considerably loss on this, but we only bought a small, speculative holding. We would like to wish the company and its shareholders the best of luck in the future.

High River Gold Mines: (HRG: TSX) We bought this at $2.49 and it is was 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. However it has been a victim of this recent sell off, which has dragged the price down to $2.42. HRG is a small gold company and so its stock price is very volatile, but this pullback represents a drop to the bottom of this range and could be a great buying opportunity. We are watching the situation closely with the view to making an additional purchase and signalling another BUY.

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$5.50. Our original purchase was made on the 15 July 2006 at around the $4.70 level showing a gain of over 17%. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. This shows the importance of taking profits on the way up in a bull market. This is a volatile sector of the market and there is nothing wrong with taking money off the table.

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Reader Comments (1)

Hello, I continue to read your recommendations and precious metal observations with great interest. I was unclear from today's post what your current thoughts are regarding Frontier (FRG). At this price level, especially if uranium is close to a bottom, do the shares continue to be a hold or is it time to begin taking a postion? Thanks for all your good work. Dave

April 6, 2008 | Unregistered CommenterDave

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