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« Could China Push Gold to the Moon? | Main | Gold Going to $1500 – John Embry »
Sep162009 portfolio Update 17 September 2009

Gold Chart 17 September 2009.JPG
Chart courtesy of Stockcharts

At the fifth attempt gold has managed to break through the psychological barrier of $1000/oz and currently stands at $1016.80/oz with silver trading at $17.45. As we can see from the above chart gold has now positioned itself for a 'pop' at its previous high of $1033/oz, should it manage to establish a new high then finally gold will be off to the races.

Our portfolio as been updated as follows:

Randgold Resources Limited (GOLD) On the 18th of June 2008 we bought Randgold Resources Limited for $37.65. This stock quickly rallied to $55.00 before being caught in the ensuing sector sell off to trade as low as $27.70, on the 28th May 2009 we sold our entire holding for an average price of $68.69 for a return of 82.44%. This is a quality gold producer so we waited patiently for a suitable entry point at cheaper price levels as per our post “Randgold: As Good as it gets” however we held out too long and missed the buying opportunity by being too tight, rats!

Agnico Eagle Mines (AEM) we originally paid $30.88 and it now stands at $31.15. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $63.27, locking in a profit of 104.8%. On the 24th July 2008 we bought again at $59.17 doubling our position with the average cost now standing at $45.03. Agnico Eagle closed at $71.27 on yesterday, a pleasing performance.

Kinross Gold (KGC) we originally acquired Kinross at $10.08, Kinross then went through a bit of a pull back so we signaled 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 31st January 2008 we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July 2008 we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50. Kinross closed on at $23.19 on Friday adding some more cheer to our week. We have high hopes for Kinross and it forms a major part of our core position.

Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.0185 up slightly from $0.013 at the last update. We are disappointed in the poor performance of this stock. The B.C. Securities Commission had issued a cease-trade order against the company, citing a host of filing deficiencies. On the 5th August 2008 this order was revoked the B.C. Securities Commission.

Silverado (OTCBB: SLGLF) has managed to arrange a line of credit of up to a staggering $US100 million as detailed in a news release by the company recently, which came as a surprise to us considering their recent performance. We are holding at the moment however we may scale back our holdings due to its lack of performance.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, and we bought again at $12.89 on the 7th December 2007 and so our average price moved up to $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 on the 3rd April 2008 we bought our Yamana position back at $14.43 in expectation of a bounce, which arrived on The 23rd May 2008, and we sold for $16.00. On the 11th July 2008 we bought again at a price of $14.95 taking our average purchase price up to $13.04. This stock closed at $11.38 yesterday, so we are looking for a significant increase in the stock price.

High River Gold Mines: (HRG: TSX) We bought this at $2.49 and we increased our position in the company on December 7th, 2007 and we are still holding on to it despite the wrangle of being acquired by others. HRG closed at $0.44 yesterday, which is double the price of the original offer.

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. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. Fronteer is currently trading at US$4.63 up from US$3.51 recently, Our original purchase was made on the 15 July 2006 at around the $4.70 level, so we are sitting on a small loss at the moment. Fronteer Development Group Inc., has now acquired all of the remaining common shares of Aurora Energy Resources Inc. So this investment is well and truly a two pronged attack via both gold and uranium.

Options Trades:

We purchased the September $65.00 PUT contracts in Randgold Resources Limited (GOLD) in anticipation of a pullback for $5.00 per contract as Randgold looked vulnerable as the stock price had increased from $41.59 on 17th April 2009 to $70.93 today, an increase of 60% in two months, and the P/E ratio was standing at a large 148. Randgold fell quickly but then staged a mini recovery just to keep our nerves tingling. However we sold these contracts for $10.00 on Monday 13th July 2009 generating a profit of 100% in one Month. Other options trades during this period were Bancorp, a profit of 75% in one week, SKF sold at a loss of 56%, IAG for a profit of 10%, the second set of IAG options are still open but effectively dead in the water.

Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

Have a sparkling week and please feel free to share your comments with our readership.

Conventional wisdom suggests having 5% or so of your portfolio in precious metals with some commentators upping this figure to around the 15% mark. We however are far more cavalier in our approach to investment and only invest in the precious metals sector such is our enthusiasm for it. We currently have 85% invested and 15% in cash.

Have a sparkling day.

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For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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