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« The Euro Is Screwed | Main | Gold Prices Update 30 April 2010 »

Fronteer Developments Group: Sold our Holdings

FRG Chart 01 May 2010.jpg

On Friday we decided to dispose of our position in Fronteer Developments Group (FRG) for an average price of $6.20 per share, taking the cash to sidelines for now. The stock price appears to be running a little ahead of itself at the moment and the divergence between the stock price and the 200dma looks a little too stretched so a breather may follow. We do like this stock very much and hopefully we will be able to re-purchase it at a slightly cheaper price in the not too distant future.

For the record, as stated in our portfolio, Fronteer was originally bought as both a uranium and gold play as FRG owned 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%. By selling Fronteer now at US$6.20 we are able to lock in a small profit of around 32% with this portion of the purchase as our original purchase was made on the 15 July 2006 at around the $4.70 level, overall Fronteer has been good to us.

Fronteer Development Group Inc., 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.

We will now place FRG on the Watch List and monitor its progress.

Over on our sister site, we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit. We are looking for similar opportunites in the gold space at the moment and will post as soon as we are ready.

Got a comment then please add it to this article, all opinions are welcome and

As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.

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Reader Comments (2)

Myself, I don't agree with that move at all. IMO, the trading from Apr 5th to the end of the month is a consolidation area, and Friday's move was simply the breakout above that consolidation. If the recent price action showed on the chart as a parabolic move with the RSI shooting well above 70 or 80, then by all means sell. But I just don't see that here.

May 2, 2010 | Unregistered CommenterBruce S


There is also a bit of a double top formation on the chart which suggests to us that FRG could be in for a breather shortly. However, we do take your point and we may have sold too early, we will know one way or the other soon enough.

Should there be a decent pull back we will probably become buyers again.

You might also want to bear in mind that patience isn't our strong point, as we mention from time to time.

Good luck with it and do let us know if and when you do decide to sell.

May 2, 2010 | Unregistered CommenterGold Prices

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