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, silver-prices.net 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.
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.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.