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« If Deflation Wins, What Will Gold Stocks Do? | Main | A Run for the Canadian Border »

Reduced Exposure to Yamana Gold Incorporated

AUY Logo 12 August 2010.JPG

As we have discussed a number of times on this site and in such posts as Are Silver Stocks worth the effort? today we commenced a revamp of our portfolio of gold stocks. We sold 80% of our stake in Yamana Gold Incorporated (AUY) for an average price of $9.53 and moved the proceeds onto the sidelines for redeployment at a later date.

Despite managing their operations very well their efforts are not reflected in the stock price as the price today is as it was 2006 having been up and down a lot since then. Again we have decided not to fight the market and have decided to reduce our exposure to this stock for now.

We will be watching AUY's progress with a keen eye with the view to returning to it should we detect a more favorable market sentiment and signs of an improved share price.

This week we intend to continue with our strategy of reducing our exposure to those gold stocks that we view as not performing adequately enough and again we will probably return the funds to the sidelines as we work on opportunities that will benefit from the ‘fall’ rally. However there are a number of options trades coming onto our radar so some of the cash may be utilized via other trading vehicle,

Also for consideration is the possibility of a double dip recession which could well effect all stocks including those in the precious metals sector, a conundrum that we are still wrestling with.

Stay on your toes these are treacherous waters and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more. 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.

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. (Winners of the GoldDrivers Stock Picking Competition 2007)

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Reader Comments (3)

YAMANA. To sell now is to ignore potential, Yamana might fall 5 dollars in a general meltdown of stock markets though I do not beleive this. But since "Money?" is flowing off the printing presses why should there be a general meltdown anyway? Secondly it will not be forgotten how quickly gold recovered after the last general retreat of stock markets and that lesson will influence gold prices this time. If gold heads for $2000 an ounce and FWIW I think that it is going much higher then the potential price for Yamana is beyond $60. Cannot say if this will happen ofcourse but if you weigh the possible loss of $5 per share againts a possibly much larger potential on the upside then what sense does it make to sell Yamana or any other gold stock now? Ofcourse the choice is yours but this may be a case of trying to be too clever. Roger.

August 12, 2010 | Unregistered CommenterRoger Levinson


We agree with most of what you are saying in terms of what the future holds. However, we are looking to get the best bang for our buck and having studied our portfolio we have decided to make what is a fairly dramatic departure from our usual way of operating. As you know we are not 5%, 10% or 15% in the PMs sector, we are totally into the PMS and intend to remain that way for some time to come.

We differ on the vehicles to use, so from time to time its our intention to plot the progress of those stocks that we have sold against our latest moves to see just how it works out.

Bring on the fall....

August 12, 2010 | Unregistered CommenterGold Prices

In the current economy, with deflation more of a threat than deflation, I would be careful about investing too much in gold. Still, it is good to have a little bit in your portfolio from a diversification perspective.

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