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Wednesday
Aug092006

Agnico Eagle Gold Mines Ltd: The Bet!

While helicopter Ben groomed himself for stardom we had a small wager on an upward move for Agnico Eagle based on a rate freeze.

The rational being that the rates would not be changed, the dollar would weaken, gold would rise and Agnico Eagle would rise with it. As we said in yesterdays article, any vehicle could have been chosen and some would have generated more cash than others. However, in the event of getting it wrong we would be left holding Agnico’s stock, which is just fine and dandy with us. We are of the opinion that this stock represents terrific value at the moment so for us there is downside.

However, the objective was to win and make a few bucks in what has become the doldrums for trading every single month. And you know our feelings on this issue.

Back to bet. We bought yesterday for $36.94. We then watched the price disintegrate as gold prices weakened. At times like this you tend to think that Day Trading is not for us, but we like the stock and did not take a large position.

All we can do is wait and do some research on other mining investments that might be worthy of our future investments. We do have a large watch list we is constantly under scrutiny and re-evaluation. When we think that we have a winner we will most certainly publish it on this site.

The news comes through that the rate will remain unchanged, the first time for numerous months although it was not that hard to predict. The next day gold starts on the path north and Agnico Eagle which was a lot less that we paid for it starts its recovery;

GO Eagle GO!

Eagle moves up and we are now at break-even point, phew! This stock keeps on rising to $37.32, a rise of $0.38, be patient! Something we need to practice. The rise continues and shows a gain of about $0.47, yippee, however gold bangs its head on the $650 ceiling, meets resistance and starts to fall. The stock drops with it, we decide to sell at $37.28, may be too early but with a little profit of $0.34.

So we made a few bucks and had a little excitement in the doldrums to boot. No doubt there are better ways to do this, but, for us this move had no downside and as Warren Buffett once said, “the most important thing in investment is not to lose money”

So back to the big picture, hope you enjoyed the ride.

09 August 2006
Tuesday
Aug082006

Agnico Eagle Mines Ltd: Fancy a quick bet?

Our bet is that the Fed will hold interest rates today, with a subsequent rise in the gold prices, which will push the gold mining stocks higher.

EagleLogo2

Betting is not our particular thing, however, if we were betting people then today we would be looking for a way to take advantage of the FOMC meeting.

Whether you use spread betting, options, and futures or buy a gold mining stock likely to respond to a Fed decision is your choice.

As we are more interested in investment than straight out gambling we would shy away from betting as such. However, investment is a bit of a gamble anyway so we thought that we would take a quick look at it.

It’s a punt but we think that the rates will remain unchanged, even if they go up the market commentators will probably say that this is the last rise for some time so it is still positive for gold.

If you want the leverage that derivatives can offer along with the excitement and all that sweating, then that’s up to you. Being a little conservative in our thinking we would tend to opt for buying a mining stock at the opening today, say Agnico Eagle (or one of your favourites) and hold it for a day or so to allow the rate news to hit the media. With ‘in and out’ costs being comparatively cheap it won’t take much of a rise in gold to move Agnico and cover your costs. So, if you but 1000 shares in the stock and get a $0.50 rise, then you have made $500.0 less commission. If the stock goes up $1.0, then you have made a $1000.0.

Agnico closed at $37.20 yesterday I will report back tomorrow on how the bet progressed.

Don’t go crazy with this sort of move, only put down what you can afford to lose.

The downside is that we are wrong and gold falls taking Agnico with it. As we are accumulating this stock it is not a problem for us to hold it, but we will have lost the bet, technically speaking.

Good luck!

08 August 2006
Monday
Aug072006

BARRICK GOLD CORP: Not for us

Stock performance is about comparison and compared to some of the mid caps Barrick Gold Corp lacks glitter.

Barrick has a Market Cap of $27 Billion, a real heavy weight in the gold mining sector. But does it punch its weight? Is big automatically beautiful? We have watched this company for some time and as an investment it is making money. But, in terms of percentage gains, the mid caps are more appealing to us.

For example, lets compare Barrick's performance over the last 12 months with Agnico Eagle and Kinross:

Barrick August 2005 $26, August 2006 $32, a 23% rise.

Agnico August 2005 $15, August 2006 $37, a 146% rise.

Kinross August 2005 $6, August 2006 $12, 100% rise.

In terms of growth 23% in 12 months is very good, but this is a gold bull market! Who knows how long it will last? We need to be positioned to ride this bull well and that means we have to choose those gold mining stocks that are capable of decent acceleration.

The purchase of NOVAGOLD RESOURCES INC may help the cause, if they get it? However, Barrick are miners who have hedged their production in the past and this strategy reduces your exposure to the movement of gold prices. As a policy we prefer to invest in unhedged mining stocks.

We will continue to observe with interest but for now we think that we can find more interesting gold plays elsewhere.




NOVAGOLD RESOURCES INC can be found under the symbol NG trading on the AMEX, and BARRICK GOLD CORP can be found under the symbol ABX, trading on the NYSE.

07 August 2006
Saturday
Aug052006

Kinross Gold Corporation: Update 05 August 2006

Kinross Gold Corp beat most analysts’ expectations by announcing record second-quarter earnings.

Base in Toronto this gold mining company generated profits of $65.6 million or 19 cents a share up from a loss of $16.4 million.

An average realized gold price of $625 an ounce pushed profits up by 48% to $252.3 million. The company said it remains on schedule to produce about 1.44 million gold equivalent ounces for 2006.

Looking forward to 2008 the company said the Paracatu project would start up in then and is expected to produce about 557,000 ounces of gold a year from 2009 through 2013.

We are pleased with this purchase and will follow its progress closely as we expect their ambition coupled with the coming increase in gold prices to push this mining stock right through the ceiling. If you haven’t already made an investment in this stock then don’t leave it to late, there may not be many more ‘dips’ to buy in to.

05 August 2006
Saturday
Aug052006

Silverado Gold Mines Ltd: Gold Update 05 August 2006

In a recent press release Silverado stated that over $1,000,000 of large jewellery grade gold and collector's nuggets have been recovered and polished for sale.

SilveradoGold

The gold recovery and processing operations at the Nolan Gold Mine, Alaska, is almost complete. The infrastructure necessary for gold recovery during the next season is now in place.

As we all know it takes time to establish a mining operation and we need to be patient. Once production increases then all the world will want a piece of the action, the stock price will be considerably higher than it is now with the opportunity to be first in and best dressed will have already gone.

Last winter Silverado mined only 25% of the gold bearing gravel in the Swede channel, leaving the remaining 75% of the gold ore for this winter's operation.

In addition to the Swede Channel, they have located other gold channels, which cause gold to accumulate on ancient hillside "benches" as the channels drain gold down the mountain from its source, these are still to be exploited.

We bought in at eight cents and will take this opportunity to buy again as Silverado is trading around six to seven cents. For the purposes of measuring our performance we will use the eight-cent price, as we believe it is only fair to do so.

05 August 2006





Saturday
Aug052006

Silverado Gold Mines Ltd: Green Fuel Update

Buried in a recent press release regarding Silverado’s progress, the President and CEO, Garry Anselmo, give us a green fuel clue. He said that the company continues to move forward and that a lot of the ‘behind-the-scenes’ activity had been completed on the LRCW Fuel project. By this, he is referring to the on-going negotiations with various government departments, which really is good news.

The little gem in what he said was his reference to a very exciting announcement either in August or September. We don’t have any further information at the moment but we would guess that it could mean some sort of government aid may be in the form of funding. This is just a guess on our part. However, it does make sense to us. Why would the United States want to be reliant on oil? Oil is supplied in the main, by the Russians and the Middle Eastern countries, how reliable is it? Would it not be better to be dependant on your own resources? Geopolitically, alternative fuels such a green, clean fuel at $15.0 per barrel approximately, has to be the way to go.

At a little over six cents a share it is well worth accumulating now.

05 August 2006.
Wednesday
Aug022006

BE BOLD: Buy and Hold Gold


As you know we prefer the gold mining stocks to holding the metal however, if you prefer to have the real deal in your hands then do it now. R.I.P. $500 gold.

We have to say that we extremely bullish on the yellow metal and gain more confidence with each day by our stocks performance.

This website leans towards those mining stocks that will be affected the most by any movement in gold prices. We tend to select those stocks, which do not forward sell their gold production, commonly known as hedging. An index of mainly unhedged stocks is collected together in the HUI index. Our objective is to outperform the HUI which means some of our stock picks will be riskier than most, although a few of them are constituent parts of the HUI. So, when deciding what to buy bear in mind that our selections could flop in a dramatic fashion or conversely put in a life changing performance.

At the moment we are looking for $850 plus by the year-end coupled with the gold mining sector playing catch up in a big way. News Year Eve will be champagne time.

However, when considering which asset class to invest in we are very bullish on silver and Uranium. Should you wish to read our opinion on these metals then just click on silver or uranium and you will see our sister websites.

02 August 2006.
Sunday
Jul302006

Portfolio Update 30 July 2006

We have now recommended eight stocks since June, so we are slowly building our position in the precious metals market. All of our analysis, ideas, predictions, thoughts, worries and actions are published on this site for all to see.

There are some commentators who are of the opinion that free information is worthless. This opinion assumes that cost equals value. It does not. It never has and never will. We as investors are constantly looking for under valued investments where the cost is less than the value we hope to obtain.

1. Agnico Eagle (AEM) we paid $30.88 and it now stands at $35.69, a rise of 15.58%, which represents terrific progress. It was interesting to observe how this stock was traded as it announced record quarterly earnings. Agnico rose, as the news release time got closer and then dropped about $1.50 when the news hit the wires. The old adage of ‘buy the rumour and sell the news’ was clearly demonstrated. However, come the next morning it looks like those same investors caught the jitters and bought back into Agnico as the stock price moved north once again. There is the opportunity to trade this gold mining stock on a short-term basis and we may suggest such strategies later on. But for now our strategy is to get into position before the next rally. Some eminent analysts are advising that we should wait until closer to the end of August for better gold prices and they may be correct. We however believe that we should be in this market now as the next move may catch us on the wrong side of the line.

Anyway what’s wrong with a 15% increase since the end of June?

2. Bema Corp (BGO) paid $4.56 and it now stands at $5.64, a rise of 23.68%, another terrific advance. Our investment is looking good with this mining stock and set to go further as gold prices improve.

3. Cambior (CBJ) we paid $2.61 and this stock closed at $3.02, a rise of 15.71%, this investment could turn out to be the pick of the bunch. It looked a little slow to start, but on Friday it gained 11.03% in a single day. This demonstrates to us the thinness of the gold mining sector. As savvy investors seek to protect their wealth by moving small percentages of their funds into gold stocks their demand forces up prices dramatically. If you are not into drama then don’t follow us.

4. Kinross (KGC) we acquired at $10.08 and this stock now stands at $11.54, a rise of 14.48%, was our leader, but now it has been overtaken, not to worry still a handsome gain.

5. Silverado (SLGLF) we bought at $0.08 and it now stands at $0.064 a fall of 20.0%. Back to planet earth with a bump. Silverado could languish here for a short time. However with a small amount of good news coming from the Nolan Heights project it could move up again very quickly. The green fuel side of the business could also do with a boost in terms of news, say about possible government grants, etc. We will have to sit on our hands for the moment.


6. US Gold Corp (USGL) we bought at $8.40 and it now stock stands at $8.00 a fall 4.76%, having experienced considerable volatility. We are still happy to hold and have every confidence in Rob McEwen, the company Chairman.

7. Hecla Mining (HL) we paid $5.27 on 05 July 2006 and it now stands at $5.35 an increase of 1.52%. Nothing else to say.

8. Taseko Mines Limited (TGB) we paid $2.78 for this mining company and it closed at $2.68, a fall of 3.6%. We will stick with this one as with all of the above.

If we placed an equal amount of money into each of these mining stocks then the overall gain is 5.31%.

Generally, we are really pleased with the current performance of our selection of eight mining stocks. Our philosophy is to be bold and buy and hold. If we have done our homework correctly and the fundamentals have not changed then there is no reason to run for the door.

We are confident that our approach will pay dividends and even if you do not buy any of the above make sure that you have some gold mining shares in your portfolio and enjoy the ride.

We welcome you to observe our portfolios performance and please do make comparisons between us and your current hero’s stock picks. Our knowledge is shared with you for free please enjoy it in a relaxed and calm manner.

Always discuss your investments with your regulated financial advisor before putting your hard earned money on the table.

30 July 2006
Friday
Jul282006

What if Gold’s current trend continues over the next 5 years?

Interesting. The graph below shows possible gold prices over the next five years, if the trend of the last twelve months continues.

goldtnext5yearsfollow12monthtrend


Taking the percentage that the gold price moved each month last year, and applying it to today’s gold price calculates a possible graph for next year. If one presumes that gold prices stay around $640, gold’s 50-day moving average, then this chart would be the outcome.

The graph shows that gold prices could be over $2000 at the end of 2011. This is equivalent to gold’s all time high in 1980, as adjusting $850 for today’s inflation gives around $2200. But adjusting $850 for inflation in 5 years time may prove to give a much greater figure.

However simply using the data from last year will not give a completely accurate predication. As with any bull market, this upward trend does not continue at a steady rate. The rate at which gold prices increase will itself increase as the bull market progresses. Therefore this graph is extremely conservative and gold is likely to move twice as fast as last year. This means that $1000 per ounce could be reached in 2007 and $2000 by 2009. In fact, gold could hit $5000/ounce in 2011. We will cover these predictions and the reasoning behind them in a future article.
Thursday
Jul272006

The Eagle Soars

Yesterday Agnico-Eagle Mines Limited reported record second quarter earnings of $37.1 million, or $0.32 per share. For the same period in 2005 it was $0.15 per share.
Earnings for the first six months of 2006 equates to $0.67 per share, three times more than the $0.27 per share, recorded in the first six months of 2005.

AgnicoLogo2

These are excellent results make no mistake about it. As we write the stock is trading at $35.64, up from $30.88 our purchase price when we bought about a month ago, as mentioned in the article entitled: Agnico Eagle Mines Limited.

This is a 15% plus rise in a very short time span.

We could be tempted to take a dollar or two off the table as it represents a nice months work. However, we bought it to get into position before the fall rally commences so we are sticking to our strategy and sitting on our stock. I doubt whether we will sell any of this stock before it has doubled, which we believe it will and in a very short time frame.

Something to ponder: A record low cash cost at LaRonde of minus $975 per ounce of gold. The costs being offset by the mining of other minerals.