Yamana Gold Incorporated: Bought Again!
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| Topic: Gold Mining Companies — July 14th, 2008
Today we acquired more of the stock of Yamana Gold Incorporated for an average price of $15.47 as gold gained $7.50 and silver gained $0.25. We analysed a number of stocks including Agnico-Eagle (AEM) and Kinross Gold Corporation (KGC) etc, but concluded that Yamana offered the greatest upside potential.
This purchase is in addition to the acquisition that we made on 11th July 2008 when we acquired Yamana for an average price of $14.95.
As we can see from the chart the technical indicators are just turning positive from low positions in their respective zones, which we view as being very positive for this stock. In general we regard buying on or below the 200dma (red line) as an entry point as the downside should be limited.
This acquisition is in keeping with our plan to deploy our opportunity cash over the summer months eventually achieving our target of being fully invested as the precious metals market sector takes off in the fall.
We were expecting more of a lacklustre summer season however with gold trading at $970/oz and silver trading at $19.10/oz our planned schedule of acquisitions has had to be accelerated.
We have also acquired more stock of the Pan American Silver Corporation (PAAS) and the Silver Wheaton Corporation (SLW) today, the details of which we will post on our silver-prices web site just as soon as time permits.
Have a sparkling day.
Yamana Gold Incorporated trades as AUY on the NYSE and as YRI in Toronto.
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When do you think slglf will come out with some more gold nugget pictures?
Comment by Andrew Lenoir — July 15, 2008 @ 1:54 pm
Did you consider buying either of the publicly traded warrants and if so why did you chose the common over them? I also have a position in Yamana but most of my holdings are via the warrants.
Comment by George Arthur — July 15, 2008 @ 3:36 pm
Andrew,
Silverado Gold Mines is big disappointment for us at the moment; they really need to come out with something good if they want to restore investor confidence.
Comment by Gold Prices — July 16, 2008 @ 3:31 am
George,
We did not look at the warrants, however a number of our readers are active in this area so maybe we will pay more attention to them in the future.
Would you like to tell us why you thought that they are a better buy than the shares – our readers would appreciate your insights.
Comment by Gold Prices — July 16, 2008 @ 3:34 am
Picked up just out of the money calls for SLW and AUY. I then put in sell orders for a 70% profit. This worked great on your last picks of PAAS and KGC. I am still in flight with the HL calls.
Great suggestion you gave of putting in the sell orders the day you buy the calls.
Comment by BC — July 16, 2008 @ 1:32 pm
I would look at the warrants because they give you a lot of leverage for the same amount invested. I would not consider buying the A wts now because they expire in Nov ‘08 but the C wts are exercisable until 2/17/10. If you wanted to invest $1,000 in Yamana you could purchase approx 67 shares. The C wts sell for around $3.35(which is approx the Black Sholes value so they are fairly priced) and each wt has an exercise price of $6 and you would get .543 YRI shares(all $ are CDN). So with a $1k investment you could purchase approx 299 wts which would allow you to ultimately own approx 162 shares. If for example in Feb ‘10 the price of Yamana had increased from roughly $15 to $20 you would own shares worth $1,333 while the owner of the warrants would upon exercise of the wts own shares worth $1,446(162 *$20)-(299*$6(exericise price)). So the purchaser of the shares would have a 33% return but the purchaser of the wts a 45% return. Of course, if the shares drop the wt holder would lose more but like you I think the price is going up not down.
Comment by george arthur — July 17, 2008 @ 4:19 pm
George,
Thanks for your insights they are very much appreciated.
Comment by Gold Prices — July 17, 2008 @ 10:05 pm