First and Last Word on Metals and Mining

Monday at PDAC is usually the busiest one and we didn’t find ourselves finishing the day until close to midnight. We had two productive meetings lasting a few hours and therefore didn’t have a lot of time to visit and report on companies during the day. In the meantime, gold has fallen to our pullback target of 1660-1680 this morning and we have been busy evaluating the situation. Subscribers have been kept up to speed on our short-term thinking about the gold market and so far we have been quite accurate. To summarize, we are looking at gold price action in the 1660-1680 range for signs of the next move. Our thinking is that gold should stage a second leg of a Spring rally from somewhere around this level and therefore we want to position ourselves by increasing our long exposure as well as gaining speculative exposure via call options, leveraged ETFs, etc.

Okay, here is a quick report on some companies we visited on Day 2 of PDAC.

Candente Copper — Walter Spagnuolo, IR, and John Foulkes, VP-Corp Dev, reminded us that the company has not been able to drill for 3 years but we are told they are close to having their permits and land agreements concluded. Over the past 3 years they have also conduct a significant amount of feasibility work and so if and when things are back on track they should be able to complete the studies in short order. In addition, they plan to go back and drill the second porphyry that was discovered in 2008. This could be even bigger than the 750 million tonne behemoth to the north but more importantly it appears to contain no arsenic.

Ethos Capital — The plan is to use reverse circulation drills to test a lot of ground in a hurry — one hole a day starting in May. There is little doubt some of these holes will come up with good gold values but the company is only using this phase of drilling for initial target. They will then come back with a core drill to target gold resources in the most prospective areas. Interestingly, these initial soil anomalies are all in the granodiorite (the rock package to the south of Kaminak’s Coffee discovery) but Ethos’ Betty property also has the same rocks as Coffee (a deformed, brecciated gneiss). Peter Tallman, COO, believes Ethos could potentially find the same style (and perhaps quantity) of gold mineralization in its gneiss as Kaminak has at Coffee … and indeed there are already some good gold in soil samples from this area.

Globex Mining — This company has so many projects that it is hard to focus on any two or three but Jack Stoch, President/CEO, did his best to explain why his company’s talc-magnesite deposit, Chibougamau land position, gold recovery process, high grade iron-manganese project and high grade Abitibi gold deposit can each easily justify the share price. We also went over the company’s new strategy of using spin-offs or share dividends to monetize the value of the company’s assets in lieu of the prospect generator or JV model.

Carpathian Gold — The company reps (who shall go nameless) to whom we spoke did not give us a good vibe at all. They continued talking to each other while we patiently waited right in front of them for a couple of minutes and then spent the time being defensive if not outright rude to our questions and concerns. These are not the kind of people you want in a booth at an investment conference. That said, Carpathian’s Rovina Valley project in Romania is the real deal and they are getting close to zero value for it. The rude duo who spoke to us claimed that the brokers will re-rate Carpathian once Gabriel Resources gets its permit to mine the Rosia Montana gold deposit to the north of Carpathian’s project. That’s likely to some extent but Carpathian will also need to pursue its own development and operational strategies in order to prove that the asset has a substantial value (which it indeed does).

Disclaimer: We don’t currently own any of the above companies with the exception of Ethos Capital and Carpathian Gold and we do not receive compensation for our reporting or commentaries from any party. This is not investment advice, which you should seek from a licensed investment professional.

About silverax

Tom has been told he is arrogant. Unfortunately only very strong medication will apparently chill him out, but he doesn't like to put things in his body that might dull his sharp mind. Which is like an ax. And no, he is not a Scientologist. He can, however, turn lead into silver by concentrating very hard. See picture for proof.
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39 Responses to PDAC 2012 Day 2Comment RSS Feed

  1. Leigh

    Hi guys, I’d appreciate a looksee into: Soltoro, Keegan, Lara, Cayden, Reservoir Minerals, and Eurasian… because all of these (ex Soltoro) are i think on the dip/bargain end of their price range … or they could have something wrong with them.

    (Another curiosity, how the heck can Pinetree Capital be buying shares in SO many miners when 90% of the miners on the Toronto are never going to have economic ore bodies or actual mines built.)

    • @Leigh

      That’s a long list — we looked at Soltoro again and found Pres. Andrew looking much closer at the types of things that would enable near-term development or sale (basically considering economics as well as size instead of just going for size as my impressive was meeting with him in SF in Nov). So I think we may consider looking at this closer again … expansion potential looks good and really all they need to achieve is 50-60 million ounces at a higher cutoff with avg. resource grade say near 2.5 – 3.0 opt silver, which for open pit with the good metallurgy would be a mining hurdle that makes project quite attractive to a producer looking for a 5 million ounce per year production profile with an initial 10 year mine life (CDE has a strategic investment in the company).

      We looked at Keegan but frankly at this stage it doesn’t look like they can do anything really big to optimize or make the mine economics much better, which is where I would see the near-term lift in value. Contrast with Orezone that is now going back to looking at the oxides in the saprolite as a stage one of a two stage operation that would see a mill and flotation developed only later in mine life and ideally mostly from heap leach cash flow. That could make economics look much more attractive.

      Also looked at Cayden and my sense is they have a very attractive target at La Magnetita — so much so that they should stop messing around with the small sliver of claims that purportedly connect Goldcorp’s Los Files and El Bermejal mines and instead drill this third magnetic structure as their top priority … in my opinion only of course. Interestingly, I mentioned this structure to Brent Cook who did not seem familiar with it (he did know about the drilling between Los Filos and El Bermejal and agreed that it was not of substantial interest what they find there because it isn’t going to be large given the small sliver of land they hold in that area) — my guess is that he may look at it closer and we’ll see if he comes to a similar conclusion that it might be as prospective as I think. Brent has spent a lot of time in southern Mexico and Central America so he is extremely familiar with the types of systems that can generate major gold deposits in this geological setting (thus his confidence with something like Almaden). Also spoke with Dan McCoy the chief geologist for Cayden and we discussed a few ideas about the regional geology in this south Guerrero gold belt.

  2. 31Floors

    Tom,

    I used to own DNT before Walter S was the IR so I met him and he comes across really well. Most IR guys are really passive but I recall him as someone I’d want to represent my company.

    I guess the question on Globex is whether Stochs said enough to have you take a closer look. The stock is just dead in the water here caught in the malaise of micro cap mining companies, but with so much (and I know this is a dirty word) value here, at 25m FD and an $31m FD market cap.

    As the strategy of spinning out companies take place it’s inevitable that street attention and coverage will come with IPOs including attention to the mother ship. I’d be really interested on your take of the refractory gold processes and their plans for that interesting project. :)

    Thanks for all the reports from pdac!

    • @31Floors

      Walter did get our name from a subscriber and asked if we could stop by the booth to get an update … it was worthwhile as we learned a few details and what to look for on the project going forward. Even before street attention, Jack and Globex will need to build up some capital market gravitas and get some financial/banking types to look at the assets…on the refractory gold they are working on at least one project where they could test it but I was not able to learn much of the nitty gritty details — he is holding it quite close to chest.

  3. Dave

    hi
    Thanks for the various comments.
    Re GMX – no price uplift on the talc PEA, hardly a pop even. Did you talk about near-term share price uplift at all?

    • @Dave

      No since that is outside the control of management. We did speak about the plans to spin off the project and fund it with about $50 million to advance toward production at a 100,000tpy talc-only flotation plant that could be used for testing the product with large paint and plastics manufacturers. Very interesting stories here but execution and strategy are key to unlocking the value.

  4. 31Floors

    Dave,

    I only came across this company at the Cambridge event in January so I have not followed it for long. At that event he told me the talc-magnesite (TTM project) PEA would come out before PDAC. The Monday before pdac I was thinking ‘what’s new the co would be late’ so I sent an email to IR asking if we would get the PEA before pdac or bust and also what the PEA would do to the share price.

    I received an email from Stochs telling me the 4 or 5 requirements that are involved prior to being able to release a PEA and did not confirm one way or the other the timing for the PEA. He told me that if TTM was a gold property the market would know how to react, but for TTM the market doesn’t get what TTM is about.

    My thoughts were ‘ok, no problem, the co will not release results before pdac’ and secondly ‘Jack is pretty good to not throw out a price target’. And of corsev

  5. 31Floors

    Oops hit the post button in error- anyway – I was impressed that we did get the PEA as promised but moreso I like the way he answered the question. Technical and professional. As part of my previous DD, as i didn’t know what the heck TTM was all about so I went to a US Geological report and I didn’t see any increases in demand and it didn’t seem to be consistent with what Roskill’s comments were in the TTM presentation. Stochs said Roskill’s was one of the two top companies best qualified to write up the report that they did for gmx in evaluating the market, and their market is BRIGHT talc and not the general talc market as reported by the USGS

    The other thing is that they have had discussions with a very significant European industrial metals company and this company had recently done a study of 50 industrial metals they wanted to prioritize and 2 of the 8 were bright talc and magnesite! On the PEA I noticed that the 20% IRR was after tax and correct me if I’m wrong but the PEA results I usually read screaming 30% IRR are usually before tax.

    There is some industrial metals conference they go to each year. And that is coming up. Maybe that will spark some interest as well as opening up potential partnering and financing opportunities. Per the last nr of the LOL 41 nr’s issued by GMX in 2011 they announced an agreement with STockhouse so we might see some short term pop from that as well. Don’t buy gmx if you can’t stand NRs, it’ll drive you nuts.

    Tom, I would like to know if you visited with Fortuna FVI, RIO Rio Alto both companies I’ve owned since 2009. As well as GPD golden predator a more recent buy. Thanks in advance!

    • @31Floors

      Thanks for extra info on Globex — did visit Fortuna but there is nothing to report, they are doing well and doing what they said they would. Did not visit Rio Alto but that has done so well that it is tempting fate not to take some profits. Did not talk with any higher ups at Golden Predator so nothing that useful was gleaned other than their exploration people do own shares and options and would have also preferred the company sell the royalties instead of keep diluting to raise money.

  6. Bart

    I thought GMA.V was going to crank up the Promo machine at PDAC..

    Guess they didn’t get the memo.

    • forwill

      @Bart

      Yeah, the REE fire ignited by the MCP/NEM merge news made GMA out to be the red headed stepchild of the group.

    • @Bart

      There are some large sellers (supposedly the original company founders but could also be some of the people in Quebec to whom they pumped the stock early on) who are going to hit every uptick it seems until they are done and out of ammo. Simon and the new chairman met with them in February and they indicated that being a’holes was the way they planned to remain, so it is a matter of the market working through this inventory. The frustrating part is that Simon can’t seem to find a large supporter who is willing to absorb this open market supply. They are all greedy bastards who want cheap shares in a PP with a warrant. Personally I wouldn’t let anybody into a deal I was doing unless they were also buying the stock on the open market where it actually matters for the share price. Then again, when you need money is not the best time to act like a prima donna…

  7. 31Floors

    LSG’s recent news release contains this:

    “At current market prices2, potential for total undiscounted cash flow of $1.14 billion, pre-tax net present value (“NPV”) of $880 million (5% discount rate) and a payback period of 1.25 years

    At analyst consensus pricing3, potential undiscounted cash flow of $730 million, a pre-tax NPV of $570 million (5% discount rate), with payback period of 1.25 years”

    Isn’t it rather shameless to present numbers on an un-discounted basis and NPV and payback on a pre tax basis? I guess that’s A ok if there are no taxes to pay and no cost of capital but I don’t appreciate a management that reports like this.

    • @31Floors

      That depends — post tax is useful for demonstrating earnings power but pre-tax is fine for comparative valuation (projects in different jurisdictions will have different taxes and also companies themselves can have different tax rates). It’s not too difficult to deduct 30% from the pretax number so this isn’t something that gets me too worked up.

  8. Mike

    Did you meet anyone from Lydian at the conference?

  9. 31Floors

    I’ve been following Norcini since 2006 or so, when I came across a former FX trader from whom I learnt so much from. What kind of guy could make a 70% + return on ONE stock in 2008 (not a misprint) and to do it with TIMMINCO? I followed him every step of the way, this is legit. As for my 2008 results, I’d rather not say, assuming Tom and David would want to keep this a family friendly website! I have NO interest in wanting to trade like him; but I would like to think that I improved my overall ability to THINK about the markets and to have more belief and self confidence from my studied conclusions – and fwiw I put in tons of hours reading and reading some more.

    That type of market touch and guts displayed by successful traders is extremely rare and it was a privilege to pick his brains for a few years. I could never do what he did, not even close. No false modesty, this is the truth. I got a glance into that way he thinks. He had a lot of time for traders that “traded to put food on the table” and in the public forum, Norcini was a favorite (and called Sinclair ‘the best’).

    I remember how he was doing somersaults when that former Vice Chair of a Big Five Canadian bank (and Order of Canada receipient) retired and left with a glowing endorsement of gold in a speech to a capital markets clients and industry bigwigs – he called that guy one of Canada’s best traders and was additional confirmation that gold was going to go much, much higher. Here’s Norcini food for thought, we shall see if Dan has this right or not.

    http://www.traderdannorcini.blogspot.ca/2012/03/hui-deeply-oversold-and-nearing-support.html

    Reflecting on the pathetic volumes that I’ve seen with Globex, I can only shake my head regarding the apathy that I’ve seen as reflected in the volumes!! Retail speculators and investors alike find COMFORT in buying plays that are pushed by experts that are ONE NR AWAY from a huge hair cut.

    And in this market the utopia results might get you a 5% gain, whereas the disappointment can knock off 30% in a day, rational or not! I don’t begrudge that and every play has its merits and some will give you that home run. I love the deep value and diversity of assets including home run potentials, in short IMO anyway a no brainer.

    In terms of the apathy, I think that some people’s investing truism of “don’t average down on your losers” is total B.S. I’m rather shocked that we don’t seem to have any buying here which means those that should know better ?? aren’t averaging down. I should disclose that this is by far my largest investment, so I have a built in BIAS – AND MAY BE WRONG so I know you’ll do your own complete DD. One step at a time, but I’m thinking 2 to 3 years out the returns from getting in now when no one knows about Globex much less cares could be ….

  10. 31Floors

    I want to stress one thing. I am not sure if I am qualified to carry that former trader’s lunch kit. He should wake up every morning kissing the ground and mumble that he didn’t lose his bloody shirt on Timminco, and while he was good even he constantly talked about his ally, LUCK. Never, ever, ever, ever even think about doing a darn fool thing like he did. I think if I were to repost the previous message it would be to say in my mind at least, I think I might be able to follow my own ideas of being able to do DD on a company and make a big bet without relying on one of the experts I follow endorsing the company first. I certainly would never bet the farm on any one company including Globex- being so over leveraged in the precious metal sector is more than enough risk already. The arguments put forth by Sprott and Sinclair seem to invoke a divine right and I know of no such divine right. Or that i would be able to gut out the most egregious of precious metals manipulations and not lose my shirt the old fashioned human (bad for making money in the stock market) psychology way! Good, glad I got that clarified and now be good boys and run along and do your own DD on whatever you want to look at because I’m certainly not a mining expert, just an anonymous poster trying to make a buck!

  11. Thanks 31Floors, lots of food for thought. on trading and markets.

    I don’t doubt Dan Norcini’s trading prowess or feel for the markets but frankly his bias for a higher gold price and manipulation theories makes his work less useful, not more so. It is an absolute fact that gold might be a solid ultra long term holding even just as a portfolio diversifier but gold stocks (as a group at least) are simply one of the most horrible things you could own beyond the up cycle. At some point in the future, gold stocks will again sell for next to nothing with the HUI probably going back under 100 (at least in real terms). The problem with Jim Sinclair is that he will never discuss this absolute truth with his readers since he is the president of a gold company.

    I think with a Globex a lot depends on how the management approaches its strategy…I’m not sure prospect generating is going to make the big bucks but it has and probably will keep dilution to a minimum and that is half the battle. I need to look closer at the assets they have to get a feel for the value possibilities — certainly something as “boring” as the talc-magnesite project can be worth a lot of money under the right circumstances and if marketed with the right strategy and the right timing. But it can be easy to screw it up as well. Bottom line, you can’t just look at a list of assets and determine that a company will be successful and the share price is going much higher, you actually have to create and implement a solid strategy to monetize the value. That strategy must be flexible and include a Plan B (and C and D). Very valuable assets have been squandered by companies in the past when bad, inflexible strategies were pursued, and there are many companies today that will end up squandering assets for the same reason. The real upside I see with Globex is therefore not necessarily the assets but coming up with great plans to extract value from them (given that Globex is clearly not going to be mining anything themselves).

    It should be noted that we like what we’ve seen so far sufficiently to want to spend more time looking at both the assets and strategies … can’t say that for many companies (the ones you can are the same companies we consider “Peerless” for the most part).

  12. 31Floors

    “I don’t doubt Dan Norcini’s trading prowess or feel for the markets but frankly his bias for a higher gold price and manipulation theories makes his work less useful, not more so.”

    31: I actually believe that the financial heft of the commercial banks provide them with a great ability to influence the price of anything that is traded, and to influence it in a way to make themselves money. But as we’re talking precious metals, I’ll just come out and say that. Some people call it manipulation, I think that is semantics and it is what it is. IMO.

    “… but gold stocks (as a group at least) are simply one of the most horrible things you could own beyond the up cycle. At some point in the future, gold stocks will again sell for next to nothing with the HUI probably going back under 100 (at least in real terms).”

    31: Tom, that’s a pretty bold statement. I don’t see it trading at 100 ever, I’ll even give you 200. If it goes under 200 i think it would be one of those incredible liquidity events.

    “The problem with Jim Sinclair is that he will never discuss this absolute truth with his readers since he is the president of a gold company.”

    31: Totally agree with you there. Like everybody else they talk their book. He has religious fervor added to it and he isn’t the only one.

    On GMX, this holding has gone a long way to why I’m still up for the year despite being about 90% invested until just this week. (Risk mgt). Best of luck in looking at that company. I totally agree with your comments on GMX strategy being so key and so many companies squandering the opportunity. GMX has a senior Centerra guy on their board and I believe they are smart enough to know they need help on another level, a capital markets level to achieve their objectives. Good proven, experienced help.

    I’ve done a lot of DD on TTM and it is absolutely not boring in my mind. On the contrary, it seems to have the goods, now… how will this great opportunity come together …. that is to be answered. To think they purchased that property for less than the price of a volkswagon during a bankruptcy sale of a gold asset is remarkable.

    Yup I agree totally with your comments on the road forward for GMX and its shareholders. We know J and D are the biggest shareholders. They aren’t getting any younger and they are darn smart enough to know their time is coming up to reward the shareholders. That is a constant theme when I’ve communicated with Jack and I don’t doubt for a minute his sincerity. Like your CA designation by the way. ;) Have a great day!

    • @31Floors

      CA designation? Don’t have that, don’t want it. If I had something it would be CPA but opted not to get that.

      Regarding commercial bank ability to manipulate markets due to size, clearly that is true. But the point is that they will manipulate it whichever way they think they can make money, screw the Fed, so you can’t base a suppression conspiracy on that true premise.

  13. 31Floors

    At some point I suspect that PDAC Day 2 will disappear from the front pages of the MA site. I’ll continue to make entries in respect to this company in the future by going in from the Company Index. Just like I am doing now as a matter of fact, so that I don’t purposely make this into a Globex forum vs. a forum for discussion about other PDAC ‘day 2′ companies. Sorry to those not interested in being so piggy! But I’m posting in the company index!! Anyway the stockhouse coverage I was waiting for was a POS and a waste of time waiting. Now here’s an interview that does justice to GMX and my ridiculing of a 24.8m x $1.18 = $29m fully diluted market cap. There’s an industrial metals conference in Austria coming up (in May 2012) that Stochs has attended in the past and should be going again this year. Looking forward to what might happen there.

    http://smallcaps.us/transcripts/GMX_Interview1.pdf

    By the way Tom or David, why are some of the peerless companies indicated in blue but not some others? I can see how the peerless standard is going to be easy to use and so practical for users!

    • @31Floors

      What did the Stockhouse coverage consist of?

      A Peerless company shown in blue is also an institutional subscriber of Metal Augmentor. Beyond the obvious benefit of gaining access to all our premium content so that the company can see exactly what we’re writing about them and provide any feedback they like, they also get the more prominent display in the index (blue), rotating logo display on homepage, a commitment from us to maintain their page and review their news, help creating custom charts, etc. We’re optimistic that for the price we’re asking almost all the companies identified as Peerless will join as subscribers, in which case it will really just be a question of Peerless vs Non-Peerless.

  14. 31Floors

    Hi Zurbo,

    I don’t know what the total SH package consists of. I had seen a GMX banner at one point and more recently this write up came out, which gets a yawn from me. I didn’t know what to expect, but I just thought the depth of this coverage was quite lame as compared to the Dec 2011 write up / interview. I don’t want to diss SH too too much, they provide a free forum for people to express their views. They do it at no cost. Business is tough all around and margins are tight for every type of business. But the SH site is frequently and justifiably dissed for so much that is bad – for tolerating idiot posters, for gltichy software upgrades etc. So it is always fighting the credibility game and so to be the source of investable materials seems to be a bit of a tough sell to begin with??? I don’t know if that is fair, but I don’t really find myself going to SH as a go to source of research, personally.

    http://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=GMX&t=LIST&m=30914645&l=0&pd=0&r=0&msg=3

    I really love the personal attention one gets as a subscriber. I’m extremely pleased to be a founding member and I find it almost too good to be true that this was still available when I joined up (and folks, no I’m not on the payroll of MA in any shape or form!!). I believe yours to be a rather unique model in terms of the accessibility to the general public to your research and commentary. But I wonder and I’m sure others also about how you can be an expert on so many companies without spreading yourself too thin. How do you keep up on quality control? How can you manage so many things at once?!

    • @31Floors

      Thanks for the adulation, we hope to continue living up to it! Do note though that we are able to still offer “founding member” attention to new subscribers because this horrible market has kept the subscriber base “manageable” — we obviously hope this will not remain the case for very long and in fact we are already starting to program the website to be able to distinguish Founding Members (all of you at this point) from just plain ol’ subscribers (those thousands of investors who have yet to realize the value we provide).

      But seriously, the way we are able to cover all this territory and not get spread too thin (though it can get thin at times) is by prioritizing and making everything that we do useful in a multi-faceted manner (for example, we also invest our own money using the same ideas we share with subscribers). Indeed, the whole point of the MA website and its organization is to make information accessible and relevant (and yes it remains a major work in progress — some of the original ideas we initially came up with in 2006 and 2007 are just now being implemented!). The other way is that zurbo and I have basically sacrificed our careers in the corporate world to do something that we feel will eventually pay off with better success … even though it has come at great personal and financial cost in the short term. In other words, this is basically entrepreneurialism and thus requires tremendous time and effort to make it work. Later we hope to hire analysts and researchers to help with the workload but for now it is a boutique shop … what you see is what you get.

  15. 31Floors

    Does anyone have a cool $50 million looking for a home? A world class talc / magnesite project is looking for YOU!

    http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120417&archive=ccnm&slug=201204170782944001

  16. 31Floors

    I was wondering what caused RPG to pop and this might have helped cause the 2 cent bubble:

    http://www.stockhouse.com/Columnists/2011/Mar/23/Huge-upside-alternative-for-energy-speculators

    But now we pop down to earth again. On John Maudlin I like him because for one, he’s a gentleman. Its surprising how much i find courtesy and decency to be an important and defining characteristic in my impressions of people; surprising in that it seems a lot of people don’t mind sounding like Pr*cks these days in their writings.

  17. 31Floors

    Because I brought it up, Anyone wanting to look at RPG needs to get comfortable with Nicaragua and the discussion there in regard to nationalization of electricity producing assets. I have no knowledge or background in it but a quick google shows plenty of writings about hydro electric and geothermal plants. Some geo thermal assets were formerly government owned and then privatized ‘cheap’. I have absolutely NO knowledge about how this affects or doesn’t affect RPG. But let’s put it this way I’d be more comfortable if those assets were in Peru, Mexico or California! When I take a big position I’ll DD it in a lot of depth – or as best I can I should say – but I also have some really small play positions where I don’t DD in depth and rely on the ‘experts’ who are flogging their picks, do an overview, charts etc. but don’t read the MD&A, etc.; and RPG is one of them. Of course all the DD in the world doesn’t make for guarantees unfortunately!

    • forwill

      @31Floors

      Thanks for your insightful posts. Keep ‘em coming.

  18. 31Floors

    I see that GMX is doing a placement. I’ve taken some GMX off the table because I couldn’t justify not doing so within my portfolio. After selling out my second and third largest positions and w/ GPD in the crapper, it didn’t make sense to have so much in GMX relative to the rest of my portfolio – another way of putting this is that while the market tanked over the past 3 months, GMX’s tanking had taken place earlier and GMX has been a wonderful holding!!

    One of the ways I funded GMX was to sell my AVR at $1.53, a stock that has since sunk to .50. To be honest the list of stocks I sold are all down significantly and much more than GMX. Anyway, just a comment that Stochs has been a consistent purchaser of shares since the day I stumbled across it. GMX remains my largest holding but I just own less of it and a few more of those beaten down high fliers.

    I’m holding 20% cash (which has been a bit on the high side for me on average) and my loss is a pretty comfortable single digit one YTD as I thank my lucky stars.

  19. 31Floors

    Two weeks ago I felt the worse fear since March 2009, for my portfolio. Read that R.R. Had capitulated on gold stocks, which strck me as strangely bullish – but that feeling I couldn’t shake that weekend. But I just held and didn’t buy or sell anything. I should have been buying, the RSI oversold was the second worse in 100 years and just maybe this could be the beginning of a new bull market.

    http://talkdigitalnetwork.com/2012/05/gold-drops-miners-pop/

    • forwill

      @31Floors

      The last few trading days have been positive for sure, but it has only been a few days. For the first time in several months I was able to lighten my most overweight long position( from serial averaging down over many moons) without taking a shellacking. It was ATAC and I had doubled my holdings(again) only about 3 weeks ago.
      I don’t remember if it was Thursday or Friday where gold went into a mini waterfall selloff and the US traded bellwether shares on one of my watchlists were unaffected. It was sureal. I’m doing everything I can mentally to make sure I don’t let these stocks ruin my mood for consecutive summers.

  20. 31Floors

    Hi forwill,

    That doubling down, doubling down sounds extremely risky to me. I play a simple mind game that makes it a lot easier to sell losers if I think that is what I should do but find it tough psychologically (a big hit). I look at something else that I’d rather be in and just pretend that I bought that one instead of my dog at the time I bought my dog. Or better yet I compare it to something that has fallen more and it makes it easier still. I use that to take the loss or a partial loss on the one I own and at least I’m not putting so many eggs on something that might blow my pf out of the sky.

    Recently one of the guys I follow wrote about how he doesn’t like to do comparative analysis and would prefer analyzing each co. on its own merits. I wonder if I’m missing something in my interpretation because to me relative comparisons are very useful. Even if it means using one’s imagination to make taking a loss a little easier to swallow.

    Yes I had a rotten 2011 as well, and we weren’t the only ones.

  21. Giuseppe

    31Floors :I see that GMX is doing a placement. I’ve taken some GMX off the table because I couldn’t justify not doing so within my portfolio. … , it didn’t make sense to have so much in GMX relative to the rest of my portfolio – One of the ways I funded GMX was to sell my AVR at $1.53, a stock that has since sunk to .50. … my loss is a pretty comfortable single digit one YTD as I thank my lucky stars.

    Hi 31F,
    let me begin saying you have done a great job with such a small loss in 2012 (maybe you are now even in positive territory) I cannot say the same thing. Then 2 more things

    1) about GMX, next time you want to sell a few you may want to contact me before, find my email on the truccofinanza.it website (I know MA bosses do not like publishing private mails), as I have difficulties to buy and you may have to sell as well because of bid-ask huge spread.

    2) about AVR I’m curious to know if you are now tempted to get back in, since I’ve bought a few at .5 after the collapse and would like to know your opinion to decide if I would be better to take profit at .6 or not.

  22. 31Floors

    Hi Giuseppe,

    Thanks for the compliment and no I am certainly not in the positive territory! Thanks also for the offer, interesting & very impressive looking website to be sure – not that I can read italian. :)

    I did some re-balancing and I’m not looking to sell more GMX thanks. As a shareholder, I’m glad you’re interested. I’m going to keep it my largest holding and be as patient as I can. But I’ll have my eyes open too. Did you catch the corporate update? I love it, what a no BS straight shooter Jack is! Let’s hope good things do happen to good people from to time!

    Regarding AVR, no one knows if it will see .60 before .50 or .70 before .35. I have always had in my head that I don’t want to own a stock where one NR can wreck my day. I don’t know if that NR has already happened or if it will get worse for AVR. I don’t follow it at all so I’ll resist the temptation to call it a decent speculation just because it is so beat up. To answer your question, I’m simply not interested in AVR any longer. Good luck w/ it.

    I’m trying to not catch knives or buy the most beaten up stocks, which tend to be the most speculative. I’m trying to just focus on safer jurisdictions where geopolitics don’t wreck my day and try to improve the overall quality of the portfolio. Stocks like Allied Nevada and Rio Alto; New Gold is a recent addition as well. RIO has been a core holding since the 09 crash and I’m flat on NGD and ANV, which I think is a lot better quality than some land in Colombia w/ a few holes in it. I prefer PVG for a company w/ property and a few holes in it and I took the opportunity to pick some of that up too. GPD is my poison, this is the one where I’m a hypocrite and yet keep buying lower, and have the big red brackets to prove it!

  23. 31Floors

    Guiseppe,

    One last thing, I really like Globex and GPD and a few of the others that I own, but I’m not in love with any of them, Globex included. I would like to exercise patience and discipline in view of the value; but there’s a time for patience and there’s a time for gut and sometimes the gut doesn’t call for patience! We’ll see… I really like a no. of the things they have esp Eco Refractory. Doesn’t sound like anything imminent there. :) Good luck and feel free to share your thoughts on the markets or what you’re up to.

    31Floors

    • Giuseppe

      Hi 31F, thanks for your comments, they enrich our MA community. I see you are a wise investor and I envy your discipline that allows you to limit losses in current environments. I watched at Allied Nevada, it is going to have about 50% silver exposure, like MUX, would be great to see them compared in the next mid-tier silver producers update or in the next gold mid-tier article that many subscribers are waiting for. I see ANV is not even down 50% from the max, so I am inclined to think it is not cheap enough :-) and that is the kind of wrong approach that has me performing worse than you. I’m glad my webmaster has done a good job with the look of the website, only the contents are very poor unfortunately: I am not supposed to teach anything to anyone, but I thought it was a pity that not a single website in Italian existed about PMs and mining companies so I am trying to do my best.

  24. 31Floors

    Hi Guiseppe,

    Sometimes I feel wise but many times I wonder if I’ve learnt a darn thing. Many of you could do circles around me in the markets; I just have the simple approach of being passionate about the markets, being a financial news junkie and following the cliche of trying to learn (a lot) each day. Once I get home from work and on the weekends, I’m always thinking…. Its a nice respite and a form of relaxation, I call it my serious hobby. Sometimes all this thinking about the markets helps, sometimes it hurts. Over time and w/ experience and the approaches I take, I just hope that it helps more than hurts. I try to follow the best and to avoid the rest, a saying that I picked up from someone a long time ago.

    The greatest artisans in history didn’t pick up a hammer and chisel, a paint brush and do their great works. They started at the bottom and more often than not I bet they learnt under the tutelage of teachers or even the masters of their time. We don’t have the luxury of that and we the retail sheep have to learn the hard way, it seems. I never want to come across as a know it all, I have a ton of humility and fear for the markets – and that is no false modesty. One of my assets is my portfolio of losing trades, it is a long and undistinguished list, but it helps provide the experience to try to make a few more better trades today and in the future than if I didn’t have that portfolio. Truly you would be pretty shocked at the stuff I sold to avoid the big falls this year….

    Fortunately I don’t have mortgage payments, a marriage and kids’ futures riding on (my) market results and those that do had best not be a cowboy. So I find taking risk a bit easier (and I confess I enjoy the rush like the next guy) and you know the more fear you have and the more you can’t afford to lose, the fear will make it easier for you to lose, selling at the wrong time. Those who have such vulnerabilities IMO should have a good number of real companies, producing and in good jurisidictions, excellent mgt and growth potentials, yada yada in their pf! Let’s try for 25% p.a. and its not always about the home run. I think ANV has a lot more upside than 25% under the right conditions, that’s for sure.

    I used to own MAI and of course everyone knows Rob M. Mux vs ANV? Argentina vs. Nevada. MUX …i don’t know about it and I don’t follow it but I’ll be damned if it has anything like what ANV has. ANV has just done a debt financing of $400m, we know how hard it is to do financings, right?? ANV in a heart beat, Sir! I got in ANV at $28 several weeks ago and ‘should have’ averaged down but didn’t. For myself I need to add more to make it a larger part of my mutual fund …er portfolio.

    I go back and forth from investor to speculator to oversized positions that will make a diff – and a more balance lol, MF approach. Looking at FVI’s chart helps explains why for myself I’ve kind of gotten back into the latter for now.

    All the best!

  25. 31Floors

    Taking some GMX off the table, a week ago it was still my second largest holding, but now another notch lower w/ a bit lower close, trailing ANV and NGD. GMX going neck to neck w/ my RIO and GPD for better balance and a more mutual fund – like approach. I feel amateurish with what feels like more trading YTD than any whole year that I recall, certainly since that maddening year, 2008.

    I always had this idea that the rookies traded too much ‘on the whiplash’, and the smarter money understood that the so called ‘big money’ was made from holding. But as the generation of baby boomers and jr stock affecionados head into retirement years and our kids are more concerned with moving out of their 450 sq foot rental and groupon, the game has changed. Research and gut. Gut and research. Before I buy or sell anything these days, I always check out what MA has to say. Thanks Tom and David!

    I missed the boom and bust of the REE bubble, with just a small loss or two to show for it. But this looks like a rather promising time to try and pick a bottom. To that end, I picked up a position in MCP Molycorp the other day at $21. it’s the leading REE play in N.A. and a far cry than the $75 it would have cost you a year ago at the bubble top.

    Good luck to all.

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