“We’re Sitting on a Goldmine!” Stephen Leeb

OK, if you read today’s weekend update email, you know that this is a rarity — a new Stock Gumshoe sleuthification on a Saturday morning, hurray!

But I have to make some allowances for the weekend, so I’m telling you the solution, but not doing much thinking … read on for the tease and the solution, and then y’all can analyze this one and sort out the nooks and crannies on your own. Enjoy!

This is from Stephen Leeb, who, in addition to being an outspoken peak oil proponent, is apparently a big fan of gold. Well, who isn’t these days, of course, but I gather he’s been riding this horse for a while now. He’d like you to subscribe to his Real World Investing, which is actually edited by Greg Dorsey, it appears, and in exchange you’ll learn all about this favored junior gold miner.

Here are the important clues in the tease — I can give you the stock’s name and ticker, but you’ll have to do the learning on your own …

“Of course, the safest way to participate in the precious metals bonanza is to buy the metal itself or some of the blue chip miners. But if you really want to ramp up your profits, the real action will take place in junior miners. And one mining company in particular could return 10-20X your investment.

“If you think that sounds far fetched, consider that in the mid-1980s to early 1990s, shares in Barrick Gold rose 50X. And that was during a period when gold prices were falling!

“Barrick’s gains during that period resulted from its rapidly expanding resource base. The more gold it discovered, the greater its asset base, and the more value investors attached to it.

“Today, Barrick has become a blue chip behemoth. While the title of “fastest growing resource base” belongs to another gold company, a junior, whose shares you can still buy for virtually peanuts compared to its potential.”

OK, so they don’t quite go so far as to call this the “next Barrick,” but that does have a nice ring to it. Some more clues?

“This company currently owns 50% of one of the world’s largest undeveloped copper and gold deposits. Located right in North America, the deposit contains some 8.9 billion measured and indicated pounds of copper, plus another 3 billion pounds inferred. (Copper prices are likely to escalate sharply on any hint of an economic recovery.) More importantly, the deposit holds 7.3 million measured and indicated ounces of gold, plus 3.8 million ounces inferred.

“And that’s just one of the company’s properties. It’s second major property contains some 29.3 measured and inferred ounces of gold. At $950 per ounce, that works out to nearly $28 billion for this property alone. Yet, you could buy this entire company today for roughly $900 million.

“Of course, owning a deposit is one thing, producing the gold is another. But this company has attracted the attention of some pretty big players. A couple of years ago, when gold was selling for just $675, Barrick offered to buy this company for $15 a share.”

And the answer?

NovaGold Resources (NG)

The large copper deposit is Galore Creek in British Columbia, the second one, the gold property, is Donlin Creek in Alaska, which is partnered with Barrick Gold (they’ve got a few other projects, too) … and yes, Barrick made a hostile bid to buy out NovaGold in mid-2006 at $14.50 a share.

After that? I don’t know anything else about NovaGold … you’re on your own, teach us well, and have a great weekend!

Oh, and if you’ve ever subscribed to any of the Leeb newsletters, don’t forget to review them for us — thanks!

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. Leave it to Steve t/b 5mos. late with this well known “comeback kid!”

   http://finance.yahoo.com/q/ta?s=NG&t=2y&l=on&z=m&q=l&p=m50,m200&a=m26-12-9&c=

   [Reply]

   Posted by SageNot | May 30, 2009, 7:11 am

2. Actually, this has been in the portfolio of his $5000 per year news letter since late 2008 and back in his Complete Investor Newsletter portfolio since Feb of this year. Of course the share price has doubled since he recommedned it to subscribers.

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   spreadtrader Reply:
   May 30th, 2009 at 10:59 am

   A friend of mine shared with me his Complete Investor newsletter from December 2008 because he was IRATE about NovaGold. In point of fact, Leeb recommended NovaGold to his Complete Investor clients in December 2007 at 9.48 as part of his small cap portfolio. The knucklehead simply held it until December 2008 when he dumped it via a “RED ALERT” south of a buck….a 94% loss (lol…..I mean, what’s the rush with the RED ALERT thing). Apparently he’s recommending it again? Some of his ideas seem good…….but the guy can’t time his entries for trades……and worse, he can’t manage trades once he’s in them.

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   Stan Reply:
   May 30th, 2009 at 4:06 pm

   I agree completely with spreadtrader. His timing is not his forte. And that goes for both entry and exit points. He does seem to get long term trends correct though; such as energy and oil. He predicted $100 and then $150 oil, but then didn’t get people out fast enough when it started going down. Now, he’s predicting $100 and even eventually $200 oil and I think he’s got it right.

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   Posted by Katie Catt | May 30, 2009, 8:12 am

3. Well whether I know more about the company than what’s pitched here, No. Traded in and out of the stock last year and this year with a profit. Now it’s surging in price and increasing volume. I’m alittle more conservative in where the price is going to 7.50/share by the point and finger calculations. Good Investing! Thanks Gumshoe

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   Posted by Brian | May 30, 2009, 10:59 am

4. OK, I had hoped Travis would gumshoe this one by now, but begging hasn’t gotten it done. Does anyone have a clue what stock Martin Hutchinson is touting that: Has a virtual monopoly in the telecom industry and is partnering with verizon. That will have substantial dividends in a few days?? I just gotta know (for free).

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   david Reply:
   May 31st, 2009 at 5:54 pm

   tkg

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   crzyruss Reply:
   May 31st, 2009 at 9:32 pm

   With all these talks about mining companies how come nobody is talking about the great state of Utah!!!???

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   Posted by Tim Dawson | May 30, 2009, 1:41 pm

5. This is NDM as mentioned on another thread… matches perfect…

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   Sophia Reply:
   May 31st, 2009 at 12:48 pm

   I have looked up the symbol NDM but get a “no match” for it. Can you expand on this (I am new to this site and don’t know which thread this was mentioned in).

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   Darrell Reply:
   June 1st, 2009 at 7:41 am

   Please go to the Forum, we’ve really hashed this one out on: Gold,Silver,Platium..they have problems with possible pollution of fisheries in Alaska. Should be a long battle.

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   Posted by Will | May 30, 2009, 2:17 pm

6. leeb has a knack for buying tops. look for ng to test $4.

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   Posted by the best there is | May 30, 2009, 6:59 pm

7. What Leeb is not saying (aside from talking his book) is that the galore project is currently dead in the water. A very long and expensive power line into the project is required, which would run thru old growth forest and has the environmental folks in an uproar, as well as the B.C. Environment Ministry. Second there is no money for the line. Don’t bet the farm on “Galore Creek”

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   Posted by Brian | May 31, 2009, 2:31 pm

8. I own NG, but am not enchanted with its prospects. As Brian pointed out Galore Creek may take years to pan out. Worse, management in its recent talks have essentially said that they are suspending prospecting & readying any of it properties for production in 2009.

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   Posted by krishna | May 31, 2009, 5:48 pm

9. NG has had the large find in the public for awhile, but getting the gold out of the ground is a problem for them and could make it too costly to get out. It’s been talked about in the regular site of Gold-oil-etc. I’m still staying away because of these reasons.

   [Reply]

   Posted by Darrell | June 1, 2009, 7:37 am

10. New subject- Gryphon Financial seems to be all over my mail box, does anyone have any experience with them?

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    Peter Marks Reply:
    June 10th, 2009 at 6:00 pm

    I suggest that you do not spend a large amount of money to have Gryphon Financial suggest options or stocks to you for investing. Gryphon charges a lot for their services, but the returns are very high. In the past two months I have over a 80% return on the options that they suggested to me. I am in their VIP Hedge Fund Options program and I paid $50,000.00 for the program. Others have paid $100,000.00 for the same program. I started with a program that cost less, $5,000.00, and when I really started to make money, paid the additional $45,000.00 to get the best trades. I am not sorry that I did, as it won’t take too long to make up that $50,000.00 by using their recommendations and buy and sell when they tell me to, not necessarily when I might want to. They have a reason for telling me when to buy and sell. They watch my trades and make sure that I will have money available to make purchases at the right time. This type of investing is for those who have a high net worth, and can handle the ups and downs of fast trades. They try to get me in and out within two to three weeks on options that expire in one or two months. In that way I won’t loose too much by the time (Theta) that lowers the price of the call or put by each passing day. I think their service is good, but one must be willing to let them tell you what to do. They do not like someone telling them what to do, as a lot of their people have been trading for 30 years or more, and they know the business better than anyone, and that includes me. I listen to them, ask questions, and help create an atmosphere of trust on both sides. It is best not to get them working against you, as I made the mistake of doing once by telling them what I thought would be a better trade. I never did it again, and am now back on track with them. Another thing, don’t let them push you into buying a program that costs more money than you want to spend. I know that if I just stayed with the $5,000.00 program, I would make money, but at a slower rate than the $50,000.00 program I am now in. They have different programs that sell for different prices. I understand that the program that I am now in is their top program, this being the same program that hedge fund traders use. In this program, I was able to place an options trade the day before the hedge fund traders got the word of the trade. This is an advantage when it happens because there is often times a large spike upwards in the stock and the option on the day of my first trade. This type of trading is not for the meek. It is getting down to business and staying with the trade until you are told to get out. I do have to admit, that I have sometimes sold before I got a phone call from Gryphon because I already had a profit of over 100% and I saw that the shares of the stock were starting to be sold more than they were being bought. I was able to determine buys vs. sells by looking at the daily trading chart and looking at the hourly trades rather than the 1 minute trades. The hourly trades showed green for buys and red for sells. When there is more red selling, I have found that most of the time it is time to sell part of or all of the option so as to lock in a profit. It is always wise to sell a portion of the option as it is rising in price. That way you will always be able to lock in a profit. I suggest not being greedy, as there is always another trade, and the other trade may do better than the one before. Then there is the possibility that there will be the one option that will go up a lot in price because another company made an offer to buy the company that you have options on, and the option will skyrocket in price and a return in excess of 1000% is possible. I had one that almost did the 1000%, it did 600%+ within one week, and I was a very happy camper. I hope this information helps you. Good luck in your trading.

    [Reply]

    Posted by gary | June 1, 2009, 1:38 pm

11. Bryon King recommended Nova Gold in his AGORA – Outstanding Investments back in Jan 2008. I foolishly bought – it has tanked – i finally gave up and sold for big loss. The OI portfolio is full of gold – Agnico, American Century, Gold Corp , Kinross, Newmont, Novagold, GLD, Van Eck gold and Yamana – plus silver

    [Reply]

    Posted by john sloan | June 6, 2009, 11:34 am

12. About NG;
    On Feb 2nd, Dorsey Wright, the P&F people, had an article about Silver & Gold issues. It contained their Precious Metals Matrix, which showed NG as #1 versus 25 others in the group.
    I bought some at $3.52.
    When earnings (read losses) came out subsequently, the stock dropped to $2.15 on April 21st, and only started to rise with the rest of the precious metals. It hit $5.97, dropped to $4.71 this week, and finished at $5.16.
    Here’s the DW descriptiuon of their matrix:
    The final step of our analysis today in the gold area of the market is to use the P&F tools to ascertain which stks within the sector are likely to be the leaders. For this, we turn to the DWA Matrix Svc. (This is an addnl svc, costing just $50 per mon z can be activated for your acct by calling Nancy at 804-320-8511 or e-mailing at nancy@dorseywright). In the DWA Matrix Svc, we take a sampling of stks within each of the 40 DWA sectors z then do a composite rel stren rankg. That is, we do a RS readg of each stk to one another. So Barrick Gold [ABX] is compared to Newmont Mining [NEM] z Agnico Eagle [AEM] z so forth. In essence, we hold an arm wrestlg tournament amongst the precs metals stks with each one wrestlg another. At the end of the tournament, we rank them by the # of wins, or RS buy signals they have given, in a matrix. In this matrix, the strongest stk w the most RS buy signals goes to the top. In genl, we look to the top 25% to be our leaders within the grp. You will notice that majority of the stks in the top 25% are smaller names within the sector but the chart patterns look great z many of the more recognizable names within the sector still reside in the top half.

    [Reply]

    Posted by Mort T | June 7, 2009, 9:19 am