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written by reader Looking for some commentary or Sndxf and relzf in regards to current market conditions.

By sphereya, September 27, 2011

Liking the new site. Hopefully in the near future Travis can lay out what he is looking at for the near future with the current sell off. Are you seeing a lot of value in any oil or gold plays?

Thanks

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Travis Johnson, Stock Gumshoe
September 27, 2011 8:45 pm

Hi Russell,
Both of those have clearly taken quite a hit — which should be expected for declining commodities prices and increasing investor fear about tiny stocks, which both of these are (SNDXF is Sandstorm Gold, which is my largest personal holding and the stock I use to get most of my gold mining exposure with, I think, less risk than the miners; RELZF is a far more speculative oil explorer in Western Canada and Montana).

With stocks like these I don’t make snap decisions if I can help it, nor do I use trailing stops personally, I know Sandstorm far better and think it’s an excellent buy at these depressed prices IF you think gold will stay in the $1300-$1600 range or even go higher, they are at a great point in their development for increasing earnings … but if gold collapses below those levels it will definitely get a lot cheaper. Reliable is far more speculative and a small position for me, it all depends on their results and I have no particular insight on whether they’ll be successful, I just like that the’re near break-even now as a tiny firm and have a bit potential land position and that bolsters their odds.

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bsjhaley
bsjhaley
September 28, 2011 12:40 pm

Travis
I like the business plan of Sandstone from the standpoint of investment and income stream without actaul ownership and responsibility of the mines.. What about the Metals and Energy divison (STTYF), do you think the same ‘business plan” and profit potential is as good there as with Gold?

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Travis Johnson, Stock Gumshoe
September 28, 2011 1:36 pm
Reply to  bsjhaley

As a business plan, I think it’s better — much bigger addressable market and they’re more unique in this space, with more potential partners so you can “buy low” on commodity trends by funding miners when coal or gas is low, for example, or when copper or zinc correct. I own both, Sandstorm Gold is much easier to analyze and further along in development and profitable, so its less risky that way, but also tied just to gold prices which carries that risk. Sandstorm Metals & Energy is heavily reliant on metallurgical coal for near-term revenue, so carries price risk for that commodity particularly, but will become more diversified over time and has more options for contrarian investing and possibly more long-term growth potential, though growth of both depends on investor sentiment about commodities pricing in the future (and, importantly, their mostly shared management team).

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