Thoughts from Myron — The ABC’s of Gold Investing
by takeprofits | November 17, 2013 10:09 am
This is premium content. To view this article (and to have full access to the rest of our articles), sign up. Already a member? Log in.
Source URL: https://www.stockgumshoe.com/2013/11/microblog-thoughts-from-myron-the-abcs-of-gold-investing/
As I have stated many times, I give stocks I thoroughly investigate and have faith in a project and its management, a MINIMUM of 6 months to prove themselves. While it is quite natural to obsess about daily price movements reflecting “market sentiment” on daily issues that have nothing to do with the fundamentals of a company, allowing yourself to be whipsawed by newspaper headlines is not the way to a profitable portfolio. The stock can just as easily recover by 25% in a matter of days or weeks. You can look at it 2 ways, you picked the wrong day to buy, the reason I advise using “stink bids” and limit orders, OR, this is an opportunity to buy more to average down, which is why I also advise splitting your allocation to a given stock so you have 2 chances at getting the best entry.
Thank you Myron,
While the USA and Britain are printing Trillions of Worthless Paper Bank Notes (QE), the Markets can’t be reflecting the true state of play. Grateful for your suggestions even if half the time, I can’t buy them in Britain. How can one apply logic while Paper Mines are worth more than Gold Mines?????
Just got scammed by a Firm called “Q V Cap” and a low life called “Michael Thompson”. Will pay a reward to get that “scum”, not so much for the money, but his invasion of privacy. I served my Country for 21 years in the Air Force, so there is no excuse for thieving. The British FCA know of the Scam, but what “I love” about this Country is if the fraudsters are NOT members of the FCA, then there is nothing anyone will do for you. The Fraud Police, The Ombudsman, The FCA, NO-ONE. As if the Fraudsters are going to join the FCA first, then defraud you. Unbelievable.
Myron,
Great picks. East west looks spectacular. Thanks for commenting on the Athabaska basin, I own Fission and Nexgen, may add Zador or UEX if uranium picks -up.
About miners- ALLRF, Allana resc. looks prime, timing is right, spectacular concentrate #’s, low cost, @ surface, 65% capital needed for construction in pocket. I’m 3/4 vested, but you & readers may want to look at this one.
Regards,
Keith
Hello Myron:
A follow up of question asked by Gerald (Nov 18) about ANV production costs going up substantially – did not get any response.
“Hycroft Mine show costs per ounce going from $488 in 2011, up to $638 in 2012, then to $905 thru Q3 2013”
Would really like to know if you have any opinions on the costs going up almost two fold since 2011 and why you would still consider it a bargain considering these dramatic increases in production cost ? Also noticed that the short percentage of the float is more than 20%
Thanks much for your insight and great research!!
KEITH: You may want to hold off a few days on your uranium purchases as my next column, is totally focussed on the Athabasca Basin and uranium in general and is probably the most comprehensive I have even done. In spite of that there are so many companies now active in the Basin, particularly around Patterson and Preston lakes that it will take at least one more column just to cover the most interesting companies, ZADAR being one of them I intend to research for the mid-Dec. column. I would HOLD Fission if it was already in my portfolio, but for new investors, earlier stage explorers as discussed in to-morrows column may well have more upside.
Owned ALLANA Potash for several years and made a nice profit, but as happens in many cases, when a company gets close to a mine building position, you will be holding “dead money” for a long time, action was mostly down for the last year, but the market may turn positive before too long and i am researching (and own) some earlier stage potash stocks. All depends what I find whether I would buy Allana again now that they have navigated some permitting and other hurdles.
Sorry for the omission, I can only send you back to the previous column where Allied Nevada was first profiled to review my actual statements. ANV is not alone in suffering increased production costs, the vast majority of miners have experienced the same in the past 18 months or so. Shorter’s always move in when they smell blood, which (as I pointed out) ANV is a LOW GRADE mine, so with market sentiment NEGATIVE about miners in general this particular stock was hit particularly hard dropping from a $40. + high to almost a 10th of that!
In spite of that, ANV was still profitable at the time I profiled it, and is taking steps to reduce costs as any professional management team would do. I cautioned that this was not a stock for people convinced the bullion price will decline into the $1000. range, but as a long established producer, could at todays prices be a big winner once gold resumes its upward trek. As some of the worlds best investors keep saying, if you want to make money you have to step up and BUY when there is “blood in the streets” indeed the other two profiled in the same column are probably less risky, but when gold hits $2000. which I am convinced it will, people buying ANV will be very happy it they bought at to-days prices.
TEN BAGGER on just returning to its previous high, but you don’t experience that without taking on at least some risk, but profitability at to-days bullion price is a pretty solid foundation going forward.
Myron, thanks for your response and I understand your take on value created by such situations. I still though would like to understand if there are some structural issues that have caused the costs to go up so dramatically for gold producers like ANV and like? Do you know if the cost trajectory will continue in this manner -what are the drivers?
Also please excuse my ignorance but what do you mean by “low grade” mine?
Thanks again for your insight….
“lowgrade”
Lowgrade means the metal percentages are lower per ton of ore
exp; 1.3% AU per ton compared to high grade 5.0% AU per ton ore
That exp. is not industry standard, but you can check anv’s percentages thru press releases on drill reports (or 43-101 resc. report) compared to peers. Bottom percentages are usually only cost effective thru heap leach mining.
There is also a cutoff percentage, say .1% or .01% in which the ore does not contain enough mineral (metals) to process profitably. Every mine for every metal has an ore% and a cutoff percentage. I know nothing of ANV’s rescources.
Thanks Keith, hope that helps Prabhat’s understanding, the point is that the price of gold and indeed precious metals in total, have been artificially depressed by the big bullion banks like JPMorgan and others, but according to latest reports they are now positioned on the LONG side, (after driving the price lower with sales of “paper gold” so they could buy cheap), so the price could reverse quickly and accelerate just as quickly as it went down. The increasing costs of labour, diesel fuel, new equipment, tires for older equipment have all escalated in price over the past too years while sales of bullion have gone down substantially putting the squeeze on miners profit margins. A few percentage shift on both sides of the spectrum can drive a once profitable mine to break even or even a loss until prices come back up based on strong demand and an end to manipulation
Thanks Keith, Myron for the explanation.
Prabhat,
Glad to help!
Just to note, gold & silver are usually quoted as grams per ton ore, and critical metals (Lree’s & Hree’s) are quoted in percentages.