Robert Hsu’s “Bullion Bull — Goose Island Gold”

By Travis Johnson, Stock Gumshoe, January 21, 2008

This one came in late last week in a flash email from Robert Hsu for his Asia Edge service — actually the ad was really for the commodities play that he tried to sell us a week or two back, which is written up here, but he added a little box teasing us about his latest flash buy alert.

And this one is a trifle out of left field for him — for this Asia Edge service he usually recommends “greater Asia” stocks, Taiwanese semiconductor firms, Filipino telecoms, Australian and Brazilian commodity firms that mostly ship industrial commodities to China. That kind of thing.

But this one has a little bit less of a direct “Asia” connection, at least as I read it. It’s a gold miner, and while there are plenty of gold mines in Asia this particular one is in Canada. Not sure what his full rationale might be, but certainly it’s true that the increase in the gold price in recent years has mirrored the rise of China and India, with some clear connections (India is one of the larger gold jewelry markets, gold is a hedge for Asians worried about the dollar, and many more).

Maybe he’s just scared to recommend anything else in this market environment. Hard to blame the guy.

I’ll quote Hsu’s whole teaser here, because it was so very short and part of a much longer message:

“I never recommend a gold mine. Mark Twain had it right when he defined a gold mine as a hole in the ground with a liar sitting on top of it. But in today’s issue of Asia Edge I’m breaking my own rule because I’ve found a gold mine that’s just tapped a vast “mother lode” of pure gold almost 2 miles long, beneath Goose Island in Canada. Now, bearing in mind Twain’s skepticism, I note with satisfaction that the mine just hiked its dividend by 50%!”

So … mine on Goose island, with a gold vein almost two miles long, with a dividend hike of 50%. What are we dealing with here?

Well, precious few gold miners — or any miners — pay regular dividends. And this one has been paying them for years, teensy tiny though they are.

Actually, it seems they pay a dividend just to make the point that they pay a dividend and therefore that they care about shareholders — I can’t see why else they would bother, since no one is buying this one for what is an extremely tiny dividend yield of .3%. And that’s the new, .18 cent dividend for this year, which is indeed 50% higher than the .12 cent dividend they paid in January of 2007 (the share price stands at about $55 at the moment).

Getting ahead of myself, though … the envelope, please!

According to my sleuthifying and the opinions of a few readers who sent this one in, the company we’re dealing with here is …

Agnico-Eagle Mines (AEM in both New York and Toronto)

This is no tiny miner, a far cry from the microcap speculations we often see teased in this space. AEM is not a get rich quick play (at least, probably not), since it’s a well-covered and very big gold miner that has resisted being bought out. This is a $7 billion company with several gold mines, and a very high PE of near 50 (forward) thanks to the fact that not all of their prospects are making money yet. I suppose that there’s always a possibility that they could get involved in the musical chairs game of mining company consolidation and get a big boost to their share price (or they could go out buying smaller companies), but otherwise this appears on the surface to be a big, well covered gold miner with some very nice prospects for mines that should be able to produce cheap gold. If you think gold is going higher, you’ll probably like it … if not, you probably won’t.

I’m no mining or commodities expert, however, and have not done any in-depth research on this particular company … and I know that each of my readers is packed with his or her own share of wisdom, so if your store of smarts happens to cover this area I’m sure we’d all be happy to hear from you.

Guesses and half-baked ideas are also welcome, of course.

Happy Investing, everyone.


Related Gumshoe Articles

Leave a Reply

12 Comments on "Robert Hsu’s “Bullion Bull — Goose Island Gold”"

avatar

C.K. Baber
Guest
0
January 21, 2008 9:51 am

A “quick” check to see if a mining stock is a buy, take its’ market cap and divide it by its’ reserves (found in the quarterly report of the company). This figure gives you a price to reserve number which should be at least a 20% discount to the current market price. Takes some research, and is just a way to see if you are buying value.

joseph c bailey III
Guest
0
January 21, 2008 11:05 am

You are a quintafabulous velcro shoe which is the up dated (where you are leading edge) and we hail you as our hero!

MARK
Guest
0
January 21, 2008 12:26 pm

THIS TEASER STATES THAT THE US GOV HELPED MAKE THIS NEW TECHNOLOGY WHICH WILL SOON BE IN MOST (IF NOT ALL) OF OUR PERSONAL ELECTRONICS. THEY RAT IT AS AN URGENT STRONG BUY…..CAN YOU HELP US OUT AND LET US KNOW WHICH STOCK THEY ARE REFERRING TO HERE????
THANKS…..I KNOW YOU CAN DO IT IF ANYONE CAN!

G IMBURG
Guest
0
G IMBURG
January 21, 2008 1:28 pm

Mining is extremely cost intensive. What is visible is the debt the company is obligated to repay, long and short term. I would compare this to annual production to get a feel or estimate of profitability. The cost of each ounce or pound in production compared to annual production gives an estimate. Miners preproduction are all debt compared to capitalization. If the reserve is large enough,and costs are under control, then the market forces of supply and demand determine the miners future.

Gravity Switch
Admin
11
January 21, 2008 2:06 pm

Thanks for the helpful comments folks — Mark, your link didn’t work but I suspect you’re asking about the cell phone GPS teaser that Andrew Mickey has been sending out for Breakaway Investor for several months now. I wrote it up when I first saw it back in July here: http://www.stockgumshoe.com/2007/07/secret-defense-department-technology.html

Dan Baron
Guest
0
Dan Baron
January 21, 2008 3:28 pm

Hi stock gumshoe, On Jan/9 Euro-Pacific sent an interesting promotion letter, recommanding two asian commodities plays:
Please find this link, it looks promosing and interesting:
http://www.europac.net/newsletter/newsletter11.htm#recommendations
(Investing in global agricultiral, two recommendations in asia) – title
Cheers,
Dan.

DHS
Guest
0
March 30, 2008 6:45 pm

Dan Baron’s link is a dud. The “interesting promotion letter” fails to disclose the names of those 2 stocks.

Mikey
Guest
0
Mikey
May 10, 2008 3:12 pm

On May 9, Cramer recommended this stock…for what it’s worth.

Tim
Guest
0
June 12, 2008 8:47 am

“Three new oil plays set to double in 14 days”

Do you have this teaser yet?

Myron Martin
Guest
0
Myron Martin
August 9, 2008 5:37 pm
The manipulation of the gold market by the big bullion banks and other short sellers to try and get out from under their short sales has to end sometime and restore some stability and sanity to the precious metals market! I foolishly sold Agnico-Eagle even though at a nice profit after which it ran up another $20. It ws up in the $70. range and is now back down around $57. last I checked. I would consider AEM a serious buy candidate if it drops another couple dollars, in fact I may just put in a stink bid just above… Read more »
farley 5
Guest
0
farley 5
August 9, 2008 10:20 pm

I have had it with conspiracy theory, manipulation of markets, etc. I know the CIA shot JR et al. There is not enough money in the world to control gold..Look here.
http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,p
Gold went up too far, too fast. Oil went up too far, too fast. AEM is in a downtrend where supply is in control. Please don’t try to ask why. It just is. Look at AEM:
http://stockcharts.com/def/servlet/SC.pnf?chart=AEM,PLUADANRBO%5BPA%5D%5BD%5D%5BF1!3!.5!!2!20]&pref=G
Serious damage had been done. Precious Metals are an Unfavored group. Please don’t try to swim upstream because of the STORY.

Luigi Cosini
Guest
0
Luigi Cosini
December 10, 2008 11:05 am

What do you guys think of AEM now, hitting a low of about $21 and currently at about $36?
Time to load up or should we wait and see?

wpDiscuz