written by reader Disappointing SAND

By Anonymous Questions, May 16, 2013

SAND is a severe disappointment. What’s your take on it now, Travis?

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hgpark888
Irregular
May 16, 2013 11:13 am

It is worrisome… But, I still long on this one along with SND.

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Travis Johnson, Stock Gumshoe
May 16, 2013 11:19 am

I agree, but my take on the company hasn’t changed — it has fallen in similar fashion to the other royalty companies and, somewhat surprisingly, has fallen almost as badly as the big miners lately. That’s obviously due to the drop in the gold price, which snowballs into large investors rushing out of the gold ETFs and gold miners.

I’ve written many times about SAND, and it remains a major holding (no longer the largest one, thanks to the fall in price). Over the past six months or so I bumped out my warrants to later expirations and have also sold puts on SAND, so I may well end up buying more in the coming months to cover those put sales. I still like SAND best of the major gold royalty companies, but Royal Gold and Franco Nevada have fallen so hard that they’re appealing too — if you want to have exposure to gold. All of the gold royalty companies offer leverage to gold with a relatively low-risk business (compared to the actual miners), but they are, make no mistake, absolutely tied to the gold price. If gold keeps falling, they will fall as well, and quite possibly they’ll fall faster than the gold price. Leverage works in both directions.

I don’t have any prediction about the price of gold, but with a financial system awash in liquidity and most major countries in need of currency depreciation to cover their debts, I want to have gold and other “hard assets” exposure in my portfolio. SAND remains my choice for how to get most of that gold exposure on the equity side. The royalty companies are not a good short-term buy here if gold is going to be at $1,000 in January, but they’re all trading at bargain prices if gold is going to be at $2,000 in January.

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John Green
Guest
John Green
May 17, 2013 3:46 pm

My guess — gold will be at $1500 in January. Disappointing both the gold bears and the gold bulls. The physical buyers come out in force at prices below $1400, the paper traders go heavily short above $1600, and it all averages out to $1500.

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Dutta
Irregular
May 17, 2013 4:42 pm

For what its worth (a lot to me!) the fine folks at Investech dusted off their 1-2 yo analysis on gold (they were bearing as they felt it was in a bubble despite overwhelming opposition) and are still maintaining a likelyhood of 1050-1150 an ounce and not recommending bottom fishing.

They are saying Gold in the very long term is still going to shine. I closed out my warrants on Sandstorm last month (all in all at my cost as prior gains were wipes out) and last bunch of shares last week. I will revisit them in 6 months or so. As a firm, they are solid as Travis mentions, but I’ve seen great companies (Ex: MTL, VALE etc) take a beating when their underlying fell.

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baygreen
Member
May 20, 2013 5:09 pm

Sand does not have anybody holding the rope over the cliff, for me to think Nolan and his team will loose to Ben .’s, money printing machine , they still have there feet on the ground . I took my profit a long time ago and still have part of both sides of there company but it is funny when some of the investors said to keep it. Well I kept the half that was paid for with the profit , now if they fall more I will be out my profit more r less break even , I think another year will be a different story . Management and not burning bridges will bring them back, a lot more than I can say for the ones getting there hands dirty. They will ride the storm out is my thought but I would feel different if I did not take good profit and keep some , can’t see them laying down when there are deals to be had there name is still good to a lot of Banks.

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bkkben
Member
May 21, 2013 9:09 am

Owning SAND, AAPL and other hits, have made this a bad year for me so far…sniffle…. even more annoying reading about new highs on the (US) markets daily…. πŸ˜‰

Cheers!

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