Scandium, Cobalt, and Water Purification: CleanTeQ HoldingsA Microcap Teaser Solution In Advance !!
(Australian stock exchange CLQ, OTC pinks CTEQF).
CleanTeQ is sure to be the answer to future teasers you will be reading about from resource gurus, To save you all the trouble of solving them, I decided to write this article.
My portfolio was grotesquely overweight in gold and silver positions, and in moments of anxiety I thought it would be a good idea to diversify and take a few positions in something other than gold mines, royalty companies, Mongolian exploration companies, and small-cap copper miners with major operations in the Democratic Republic of Congo.
Thus I made a small speculation in CleanTeQ, solely on the basis that mining titan Robert Friedland was the Chairman, and CleanTeQ was the only resource company I could find that seemed to be in a position to mine scandium, a very rare metal that sells for a couple of thousand dollars a kilo.
My due diligence was so slight that I was embarrassed to emphasize my position to the readers at Stock Gumshoe. We are supposed to study these things a little more than I did for CleanTeQ. And after entering at 50 cents, the stock promptly dropped to 35 cents or so, making me glad that I did not look foolish by publicizing my position.
As the weeks went by, I started to find more information on the company that I should have found out beforehand. This was partly accidental, partly from other Gumshoe readers, and partly from new announcements and company news that occurred after I took a position. But the findings were all very positive, and because the company is so interesting I thought it warranted its own thread apart from the hard asset thread which I moderate.
I have a full long position and high hopes. And I thank Secretsquirrel, Griffin, Larry McKenna, and several others who helped fill in the missing pieces of the puzzle.
Below are my findings, opinions, and summary on CleanTeQ Holdings:
BUSINESS MODEL CleanTeQ is a hybrid company based with three bases: scandium mining and production, cobalt mining and production, and water purification. This seems like an odd combination, but as you will see, it is not. It is a stroke of genius. And I will explain why we should care about scandium and cobalt.
(1) The company is starting production of the Syerston mine, the world’s only scandium mine;
(2) The company will also produce significant amounts of cobalt as a co-product to the scandium;
(3) The company has a large-scale water purification technology, which will target municipalities,
Industrial operations with waste water problems, and mines, which also have water problems
PROSPECTS FOR THE THREE SEGMENTS
(1) Scandium is a very rare metal that usually occurs in only small amounts that are not economical to mine. It is mostly available as a by-product and the market is opaque, usually between private parties. Scandium has very beneficial applications in aerospace, aviation, and technology, but has not been widely applied because there is not a sufficiently reliable supply of it.
(2) Cobalt is essential in many batteries. Lithium gets all the investment press, but a majority of the battery formulations need cobalt, which is rare compared to lithium. Cobalt has a similar supply situation as scandium, it is mostly a by-product and is not commonly a prime mining target in and of itself. But demand for the electric energy market is growing rapidly and cobalt demand is growing and will continue to grow accordingly. Supply chains on cobalt are iffy.
(3) Water purification is a pressing need throughout the world. Cities with lots of people, industrialized places with lots of factories, or mines with waste water, all have a real and pressing need for large scale water purification. I think most people can accept this premise of widespread demand without a lot of documentation.
HOW DO THESE SEGMENTS RELATE TO EACH OTHER ? I cannot get too technical about the water purification technology, but I will try to explain what I understand, and how it relates to the scandium and cobalt operations. They call it Continuous Flow Ionization. Ionization is not a proprietary technology per se, but CleanTeQ has developed a way to implement ionization in a continuous feed, automated loop that improves volume, improves economics, is reasonably priced for installation, and can be custom-modified to specific waste problems. It can be used in conjunction with other filtration techniques. Further, it can be modified TO EXTRACT CERTAIN SUBSTANCES from the feed waste water. This is done by modifying the resins that are used in the ionization process.
Now it so happens that CleanTeQ has developed resins that can extract scandium and cobalt from waste water. So they potentially will have commercial sources of rare metals from the by-product waste of their water purification process !
HOW CLOSE IS THE WATER THING TO REALLY HAPPENING ? It is happening. CleanTeQ has signed a memorandum of understanding with a major Chinese municipality to implement their technology. There is a joint venture, 55% Chinese/45% CleanTeQ. Once the first one is up and working, China has a mind-boggling potential for water purification. For their teeming urban centers and for their mining and industrial locations, shall we say the potential is very large ?
CleanTeQ has 100% of rest of the world. CleanTeQ is closed-mouthed about other commercial sources, but they let on that they have been in contact with the likes of GE, Dow, and other big hitters. They state a pipeline target of $100 million by 2020; I predict they will do much better.
HOW CLOSE IS THE COBALT THING TO REALLY HAPPENING ? Very close. Battery useage is soaring and is the strategic target of many governments, corporations, and environmental groups. Batteries need cobalt.
HOW CLOSE IS THE SCANDIUM THING FROM HAPPENING ? This will take a while because the applications are high tech, with long lead times, and there is only one scandium mine in the world (CleanTeQ’s newly commissioned Syerston mine). CleanTeQ intends to develop the scandium market by being a reliable source of supply, and by driving the price down.
CleanTeQ will have viable margins with scandium prices up to half of current prices.
To give you an idea, the Russians made a few MIGs with scandium/aluminum alloys. They were faster, lighter, stronger. An addition of 0.5% scandium to aviation aluminum strengthens the frame, removes the need for riveting, reduces weight, and makes repairs easier. . The Russians dropped it because of costs; and Boeing and Airbus will not use it without a reliable source of supply. But there is about to be a reliable source of supply: CleanTeQ.
WHAT ABOUT IP PROTECTION ? I believe the IP and know-how moat is sufficient. CleanTeQ holds a perpetual license from a high-level Russian research organization that provided some of the foundation technology. I am not a patent lawyer and a lot of the know-how will be proprietary, not patented. CleanTeQ has been at this for over ten years, I think the barriers to entry are sufficient.
MANAGEMENT Totally a plus. Robert Friedland is the Co-Chairman and CEO, he has 20% of the company, great credibility and clout with the Chinese, and an unbelievable track record in mining. Sam Reggall is the other co-chairman. I know little about him, other than from my observations of him on an Australian investment show that aired last week. He was impressive.
MONEY AND FINANCES I don’t think there is anything at all to worry about. Friedland must be worth billions, the Chinese are in, and the concept has enormous potential.
Sources: as I mentioned, information is scant. My sources were the CleanTeQ website, presentations and and interviews with Friedland and Reggall, and the sketchy information on the brokerage sites. Nothing you cannot find on your own.
Long CleanTeQ
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
$CLQ $CTEQF CleanTeQ…one reason I am taking an aggressive position in CleanTeQ is that I think its growth opportunities will be relatively immune to disruption in a wide variety of world economic, financial, political, and regulatory scenarios.
This is in contrast to most of my commodity positions, which could be adversely and severely affected in a deflationary environment.
-CleanTeQ’s mining commodities are relatively rare and are smack in the path of the hottest energy trend. The growth rate may be lowered, but there is an international juggernaut headed towards battery use. Currently CleanTeQ has effectively no sales and zero percent of the nickel and cobalt market…yet Elon Musk of Tesla is nosing around looking for a ten year supply of the stuff from CleanTeQ.
-Their water business is at ground zero, so an incremental change in the future growth rate is immaterial. So they will get orders at a rate that is 80% or 50% slower than it would have been
if things were great. So what ?
-The demand for industrial, municipal, and mining water treatment will not be materially affected by economic conditions.
And again, the company is at ground zero. All the contracts are a plus, and any market share is new market share for CleanTeQ.
And they are actually going to create a market by solving tough problems for their customers.
-Their mineral extraction business, if economically efficient, will be in demand no matter what the general conditions are. Low costs, getting incremental income, and minimizing waste are especially in fashion when things are tough.
-The benefits of scandium/aluminum alloys are very substantial and are being held back by the price and availability of scandium.
CleanTeQ is squarely addressing both the price and availability of cobalt and scandium. If they are able to supply scandium reliably at reasonable prices, general economic conditions will not matter…the demand will be there because of the economic benefit of the alloys, and technology moves forward whether economic activity is up or down.
-There are powerful social and political tailwinds in environmental issues. These are likely to continue even in difficult economic conditions; and CleanTeQ will benefit from this trend, whether it is strong or weak.
Long CleanTeQ
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$CTEQF – Dear Clean TeQ News Subscriber,
We are pleased to advise that Macquarie Bank has initiated research coverage. The full report is attached for your reference.
https://gallery.mailchimp.com/6b234a59bc4b0bc555986937a/files/b17c1648-5068-45c4-9d9e-704ac3fe726c/20170307_MBL_Initiation.pdf
This is a 33 page PDF research paper from from Macquarie Bank. This is the second paper this week reporting a shortage of Nickel, see my previous post on Nickel I need to start looking for a nickel stock better than my last one $WSCRF or buy more $CTEQF.
x posted
I think the word might be getting out…CLQ humming – look for a new sub holder soon. Either that or the Chinese are buying on market.
Mining & Metals outlook…quick and dirty
The following opinions are just opinions…they are not backed by a lot of hard-core analysis, but they reflect opinions and feelings that I have come to hold that reflect my investment activity.
Opinions are subject to change, and I welcome dissent and different ideas. Just because I don’t like a sector doesn’t mean one cannot make money in it.
GOLD…If you play at a rigged casino and lose, you can complain and feel cheated. But you still have lost.
My attitude towards gold is somewhat similar. I am still very deep in gold and gold-related investments, but my expectations in terms of appreciation are lowered with respect to “established” gold companies. I have become resigned to the fact that there is manipulation and price suppression. I still intend to have a major
position, but I do so as a store of wealth and look at it as cash with appreciation potential. I am not holding my breath for a dramatic spike. Someday, yes. But no near-term expectations, the central banks and governments will do anything to keep the price down and they are likely to succeed for a while.
My feeling is different concerning gold exploration and discovery plays. These still have very dramatic upside.
SILVER…still liking it. It is also money. My feelings, shared by others in the industry, is that silver has greater percentage upside than gold. Manipulation is still a consideration, but less than for gold. I like silver and have all forms: physical, redeemable bullion trust, miners, exploration, and royalty companies.
COPPER, ZINC, PGMS…bullish. Ivanhoe covers for me in all.
I am not even interested in exploration or discovery plays…why bother when you have the enormously rich
deposits of Ivanhoe, and the company is selling so cheap ? The only reason I can think of would be jurisdiction and larger market cap companies.
COBALT…bullish. CleanTeQ.
ALUMINUM…too much supply. Might do a large cap maker at some point, but for now no interest other than scan/alu alloys via CleanTeQ.
LITHIUM…Bullish but I do not like the market choices very much and will pretty much pass until I become persuaded on specific companies. I have some Galaxy Resources but do not want to get too involved.
URANIUM…Bullish but who knows when ? I am a little more exposed here than with lithium, but watching paint dry is more exciting than waiting for U238 prices to turn up.
IRON ORE, LEAD, NICKEL…these do not interest me so much because most of the players are big cap miners, which I dislike on principle. CleanTeQ has some nickel upside, but that is not the reason I am in it. The big cap miners all depend on general economic levels, and I am not especially optimistic yet. I like VALE and BHP but am not currently long either one.
COAL…no interest. I have some stubs from my bond disaster on Arch Coal.
POTASH…actively looking for a good potash stock. I like agriculture, and potash is a fertilizer.
OIL & GAS…I am pretty intimidated by the complexity of this market and will stay out until I get my bearings.
There are lots of interesting choices, too many. I feel energy prices are in a deflation, and energy sources are in flux. This can be dangerous for stocks.
SOLAR…no interest, it is basically a manufacturing sector as opposed to a raw material or resource sector.
WIND POWER…pretty fringe. Hard to get excited about speculating here with so many unexplored options in mining and oil and gas.
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Best regards to all.
The dynamics of gold are very complex, and predictability is close to impossible in the short term. I am heavy into gold because I have a conviction that it is presently in the early stages of an up-cycle, that is likely to last at least 3 years, but I think probably much longer. I base that conviction on my own analysis of all the complex factors, which is what I am good at. My major qualification as an investor is I completed the video game Myst, no cheating. I’m good at solving puzzles, and figuring stuff out. I’ve been around long enough to trust my instinct, and go big. I’m still learning, but gold is a small enough subsection of the investing world that I am becoming somewhat of an armchair expert in the field. That is what I like, to focus on something, and learn everything about it. I’ve diversified a bit into other resources, but really my big picture is definitely a gold play. If I’m right, and gold trends up over the next 3-5 years to the point it challenges and possibly breaks thru old highs, then it will be almost impossible not to make a fortune in this sector. And in the environment of everything trending up, its fun trying to play three dimensional chess, and optimize gains. But even in a gold bull market, you have to build a strategy to withstand the steep pullbacks, and know when to trim, and when to double down. This kind of trimming around the edges, using rallies and pull backs to tilt the game in my favor, I am amplifying gains by at least 100%. This sector is too volatile to just play it passively. Of course, if gold decides to drop thru the floor you get crushed, but that’s the price for being wrong. I think I’m going to make 6 times my money in this 3-5 year gold up-cycle, and I have a very specific plan to that end that I continuously hone based on new information and changing circumstances. I’ve doubled already in 14 months, on what has been just a 10% increase in gold price. I see all the manipulation, the promotion, the business of ripping off investors, all these factors can be played to ones advantage. There’s a lot of “sucker’s money” in this sector, which means there’s a ton of money to be had, even for a retail investor.
Renby: Oh dear….so wrong. You will NEVER make money in gold coz the best you can do is swap it for devalued fiat $’s. The best you can do is preserve value while all else sinks. How many failed attempts at Myst did it take you to finally get there? Itll probably take you as many playing gold.
Preserving value is important.
Things could get out of control pretty quickly.
On a long term basis, look at the value of the dollar.
Agree. Preserving purchasing value is critical as $s buy less and less.
If one ounce of gold is bought at $800 and cashed in at $1200, you preserved the purchasing value of the $800.
Just another form of TIPS.
Hi Hedy. I think the idea of pricing everything in dollars is inherently misleading.
It is more accurate to price things in gold, if one wants to see what the value of gold is and how it has maintained itself.
One research project I have started, but is far from finished, is to look at the relative value of gold over long periods of time, versus things one wants to buy
and other commodities.
The study is over 100 years at 10 and 20 year intervals. There is some difficulty in equating new products with old ones, but the problems are not really that difficult.
In many manufactured products, the modern ones are far superior to the old ones; so the natural bias will be towards dollars buying modern products.
In automobiles, for example, I can look at an entry level, moderate, or luxury sedan from 1930 and relate it to the gold price of the time; and I can do the same for a car in 1970 or 2010. Likewise one could look at a steamship transatlantic fare in 1910 , and compare it to an airline ticket in 2015, priced in gold. Both were the best way to get from New York to London; the differences in time and convenience are subjective and can be considered separately.
Naturally, many items are more straightforward. And ounce of gold can be related to butter, wheat, and silver; or ctton and wool, as a proxy for clothing; etcetera.
So far the the indications are that gold has held its value very effectively. But as I say, the study is far from complete.
One standard is the cost of a good suit equal one ounce of gold over time.
Alan: I don’t understand what you are saying. Preserve value how? The reason I am super heavy into gold stocks is I feel gold will preserve value relative to fiat currency. I have a lot more gold than I have cash, and i own gold on every continent and in dozens of countries. It is my working assumption that gold will go up in price over the next 3-5 years, and that is how I’m playing it. So please help me understand what you are talking about, cause I’m really interested. Are you saying I should hold 100% gold and no cash at all?
Alan: Also, I don’t really think it is very polite to say I will never make money in gold. Do you really profess to know that? If gold goes up in price I will surely make money, if it goes down, maybe not. I’ve already made hundreds of thousands. So why would you say that, not very nice?
Renb: Eye yoy yoy. You are misunderstanding me. How do you value gold or anything (material) for that matter? Its relative to what it will buy you (1 oz = a new suit). Gold and cash are at the extremes of a see saw. If you own gold, you suffer when the economy is doing well. If you hold cash, you suffer when the economy is doing badly. What I said was that if you have more money than you need to live day to day, gold is a fab insurance policy for when the economy is not doing well and cash is in the toilet…..an ounce will still buy you a good suit. So, its an insurance policy, not a means to make a profit (if gold is suddenly worth twice as much cash when the $ has devalued 50% and a new suit costs twice as much cash, is that a profit?). The key is to have an equal balance of gold/cash so that your personal wealth remains balanced whatever happens to the economy. If you have made enough to have gold stashed in all 4 corners of the Globe, Im astonished that you need this explaining. Did you inherit?
I’m far from a stupid person, so why do you need to be so rude. You can make your points politely. There’s nothing that you are saying that I don’t know. I didn’t understand your point, now you explained it better, I get it. I hold both cash and gold and real estate for exactly why you say. They all hedge each other. But sir, people have gotten rich from gold from time immemorial. Someone needs to explain the concept of leverage to you. Forget it, I teach you now, it is easy. Gold stocks are leveraged to the price of gold, usually going up multiple times to the gold price. Thereby, when you make a killing in gold stocks, you are increasing your wealth relative to dollars, not just retaining value that dollars have lost. In the future, don’t make any more rude comments to me. I am interested in your points, but right now feel like punching you in the face for the kind of obnoxious tone you take with me.
Im aghast. You have all the answers yet you cant make the connections. You have to ‘value’ both cash AND gold against something (typically each other) or its bits of paper versus a chunk of yellow metal only useful as a door stop. As one goes up, the other goes down. If youre trying to off-set inflation, gold is a good hedge….thats hedge. But a hedge doesnt make a profit, it simply aims to mitigate a loss. If youre talking about using your gold to levarage a deal, then the profit comes from the risk, not the price of your gold…..and it can go both ways.
And you know precisely where you can stick your threats. Youll find no profit in those. Do it again and Ill see you thrown off this site.
There’s a lot I could say in response, but honestly, I just join this blog to contribute and learn with very like-minded investors. Not to have these kinds of bad mojo interactions. I go somewhere nicer.
Good luck with your constipation.
Here is what I think is important about gold: It is the best proxy for wealth, but the banks and governments don’t want people to treat it that way and will do whatever they can to discredit hard money. They like soft money because they control it and can make as much of it as they want to, to line the pockets of whatever group of schnooks has control of things.
But they themselves accumulate gold and silver, while they pooh-pooh the value of it and discourage everyone else from owning any.
The government and banks are in complete collusion about this, and the banks have unlimited access to fiat money to play whatever games they can dream up.
In the meantime, I am just as comfortable with SAND at $4 or FNV at $60 or PVG at $10 as I am with “cash in the bank”.
Nice round up Hen:
Ive always hated gold. I get it that its an insurance policy for people who have more money than they need for day to day living (and want it to stay that way come what may 🙂 ) NP
Silver is better coz it does have some functional uses. NP
We seem to be in a software world where power is not too sexy so long as the local power systems stay working. Im not recco’ing this, but its worth a look and your own DD. $CLIR has developed a way to make ancient, no eco compliant boilers, fired by v cheap coal, very ‘green’. Theres no question that they have struggled to get a foothold, but think their day commeth. NP
Whats missing is tech. where are you on that? Longish NVIDIA
For me, the rest of what you say = ditto. Long Clq.ax, IVN.T
I still have large positions in gold. The financial and economic forces at work are inflationary and debasing to all the major currencies. But since the timing is so unpredictable as to when the house of cards comes down, or as to when inflationary pressures break out, it is best not to hold one’s breath. The financial markets seem to be optimistic with Trump although it might be a head fake…who knows ? All of Trump’s stated objectives are pretty inflationary. More spending, but reallocated; less taxes.
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I do like tech but it changes so quickly. The guy on top today is a disaster tomorrow. It is a calmer version of biotech, and I do not have a trusted source or forum like we have in biotech here with Doc.
Incidentally that is one reason I like CleanTeQ. I consider it to be more of a technology play than a mining play. The mining just forms the basis for a valuation. It is an applied tech play in mining, water purification, and mineral extraction.
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In traditional tech, from perusing and thinking I like NVIDIA, Qualcomm, Lockheed, and a few others but I do not follow them closely and currently have no position.
I prefer the guided tour with Doc. The last quarter was tough but things seem to be turning around, a few picks have reflated dramatically, like ESPR.
Ivan and CLQ are ALL of my stock gains this quarter. Biotech is in the red and the straight gold/silver investments are evenish. Still have very large positions in ARTH and a few others.
The government and corporate push towards alternate power, especially electric, is not a headwind I want to sail against. I looked at lots of data about coal’s role in power generation, and was persuaded of the value of the stuff; but I got murdered. Once is enough for me.
The vested interests will make sure the electric cars and portable electronics are ubiquitous.
Long cobalt and nickel, via CleanTeQ.
Electric engines are great, but something has to burn for them to turn. The big advantage is that the burning is central, so you can economically capture the waste product. Thats where CLIR comes in. Im beginning to think I should invest ?????
Don’t know anything about CLIR, hum a few bars.
Sure: Old king coal was a merry old soul till the ecowarriors came along. In came CLIR and swept the soot away, now (perhaps) King coal will be happy again. http://www.clearsign.com
Why do you hate gold ? Gives you a nice, comfy feeling.
Not if you bought at 1800 ‘coz its gonna double’. But I hate it coz its so useless…….except for wedding rings….and I cannot imagine a worse investment than that!
If you buy gold at $1800 because you believe it is going to double is no different than buying a $20 Billion corporate stock at its all time high for the same reason.
Either could happen if you wait long enough….
Hedy: Its not the same. You buy $AAPL for cash hoping to make more cash, but you risk it going the other way. You buy gold in preparation for when cash devalues. But that oz of gold will still buy a good suit. A la 1930, the cash value of your 100 $AAPL shares might not buy you a pair of socks.
Gold goes up 5% and so does a suit…..its a wash…value is preseved. Cash goes down 5% but the suit doesnt….it costs 10% more (thats called inflation). ie Gold preserves value….it neither goes up or down except relative to the value of cash. Which is fine so long as its held as insurance and not needed for day to day expenses.
Do not agree with parts of your argument.
First gold can rise when dollar falls.
Gold can rise when dollar rises. Happens many times.
If cash goes down 5% (not sure exactly what that means but I assume in buying power) the good suit may or may not go up in price. As you said in the 1930s its possible the cost of suits when down when there was no demand.
The “value” of a USD is always going down over any time span relative to a market basket of goods. So it goes without saying that you “need” protection.
Gold stocks are a completely different animal. So if you invest in both Gold and Gold Stocks you can do very well with that portion of your asset allocation.
hedy: It gets complex once you add in a third or 99th comparitor …. say cost of living. If someone finds a way to sell $1 wiggets for 50 cents, both gold and cash will buy a lot more wiggets, so relative (to wiggets) both have gained in value. But typically, we are talking about the straight comparative value of gold to cash coz thats typically what you swap gold for…..I mean, gold is nice but you cant exactly go down the shops with a block of gold to buy carrots and shave off a few grains at the checkout !! Take a look at the charts for gold/cash over 50yrs they are virtually mirror image. So the point to holding both cash and gold is that you flatten the line. Thats insurance. You stay as wealthy as you always were….but theres no profit unless you trade in and out. Even then, the gain isnt for gold or cash….the profit (or loss) comes from the risk you have taken in trading.
I do not understand the statement ” the charts for gold/cash are mirror image”.
Do you mean against a market basket of local goods?
Hedy: I dont think you want to understand…we’ll leave it there.
The “equivalency” of gold and currency is valid
only when looking at relatively short time frames.
Over longer periods, gold is superior to fiat money
as a store of wealth. It is true that on a short-term basis, fiat currency is more liquid and divisible.
For your loaf of bread or bunch of carrots, gold is not suitable; but silver certainly is.
I will buy as many pre-1961 quarter dollar pieces as anyone wishes to supply me, for 25 cents. But no one will sell me a quarter dollar silver piece for 25 cents.
The silver is the same but the currency has been debased.
Yes…or take a Model T at $600 in the early 20th century.
At $20 a piece, that’s 30 1-ounce pieces of gold.
Fast forward to today. You can get a far superior car, say a Mercedes C-class, for a sticker price of say $35,000. Same number of 1-ounce pieces of gold…yet you are getting a product that is far, far superior to that of a Model T. Yet $600 barely makes a one month payment on your loan.
Granted the improvements to the car are largely from technology and manufacturing…but no matter, the gold commands far more than it before, with respect to automobiles.
Hmm? I think youd get a lot more than $35k for a pristine Model T these days. Still, gold doesnt corrode 🙂
Alan, 30 pieces of gold buys more automobile value in 2017 than it did in 1920. That is the point: How much does gold command now versus then.
Alan, if you do not believe in gold as an investment vehicle, that is fine, and you may be right.
But this thread is for people who are inclined towards it. It is not an open debate on the value or utility of gold investments…it is meant for those who are persuaded towards it.
Of course we discuss other hard assets also, but gold is really a focal point of the thread.
You have expressed your opinion on it, again this is fine; but this is not the place to argue against it or make the philosophical arguments against gold. The intent is to find the best vehicles for investing in these assets; for those who do not believe in gold, there are other threads and there is no need to generate controversy over the issue, which is the foundation commodity of the thread.
We are not trying to change anybody’s world view. We are looking for the best investments in gold and other hard assets, for those who believe in them.
I agree with Hendrixnuzzles and want to continue to learn from Renbycage and other gummies. Please keep posting.
mhardin, thank you. I understand that maybe my style is a bit much, especially for someone who may hold some bitterness, so I’ll tone it down. So much good information here, and I rather stay part of the group, even if just to read what you guys are saying.
HN; My sincere apologies, I missed the word Gold in the thread title. But Im astonished that someone so tuned in would think that any counter view to the ‘perma bull’ was offensive. Are we all to sit here saying ‘Ra Ra, its better than sliced bread….oh never mind the doubters…never mind its gone down 50%, itll all come right if we cheer loud enough. Sorry, I never realised that my thoughts on the matter would be subject to implicit censorship. I dont mind logical argument but when others dismiss logical argument for miopic reasoning, I wonder where the gain is for you guys.
I think it was Einstein that said ‘The definition of madness is doing the same thing time and again and expecting a different result. Well without considering counter argument, you are bound to do the same thing time and again.
I have not said investing in gold resources is a bad thing. But I have said that holding physical gold, other than insurance or to trade it, is a fools mission if your aim is to profit.
Agree about physical gold, unless it is in very large quantities.
Gold is not in the title of this thread, but please consider that the thread is a direct offshoot of the Gold and Silver and Hard Asset thread, and most of the readers migrated from there, as far as I can tell.
I considered CleanTeQ to be interesting enough to warrant such treatment…much the way Arch Therapeutics was split off from the main bio thread.
Your position on gold would be analogous to a rant against the dangers of clinical biotechs on the Arch Therapeutics thread. No harm done and nothing personal, but it is not constructive to the issues at hand.
“Buying gold”…for most of us, “buying gold” is not what we are doing. I assume that the majority of readers are not primarily invested in gold coins or physical bullion. This has a place, depending on your outlook; but I have never recommended it as an “investment”, I have stated repeatedly that I consider physical gold as disaster insurance and not an investment.
We are buying shares of miners, royalty companies, and explorers and developers who are highly leveraged to changes in the price of gold. These may be speculative or investments, or in certain cases (SAND, FNV)
I consider it equal to a savings in a bank account.
Over a year has passed since I started posting here on the subject. Gold and silver prices went up, then down. They are pretty much where they are when I started. My “conservative” investments are up or down marginally; but I have had some big winners on the “risky” speculations like MRLDF, ERDCF, and BCEKF.
HN: Then we agree. As a ‘disaster fund’ hedge, gold is a great idea (so long as its spare cash in excess of your day to day needs) Trading gold is as good/bad as trading anything else so long as your finger is on the trigger.
The stated approach from the beginning has been long- or medium- term investments and speculation.
You are a frequent short-term trader by inclination
Physical gold is not a suitable target for investment or trading, this has never been the objective.
But if you do not like gold miners, gold royalty companies, or gold exploration companies as investments, store-of-wealth, or trading vehicles, then your opinion varies from the majority of the participants. You may be correct and are certainly entitled to your opinion, but I would prefer not to argue the issue on a hard asset thread. Glad you are following along, but please don’t chase renbycage away. I get a lot of comfort having someone agree with me.
Best regards
All: For clarity. I have no aim to chase anyone away (but I do react badly when threatened with physical violence).
This all started with a single blithe comment by me that ” I hate gold”. By that I meant physical gold as in wedding rings, bullion or coin. I assume this got misinterpreted as anything to do with gold. When I was asked ‘why?’, I gave my reasons ie coz you can’t easily trade it…..though Ive accepted it acts as a good ‘doomsday’ insurance policy. However, gold miners, gold royalty companies, or gold exploration companies as investments, store-of-wealth, or trading vehicles are all fine by me and I see the potential for excellent profit….as I’d previously stated, Im already long $SAND, IVN.T, and a couple of others. It really doesn’t matter what the commodity is, the profit comes from trading it….(trust me, if you bury a gold coin in your garden, you wont find two there when you dig it back up). Trading takes skill, subject knowledge and a finger on the pulse of events. Those are the reasons Im here (or more precisely, on the Gold thread). You guys are very knowledgeable and I benefit from your sharing. For that Im v grateful.
With that said, I hope we can all move on.
Some very detailed scandium info, including some specific to cleanteq. https://www.linkedin.com/pulse/scandium-nutshell-next-industry-changing-metal-majid-davoodi-p-eng-
Mar 9th 2017
Mining companies have dug themselves out of a hole
Electric vehicles and batteries are expected to create huge demand for copper and cobalt
http://www.economist.com/news/business/21718532-electric-vehicles-and-batteries-are-expected-create-huge-demand-copper-and-cobalt-mining
For the cobalt mention.
Detailed info on CleanTeQ – http://www.marketindex.com.au/asx/clq
Buying and selling…I am going to take a page or paragraph from Alan Harris and swing trade with a long bias.
Liking SAND at $4, IVPAF under $3, CTEQF under 80 cents.
MRLDF under 80 cents and BCSKF under $1.90 are also pretty attractive.
HN do you mean you are selling and then will buy back after a drop? If yes, how much movement in either direction (%) wise would cause you buy back? You could buy puts for protection if available.
I am not worried about protection. I see gold stocks as protection.
I would sell cash covered puts for income, or covered calls, before buying naked puts or calls.
So what do you mean by swing trade?
Take a portion of the position and do as you say…buy on dips and sell on spikes. But since I have a long bias, I will always stay long the bulk of the position, I will be net long.
If my bias were neutral, I would sell out the whole position and be flat. If my bias were short, I would be net short at all times.
Short answer….yes.
I have not thought out firm guidelines, but in practice I was stimulated to do this in the past week with the drop in IVPAF, which went from 3.89 to 2.84 over a few weeks, BCEKF which went from 2.89 to 1.85; SAND, which seems to drop periodically to about $4 from its recent high of 5.80 or so; and MRLDF, which after hitting up to a buck has retreated to 75 cents or so.
In retrospect this indicates a retrenchment of 25% or more on stocks where I see no fundamental changes in value.
***
This is akin to what you do with your “if it doubles, take out 50%”.
I am just inclined to stay longer than 50% of the position.
I have noticed a marked change in mentality depending on the entry point. For example, I have Ivanhoe in three accounts, all with dramatically different average entry prices (80 cents, 1.30, and 2.00).
My emotions when selling are very instructive. If I am going to sell some Ivanhoe, theoretically there is no profit difference whether I sell from one account or another (except possibly for taxes); yet
my emotions change completely when I look at the positions,
based on the entry prices.
Thanks. If you sell after the swing down, you are expecting a greater swing down. Sort of a momentum trade.
Using your example, you waited to swing trade (sell) some Ivanhoe after it dropped 30%. So this is like a trailing stop to sell part, then waiting till it stops dropping and turns back up to buy back.
So now that Ivanhoe has gone up 11% today, what is your view. Buy or wait?
The way I do it is there is a portion of my portfolio that I consider long term, and don’t touch it, unless there is a really good reason. Then there are other plays I like, that have targets on them. A company like Cleanteq, I’m in because I love their business model and see long term growth far into the future. That it dropped 9% today doesn’t really concern me, I just go with the ups and downs. Apple stock has dropped 80% from highs I think 4 times. But a volatile company like AG, that amplifies the ups and downs of silver, I may have a buy target and a sell target, and if it drops that low I’m in, and when it hits my target, I cash it. About half my stocks, comprising 75% of my value, I just leave alone and watch the story of the company unfolding, and keep very close track for anything that could change my opinion on their prospects. But with the other 25%, that I’ve traded like I have said, buy the dips and sell the rallies, I have accomplished the following, which bodes well for my portfolio: 1. gold is up 10% since I initiated my gold position 14 months ago, but my portfolio is up close to 100%. 2. my portfolio presently is valued at 1200 gold the same as it was last summer at 1300 gold. It is a 3 dimensional chess game, and it works best during an overall up cycle [that is my basic assumption that in at least a 3 year timeline gold is going up], but just staying passive in this volatile sector I think doesn’t optimize its potential. The other major factor that has led to more optimized success in this sector is my diligence in looking for underpriced companies, more even then for growth stories. This game is about percentage gains and losses, and allocation of money into the right slots. Getting in at the right time is such a major factor in overall success, even more so then getting out at the right time, IMO.
Totally agree. I’ve learned the hard way that being too much in and out the market can be very expensive. Today I’m more relaxed, but I’m constantly monitoring the movement anyways.
Regarding Cleanteq I immediately bought a position on today lows @0.77$ I’ve been waiting for a pullback, and it was “finally” here 😉
Sending my best wishes on your new purchase, for both of us. I have a lot of confidence in this pick.
The concept behind selling the rallies and buying the dips is of course as old as the stock market. I think it is by far the better concept than “honoring ones stop losses” which tends to result in selling low. The physics law in effect here is “regression to the mean”. I’ve found that to be a useful concept with a lot of applications, but to me it tilts the game in your direction. It doesn’t mean there will never be a stock that shoots to the moon without ever seeing a 5% correction, or the reverse going down. It means that if you take the entire field, and understand that the stock market often tends to over-correct, you can use that to your advantage, and any casino owner or bookie will tell you if you can tilt the playing field 3% in your direction, you can make a ton of money.
No, if Ivanhoe drops 10%, I want to BUY. If it drops some more, if I have cash, I want to BUY.
The target sell price depends on how well I entered.
If I went in really well, 10% up in a day might be good enough to cash out.
Gold and currency…not to belabor the debate, but the fact is that
gold has performed better as a store of value than ANY currency.
Currencies come and go, their value fluctuates wildly and eventually they all go to zero. This is an historical fact, as is the dismal history of national defaults, inflations, and currency debasements numbering in the hundreds that have occurred repeatedly.
I defy any reader to name a currency that is worth more today than it was 50 years ago.
The USD, the euro, the yen, any of them…eventually they will all go to zero.
$CTEQF…taking a breather after a run up…
CleanTeq was under 60 cents until February 22. On Februrary 23, it gapped up over 60 cents and headed up for two and a half weeks, topping out below 90 cents.
Late last week there was a pullback, it touched 73 cents but seems to have stabilized in the mid- to high 70s.
The market cap is about $350 million. The Chinese partner is in around 60 cents. The US market is growing but still thin compared to the Australian. I think US demand will really start to build in the next two months, and there are already more analysts adding coverage.
There will be a North American road show, and at some point soon I expect announcements on new business.
I think the stock is a bargain under 80 cents and I intend to accumulate more. This stock will be my primary focus in the near term, honestly I am liking everything about it.
When’s the North American roadshow?
I’ve inquired of CLQ about upcoming events they can disclose.
A few weeks ago, Friedland and Reggall were at the BMO Capital Markets event in Florida.
https://www.otcmarkets.com/ajax/showNewsReleaseDocumentById.pdf?id=24228
$CLQ…the investor relations guy just referred me to the news release of February 27. Reggall and Friedland were at the BMO conference in Florida for 5 days, end of February to March 1. No other information was given.
Link to the investor presentation given at BMO:
http://clients3.weblink.com.au/pdf/CLQ/01832660.pdf
Totally agree, HN. It was about time some pullback came, and I still hope that it will remain low for some more time so I can add even more to my position. I’m confident that CleanTeq will be one of my best performing stocks for 2017-18. I’ve been looking on this for some time back, but the Australian stock-exchange listing put a stop for my investing, so I was standing in line for the opening on US-exchange.
It’s ridiculously undervalued, and I don’t see it as a big risk because of all the directions and option this company can take.
https://www.metalbulletin.com/Article/3668948/Cobalt-prices-rise-further-on-continued-supply-tightness.html
James Heywood March 13, 2017 14:01 GMT London
Full article – Cobalt prices were higher still on Friday 10 March while producers continue to hold back from offering to the spot market to fulfil long-term contracts. Metal Bulletin’s high-grade cobalt quotation rose 1.1% to US$25.00-26.75 per lb while the low-grade quotation rose 0.6% to US$23.00-24.75 per lb. The high prices, while good for traders and those who have spare material, are becoming something of a burden for the producers trying to keep long-term customers happy. “As producers, we don’t like these much higher prices. For traders, the pace of the rally is fantastic, but for producers and consumers, it’s not healthy, and very worrying,” one producer said. “We don’t want to be going to our loyal customers and asking them to pay such high prices because the market is overheated. That’s not good for them, which isn’t good for us either,” he added. Most producers have had requests for maximum tonnages on their long-term contracts since earlier this year. Some are starting to test whether they can push back. “I am starting to talk to my customers that I don’t get the best terms from about not delivering maximum tonnages every month,” a second producer told Metal Bulletin last week. “If I have to keep delivering the max to all of them then I’m going to be very squeezed if we have any problems.” Other producers echoed this sentiment, with one explaining that pushing back, while not ideal, might be the only option to ensure supply. “I would not say I’m oversold. But I would say I am completely sold,” the producer said. “I can cope if everyone goes for the max but I do not have a single tonne spare. I’m so tight that if we have even a small problem with our production then it’s going to be difficult.” “It’s an interesting situation, especially hearing what other producers are doing: you can’t really not deliver max on a contract when asked to but, equally, the buyers won’t want to hear the words ‘force majeure’ at any point, so there will have to be some negotiation on both sides,” he added. Some traders reported consumers trying to take advantage of the tightness by looking to generate cash through selling spare stocks. “I have no sales to report but [I’m seeing] quite a bit of re-selling by consumers here,” one trader told Metal Bulletin. “I do not see this as a negative [indication for prices]; only profit-taking or other reasons such as cash flow. [In fact] I think we can argue it moves the metal into stronger hands
Thanks for posting squirrel, interesting article. A lot of talk about ‘heated market’, and ‘over sold’. Even talk about ‘consumers’ (battery mfg.s) selling excess inventory. There is no mention of a Cobalt shortage most analyst are predicting. Is this an early indication of the Cobalt shortage analyst are predicting. Nemaska started production of Lithium(see post above) this month that won’t help the Cobalt shortage.
I bought back into eCobalt Solutions, $ECSIF last Aug and have oubled since and they arn’t producing. I’ll have to check their web site and find out when their mill is going to produce.
$CTEQF, $ECSIF, very long
https://www.ft.com/content/bc8dc13c-07db-11e7-97d1-5e720a26771b
Cobalt’s meteoric rise at risk from Congo’s Katanga
The price of cobalt — an essential part of most lithium-ion car batteries — has surged 135% this year
Henry Sanderson
Hedge funds and speculators betting that the electric vehicle revolution will drive prices of battery material cobalt into the stratosphere could be wrongfooted.
Next year Glencore, the world’s biggest producer of the bluish metal, is due to bring the Katanga mine in the Democratic Republic of Congo back on line after a $430m overhaul of its processing system. The operation has the potential to add as much 22,000 tonnes of cobalt to a market with annual output of around 100,000 tonnes.
That could bring the price of cobalt, which has surged 135 per cent this year, back to earth with a bump. Goldman Sachs analysts say the resumption of production at Katanga “will significantly change the supply dynamics” for cobalt and ensure the market is well supplied up to the end of 2019.
“We believe the resumption of Glencore’s Katanga mine will end the supply shortage,” Goldman analysts noted of the metal, which is an essential part of most lithium-ion car batteries.
Speculative buying has added vim to a metal already helped by a strengthening in demand and a poor supply picture. When commodity prices crashed at the end of 2015 and into 2016, several copper and nickel mines were forced to curtail production. Cobalt is a byproduct of the two metals.
At the height of the market downturn in late 2015 Glencore mothballed its Katanga operations. It was followed early the next year by Brazil’s Votorantim Metais, which suspended its nickel and cobalt operations.
Cobalt production in the DRC alone, which accounts for more than half of global demand, fell 8 per cent in 2016. Refined cobalt supply, where cobalt is processed into chemical or powder form for battery makers, mostly in China, had its “biggest decline in recent history”, last year, according to Guy Darby, head of Darton Commodities, a cobalt trading company based outside London.
Those dynamics led hedge funds and speculators to stockpile thousands of tonnes of the metal in warehouses in the US and elsewhere. They are estimated to have captured as much as 6,000 tonnes, on expectations that China’s target for 5m electric vehicles by 2020 and the rollout of Tesla Motors’ first mass-market electric car will swell demand.
Prices for high-grade cobalt have now touched as high as $27/lb for small to midsize quantities, according to Edward Spencer, an analyst at CRU, a commodity consultancy in London.
“While the sun is currently shining, there are potential clouds bubbling up on the horizon,” cautions Mr Darby.
The $430m overhaul of Glencore’s Katanga mine in the Democratic Republic of Congo is forecast to curb cobalt’s rally © Bloomberg
Although demand for cobalt could rise by around 6 per cent this year to 106,100 tonnes, according to Goldman, rising copper and nickel prices this year are likely to lead to further production of these metals and, in turn, cobalt.
As is often the case with commodities, China is likely to be pivotal both to cobalt’s short-term and long-term outlook. The country’s market is currently dominated by batteries that do not use cobalt, but manufacturers are shifting to lithium-ion batteries that rely on cobalt because they offer greater power capacity.
China’s BYD, the world’s largest electric carmaker, will make a “meaningful” transition to so-called nickel-manganese-cobalt batteries between 2018 and 2020, analysts at Bernstein estimate.
But the shift in China could be delayed if cobalt prices remain high, warns Mr Spencer of CRU. “The appetite for EVs [electric vehicles] is there, but the uptake of cobalt-bearing technologies will definitely be slowed down as a result,” he adds. Nomura strategists add that the record level of cobalt and other raw material prices could force battery and carmakers to pass on the costs to customers, creating another potential drag.
That matters for the price because batteries used in electric vehicles will account of 43 per cent of incremental demand, according to Goldman, even though they currently make up just 7 per cent of total demand.
Wall Street analysts are still painting a rosy long-term picture for the metal. Those at Bernstein, for example, estimate the rapid adoption of electric vehicles between now and 2035 will create an uplift for commodities demand eight times larger than that generated by China’s boom in the early 2000s.
And for those becoming anxious about supply, they may find comfort in how much production Glencore will actually bring back online at Katanga. Ivan Glasenberg, its chief executive, has consistently said Glencore will only add supply if the market fundamentals are right. The higher price is lucrative for Glencore, which analysts estimate generates about $55m in earnings for every dollar rise in cobalt.
A giddy rise in price of the sort cobalt has experienced this year may well lure more speculative buyers, but it also sharpens focus on the risks of chasing it higher. Mr Darby reckons the balance between supply and demand should have pushed cobalt to between $15/lb and $20/lb, and speculative buying has done the rest.
Chasing the price from here looks more fraught
No offense intended who is Henry Sanderson?
I’ve been following Matt Bohlsen @ SA. One of Bohlsen comments has been that the other analyst are under estimating EV production and given data to support it,. Analyst can predict/forcast whatever they want until it happens it’s all a guess. I’ll stick with Bohlsen for now till events prove other wise.
None taken,
Henry Sanderson is commodities correspondent at Financial Times London, it’s just an opinion like a lot of people have regards the future of EV production. Devil’s advocate? and of course he is the press/media let’s not forget.
Not saying I agree with him at all…..
Long CLQ.
More on cobalt here:
http://www.marketwatch.com/story/cobalt-a-purple-patch-for-the-blue-metal-2017-03-13-5203212
That report is more like what I want to see. What I did find was the Roskill report unfortunately it is $$$. The date for the Cobalt report should maybe be put on a calendar to see if the cobalt market moves.
Long Clean TeQ (OTC – CTEQF)
Monday 3/13 I was doing some homework/research on scandium to better understand how it plays into the aluminum market and found some very informative videos on the Scandium International Mining Corp. website
If you go to their site
http://www.scandiummining.com/s/Home.asp
and look on the right hand column Titled Videos there is a 4 part series from
George Putnam who is the Scandium International CEO and is Speaking at the Murdock Capital Partners Symposium, July 2016. The videos are:
Part 1: Corporate & Project Overview
Part 2: Aluminum Alloys & Scandium
Part 3: Aluminum Properties & Use in Aircraft
Part 4: Q&A Session
The longest of these videos is only about 12 mins. And well worth the time to better understand the scandium/aluminum connection and its potential
There is a 5th video also there tilted:
InvestorIntel Interview with George Putnam on Scandium International’s R&D Tax Incentive Award
https://www.youtube.com/watch?v=zAU3v5NvQb4&feature=youtu.be
Published on Jan 3, 2017
Scandium International is a scandium only play (as opposed to Clean TeQ which has a much broader field of play) but if you listen to the Part 4: Q+A Session he discusses Clean TeQ and states his number 1 problem with his Project
And if you are wondering Yes I did take a position for now it was just too cheap to pass @.27
Long Scandium International (TSX:SCY OTC: SCYYF)
Thanks, will watch all that in due course,
Nice entry point!
Interesting videos, George Putnam seems knowledgeable.
Q&A video – the one thing he said, at the very end, Scandium International Mining Corp do not have enough scandium, whereas Clean TeQ has lots If I recall…..
Long CLQ
CTEQF
Increased my position today in Clean Teq, and it’s now my biggest position alongside Ivanhoe Mines.
….it’s now my biggest position alongside Ivanhoe Mines.
Great minds think alike (-:
Indeed 😉
Maybe this have been discussed before, but I’m curious to hear what valuation you guys picture on Clean Teq? Where could the stock-price realistically be headed in 2017-18? I’m finding it difficult myself to put a valuation on it other than it could be substantial 🙂
We can fantasize, which is all that it is, but a reasoned fantasy. If everything folds out perfectly I think we’re looking at a 5-10 timer in a 3-5 year timespan, for me that means share price between 3-6.
$CLQ $CTEQF…I am reluctant to name a value but I tend to agree with Renbycage, my opinion is that it is a big time multi-bagger. That is one reason why I introduced it on a separate thread.
It is a little daunting to think of valuations based on stock prices. One begins to doubt if one’s critical faculties are intact…can a stock really go from 20 cents or 11 cents, to six or eight or ten dollars ?
It is a little more reasonable to consider market cap.
The current market cap is 400 million, with virtually no sales or revenue. I do not think it is preposterous to imagine substantial revenues from cobalt, scandium, and water purification. When you start imagining these revenues, and applying “market” stock multiples to them, it is not at all difficult to imagine a market cap of say, $2 billion.
This would imply a 5x increase from current levels.
Hardly a sure bet, but certainly a little more grounded than pure fantasy. Friedland has several penny stock companies in his resume that have valuations in the billions.
New commodity stock you were going to talk about?
Posted Thursday on Hard Asset thread.
Lucara Diamond Corporation, a speculation.
It’s nice to hear that I’m not the only one that share the same optimistic view 🙂
Friedland once said that ALL his companies had eventually gone to a stock price of 9$ so I hope Clean Teq will not be an exemption 😉
$9 is over twenty times the current market cap.
? 20x.8=16
More like 11 times current price.
Still a nice problem to have.
You are right, I took the old market cap of 400 million from a few weeks ago:
$9,000,000,000 (nine billion) divided by $400,000,000 (four hundred million) =
90/4=22.5x.
But the current market cap is $ 700+ million. So you are correct.
The $9 billion valuation is Friedland’s suggested implication, it is not my prediction. I would be pretty happy with $3 or $4 billion.
Well I thought he meant $9 per share stock price.
So I was confused as well.
Current CLQ market cap is $400MM.
I didn’t see the original quote by Friedland, so I don’t know what he said with respect to that. Plus maybe I’m getting senile and confusing CLQ and LUCRF, which I have been looking at intently.
I apologize for any inaccuracies. I should take notes when I am looking at these things instead of just going from my increasingly unreliable memory.
The multiples are so speculative that I don’t worry too much about them, as long as they are potentially very high. When I see something that could be worth well over three times the current market cap, I am pacified as far as the valuation proposition.
Amen
I (and Friedland) meant the stockprice to be exactly clear. I heard this interview earlier this year, and if I’m not mistaken, it was from the interview that was quickly taken offline (Midas Letter).
Don’t put too much into it HN, but he said it with a smile around his mouth, but still it was a statement referring to his past companies…and they had all reach this price level.
Friedland is a very entertaining speaker, and loves saying things that he believes in a way that makes you think he is joking…but I don’t think he is joking.
At the African conference, to an audience of analysts and investors, he said: “I’m giving you a stock tip.
Buy CleanTeQ ! ” It was done with a blithe, tongue-in-cheek attitude that made you laugh. But I got the feeling he was dead serious. I bought CleanTeQ.
Well that’s as good a guesstimate as any….
Definitely on the + size of HUGE IMO….(-:
Look up how many standard metropolitan areas of
more than 1 million people exist in China and India.
Valuations and exits…It is hard to find winning stocks, and even after they are found we will all have the next problem of deciding when to sell and exit.
One approach I have been using that may be helpful to those with an investing mindset (as opposed to a trading mindset) is to decide to hold the bulk of the position until a specific event occurs that is not related to price.
The event needs to be a major milestone that demonstrates concrete advancement to the stated business goals; or, it needs to be something that invalidates the original premise for owning the stock.
For example, in biotech I have a large position in Arch Therapeutics. Because the time frames are so long, my exit
strategy is to hold the stock until their products are approved and actually in the market. Unless something happens that materially affects the chance of this occurring, I intend to maintain the position. A whole lot of other things may occur along the way, but I have no specific stock price target in mind…I’ll take a look at the situation when AC5 is shipping to customers, and then reconsider.
With CleanTeQ, I do not want to be out of it before:
(a) the Syerston facility is producing cobalt, or (b) there is a major announcement by Boeing or Airbus or Lockheed to build something large using an alu/scandium alloy, or there is a major offtake agreement for Syerston production, or (c) There is a successfully operating Clean-iX installation, and order backlog on water purification of over $100 million.
When and if these events occur, it is impossible to guess what the stock price might be. But it is damned sure going to be more than 80 cents.
If it starts to look like none of these events are likely, then of course I would exit. But in the meantime, my exit is not tied to a price. When a milestone event occurs, then I will take a look and consider whether I should exit. Hopefully the stock price will be considerably higher than my entry.
With Ivanhoe Mines, I do not want to consider exiting until the Kamoa/Kakula operation is in full production of at least 8 million tons per year and has one year under its belt. This obviously gives copper prices plenty of time
to move up. Ivan might decide in the meantime to expand production to 12 or 16 million tons…but 8 million tpy is a lot, and we’ll see what’s up when this happens.
Friedland described the situation: “We are sitting on an ocean of copper. The question is how big a bucket to bring.” The multiples for efficient copper production are units of 4 million tons.
This line of thinking will calm me down if something else happens, like Ivan deciding to sell Big Zinc, or platinum prices going crazy and spiking the valuation on account of Platreefs. Or copper going back to $2.00.
Is the copper mine big enough at full production to lower the global cost?
Short answer…I doubt it as a practical matter, because Ivanhoe will add capacity in increments and it is not in their interest to try to drive prices down. I think the strategy at Ivanhoe will be to react to market forces and profit from them, rather than influence them.
If you could wave a wand and be producing as much as the deposit would allow, they might be able to influence world prices. The deposit is just enormous and the limits have not been determined.
But you cannot just wave a wand. Friedland has stated that efficient copper production is in multiples of 4 million tons processing per year. They will start with 8 or 12 MMtpy; then go to 16, 20, and so forth as conditions warrant. Each added increment takes additional capital.
Copper is a big market but its ability to absorb additional supplies is a factor in their thinking. They can expand production to nearly any level, but even modular expansion of capacity takes a lot of capital, hence more risk. There would be no reason to expend more capital and drive down the price of your product at the same time.
They have very low production costs, around 50 cents a pound; so they will make tons of profit in a strong pricing market, and do very well in a weak one.
Thanks HN.
I couldn’t agree more with HN I have a hard time seeing copper go down under 2 dallars ivn has great management that is the key to big gains in ivn and clean tech in my opinion there in what I believe is the sweet spot for big gains holding while adding on any down days for a full position versus trading them is likely prove to be the best way to gains. Robert Friedland has a great track record I’m holding overweight positions now and will still consider adding if price has any quick dips. HN I like your view on ivn/cleantech keep up the good work. Long clean cteqf and ivn
When you have a full position,what is meant by that?
question to the board. I see clq @ 1.05 and cteqf at .81, if you convert 1.05 australlian dollars to USDs you get .81. So am I correct to assume that these two stock prices correlate with each other by virtue of the relative value of their dollars, and not by other factors, such as differences in shares allocated or that sort of thing. I assume these numbers may diverge at times due to wild factors, such as somebody buying a ton of shares over the counter. But my question is, all things considered equal, should the two numbers correlate relative to the currency values, as they do now? And if so, is there a play on the AUD vs the USD built in to this stock?
why such low volumes in the US? The ASX trades millions per day CLQ
$CLQ
Low volumes in US because:
1. AU based co.
2. Small AU company by US standards
3. Niche market
4. $1.00 price range seen as penny stock.
5. Not on one of our major exchanges.
Nobody but us has heard of the darned thing !!
Positive attitude: “Nobody has heard of it. What an opportunity !”
Negative attitude: “Nobody has heard of it. Better wait until more people have heard of it.”
Hey people: We want to buy when no one has ever heard of it and prices are low.
The most fun [and profitable] is to figure something out before everybody else, be right, and cash in.
Not really a play on currency in the long run, since they probably won’t earn much in Aussie $ and any short-term impact gets zeroed out when you sell your shares and spend the money in US$.
The shares will be identical, the occasional differences in price will be because someone in the US really wants to buy or sell — the fair price is set in the liquid home market, the US OTC shares will generally follow those prices but it wouldn’t be unusual if it was very hard to sell a position in the US when there’s downward pressure in Australia — since the two markets are never open at the same time a banker can’t arbitrage the shares, and anyone buying from you has to be willing to take the risk that the shares won’t be much lower the next day in Australia. Buying such shares is almost always easier than selling them.
A very thoughtful analysis, Travis.
Thank you,
PetervR
thank you
$CLQ
Yes the prices are very close based on currency exchange rates at all times.
Bid/ask on ASX likely to be tighter due to higher volume.
Short answer is that the prices should correlate ROUGHLY.
There are three factors that eliminate exact correlation:
First is the bid/ask spread. Second is the currency conversion. Third is the fact that the US and Australian markets are not open at the same time; so a big move in Australia should have an impact the NEXT day in the US.
Because we are poor retail slobs, we will lose at arbitraging the differences between Australia and the US because we are paying too much in commissions on currencies and stocks, and we are facing the bid/ask spread.
I think that CleanTeQ’s price the following day as CTEQF in the US
will be influenced by the prior day’s action in CLQ in Australia. Not guranteed, but you will get a pretty good idea of where you are headed
from the prior day’s action in Australia. On this one, for the time being,
Australia is the dog and the USA is the tail.
Yes, it is a new behavior for me to check out CLQ at night, to give me a heads up on what is likely the next day with CTEQF. What’s going on with this pattern of CTEQF going contrary to gold stocks in general? It goes up when gold goes down and vice versa, since I bought it. Its been neutralizing my daily gains and losses, [well other than being up 30% for me, to date]. Surely just a small sample coincidence, but has anybody else noticed this?
There is no reason for gold to be correlated directly to CTEQF, unless there is generalized price inflation driving stock prices of the underlying commodities and/or services. Gold is not an industrial metal; while cobalt and nickel are. And scandium is a speculative commodity with no public market to speak of.
The value of CTEQF’s interests in water purification are also unrelated to gold, as far as I can tell. So I don’t see a lot of reasons why they should move in tandem.
There is no reason, I was just noticing it, since many of us here have similar portfolios, I figured others may be noticing it too. But I don’t attribute anything to it other than short term coincidence. Its been good on some of the “bad gold days” mitigating a daily loss, and also frustrating on some of golds best days. I have a pretty outsized investment in CTEGF so I guess it plays into my performance in an outsized way.
Maybe confidence of stock speculators is high when CleanTeQ is up and gold is down;
fear of speculation when CleanTeQ is down and gold is up. Traditional “flight to safety”.
But I think that CleanTeQ is pretty safe. Long term, volatile, but in the end it is safe. As long as you are in under 80 cents.
Upside-down Hendrixnuzzle logic.
DIGITAL ECONOMIC TOTALITARIANISM…where things are headed. You heard it here first. I claim authorship.
European, American, Chinese versions differ.