“Huge Profit Opportunities in Gold”

Teaser picks from Monty Agarwal's Million-Dollar Rapid Growth Portfolio

By Travis Johnson, Stock Gumshoe, March 23, 2010

Today I’m looking at a gold stock teaser that’s a few days old – but don’t worry, none of the stocks teased have so far entered the stratosphere, despite the fact that yesterday was supposedly the day by which we “must get on board now.”

The teaser is for Monty Agarwal’s Million-Dollar Rapid Growth Portfolio, published by Weiss research and, like some of Martin Weiss’ other projects, based in part on the work of the Foundation for the Study of Cycles. I’ve heard a lot of complaints about this “Foundation” and about the other Weiss newsletters this year, but that seems in large part because of the “Great Depression” marketing and fearmongering that we see so much of from Martin Weiss (not that he doesn’t truly believe it, or that he won’t eventually be right, but he apparently made a lot of subscribers angry during the last year’s steep market rally).

I don’t know whether Monty Agarwal has a track record to be envied in mining stocks or not, but I do know that he’s teasing a few of them today to buy for gold’s next leg up … and since he’s teasing with a few clues, we ought to be able to track down his picks.

Here’s the backdrop:

“HUGE profit opportunities in GOLD BEGIN NEXT WEEK!

“Nearly two dozen Western nations are now lighting the fuse on the greatest economic convulsion in many generations.

“Every major asset class will reel: U.S. stocks … the bond market … the dollar, the euro, the yen and other currencies … energy and other commodities … ALL will convulse violently.

“And gold, mankind’s venerable, time-honored safe haven and inflation hedge, will give you the opportunity to multiply your money over and over again.

“Monty Agarwal: Right now, I’m eyeing these THREE mining stocks with the potential to surge 50% … 100% … 300% … up to 400% as gold prices continue to climb …

“But you must get on board NOW — no later than NEXT MONDAY, March 22, or you could miss them!”

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And gosh, I am so very sorry that I’m writing about this on March 23, so perhaps you’ve missed that critical deadline. The deadline, of course, was really just for their “special offer” for the newsletter, not for any catalyst for these specific stocks, so perhaps we still have time to grow wealthy beyond our wildest dreams. Still, best to hurry up here, no? How about those clues?

“Stock #1 — Potential gains of 50% … 100% … or MORE: Our first candidate is a true triple-play, controlling a total of 21.7 million ounces of gold … 84.5 million ounces of silver … and a remarkable 541 million pounds of copper.

“In the last three months of 2009, the company set a new gold production record — up an impressive 41% over the previous year.

“Plus, this company appears to be one the great bargains in the mining space. It controls gold, silver and copper resources valued at $26.96 billion. Using commonly-accepted “10% rule,” this company should have a market cap of $2.7 billion — but its total market cap is just $1.8 billion.

“We think its shares would have to jump 50% just to catch up. If gold prices hit $1,300 per ounce, its share price could double.”

If we toss those clues into the Thinkolator we get our universe narrowed down considerably — market cap around $1.8 billion, 21.7 million ounces of gold, 84.5 million ounces of silver, and we really are down to just one stock: New Gold (NGD in both NY and Toronto).

And yes, New Gold did report a 41% increase in gold production last quarter, too — so that’s pretty much a perfect match. But the reserves numbers are all wrong.

Take a look at this page listing New Gold’s resources and reserves — if you add up the gold proven, probable, measured and indicated reserves and resources, you get almost exactly 21.7 million ounces of gold. So that plus the exactly 41% gold production growth makes me pretty certain that we’re right about New Gold being the solution to the teaser — but if you’re going to stick to actual reality, you usually can’t add resources (measured and indicated) to reserves (proven and probable). Usually reserves are calculated and described as a subset of resources, and the smaller reserves numbers represent the fraction of the resources number that can probably (or definitely) be produced economically. This is not always the case, so I could be misunderstanding these filings — though if so then they’ve mixed up the silver numbers by not adding them together … on to that …

The silver and copper numbers teased are both on this page, too, but they’re calculated differently. There is a 84.5 million ounce silver number listed, but that’s for the measured and indicated resources, so to my understanding it’s more defensible — of that, assuming that we’re working with resources numbers that are inclusive of reserves, New Gold claims that 56.2 million ounces are proven and probable reserves. And there’s also a 541 million pound copper number on the page, but that hardly makes sense at all — it’s much smaller than the “impressive” numbers that New Gold claims, they have claimed 3.68 billion pounds of copper in their reserves and resources, and the much smaller 541 million pound number comes in as the add-on “inferred” mineral content, the most uncertain level of ore claimed for their properties.

It seems very unlikely to me that we’d find all these numbers associated with the resources and reserves for a mining company that does have a market cap of about $1.8 billion and gold production growth of 41% last quarter and not have it be the answer to our teaser, so I’m pretty certain that New Gold is our teaser target here — but if I’m right, someone was either staying up too late to finish their work or playing a little fast and loose with the numbers in the tease. Not that I haven’t been guilty of big errors myself, just wanted to point that out.

You can see New Gold’s latest quarterly report press release here, and they did just resume work at one of their main mines, so that may be a positive. The company has a few development sites, but the main mines are all producing, and at very similar levels (they are Peak in Australia, Mesquite in California, and Cerro San Pedro in Mexico, which is the somewhat embattled mine that shut down briefly — Peak and Cerro San Pedro are expected to produce right around 100 thousand ounces of gold this year each, Mesquite about half again as much. New Gold is not tiny, it is large enough to make it into the portfolio of the GDX gold miners ETF and the market cap is still right at $1.8 billion, but it is certainly far smaller than the big multibillion dollar names. I’ll leave it to those of you who follow miners more religiously to tell us what you think of this particular stock, just throw out your comments in the box below.

Shall we see if we can figger out the next stock, too? I’ve got a bit of a headache from the silliness with the reserve and resource numbers, but I’ll give it a shot:

“Stock #2 — “Triple-Your-Money” gains possible: This is one of the biggest, brightest gold miners on the planet, with 85 million ounces of proven gold reserves, worth nearly $94 billion with gold at $1,100 an ounce.

“The headline story here is great management: In 2009, for instance, revenues jumped 26% and net cash flow more than DOUBLED to a record $2.9 billion.

“Like stock #1, this one could double as gold prices surge in the months ahead.”

Criminy, here we go again. The only mining stock that I can find with a cash flow of $2.9 billion for last year (a scale which really narrows our search to just the largest few miners) is Newmont Mining (NEM). But I don’t know that anyone has proven reserves of 85 million ounces — the only way I can get at that number for Newmont is by combining proven and probable reserves (the proven reserves are just about 20% of that amount), and by using 2008 numbers instead of 2009. The proven and probable reserves increased a bit in 2009, from 84.96 million ounces to 91.78 ounces, so if this is indeed Newmont then they’ve been shortchanged a bit. There’s a lot to like about Newmont, as there is about fellow titans Barrick Gold (which has the largest proven and probable reserves, at almost 140 million ounces) and Goldcorp, the only miners that are bigger than Newmont — but they’re huge, Newmont is a $25 billion company, so I’m not going to reveal any secrets about the largest and most closely-followed miners in the world.

And frankly, if you love gold and think Newmont, Barrick and Goldcorp are the best bets as huge miners of the yellow stuff, you may well be just as happy owning shares of the Market Vectors Gold Miners ETF (GDX), which is dominated by those three companies (throw in Anglogold Ashanti and Kinross and you’ve got half of the ETF in those five stocks).

But we’ve got one more teaser stock to search for … here are the clues:

“Stock #3 — A possible QUADRUPLE: This company has outperformed almost every gold miner on the planet since the bull market in gold began back in 2000.

“But it’s NOT sitting on its laurels — not by a long shot! Last year, it increased its proven gold reserves to a new all-time record 18.4 million ounces. And, at the same time, it also boosted its gold production to a new all-time record high.

“Management is world-class all the way. With gold selling at over $1,100 per ounce, this company’s cost for producing an ounce of gold is still just $399!

“We are looking for this outstanding miner to rise in value much faster than gold, and it t won’t be the first time: Since 2000, gold is up 400%, this stock is up 1,184%, outpacing gold’s rise by almost three to one!

“If we see the same leverage going forward and gold rises, say, 20% to $1,300 an ounce, we could see a 60% gain in this share’s price. And if gold rises 100% in this next major cycle, we could be looking at a 300% gain!”

The best match for those clues is, again, an imperfect match — this is probably Agnico-Eagle Mines (AEM), which has had a spectacular decade and is a low cost producer … though they report cash costs now are down to about $350 per ounce of gold, not $399 any more. And as of the last quarterly release, they were still experiencing record levels of production, and reported reserves of 18.4 million ounces, which is indeed their “all time high.” And again, this is a huge company — market cap of near $9 billion, and also one of the major components of the GDX ETF (though in the top ten, not the top five.

So what do you think? Excited about the potential for New Gold, Agnico-Eagle or Newmont? Prefer the bigger guys Barrick or Goldcorp? Think that all this just hurts the head too much and you might as well buy some shares of the GDX ETF? Prefer to go down the chain a ways to the junior miners and hope for a real barnburner? Let us know your thoughts by sharing a comment below, thanks!

Oh, and a very special P.S.:
You’ll be shocked to hear this, but Martin Weiss just sent me an email saying that there was a “computer glitch” last night (heard that one before? Me, too … the “glitch” seems to often be of the “gosh, the petty cash is getting low” variety) — and so some investors who were terribly excited about his Million-Dollar Rapid Growth Portfolio were unable to get in before the deadline, so they’re extending the offer to today. So if you want to spend a couple hundred bucks to see if I’m right about these three miners, and see what else the “Foundation” has to tell you about the impending boom in gold prices up to $1,300 and the leveraged move the miners will make, well, there’s still time. If you do choose to throw some money their way, make sure to come back here and let us know what you thought by sharing a review of the Million-Dollar Rapid Growth Portfolio at Stock Gumshoe Reviews (this letter is brand new so we don’t have any reviews yet, but you can see the other Weiss newsletters reviewed here). Thanks!


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dlst
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dlst
March 24, 2010 3:24 am

I'm intrigued by Monty Agarwal, so I held my nose (recalling Million-Dollar-Contrarian mess) and ponied up the $ for a look-see in this new service. It's money-back for 90 days, so nothing lost unless the picks go bad, and Monty impresses me with his knowledge of global markets. He's also happy to invest in either up or down markets, unlike the Teutonic Titan (Claus) who, like Martin, was a fixated permabear.

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Steve Heine
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Steve Heine
March 24, 2010 10:49 am

dear Mr. Johnson

Do you know of the HS Dent forecast? As I understand it he is saying that between 2010 & 2012 we will see the start of the greatest depression ever that will dwarf the one in the 30's because of demographics and the fact that the boomers are out of the spending age now and there is nothing they can do to stop it. This seems like what Mr. Weiss has been saying.

thanks

Steve Heine ( nightowlsteve@hotmail.com)

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paul
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paul
March 24, 2010 1:57 pm

BEARS WILL EAT YOU
DON'T BUY BEAR ETFS

Mysticstocks
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March 24, 2010 2:01 pm

All the hype about gold hitting $2000 is no more justifiable, i think the gold would remain flat or even go down as economy gets better. As most of you know the economy and gold are inversely proportional.!

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Jeff
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Jeff
March 24, 2010 2:14 pm

I have two main gripes with Martin Weiss. One, he said that little lord Obama would be good for the country. And two, he scared the daylights out of me with his claim that we were already in a depression. I listened to him and moved my money out of The Baptist General Conference Cornerstone Fund, which hadn't lost a dime since its inception over 50 years ago, and into a non-interest bearing account at Schwab. I went from earning over 4% on my money to earning nothing on my money, all because he said that it was better to retain your principal than to worry about making money on it too.
Having said all of that, I must also admit that I do NOT think that he is a con man in the least. He may be wrong in his beliefs, but I do not think that he is trying to scam anyone. And he may end up being right after all. I could see the economy taking a huge nosedive in the second half of this year, so maybe we will enter into "The Greater Depression" after all. He may end up being right, but his timing so far certainly stinks.

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RobK
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RobK
March 24, 2010 4:59 pm

Weiss made similar predictions back in 2000-2001 when the Dow was crashing. He claimed it would drop to 5000 or less and said to get out of the market immediately. I took his advice, selling off many investments. The Dow, of course, never did hit that low, instead turning around and starting its way to 14000. I figure that cost me about 30K.

I don't know whether Weiss is a con man or not. I hope not. His bearish sentiments may be right in the long run, but, as has been said, timing is everything.

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Bob
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Bob
March 24, 2010 8:25 pm

In the past two years gold is up 18% and GDX is down 4.5%. So I don't see a whole lot of leverage in owning the gold stocks over owning gold and gold is simpler to own — no disgruntled miners, no government rule changes, no flooded mines, no skyrocketing fuel costs, no environmental road blocks.

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Advantedges
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Advantedges
March 24, 2010 8:57 pm

JEFF — YOU SAID: "Having said all of that, I must also admit that I do NOT think that he is a con man in the least. He may be wrong in his beliefs, but I do not think that he is trying to scam anyone. And he may end up being right after all." YOU WERE SPEAKING OF THE PRESIDENT? WE HAVE NEVER HEARD SOMEONE DISRESPECT A PRESIDENT WITH THE TERM 'LITTLE LORD.' PERHAPS YOU ARE PREJUDICED?
Too bad you didn't think for yourself — Weiss has lost people a lot of money. Meanwhile, our economy and markets are getting stronger every day. Of course, folks like you will never give Obama and the Democrats credit for the turn around! Great Depression in the second half of the year? Keep watching FOX, buddy. The Great Depression will come when Fox stops showing cleavage!!

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thinker70
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thinker70
March 27, 2010 3:57 pm

Comments seem somewhat extreme, on both sides. Here is what i agree with; "timing is everything"! For instance gold being up 18% and GDX being down 4.5% is meaningless, gold has been up and down numerous times in the past 2 years and so has GDX, have made good money on BOTH, it's all in reading market sentiment, knowing when the bullion banks are likely to drive the rising price back down, and FOLLOWING the TREND with appropriate ETF's on both the long and short side!

The same observation applies to Martin Weiss, he is a valuable source for contrarian opinions, he tends to be right more than wrong on the LONG TERM trends, BUT usually much to early, so you look for the evidence developing to support his thesis rather than acting in a panic to follow his advice, balance it out with less extreme viewpoints.

People who are "politically biased" rarely make good stock pickers because they can not be objective and the second worst stock pickers are those who follow the establishment view that government or the FED can somehow manipulate or control the economy through interest rate policy, "stimulus programs" ad nauseum and believe the FICTION that a true economic recovery is underway! It makes little different whether the Democrats or republicans are in charge, the fact is BOTH parties are in the back pockets of the International Bankers who CONTROL the Central Banking system worldwide and follow their dictates and policies that have enslaved the whole world to DEBT!

Fundamentals such as debt levels, mortgage resets, unsold housing inventory, off balance sheet obligations etc. are a much more reliable guide to the FUTURE direction of the economy than government statistics and pronouncements that are self surviving and generally unreliable and touted by a complicit and compromised establishment media!

GOLD and SILVER are REAL MONEY, the credit and derivatives issued by the banking system are FAKE (counterfeit) nothing more than I.O.U.'s and it is primarily the constant MANIPULATION that drives the gold and silver prices down (temporarily) the key point is that the TREND LINE since 2000 is UP and the value of the fiat currencies, (all of them) is DOWN and those trends will continue unless the system is reformed to restore honesty and transparency in place of the PONZI scheme presently employed! So far it has fooled the gullible public while the International Bankers STEAL our substance through the hidden tax of inflation that has seen the U.S. dollar lose 30% of its purchasing power since 2000 while gold has INCREASED 300%!

Eventually you doubters will be forced to become believers as more and more people lose faith in fiat currencies and the manipulated fractional reserve banking system and exchange their increasingly worth-less paper dollars for REAL MONEY that has preserved intrinsic value and purchasing power for over 5000 years.

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Shoeless,Noank
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Shoeless,Noank
March 28, 2010 6:05 pm

I'm supprised nobody has mentioned the top gold investor news letter per Hurlbert,Tom O'Brian's Gold Report. I subscribe..Look up his site, listen to his 2 hrs of tech analysis, mrkts,stocks M-F 4-6 EDT. I've followed him for about twenty years. Covers much more then just gold. I highly recommend going to his site http://www.tfnn.com. There are more shows during the day and a site ,to which I belong, of 250+ traders streaming their ideas,trades,etc. You'll be hooked.

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darin
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March 29, 2010 1:47 pm