MAKE YOUR PORTFOLIO GREAT AGAIN !
This thread is a continuation of several threads posted previously by the author on gold and silver and hard asset investments. I am still a believer in hard assets. I also believe we are entering a period of inflation with continued dollar devaluation, higher interest rates, and a sluggish economy with chaotic dislocations. I believe there will be a lot of uncertainty and high volatility.
PURPOSE My intent is to find and discuss good mining and commodity ideas. Gold and silver remain a focus, but I want to achieve a more balanced approach still based on tangible commodities.
STEEL and IRON ORE…I believe Trump’s programs will benefit iron ore and steel. Stocks in this sector have been beaten down terribly but are rebounding. I am long VALE, a Brazilian company which is the world’s largest iron ore producer. I have been long Arcelor Mittal but do not have a position at the moment. Anybody know anything about cement and asphalt ?
COPPER, ZINC, PGM METALS…My very best conviction stock is Ivanhoe Mines IVPAF. I am completely comfortable with a large single position in IVPAF to cover these metals. However other investors may be uncomfortable with a small cap in sub-Saharan Africa. So I think it is beneficial to introduce other names even though I myself am not interested. Rio Tinto, Freeport-McMoran, Teck, Turquoise Hill, BHP and others come to mind. Travis, our host, is long Altius Minerals, and I have been also.
URANIUM…I’m bullish but the choices seem pretty limited. My top three investment-grade choices are Cameco first, then Cameco second, or my third pick would be Cameco. After that, you are speculating on small caps, or buying ETFS or funds comprised of Cameco and some small caps. At the moment, I am long Cameco and UEC.
LITHIUM…I am considering a long position in lithium. I have nothing to recommend at the moment, although I am strongly considering Galaxy, an Australian company. And I like Neometals, also an Australian, but it is difficult to get from my broker, who hates it when I want to buy obscure 50 cent companies on small foreign exchanges. If anybody’s got a great battery play, I am interested.
POTASH/FERTILIZER…very interested but they all seem pretty expensive. There has been consolidation but I have considered Agrium, Mosaic, and there is a German company whose name I forget at the moment (K&D? K&S?).
OIL AND GAS…I would like some very good conviction picks accompanied by strong reasons and decent research. This field is so big, we could get completely lost just tossing names around. I am somewhat worried about price weakness in the energy sector but feel that it is worthwhile to develop a point of view on a few companies. I have little experience although I made very good money in the past on XOM and CVX. Currently I would be interested in pipelines, LNG, or any other sector that someone knows something about. In natgas I like OGZPY.
SOLAR and WIND…really not too interested. The results depend too much on politics, the time frames seem too long. But I am not completely closed-minded on it if you have conviction on something.
COAL…same opinion as solar and wind, but the prices are low and depressed instead of hyped and high-flying. I am still stuck with some defaulted Arch Coal bonds that my financial advisor recommended. They went to ZERO. Now they are worth a Starbucks latte and a pastry. And no espresso shot in the latte, either.
AGRICULTURE…very interested. A large sector but really not too many choices if you rule out futures, like I do. I have a few obscure favorites, but no positions at present:
WHGPY (Chinese pork processor who bought Smithfield)
LAND (Gladstone Land, California farmland)
INCPY (Input Capital, a Canadian canola, streaming model).
Open to more conventional picks like ADM and DBA.
GOLD AND SILVER…my picks have been discussed at length previously. I follow these pretty closely. I am long royalty/streamers SAND, FNV, SLW, and OR; miners PVG, MAG; developers SA, CLASF, MRDCF, BALMF, KNTNF, and LXVMF; and I own PSLV and physical bullion. I swing trade big caps ABX and NEM.
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DISCLOSURES. I am a retired executive and an amateur investor. I like both fundamental and technical analysis. I am a medium-term to long-term position player and prefer to discuss stock investment in that context. Please no minute-by-minute reports that oil is now 52.50 down 10 cents and the Iranians may suspend Ramadan next week so you are going long until the afternoon bell.
I am not an expert in any of the commodities discussed nor am I qualified to give advice.
Everyone makes mistakes and I make more than my share.Sometimes I change my mind.
When I post, I express my opinions and my positions. These are just that…they are my opinions and my positions. They are not advice or recommendations, which I remind you I am unqualified to make.
Opinions and positions are subject to change at any moment. That is quite unlike the pig-headed and foolish political convictions everybody carries around adamantly, and which change only rarely for unpredictable reasons that have nothing to do with logical thought or reasoned discussion.
Because of this, political developments can be introduced on this thread only when they have a clear bearing on the commodities or companies under discussion.
You are responsible for your decisions, and I am responsible for mine. Caveat emptor.
I would like to operate in a friendly, honest, and constructive atmosphere.
As thread moderator I reserve to myself the role of referee, censor, arbiter, and Grand Poobah, subject to the over-arching authority of Travis, who owns the site and who has on occasion exercised his right to ruthlessly censor and suppress my radical blatherings.
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.
I guess since I was talked to like an idiot, [on the scandium blog], I would like to point out this contribution I made to this board on sunday night, february 12th, which was the exact date of the end of the 8 week rally before a sharp downturn. I’m not just posting “look at how great I’m doing”, I’m telling you in advance my moves, i’ve told you everything I own, and if you follow me, you’ll see I kill the market by a large percentage. I tend to call the turns often to the day or week, and to be totally honest, i have no idea how I do it, lots of complex mathematics going on inside my head, its a rainman thing. But who knows, past performance is no guarantee of future results. If you read thru my posts here, you will find at least 3 other decisions I told you about when I made them, and you can see for yourself how it worked out.
This from feb 12
I am armed for bear if gold rises, but also taking leverage off after this beautiful run. I know this is basic, but friends, nice long rallies can be a great time to take a few profits, then buy the dips. To illustrate how powerful that concept is, my gold and silver portfolio, which I initiated in january/16 [yes, the renbycage neurosensorytingle strikes again] is presently very close to my highs, even with gold about 140 dollars lower than its high during this interval. That is because of small adjustments I do, selling the rallies and buying the dips. These… Read more »
2 REPLYFebruary 12, 2017 11:33 pm
Stick around, from my experience Alan is a good guy, let’s just keep in focus.
Sometimes certain people just get other people riled up.
One of the nice things about the forum is that we tend to avoid the one-shot digs, insults and put-downs that are common on other sites I have seen. Let’s try to keep it that way.
“we tend to avoid the one-shot digs, insults and put-downs” As a guest for many years, I have seen very little of this type of behavior/writing.
Thank you. Its all good. For a few moments, I got kind of pissed, was like WTF, some guy jumping on me, but honestly, who cares.
– my largest position (being a Canadian most of them on TSX or TSX.V) is IVN.TO, adding on any pullback, most of it in my TFSA (aka IRA), some accounts from $1.8 and some up to $3.2
– others: ERD.TO is 2nd by size, after IVN, avg from 0.35 to 0.78, multiple accounts, recently bought more for 0.83; tightly held shares, doesn’t drop as much with GLD pullback. These guys are still drilling and defining the resource, nice grades
– MOZ.TO, buying from 0.61, recently added when it went below $1
– SEA.TO, OGC.TO, HBM.TO, EXN.TO, NXE.TO
– other, smaller size plays are BCM, GRG, OOO, TUO, GDM, BEX, all canadian tickers
This carnage in GDX/J we are seeing will end soon, planning to add KL.TO, Sheritt, and a few more in the coming days/weeks
abubu…thanks for posting. We have many of the same picks…did this happen independently, or have your picks been influenced by this thread ?
It is interesting to have a Canadian small cap investor’s perspective, especially one who is investing retirement account money.
Jim Rickards says that Trump will raise the US debt ceiling on March 16, which will cause the price of gold to “explode”. Is there any truth to this?
James- Why would raising the debt ceiling cause gold to explode this year when it did not last year or the year before that or the year before that or the year before that… I think you see where I’m going. Why is this year any different?
Lots of folks talking up the debt ceiling fight as it may impact either bitcoin or gold, though when it’s a newsletter doing the talking you can be pretty sure that they’re exaggerating the importance of a particular date because they know you need a hard and scary deadline to make you subscribe to an expensive newsletter. Here’s what gold and big gold miners did during the last two hotly-debated debt ceiling raises, FYI:
http://www.stockgumshoe.com/wp-content/uploads/2017/01/debtceilingGLD_GDX_chart.jpg
Thank you Travis, for putting the big issues into an appropriate perspectives. By helping to educate us, you are preparing us to make better investment decisions.
Thanks, Travis. Brilliant and clear as always.
This is two speculations in one…first that the debt ceiling will be raised, second that it will have an inpact on prices. My opinion is that the debt ceiling is the tail on the dog…it is a symbolic gesture that indicates a desire to manage federal spending. I’m somewhat skeptical that it anyone really knows how much the debt is, or if the ceiling is anything other than a statistical alarm bell.
As far as triggering anything, exceeding the ceiling or approving the raising of it just confirms the move towards inflationary policies that are already in place. Trump’s stated policies are mostly inflationary. If he is successful implementing them, it is hard to see how they will not be inflationary. He will succeed in creating inflation, whereas the old Fed policies failed at it.
As far as gold and silver prices, the tug-of-war betweren inflation and deflation will be played out and the results are uncertain. On the one hand, inflation and currency debasement should result in higher prices. On the other hand, higher nominal interests would be expected with inflation, and this is bearish for gold.
I don’t see the debt ceiling as consequential in any way. Its just a tool for conservatives to hamstring democratic presidents. When a republican is president, its more like shhhhhhhhhhh, nothing to see here. Not sure whether Trump will be inflationary, but probably. I kind of see more winners and losers, and a lot of unintended consequences that are very difficult to predict.
I agree. However, it is just 1 of the many things that each side complains when the other’s is in office but not when theirs is. I am disappointed that both sides are not doing much to deal with the rising debt – especially the unfunded debt.
no sh*t. World debt, government debt, corporate debt, individual debt….. is exactly why I have a huge allocation in gold.
Indeed, bery logical and I mostly agree in the big picture (and buy gold pretty regularly)… but be careful about perspective and timing — Debt was also rising and out of control in the US and elsewhere, at least according to the norms we had then, throughout the 1980s — and that was not a particularly good time to make an aggressive switch into gold (the price generally trended down from 1980 or so until the dot-com crash (and brief recession) in 2001).
Debt has been obviously unsustainable for decades, predicting the end of the empire of debt is a cottage industry that has grown nicely without, so far, actually helping anybody.
Great point. At the least, the smart investor should be aware of the vulnerabilities, and have a strategy to do well, or at least be OK, under all conceivable circumstances. I like gold better than dollars for many specific reason I’ve already shared here, but I still hold a significant cash allocation, as well as a few other asset classes. My own feeling is the consequences to all this unsustainability is getting closer. I’m not screaming its coming tomorrow, but my sense of the over/under is about 5 years, and it could hit any time.
I am of the same opinion…could happen any time, in unpredictable ways, for unpredictable reasons, with unpredictable results.
This is uncertainty. When things are uncertain and start to unravel, I want to be in gold.
Better a year too early than one day too late.
No one can solve overnight the problem that has been created by 50 years of mismanagement.
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
Mentions Ivanhoe….
https://youtu.be/TjYTyt7jCwM
Ivanhoe Mines recent video….
Just some more general thoughts about gold. I like gold for a lot of reasons, mostly as a hedge against paper money. To me it is a pretty simple formula…. if they are printing and distributing dollars [and other paper currencies around the world], in order to stimulate the economy by encouraging more spending [and debt]…. that means that currency relative to gold, which cannot be printed [or created digitally], will go down. The formula really boils down to, at the end of the day, something which is in limited supply will go up in value relative to something that is in unlimited supply, when those two items represent the same thing. So just from this perspective, I feel the odds are pretty low that gold is going to come crashing down in paper currency terms anytime soon. I do however, fear the vulnerability of the dollar crashing, I would put at least a 15% probability of a major crash event happening in, lets say, a 10 year time span. If it happens it could wipe out 90% of people over 50, with no chance of recovery. Between my large gold allocation, and my ocean-front condo in costa rica, where if I want or need to, i can live for basically the cost of food, I think I’ve covered myself against a variety of quagmires. If the world somehow keeps itself glued and paper clipped together, then I have no problems, I can continue teaching doctors into my old age.
So while the above forms the fundamental principle why I want a percentage of my money in gold, there are actually a whole other mess of reasons why I think gold may significantly go up in dollar price, in the next 3-7 years.
The first is just its cyclic nature. 14 months ago it just came off a very long bear period, and to me, the gestaldt of things points me to the view that what comes next is a long bull period.
I also view the vast differential between the paper money gold, and the available physical gold, as a time bomb. If that bomb goes off, meaning somehow even a small % of the paper money wants to take hold of the physical, that blast could send gold up like a rocket at the speed of light.
I am not an expert on this topic, but if I am reading the tea leaves, China is going to become a lot more influential in affecting the price of gold, and I believe they are also setting up new gold exchanges in Shanghai and London. My projection of this development is gold is now traveling a path that may begin to dis-entangle itself from the powers that presently manipulate it. And again, if my understanding is right, these powers have tended mostly to suppress its price. So dis-entanglement could set it free for a very different valuation.
I am pretty certain the future of money is digital, no more pieces of paper, just cards with chips, phones with chips, and eventually they just put a chip inside you, and then someone just swipes a credit card down your butt crack, and it debits your account displayed at the back of your neck. How this will effect gold is something I really haven’t figured out. I’m considering both positive and negative potential affects.
Anyway, I continue some other time, that’s enough thoughts for now,.
Thanks for posting renbycage, agree with your observations.
You never quite know what is round the corner, hopefully nothing to much regards fiat, but the writing is on the wall. How long they can keep printing is anyone’s guess. Complex but simple subject in many ways.
Regards digital (the future no doubt) and gold, well pressing a computer button applies to both, but digital they can control “all things” much easier IMO….
I agree. However, over 3 decades ago, before I knew or understood the amount of silver manipulation that was or would occur, I purchased a bag of junk silver coins. I reasoned that the coins would serve duel purposes – a store of value (inflation hedge) and coins that could be used as practical ‘real money’ (denominations small enough to use for many/most transaction.
The first and best silver purchase one can make.
Interesting and valid observations, Renbycage.
I’m betting on gold and silver, and I wish I had a condo in Costa Rica. (I seriously considered buying property there when BHO was elected to a second term because I was very worried about the direction the country was taking. I didn’t have the funds at the time, but maybe someday…).
If all “goes well,” digital currencies (anything from debit cards to bitcoin-type currencies) will probably become more popular. Most people don’t tend to think much; they’ll go for the immediate convenience and not bother to think about the government-control aspects of a move away from physical “cash.”
HOWEVER (and it’s a big however), anything that depends on an electrical or digital infrastructure is neither secure nor guaranteed to be available when you need or want it. Grids are too easily destroyed and computers are too easily hacked. Random, planned, or catastrophic interruptions in those systems can either temporarily or permanently–and without notice–part you from your money. That is true with today’s banking system and will become more so as the powers that be try to get rid of physical cash and centralize and track all financial transactions. Even bitcoin–although decentralized and not government controlled–cannot exist/function without the electrical grid and computers.
On the other hand, as long as you have physical possession of them, gold and silver aren’t going to be turned off and aren’t going to disappear if the lights go out, if the banks turn off their computers, or if an enemy (internal or external) maliciously messes with the system. Gold and silver are not ink splotches on pieces of paper or electronic 0’s and 1’s on a computer; they are actually “there.”
The most important attribute of those two precious metals is that they seem to have staying power. They have outlasted ALL other forms of money for thousands of years. Salt, beads, furs, paper currencies, etc., have all come and gone–but gold and silver are still with us and are still considered to be valuable. And silver has industrial uses–at least at present.
On a tangential note: The “at least at present” is important for any commodity other than the precious metals that have a 5000+ year track record. Investors sometimes tend to forget that the future might be very different than the present. For example, I have a small position in a lithium miner because I foresee increased demand for lithium batteries. BUT, tomorrow someone could invent a better battery that doesn’t use any lithium, and the lithium market could go poof. At one time, investing in buggy makers and horse-shoe makers probably seemed like a sure bet. We need to be aware of our “current moment” bias.
renbycage…I agree with the simplicity of your observations on gold, and would add only the observations of the strong historic, transnational and trans-cultural fact that gold has always been and will likely continue to be a prized and valuable commodity.
I believe that gold is the ultimate form and symbol of money and wealth.
But only in the last year, I have come to believe that the price has been suppressed, and will continue to be suppressed, by the international Establishment.
Instead of complaining about the situation, I try to just take the position “they” don’t want one to take…I accumulate the real asset, like they do, at favorable prices.
As I have a long-term perspective, I just try to be patient. I believe that the increasingly desperate machinations to manipulate the price will end eventually, as most such attempts have ended: in complete failure.
What is “different this time” is the international effort to prop up a variety of fiat currencies all at the same time, and the technical advances in communication and banking. There is no historical precedent that I know of for these circumstances.
Even so, we have the historical infallibility of fiat currencies to destroy themselves. This is simply a reflection of the inherent tendencies of governments and human nature. I do not believe these have substantially changed on account of digital advances in technology and communication, although the eventual outcome may be delayed.
renbycage, on the digital future: the tendency is definitely in the direction you describe.
I for one think it is to be avoided, but the practical options for doing so are pretty limited.
We will all be seduced by convenience and comfort. The only real hope, as I see it, will come from
adherence to old-fashioned American ideas like the right to privacy, and limitations on the power of our national government: and I mean, OUR national constitution, OUR laws, and OUR Supreme Court.
DIGITAL FUTURE and the dangerous potentials of technological advances: The advantages to the consumer will always be stressed when powerful technology with negative possible effects is introduced.
Recent examples are RFID technology, GPS in phones, driverless cars, drones, and home control utilities.
1. RFID technology is introduced in the retail sector to gain inventory control and tracking. But of course it can be used on anything, such as PEOPLE.
2. GPS…of course we all use google maps. But our every move and location are now recorded and can be monitored.
3. Drones…great for UPS deliveries and saving American lives in warfare. But in conjunction with GPS, authorities can kill individuals remotely, as has already been demonstrated.
4. Driverless cars…great but see number 2 and 3 above. The possibility of authorities murdering you by crashing or hacking auto computers and driving you into a tree has already been considered, as revealed by CIA revelations in Wikileaks. Someone will also have the ability to take you where you don’t want to go, or prevent you from going where you want to. Or taking you to one place that you think is someplace else. That is called kidnapping.
If they will consider doing this to prominent people, you certainly have no protection.
5. Home control utilities…wonderful. You can change your thermostat while you are on vacation, all by voice. Trouble is, the people controlling these utilities can evesdrop on you, cut off your power, tap your phone, turn off your alarm system,
and get into your computer the same way. And the whole thing is tied into the untrustable bigs…CIA, NSA, Google and Microsoft and the rest.
I believe Cesar’s political advisors suggested that he distract the populace by giving them Bread and Circuses, which the crowds readily accepted. I suspect we are now dealing with the technological equivalent – but the purpose is the same – to control the opposition. Ah, the price of progress.
I have had the same thought about Bread and Circuses.
The attention and distraction of athletics is ubiquitous, and often takes place in venues that are architectural descendants of the Colosseum. The combat is watered down, people do not literally kill each other or get torn to pieces by wild animals; but the language and metaphors are the same. Sponsored by McDonalds and Pepsi and Pizza Hut.
The popularity of the fighting sports is also derived
and akin to the gladitorial tradition. These have become increasingly violent and often show blood.
The viewing is both live and in the comfort of our living rooms thanks to technology.
Why do you think the Super Bowls have Roman numerals ?
HN – I think history often provides us with answers to today’s problems – hence our references to the Romans and the Colosseum. Sir Walter Scott also made his contribution when he said. “”Oh! What tangled webs we weave, when first we practice to deceive”. One deception will inevitably follow another, until Reality becomes a distant memory.
Good point, Petervr.
Gee…why does Sir Walter Scott’s comment remind me so much of our federal government and its media accomplices of the last several decades??
Without the alternative news outlets, we’d likely know next to nothing about much of the corruption and lies–including gold and silver manipulation–that are coming to light. I shudder to think how much propaganda we’ve been fed in our lifetime. (Julian Assange deserves a medal of freedom.)
The problem is figuring out which parts of the information that we are being fed are meant to distract us and which parts are truthful and important issues.
I think of the (unverified) report of Hillary Clinton at a high-level meeting about Julian Assange and Wikileaks.
She is reported to have said, “Why don’t we just drone him ?”
I also think of the films I have seen of military personnel in Nevada directing drone strikes on computers and real-time monitors against individuals in Afghanistan. Pretty much like playing a video game. They can kill an individual on the other side of the world with a mouse and a click.
gold,silver -thanks travis. what is current take on mariana resources? seem the assets with having especially Hot Madden and others . best of luck and God bless you for everything youv done.
$MRLDF…there has been no major news I am aware of. We are in a hiatus pending new announcements concerning PEAs and timetables…the last set of announcements indicated plainly that Lidya (70%) and Mariana (30%) were moving with all possible speed towards developing data to support a mine plan and construction decision. So my guess is they will be quiet until then.
The recent drop in spot gold has drubbed the stock price. I am a little surprised the stock has dropped so much, but nothing fundamental has changed. I am in at pretty low prices so I am not distressed, in fact I am considering adding to my position and I think
the current prices, well under $1, are pretty attractive.
The deposit, management, and backing are still all in place. This is not a discovery speculation. We are not gambling on finding something good. Something good has been found, and there are major efforts going on to develop the mine. Sandstorm has nearly a ten percent interest. They are not only in it for the royalties, they have a major equity position. They have geologists and financial expertise. So why do they have such a big stake ?
Another thing. One director from Lidya and one from Sandstorm Gold have been appointed to the board of directors of Mariana. This would not occur unless there was serious intent and high confidence in a productive and profitable mine being built on the part of Lidya and Sandstorm. Why else would Ron Ho, the CFO of Sandstorm Gold, who must oversee a few dozen producing royalty and streaming assets and over 100 royalty deals, take the time and energy to join the board of an English penny stock company with a project in eastern Turkey ?
Mariana is primarily a gold development play. But I suspect the copper in Hot Maden will add a nice plus to the valuation at some point. It is a gold/copper deposit, and a big one.
Long $MRLDF, long $SAND
A telling clue for good mining and resource stocks…I have noticed the following circumstance in three mining stocks that gives me a very good feeling. Whether this confidence will translate to strong stock performance and personal profit remains to be seen.
(Drum roll)…when a resource has been confirmed and a PEA has been written, I think it is a very good sign when management has to go back to the drawing board and revise the PEA and mine plans, TO CONSIDER THE POSSIBILITY OF EXPANDING THE MINE BEYOND THE ORIGINAL PLAN. This often results in a delay, but is obviously positive because the discovery is so much larger than originally contemplated that management wants to build a bigger mine.
This circumstance has occurred with:
IVANHOE, concerning the Kamoa/Kakula copper discovery in the DRC.
MAG Silver, concerning the Valdecamas/Juanicipio project with Fresnillo.
SEABRIDGE, in connection with the KSM deposit.
The speed and decisiveness of a decision to complete the PEA and other milestones is also noteworthy. Compare the all-out, pedal-to-the-metal action of MARIANA RESOURCES. Lidya and Sandstorm Gold on the Hot Maden project, to the foot-dragging of NAK. Hot Maden will go from drill discovery to PEA in about 3 years, whereas NAK is decades old and there still not even one ounce established of proven or probable mineral reserves.
Colorado Resources up date:
March 13, 2017
@marketwired Colorado Resources Expands North ROK Property to Include ROK-COYOTE Copper Gold Property $CXO
Long CXO
Link here – http://www.coloradoresources.com/s/NewsReleases.asp?ReportID=782657&_Type=News-Releases&_Title=Colorado-Resources-Expands-North-ROK-Property-to-include-ROK-Coyote-Copper-…
Here is a link from end 2014 regards last drill results from ROK Coyote, I guess they thinking something is there having completed a deal?
Firesteel Announces the Withdrawal of OZ Minerals from the ROK Coyote Option Agreement and Releases 2014 Drill Program Results
November 14, 2014
Firesteel Resources Inc. (“Firesteel” or the “Company”) (TSXV: FTR) today announced that it had received notification from OZ Exploration Pty. Ltd. (“OZ Minerals”), (a wholly owned subsidiary of OZ Minerals Limited [ASX:OZL]), that it is withdrawing from the Option Agreement concluded on February 3rd 2014 (the “Agreement”) on the ROK Coyote property (the “Property”) in northwestern British Columbia.
$CLASF North Rok property announcement…Mildly positive but the focus of the company is not on this property. The focus of the company is on the KSP/Seabridge option.
I looked at the maps, it fills a big crater in the Colorado holdings, but the gold content of this zone is not a slam-dunk. And the deal is for Colorado stock, there is a lot of advantages for both parties. Maybe Colorado has something up its sleeve; but this looks like a consolidation of long-shot properties more than something that will be on the front burner.
Long $CLASF, it is an exploration speculation.
Long $SA, it is a development play with big proven economic reserves.
Thanks for the insight hn, appreciated…..
$CLASF – COLORADO RESOURCES EXPANDS NORTH ROK PROPERTY TO INCLUDE ROK-COYOTE COPPER GOLD PROPERTY
http://www.stockgumshoe.com/2017/01/microblog-gold-and-silver-and-hard-assets-after-trumps-inauguration-2017/
$CLASF long
Oops secretsquirrel posted where is second coffee
Ha ha, but yours in better laid out/easier to read….
Seems to have been positive regards the SP so far today.
$IAG
Should I take a 5% loss on $IAG and use those funds on $IVPAF or some other miner. I’m liking Uranium too. Thanks for all the great insight.
Cliff
Not sure anyone but you can make that call without knowing a great deal more about your holdings, investment goals, etc.
Each of us has to make our own call based on these factors. Personally I have never been a fan of IAG but it is likely far less speculative than Ivanhoe given the size of the companies. Remember “ALL MINERS SUCK” 😉
RE: IAG, IVPAF.
Heady Hedy.
I do not know IAG at all. But in my own portfolio I have sold winners, losers, and those in between to raise money for Ivanhoe and CleanTeq,
which I regard as the best resource stocks I know of for likely appreciation potential. I have even trimmed some of my conviction gold picks.
I can understand it if people are shy about CleanTeQ. But with Ivanhoe, it is hard for me to understand why someone who is interested in resource stocks would not have a position.
HN
No disagreement. Cliff needs to decide what is best for him. Companies he asked about are not comparable.
Full position in Ivanhoe.
Thank you for the reply. This community is awesome. I just started a little account with fidelity in October because I knew Trump was going to win so I wanted to make some bets. My account is basically gambling money that I can afford to lose but I would love to see some explosive gains ($NAK and $SING took me for a nice ride) When I look at the chart for $IVPAF I get discouraged because I feel like I missed out on the party. But you all seem to be pretty high on them so maybe I will just show up late to this party.
Crusadercliff…if you are a long-term or intermediate-term investor, take the time to go through the threads and websites on Ivanhoe.
You will get a feel for why there is reason to be bullish.
If you are a short-term trader you can probably win playing on the long side. It makes a big difference if you have a point of view on the ultimate direction of the stock.
When copper hiccups, Ivanhoe will react. The rcent move in copper from $2 to 2.80 sent Ivanhoe through the roof.
There are a few miners that suck less than others.
Hendrixnuzzles Teaser…stay tuned, this week I will unleash a new pick in a totally different hard asset commodity that has never been the focus of attention on my hard asset threads. One of the companies we spend a lot of time discussing has an investment in the category.
As usual I am not claiming any special expertise in the target field. But I will try to bone up on it a little bit before subjecting you to my opinion. Also I want to be long at the time of publication, and I have not decided where to get the cash.
Very interesting interview with James Turk…
When Silver Breaks $50, that’s when Bull Market Begins! – James Turk Interview – YouTube
https://www.youtube.com/watch?v=ij4c__Qnnio
$NMKEF – Nemaska Lithium Produces up to 6.65% Li2O Concentrate from DMS Modular Mill at Whabouchi
Nemaska Lithium Inc. (“Nemaska Lithium” or the “Corporation”) (TSX:NMX)(OTCQX:NMKEF) announced today the results of its initial production of spodumene concentrate from the Whabouchi Mine, using a mine representative bulk sample. The plant is running continuously at half its capacity, 12 hours per day since March 7, 2017. Operation is steadily ramping up and should reach a throughput of around 150 tpd.
http://www.nemaskalithium.com/en/investors/press-releases/2017/021b0819-6067-4888-995a-098ce91e6acf/
Note, From this article 6% is the min for deliverable Lithium to battery mfg Memaska has just started production.
THE HARDEST OF THE HARD ASSETS
As promised, a new speculation in hard assets, to my knowledge never
discussed in depth on our Venue.
Diamonds, of course.
The diamond is manifestation of wealth, and a metaphor for beauty, value, and durability that has spanned human civilization. The diamond, like gold, is proverbial and has insinuated itself into our language and thought as the ultimate in density of value and durability.
Diamonds are the ultimate hard asset. Even so, as an investment vehicle, there seem to be more reasons to avoid diamonds as an investment than to own them. If one has the means, collecting them might be an enjoyable and potentially lucrative pastime; but as an investment, I am distrustful.
Diamonds are illiquid, they are indivisible, they require experts of the highest integrity to evaluate, and the market is difficult to penetrate economically for amateurs. Ordinary people cannot buy and sell them without great risk and without surrendering large spreads on buying and selling. We are sure to be disappointed when we really need to sell an heirloom gem, and we will usually pay large markups over wholesale when we buy.
As investors, we can find large miners like Rio Tinto, but large miners suck; or big distributors, like DeBeers, who are either opaque or private; or retailers, like Tiffany’s or a large jewelry chain store, who must survive by marking up the assets to prices well above the intrinsic value of the commodities being sold. In short, I dislike the investment opportunities I have seen up to this point.
The expertise needed is a barrier for knowledgeable investing, whether one wishes to own the diamonds directly, or one wishes to put a diamond miner into one’s stock portfolio. Personally I would not feel comfortable investing a large amount into diamonds without taking a course in gemology and being an apprentice in a jewelers for two or three years.
For these reasons, diamonds have been absent in my investment portfolio, and very rare in my personal acquisitions.
Keeping these caveats in mind, I have found a diamond miner that I think is a reasonable speculation, and into which I have put a few bucks that would otherwise be invested in Ivanhoe, Sandstorm Gold, CleanTeQ, PVG or MAG. I do not consider this miner an investment, it is presented as a SPECULATION.
I have a good feeling about it, but for various reasons I do not think it is possible to develop the same level of conviction as one might with other miners or commodity investments.
My thinking is more along the lines of a “black box” and mega-trends.
The traditional figures and data used in mining company analysis are present and decent, but not compelling. I have given more weight towards certain factors that I feel are significant in the evaluation of the potential.
***
LUCARA DIAMOND CORPORATION is listed on the Toronto Stock Exchange LUC, on the NASDAQ LUCRF, and in Sweden. It is currently selling for about $2.70 Canadian, $2.00 USD. The market cap is about $700 million USD.
I am long, I entered this week at $2.00 USD.
Their main operation is the Karowe diamond mine in Botswana. The Chairman is Lukas Lundin.
They have been in operation for about 5 years: the Karowe mine was acquired from DeBeers, who did a lot of geological work on the property but did not see it as a high priority project.
The traditional metrics in financial and mining are OK, but not eye-popping: things like reserves and income, profit and so forth.
What stands out to me is that they have no debt, and $ 50 million cash. They are able to process the ore at what seems to be a low cost ($30 per ton); more on the data later.
***
Here are the main reasons I was willing to speculate on Lucara:
MANAGEMENT, LUKAS LUNDIN His track record in resources is phenomenal. Runs in the family. He is a billionaire. He sees something very important in Lucara, and I am sufficiently confident that the company will have whatever is needed in the way of finances, and that the management of the company is solid.
KAROWE MINE…It looks like it could surprise. In fact, the mine has already surprised. Sit back and think about this: After being in operation for only five years, this mine has already produced two of the top ten largest diamonds ever discovered in human history. They already have mined the second-largest and sixth-largest diamonds ever seen.
The diamond they found late last fall has been surpassed in size only by the legendary Cullinan diamond, discovered in 1905 and on display in the Crown Jewels of England.
Once, you can call it a lucky hit. But if your mine has found two of the ten largest diamonds EVER mined, in your first five years of operation, I say your mine is onto something.
OK. So they found a big diamond. How important is that to the overall picture ? How much will one such diamond, or two or three be worth ? Well, we don’t know. The big diamond found recently has been named in an international competition, and the diamond will be auctioned in summer of 2017. It will likely fetch a price north of $50 million. They are getting calls from buyers all over the world for this stone. There has been discussion of $70 million dollars for this diamond, which is about the size of a tennis ball. We’ll just have to wait and see.
PRODUCTION PROFILE…The Karowe mine has a disproportionate amount of very large stones. Overall, world diamond production has a tiny percentage of diamonds discovered that are over 2 carats. Yet stones of this size are something like 75% of the recoveries at Karowe. Thus the Karowe deposit is very unusual in that large stones are a very high percentage of the production.
In addition, the chemistry and quality of the stones recovered at Karowe are very high. These qualitative factors are strong considerations in the murky and arcane world of forecasting income and sales per carat, as diamond prices at all levels are highly sensitive to size and quality. A diamond that is a little bigger, or a little above a certain quality rating, can command a dramatically higher price over the grade or size just below it.
BOTSWANA…Didn’t know much about it, another sub-Saharan African country, but from what I have been able to find, it is as good as it’s going to get as a jurisdiction in that part of the world.
MARKETING… Lucara seems to be really on the ball in sales and marketing. They are having regular auctions on their best stones, so besides the usual mind-numbing quarterly accounts, if we are interested we will be able to see their auction results. I have already mentioned the auction coming this summer of the monster diamond they found…it will be at Sotheby’s. This is completely uncharted territory in the gem rarity business, and will be of interest to the world’s wealthiest individuals and institutions.
TECHNICAL ASPECTS, PRICE…the stock seems to be at a good entry. $2 is an intermediate low, the stock has been over $3 recently so I feel we are at a decent place to enter.
Geology and metrics: I am not an expert but am trying to make some sense of both the lithography and the methodology used in the NI-043 figures and technical reports.
The lithography is basically centered around a pipe-like upwell structures, composed of a rock called kimberlite. The Karowe mine plan includes three such pipes, or lobes; one of which, the south lobe, is significantly bigger and of more promise that the others. The diamonds occur in the kimberlite, and its extent in the drill cores are the basis, for what I can tell, for determining the extent of diamond-bearing rocks. Of course, in the drill cores, there is a measure of the carats of diamonds found per 100 tons of rock; but the value of those carats found is uncertain, because grade and size of the stones are highly relevant. The data is boiled down into a gross figure of carats per 100 tons of ore. It appears that grades of 10-15 carats per 100 tons of ore are economically attractive at Karowe. In 2016 Lucara realized over $800 per carat, and their milling costs are about $30 per ton of ore processed; so in that case, $3,000 of processing would fetch $8,000 or more in diamond sales.
There are reams and reams of charts showing diamond frequency, by size and quality and other measures, but despite all the data there remains a highly imperfect estimate of the diamond content. What we want to know is just not something that can be known with any degree of certainty.
It is not like a copper deposit, with a drill core one hundred meters long that grades at 4% copper and can be proven to extend for X acres.
So no matter how much data one sees, in the end we are speculating on there being more diamonds, rather than less, in the mineable ore. We just aren’t going to know what is there until they process it.
TECHNICAL ASPECTS OF MINING…Lucara seems to have a pretty advanced processing and mining operation. They seem to be aggressive in applying technical improvements.
***
In the big wide world, high net worth individuals seem to be increasing, regardless of the social desireability of wealth concentration. These individuals and other institutions will be the target market for Lucara production from Karowe.
It is a clientele and market most of us are unfamiliar with. But if these folks are willing to spend tens of millions of dollars on a painting or a yacht, it is not hard for me to imagine numbers of them willing to spend similar amounts on rare gems that have been previously the objects of acquisition by kings and queens and emperors, and the wealthiest people of the ages.
I have a hunch that Lucara will find more noteworthy gemstones and reach this market effectively. And I am speculating that their production and the pricing of more “ordinary” stones, over 2 carats, will continue at rates that make the company an attractive speculation.
DIVIDEND…lest I forget, Lucara pays a nice dividend of 25 cents a quarter. Dividends are subject to change, and I am not chasing their dividend. But to get $1.00 a year in dividends on a $2.00 stock would be a pretty good reduction of investment risk. I suspect that Mr. Lundin uses the Lucara operation and dividends primarily as a source of income. Even billionaires need cash flow, they have to have income between their 500 million dollar company transactions. The crew on the yacht has to be paid.
EXPLORATION UPSIDE…there is some exploration upside, but it is not compelling, nor is it a major factor in my consideration.
DIAMOND PRICING UPSIDE…might be there. Might not be. The tests on some satellite pipes show diamonds but not at the density of Karowe.
SOCIAL CONTRACT…they look solid. They have a lot of waste rock and use a lot of water. Maybe they will be a CleanTeQ customer.
That’s about it. My information comes mostly from their website, and a few interviews with William Lamb, the CEO. Lukas Lundin I had heard of by reputation.
http://www.lucaradiamond.com
Thanks hn,
For interest – Mining pastor unearths 706-carat giant diamond in Sierra Leone
https://www.theguardian.com/world/2017/mar/16/pastor-unearths-giant-diamond-sierra-leone
The diamond presented on Thursday, once confirmed by experts, is expected to rank among the largest. A 1,111-carat diamond was discovered at a mine in Botswana in 2015, the biggest find for more than a century.
HN: thank you for the thorough analysis as always.
Does anyone know how it works with respect to the dividend payments for holders of $LUCRF (i.e., the Nasdaq OTC version of the stock)
You get the dividend through the less some minor fees charged by the intermediaries and whatever taxes are levied by the Powers.
HM,
Clear and concise write up. Just curious if you buy many/most of your resource picks OTC, or make directed buys on the original listing exchange (if you don’t mind sharing that info). I have really enjoyed this thread. Thanks to all contributors.
I buy mostly on the OTC market, not that this is the best way. It is just convenient for me.
I would prefer to buy on the appropriate exchange in the local currency, but I do not think my asset sizing would make it efficient to do this since I am looking at various countries and currencies. I have positions in companies domiciled France, UK, Canada, Brazil, and Australia. I have occasionally bought Russian and Chinese stocks as well.
Self-correction and other information:
I gotta remember to check those Youtube dates. The interview with William Lamb was an old one, the Sotheby’s auction was LAST YEAR and the diamond was not sold. However in one of their own auctions, they sold an 813 carat stone for over $60 million. My apologies for the inaccuracy.
The diamond from Botswana referred to in the Guardian link was from Lucara.
Thanks HN. Much appreciated.
Nice work HN.
Colorado Resources news release.
https://ceo.ca/@marketwired/colorado-closes-financing-for-367m
Long CXO
$LUCRF…Lucara Diamond Corporation…Having introduced this speculation, I feel obligated to report potentially negative factors as I discover them.
Two such facts have come to notice:
First, the noted research error I made, that the date of the Sotheby’s auction had come and gone last summer, and the stone failed to bring a satisfactory bid.
Second, published on the website is a three year graphic on sales of exceptional stones by price point. The years charted are 2013, 2014, and 2015; 2016 and 2017 YTD are not included.
The figures show a a spike up in 2014, and a reversion to the 2013 level in 2015. So there is not a clear trend upwards in this segment, which is the basis for my speculation.
It could be argued that the chart trend indicates that this category is trending downwards, or has peaked.
I have no rebuttal for this, and when we see 2016 figures the concern could be amplified. It is possible that there is a main deposit of large stones which is being exhausted, and that production will be downhill at Karowe from 2014.
The main statistical basis for my speculation was the profile of large stones of high quality, and the potential
value of them; so both facts are germane and must be considered as detrimental to the outlook for the company.
I am not trying to persuade anyone that Lucara will be a great investment. It might be, but at this point it is a just a speculation.
HN: another diamond share you and fellow gummies may like to look at is Lucapa Diamond ASX LOM currently .38c AUS
Williamstown, thank you very much for this.
Lucapa appears completely credible, and I wrote up a comparison of the relative plusses and minuses, but erased it by accident before publication.
Anyway the upshot was that in some ways Lucapa may be preferable to Lucara, especially because of Lucapa’s small market cap.
In both companies I need a better understanding of the geology and technical reports to form a stronger opinion.
The deposit size and quality is the key in both companies,
as it is with all mines, and my impression is that diamond
reserves are more unpredictable than most mining commodities.
Thanks again for your contribution.
Lucapa was recommended by one of the Port Phillip newsletters I think.Have been following it trading between 35-40 cents Aussie.