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XMFSinchiruna (27.12)

The Greatest Gold Stock in the World

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September 26, 2011 – Comments (23)

I haven't experienced a moment of true concern in the precious metals market since my first correction in 2006. By the time the 2008 correction came around, I had acquired a strength of conviction egarding the longer-term trend that empowered me to watch with almost detached fascination as my portfolio took a previously unimagineable hit. That conviction came from trusting in my constantly tweaked read of the macroeconomic landscape, and in that pursuit I have never waivered. This correction finds me watching with a similar sense of fascination, but not a single shred of concern. My sole point of self-recrimination is that I did not retain a larger cash allocation before this fall, thereby essentially committing the same mistake I made in 2008 and sought not to repeat. The good news for my fellow Fools is that, since I am essentially now all-in, I am not likely to be hindered in my coverage by conflicts with investment activity. Often during selloffs I am unable to comment on some of the best-looking buys because I may be buying shares myself. This time around, I'll be able to focus on you and where you all can best be looking to find opportunity in the midst of this near-term weakness.

Along those very lines, I offer to you:

The Greatest Gold Stock in the World (Part 1)

and

The Greatest Gold Stock in the World, Part 2

If I had been wise enough to retain additional cash on the sidelines to take advantage full advantage of this selloff, I would be buying shares of Primero Mining hand over fist beneath $2.50. I encourage you to read the two-part series above, and share your thoughts on the company's prospects and the valuation below.

In just an abbreviated, off-the-cuff fashion, here are some other tickers that have been catching my eye recently as extreme bargains in the midst of this selloff. I will list tickers without much explanation, and leave it to you all to take responsibility for determining relative risk between different types of vehicles at various stages of development, etc., etc. There are many, but these stand out as being particularly alluring (in no particular order):

PPP (pole position: see above) 

CDY (best value outside of pm sector)

TGB (they are beautifully hedged against this copper decline)

BRD (I doubled down at $1.47, and frankly never thought I'd see the level again)

AUQ (I mean, come on! Under $10?)

CPFXF (practically a 2nd chance for those who missed it the first time)

PLGTF (The market has seriously dissed the Fronteer Gold gang, and ignored Haligaga!)

SGSVF (One of my all-time best performers, back down to earth for a second voyage)

+ Most of the copper (esp QADMF, HBM, SCCO) and coal stocks (esp. PCX, ANR, BTU, YZC). Seriously, these entire sectors are WAY oversold IMO. Further intervention and stimulus will seal the deal.

I hope many of you still have some cash on the sidelines to play with. IIt wiull be fun to live vicariously through your subsequent moves to ease my pain about having left myself with insufficint cash (again!).  :)

Good luck to all!

23 Comments – Post Your Own

#1) On September 26, 2011 at 5:28 PM, XMFSinchiruna (27.12) wrote:

Not to steal skypilot's thunder, but .... :)

http://www.copperfoxmetals.com/s/NewsReleases.asp?ReportID=481234&_Type=&_Title=Copper-Fox-Extends-Mineralized-Zone-to-the-East-And-Completes-Strategic-Acq...

Vancouver, British Columbia - September 23, 2011 - Mr. Elmer Stewart, President and CEO of Copper Fox Metals Inc. ("Copper Fox" or the "Company") (TSX-V: CUU) announced additional diamond drill results from the Paramount zone and the acquisition of four strategically located groups of mineral tenures located adjacent to the Schaft Creek project. Mr. Stewart stated that "DDH CF410-2011 extends the zone of higher-grade mineralization to the east beyond the limits of the 2008 open pit and further demonstrates the mineralized nature of the chargeability anomaly outlined in 2010. The acquired mineral claims provide additional coverage of the interpreted extension of the Schaft Creek mineral trend and the presence of low grade copper mineralization on these new claims increases the potential to find additional mineralization to the north and south of the Schaft Creek deposit."

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#2) On September 26, 2011 at 5:29 PM, XMFSinchiruna (27.12) wrote:

http://www.sabinagoldsilver.com/s/NewsReleases.asp?ReportID=480241

Sabina Gold & Silver Corp (SBB.T) is pleased to announce a new resource estimate for the Goose deposit at its 100% owned Back River Project in Nunavut, Canada. These new resources consist of an Indicated Resource of 7.7 million tonnes grading 4.45 g/t Au for a total of 1.1 million ounces of gold and an Inferred Resource of 0.4 million tonnes grading 3.53 g/t Au for a total of 50,000 ounces of gold within an optimized pit at a cut-off grade of 1.50 g/t Au. In addition, there is also an Inferred Resource of 0.6 million tonnes grading 5.81 g/t Au for a total of 106,000 ounces of gold that is available to be mined by underground methods. This current interpretation has increased the amount of contained ounces of gold at Goose by 358,000 ounces Au in all categories.

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#3) On September 26, 2011 at 7:30 PM, SN3165 (< 20) wrote:

Unrelated - Ron Paul is on the Daily Show tonight. Should be great tv

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#4) On September 26, 2011 at 8:42 PM, Frankydontfailme (27.77) wrote:

 So far I've bought sandstorm gold, sandstorm metals, franco nevada, brigus gold, and primero gold during this massacre. Still have some powder left, looking to add to slw, aurcana, sandstorm and or yamana if I get one last move lower!

Thanks SN, a reason to stay awake.

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#5) On September 26, 2011 at 11:37 PM, SN3165 (< 20) wrote:

can't go wrong with all of those. check out the sandstorm warrants as well

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#6) On September 27, 2011 at 3:42 AM, reflector (< 20) wrote:

i picked up a small pile of cash recently from 20,000 lbs of scrap electronics i turned in with a local refinery, for gold recovery.

i've been mostly buying 100oz silver bullion bars with the proceeds, nothing like having physical in your hand.

but kinda kicking myself now for having bought a bunch at $40/oz spot.

fortunately i did save a decent amount of the cash for a big dip.

i'm going to put 50% of remaining cash into AGQ in the next 1-2 days, after SEP silver futures expiry. i believe the odds are very good of AGQ at least doubling by the end of this year, especially if QE3.

once i get a double off of AGQ, i'll be moving the funds to mining stocks: AUQ, AUY, GPL, and i'm very bullish about SVM too, which is highly undervalued assuming the rumors about it are false, which they seem to be.

fortunately mining stocks really lag spot prices, so you can get a run-up in the commodity, take your profits, and then move it to the mining stocks and get a good run-up there. mining stocks seem to be priced using 1000 DMA pricing instead of current spot, guess institutional investors are conservative (slow) like that.

thanks for the great articles, Sinch! i plan on checking out more of your research in detail in the coming future, especially on the juniors i'm not familiar with.

 

 

 

 

 

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#7) On September 27, 2011 at 10:36 AM, puccini3005 (29.85) wrote:

Hey, Primero is up 14% today - investors must have loved your articles ;)

Do you have any any love for the steel stocks these days, many of which are also near (or below) 2008-9 lows?

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#8) On September 27, 2011 at 10:58 AM, XMFSinchiruna (27.12) wrote:

I don't have love for steel stocks. The risk of getting squeezed on margins just seems too great going forward. I think many of them are fantastic companies, and I have particular regard for Nucor's management, but this environment is just tough.

In other words ... I want to remain at the top of the supply chain.

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#9) On September 27, 2011 at 12:14 PM, jwebbzor (< 20) wrote:

Last time gold and silver corrected hard, there was a rebound rally, followed by another correction. I'll sit the next few days with cash.

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#10) On September 27, 2011 at 12:15 PM, skypilot2005 (< 20) wrote:

"#1) On September 26, 2011 at 5:28 PM, TMFSinchiruna (99.37) wrote:

Not to steal skypilot's thunder, but .... :)"

Good one, Sinch.  :)

Sky Pilot

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#11) On September 27, 2011 at 12:20 PM, skypilot2005 (< 20) wrote:

Here's a little "lightening":

http://paramountgold.com/News/NewsRelease.asp?ID=100216   Paramount Gold reports new high grade drill intercepts at its San Miguel Project in mexico

 

Winnemucca, Nevada - September 27, 2011 - Paramount Gold and Silver Corp. (NYSE/TSX: PZG) (Frankfurt: WKN: A0HGKQ) ("Paramount Gold") announced today new high grade assay results from 10 core holes drilled on its 100% owned San Miguel Project in northwestern Mexico.

 

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#12) On September 27, 2011 at 1:51 PM, texasflyfish (53.96) wrote:

TNFSinchiruna,

Thanks once again for helping us.  I bought more Primero on Friday and again on Monday after reading your blog.  Looks good today!!

Texasflyfish 

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#13) On September 27, 2011 at 3:09 PM, ikkyu2 (99.14) wrote:

Opened a little position in PPP today, mainly based on your strong conviction, also because I like the idea of buying gold reserves in-ground at a discount.

Did you know that in July PPP got $25 million just for *not* acquiring Northgate?  That should probably cover their legal costs and due diligence, and then some.

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#14) On September 27, 2011 at 3:29 PM, silverminer (30.49) wrote:

ikkyu... yes, the $25m is mentioned in the article. :)

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#15) On September 27, 2011 at 3:31 PM, silverminer (30.49) wrote:

Have gold and gold stocks bottomed?

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/27_John_Hathaway_-_Here_is_Why_Gold_%26_Silver_Have_Bottomed.html

When asked if he felt the recent crescendo of selling marked the low, Hathaway responded, “Yeah, definitely it did. I’m simply a market observer (with over 40 years of experience) and a long-term investor, but I saw plenty of signs, panic liquidations and the kind of people that were selling were the kind of people that make bottoms.

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#16) On September 27, 2011 at 4:08 PM, catoismymotor (< 20) wrote:

Over the past week I surprised myself. When seeing gold and silver along with their miners drop as far as they did not panic. My only reaction was that of regret. I had recently increased my holding of Impact Silver by 60% at $2.16 a share. Then the dip happened and took the price down to $1.70. If only I had waitied a week to buy! Oh, well. It helps when you are focused on the long term. :)

 

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#17) On September 28, 2011 at 1:45 AM, ikkyu2 (99.14) wrote:

Ah, so it is, silverminer.  Well, Sinchiruna is always accurate and detail oriented.

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#18) On September 28, 2011 at 2:27 PM, skypilot2005 (< 20) wrote:

http://www.yukon-nevadagold.com/s/NewsReleases.asp?ReportID=481799&_Type=&_Title=Yukon-Nevada-Gold-Corp.-Submits-Assessment-Application-for-Ketza-River-Yuko

September 26, 2011
Yukon-Nevada Gold Corp. Submits Assessment Application for Ketza River, Yukon

 

Sky Pilot

Official Web Link Assistant to Sinch

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#19) On September 28, 2011 at 6:13 PM, jwebbzor (< 20) wrote:

BRD at $1.22? I feel like I'm stealing.

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#20) On September 28, 2011 at 10:17 PM, mjmac89 (< 20) wrote:

Sinchi,

What's Primero doing to protect itself from a hostile takeover at a price well below its fair value? If Northgate was willing to pay about $4.15 a share and since then Primero has added about $0.28 a share in cash thanks to the termination fee, what's stopping one of the bigger companies from coming in and bidding $3.50 for Primero, which would be about 40% above today's share price?

Should this be a concern for shareholders? Or does Goldcorp's 36% stake in the company prevent such an attempt?

Thanks again for all the great research you do. 

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#21) On September 29, 2011 at 10:10 AM, XMFSinchiruna (27.12) wrote:

mjmac,

Goldcorp's 36% stake is a powerful voting block. A hostile transaction for Primero would be a major undertaking, and frankly I believe a would-be acquirer is more apt to select a target with such a countervailing force in play.

Look at what Peabody went through to get Macarthur Coal. Battling stakeholders like POSCO and CITIC was no picnic.

Therefore, it's more likely an interested suitor would wait for the equities to stabilize from these levels and seek a friendly transaction at a realistic valuation.

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#22) On September 29, 2011 at 11:47 AM, darroj (28.96) wrote:

Sinch - thanks for the updates - slightly off topic, any thoughts on TC currently? It keeps going lower and lower... and I'm fairly surprised.

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#23) On September 30, 2011 at 8:13 PM, Speed03 (< 20) wrote:

Hey Sinch, would you have any feedback on Monument Mining Limited (MMY on the TSX)? I believe they are producing gold at approx $250 an ounce.

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