Greece... a storm in the teacup

I wonder why all this fuss about lazy Greeks. It is so small in the scheme of things. And even if it is an unstable piece in a domino, it is confirmed to the Europeans mostly. While the markets go crazy with this miniscule economy, I have been topping up when idiotic sellers dump their stocks.

The last time it happened in early 2010, I made a lot of profit out of those stocks. So while overall, my portfolio has fallen, I have managed to pick up cheap stuff during the mini crisis. Most investors' stocks have fallen but mine has fallen more because of my investment in riskier stocks. But over the last 2 days, the re-bounce has been doubled the average rise.

At the end of the financial year, I have nothing to brag about... but I am hoping what I have picked up recently will confirm me as a profitable contrarian. It does not matter if you are a fool or genius, as long as you can make a profit!

BSR

It must have discovered lead rather than gold according to the blockheads who have been selling it. Yet when you look at its most recent drilling result, it is gold and pretty good result, too. So, I have no idea who has been selling but it better not be the financial institution that looks after your money!

So at 6.6c, I topped up some more. West African miners are subjected to political events, dictators and other world issues but mostly local events. While the price of gold remains over USD$1500, I am happy to park my money with this mob. And AUD has been around USD$1.04 to $1.06.

.... at least AZM has done well after I picked some at 48c. And I should be topping up ADU too because this is a PRODUCER!

RMP RRSO

These two have joint venture in Georgia and are about to spud. Yet the share prices fell today for both of them. Does someone know something that I don't? They did a helium test sometime ago which suggested a better than even chance of hitting oil.

Both of these stocks are still in the green for me in spite of poor market performance recently.

AZM

While the POG remains around USD$1500 per oz, I am happy to collect gold miner. AZM is not a producer yet, but it is finding more gold in Ghana. So today, while I set a low price a couple of weeks ago, I now collect some AZM shares. Always happy to buy from a desperate seller.

But then a year from now, the seller could be wondering how the silly buyer today is coping!

Big crash

This is like my version of the GFC or 1997 crash. But this one is just not justifiable because the price of gold is still near USD$1500 and AUD is still worth USD$1.04.

So today, it is my biggest fall but I remain very optimistic about my portfolio. If anything, it is time to buy rather than sell or sit on the fence. Italians should be more worried.

Today, I was at work, churning over many cases so there is no time for trading. The European bourses are opened higher.

As long as I haven't done anything illegal, and paid my taxes, I can always sleep in peace.

Simple arithmetic

I am still a faithful believer of simple arithmetics. AUD is steady at USD$1.05 and POG have been over USD$1500. I love gold producers that are ignored by the market. Actually not 'ignored' but sold down. These are the best buys at the moment. As long as gold is produced profitably, I have no problem with the share price coming down. In fact, when the share prices of gold producers keep tumbling, I will keep buying with whatever spare cash I can lay my hands on.

Smart or dumb? Don't know but I know simple arithmetic is easy to understand.

ASX turning... momentarily

The Greek problem is only featherweight. What is more worrying is debt in the bigger nation, like the USA.

Today, the market turned but I think this is only temporarily. Not a good day to buy but I did collect more RAU at 0.4c. Smart or dumb?

Certainly what I collected yesterday has done okay. Because I sold my SGY and EQN, I have spare cash but not a lot. This allowed me to indulge at the bottom of the barrel. If people want to sell low, I am happy to buy.

STB SSC

I put a low bid for SSC. It came tumbling down today, so I picked up some shares. In fact, I was luckily I dropped down my bid price this AM.

http://www.theaustralian.com.au/business/mining-energy/sultan-corp-chases-phosphate-prize/story-e6frg9ex-1226071556147

When I saw STB tumbling, I could not find a reason. So I picked up a small parcel; bought near its low for today. When I got home, I realized why. D&D, the tipster, has advised his subscribers to sell out of it. I went against the recommendation. It is finding more potash and it is so shallow. Only problem? It is at the border of Eritrea, with Ethiopia on the other side. These are WARRING neighbours!

Let us see who is smarter when the Greeks have gone bankrupt and defaulted on everything! SSC explores phosphate and STB explores potash. Chinese and Indians have to eat, and they are becoming richer. This is dangerous time to invest but based on my experience, it can be the most profitable time, too!

PO4 and K

After the floods in China, there will come the need to plant. Water will be plentiful again. So expect price of PO4 and K to rise again. Is this too simple? No, it is too complicated.... the share price of K explorers fell yesterday. I didn't follow any PO4 producers but I am sure market sentiment makes investors' brains very pulpy.

POG AUD

Price of gold went up and the AUD went down relative to the USD. But why are investors selling down their gold producers? Did their mothers never sent them to primary schools to learn simple arithmetics? You just have to love these idiots if you are a contrarian.

The Greece problem has not been resolved yet, just postponed till July 3rd. So there may be another round of irrational selling.

Greek dilemma

No, nothing to do with Australian Greeks but Greeks from Greece.

It is for me a good time to buy into the market. I was busy at work so I couldn't indulge. Last time I bought when Greece was unfolding, I made a lot of profit when investors were selling.

I am hoping to repeat that experience. I sold EQN recently to Barrick and am still waiting for my Canadian cheque.

I am assuming the markets spooked because of Greece. But there might be a bigger picture because Greece is so insignificant in world trade.

SBL

How does the Aussie market value a gold producer -for what it is going to produce, starting this week, and what it is going to earn? I have no information about hedging but from what I have read (not from SBL) it is nil. Correct?

So while gold is at >USD$1500 and AUD is at $1.05, it should be profitable. But I don't know what is the cost of producing it. Can't get data on it but one broker estimated it as USD$550 -650 per oz.

So why did the price go up and then down? I have no idea but I bought a bit more at 2c.0c a share today. It is now 1.9c. In a year's time, you will know whether I was an idiot to buy in a down market.

MNC GMM

In a sea of red, I picked up two buys.

MNC was based on Our Man in Oz article. There is still one leftist who is sensible! The new Peruvian president is going to follow Brazil rather than that idiot in Venezuela who is bankrupting that nation.

http://minesite.com/news/metmincos-imminent-resource-upgrade-should-help-it-shake-off-the-drag-of-perus-political-uncertainty

And I also picked up GMM which is starting to drill again in Mongolia. Winter is not the best time to explore there. The price has been falling so I topped up my holding.

SGY

I had made a nice profit out of SGY but I sold at 9.1c after a bad announcement so my profit could have been much higher. Because only 1 drilling result was bad, the market never quite punished SGY. I put a buy at 8.1c. However, today, it followed with another bad report.

Luckily I was around and immediately took the buy off. It has since tumbled to 7.8c. That was a quick escape for me!

Life when the markets are down

I am sitting in front of computer and listening to one of the sexiest sopranos, Elina Garanca. I am a sucker for melancholic arias. They tickle a part of my brain that I never knew existed. Sopranos are often big girls but this one can be my Carmen anytime!

That part of my brain was never tickled because living in Malaysia, I was never exposed to this classical music, especially operas.

Markets tumbling...

Looking at the figures this AM, you would think the world has caved in. But look at the price of Cu, U, oil and gold, and then look at AUD, you really wonder what is going on in the market.

I am still on the prowl for gold miners. SBL is very impressive. After only 2 years of uncovering gold in its Ghanaian tenement, it poured its first gold this week. But I don't know if it is hedged.

My best performing stocks during and shortly after the GFC have been oversold stocks. Not many people are brave (and stupid) enough to be contrarians.

Market tumbling...

There will be a lot of tumbling to come. The US is not going to save the world. Neither the Chinese.

In fact, only gold will save! Why? Because the value of gold will remain much the same. In fact since biblical time. But not totally. Market sentiment is a very powerful force, sometimes, totally without logic or rationale.

While the value of my portfolio has fallen badly, I am still buying. It has been my experience that the most profitable time to buy is when lots and lots of people are selling for no good reason. Afterall, POG and AUD has not changed much.

SBL

Does anyone read my blog?

I hope not! Purely for selfish reason, I hope no one reads my blog. The less competitors I have to buy my stocks, the better for me.

SBL announced its first gold pour today after such a long period of silence. Must be deliberate. I am glad anyway. I topped up a significant amount at 2.1c. Today, there are people offering to buy at 2.5c. I think it will go higher. Gold producers are becoming very profitable. The lowest was 2c and I could have topped up but I think I have enough shares in SBL now.

I kept harping on gold producers so if you missed out, then you only have pity from me...

Short term predictions

Last week, after the continuous tumble in Wall Street, the analysts predicted that this is going to be another bad week. And so it should be. Yet, there seems to be a dead cat bounce. Or maybe not. The economy in China is doing better than expected although inflation went to its highest.

Australia can continue to rejoice. And lots can still go surfing.... overseas.

Ah, the curse of mineral wealth. It encourages sports and minimizes utilization of brain power.

Gold producers

Someone rich must be reading my blog. Why did so many gold producers go up today? I wanted to buy but most of them have rallied. I put a low on a lot of them but none went low enough as there were hardly any idiotic seller. Watch SBL! It had been drumming its production forecast but there has been no update on it.

PXG

I was so lethargic today. PXG made a great annoucement but the share price hardly moved. However, that was also due to the poor market sentiment this AM. By afternoon, it has jumped more than 10%. I missed my second boat but I did catch the first one!

Why did I buy PXG? I saw it was cheap in term of EV/Oz Au in Ground.

Gold producers

These are some companies that I am keeping my eyes on.

RMS, CGX, ADU, SBL, FML, IGR, SLR, KCN

I have no idea about the level of hedging. Sons of Gwalia went under because it was heavily hedged and was producing gold at a loss just to comply with forward sales.

I used to own TRY, too and it is giving dividends, like RMS.

Markets tumbling...

I wrote the previous note before looking at the world markets. Again POG has not tumbled down although it has dropped a little but the AUD has fallen a little more. Hence, gold in AUD per oz has gone UP.

I will be hunting for more El Dorados on Tuesday, especially if Wall Street continues its decline and POG falls less proportionately. The AUD will fall if DJI drops. We are still USA's puppy. China can only be much wealthier if her markets can afford its products. The number one market in the world is still the USA.

Mental exercise

When I was a kid, it was knowledge acquisition that drove me to spend time reading. In Tangkak, Johor, Malaysia, there was nothing to read. But somehow, I acquired enough general knowledge to know more facts than most youths of today with the Internet at their disposal, including the huge knowledge bank in wikipedia. My wife and I played Trivial Pursuit a few years ago against a bunch of young people, and they knew so little of what we know.

I have no need for additional wealth other than to keep my wife in the life she is accustomed to. My margin lending is small and easily serviceable even if the market enters into another GFC. My mental challenge is to beat the big city boys with finance background.

One avenue today is to ponder why so many stockbrokers are recommending blue chips when it is so blatantly obvious where investment money should go to.

Biotechs are extremely difficult to pick because research/development/marketing cost is phenomenally expensive. If you have a good product (like a cancer cure, a common cold/flu cure, heart attack prevention, diabetes cure), you will be rich. But it takes a long time before you can be rich. And mankind expects you to be benevolent. Then if someone else produces something a bit better or your product has an unexpected side-effect, all your expenses are wasted.

But gold? This has been around since biblical time. If AUD is stable, if POG is stable at its high, if you are producing gold and not hedged, if your cost of producing is low, if your tenement is in a stable democracy, then voila! I have yet to see a good set of report on this issue. In the meantime, the stock markets around the world are experiencing a downturn in gold stocks due to market sentiment. For those reading my thoughts, the gold producers are my current El Dorado. I have recently bought SBL and ADU. These are starting to produce and have fallen in share price. Next year, I will know whether I am a foolish buyer or I can say that finance background does not make you money wiser, especially those employed by big broking firms earning bigger incomes than me.

SBL

At 2.1c, suddenly I got a top-up recently. The company has not produced any announcement for more than a month now but it promised production. Therefore something odd is going on. Bad news and the directors have gone underground? Or good news and the market has been kept in the dark?

I don't know the answer. I only know I bought at a recent low and that there are very few people buying stocks. A year from now, I will know whether I am today's idiotic buyer.

IGR

"With Integra Mining achieving all of its publicly stated targets and expansion plans to move to 140,000 ounces of production, it is difficult to fathom why the company is valued at a miserly $374 million against a forecast pre-tax operating profit of A$192 million. "

That is per annum... if the calculation is right.

That means within just under 2 years, the company will be worth more than its current market value before tax. I wonder how many companies are there on the ASX as cheap as this!

PWN and Eureka Report

The Speculator claimed to have collected 20,000 shares in PWN because he "applied" for it during the IPO. The truth is you only get around 17,000 shares as there was a scale-down.

The good thing for me, is after the float, the share price fell due to market sentiment. Since then, it has risen to 24c from a float price of 20c. Because I topped up before the rise, at 17.5c and 19.5c, my average buy price is actually lower than DH's.

Nice to be one ahead of him!

ADU

All West African miners are worthy of consideration, especially if they are producer. Work this out yourself, ADU is worth about AUD$260 million at market capitalization. Today, it announces that it will produce 100,000 oz of Au per annum at about USD$500 per oz for cost. At USD$1538 per oz of gold, that delivers a net of about USD$100 million a year profit after cost.

And if more gold are uncovered in the tenement, then Ghana is going to be happy too. But like many countries, higher mining tax will also be a consideration for investors.

Yes, I bought a small parcel of ADU because I put a low bid a few weeks ago and the price has been falling gradually so I collected some at 57c. I go for value... and I am a patient investor.

POG, AUD and the disparity with share prices of gold miners

It is ridiculous but in the short term, sentiment without logic wins the day. But for me, it provides opportunity to buy gold producers on the cheap. So I am looking, looking and looking.

IMA

Today, ILU had a big jump. I have been watching IMA for a while. This company is one of the most ignored in the ASX. If you look at the number of excellent announcements and the share price performance, there is hardly any correlationship. In fact, it was mostly down. Yet, what it uncovered in SA and WA had been phenomenal. ILU eventually will need IMA's in-ground assets. But the market has been disregarding IMA. Singaporeans/Malaysians are not; they have been big investors. Today, I did another top-up at 47c.

It ended at 51.5c because some investors know that if ILU's products are increasing in value, IMA's worth should be up. Smart guys.... luckily, I moved just a little ahead of most!

GOR

http://www.minesite.com/nc/minews/singlenews/article/an-exploration-project-at-the-limit-minesite-kicks-the-tyres-at-gold-roads-ultra-remote-yamarna-di/1.html


Yes, I am one of the lucky ones who hit this "ten-bagger". I bought my first lot of GORO (was EKMO)at 5.8c and yesterday, it was worth 58c. I was also brave enough to buy another smaller parcel 1.5 months after the first at 31c. The next lot, after a code change to GORO, was purchased at 33c in March 2011 when more gold was uncovered... and idiotic sellers abound (i.e. the share price went down!). All my options had been converted recently before I went to Shanghai at 7c a piece.

IF the drilling results are good, then I should take those idiotic sellers to dinner! The arithmetic of investing is so easy for long term investments but short term market sentiment is impossible to calculate. I bet not a single reader of mine invested in this stock. Read my postings on EKM or GOR!

Poodles

If you look at the chart for DAX and FT indices, you will realize that these two are far more obedient Yankee poodles than the ASX. We are now closer to being a Shar-pei. Europeans are now so poor that they are tailing Wall Street.

Cu is up, Au is up, AUD is up but only a little. So, our crunch should be much slower...

Ah.... if only Aussie Greeks can rule Greece and make them work!

US Job figure and POG

AUD much the same, POG went up a little. Wall Street cannot cope with the nasty job figures.

Looking at the logic again, you still wonder why gold producers are marked down. And it will be worse on Monday.

Price of gold

It is simply not logical for the exchange rate to remain steady and the price of gold to remain high, yet the share prices of gold producers are low. Are these miners hedged so heavily that they are producing gold at a net loss?

PWN

In the sea of red, there was one outstanding green. Since floating, it has been a one-way trip for this stock. Except today. When it fell very low, I topped up partly because I didn't get all the shares I requested for. And then came the great announcement 2 days ago. That hardly moved the share price, so I bought some more. Suddenly someone noticed the stock and moved in big. The rise today is out of proportion even on a good day.

When you invest for value, investors will eventually follow your trail.