AXE SER - Graphite

Last Nobel prize for physics in 2010 was for graphene, where one atom thick layer of carbon was extracted from graphite. It is extremely strong and have very applicable properties.

http://www.nobelprize.org/nobel_prizes/physics/laureates/2010/press.html

And the US government lists graphite as a strategic mineral... controlled largely by China.

Here in Australia we have good quality (large flakes) and large deposits and the market is totally indifferent to it. Inshallah!

http://www.asx.com.au/asxpdf/20110901/pdf/420t7t6hwkx34p.pdf

AZM

This is a headache most CEOs would love to have. AZM is discovering more gold than it foresaw. Hence, the CEO has to rejig its processing plan to cater to the larger mineral deposit. No need for aspirin here, just a bigger loan for a bigger plant!

If Our Man In Oz tells you about this problem

http://minesite.com/news/azumah-resources-gets-ready-to-brief-attendees-at-the-africa-down-under-conference-on-a-gold-project-that-just-keeps-getting-bigger

then it is a 'big' problem but a desirable one!

TVN

As a small calculated gamble, I bought a small parcel of TVN shares based on its ASX announcement in July 2011. It is not hard coking coal but with such a thick seam and next door to Peabody's tenement (and 'next door' to China), it can't be too bad. I was wrong. The share price went down further and there is a question regarding its quality.

Today, it has found further extension of that seam, thick and shallower. So it will go for a ride this AM but until the quality is confirmed, it will probably be a spike and then a fall.

http://www.asx.com.au/asxpdf/20110901/pdf/420t3ts3p0dg2f.pdf

Today's most important news for Australia

At 1100h today, the Chinese Manufacturing Index will determine the wealth of Australia. Greece is about to fall off its perch and should be allowed to fall into a cesspool. If you won't work and you have been overvalued, you deserve to be covered in shit.

Now you know why the biggest chunk of our tourists are from mainland China. They come draped in high tech Japanese cameras and videos, and they eat in good Chinese restaurants.

Africa... Down Under

http://minesite.com/news/the-africa-down-under-conference-kicks-off-with-a-bang-in-perth

Our Man In Oz has been one of my favourite journalists because there is a subtle analysis content in his articles. When he reviews a stock, he is worth listening to but he is not as prolific like RB or DH. He has made me a lot of profit too. One outstanding stock is GOR which has risen 260% since I bought its options in Sept and Nov 2010 (converted into ordinary shares in Apr 2011) and more in May 2011. It is now in my top 10 stocks in my super fund portfolio. The biggest and still most successful stock is GIR which is now AGO. I sold some AGO as it was making my portfolios very top heavy with just one stock.

If you read the link above, you will find the other stocks (mining in Africa) mentioned have also made me a lot of dough. My gains from PDN are because of its takeover of SMM and the fact that I sold some of PDN a long time ago after the takeover for $8 -$9 a share. The truth is I sold some SMM shares when it boomed to recoup my capital cost so my PDN shares are basically... free.

These are the Australians who should get a ticker tape parade for making our nation wealthy by taking financial risks and being at dangerous frontiers. Instead we are mostly honouring f#&k@ng sportsmen. Great for Cadel to win the Tour de France but the profit is all his.

Good announcements

I have been scoring lots of good news these two days but the gains have not been spectacular but they do give me alpha.

PRU, DRA, ABU, AMX, AQD, BSR, ADU all had good hits.
IPR, CGX had good profits.
AUK has extended its gold area but not spectacular grades.
VOR has found lots of copper in Mongolia.

Nice...

ABU

This one has been providing the market with good drilling results almost forever. And today, there is a trading halt pending result from Twin Bonanza.

Why halt it if the result is bad? And every time, it has been good or better. So what is the difference this time. Again, this is a stock few people are interested in. I have harped many times about it as its share price has never performed superbly with good announcements. I have bought 7 times and never sold. Currently on 60+% profit.

Good stocks, few people want.... those of my kind of stocks.

VOR

Luck for me or calculated by me? Bought at 1.7c and 2.2c in Sept 2010 (the bulk) and then 5.3c and 5.2c in May 2011 (now can afford only smaller parcels). Today, it is moving towards its previous peak. I was in the theatre in Sept 2010 when I told my colleague that he should buy this stock when it was under 2c based on recommendation by 3 tipsters (all free of charge, including this gasman).

I like the announcements from this company so I have already bought 4 times. The last 2 were because the share price has fallen below the SPP at 6c. If idiots want to dump good stock, I am happy to soak them up. Don't even need to buy them a coffee or a dinner to show my appreciation.

It has been anticipating good hits and the recent drilling activity has confirmed the hype/prediction. However, I do hope the ASX will investigate the rise in share price for the few days prior to the announcement today. It is too coincidental to be purely due to chance. Insider trading is very unfair and the culprits should be penalized.

Still not following RB?

On the new CommSec website, I expect this stock will ride into my top 10 stocks very shortly. And then get taken over shortly after that. By a State Chinese company.

LRF

I can never understand why the market underrates LRF, yet you have analysts out there recommending stocks like TLS and WOW. Some even dare suggest how good the dividend is from TLS. This is not dividend from profits.

The biggest profit generated by LRF is a >700% gain on Riversdale, taken over by RIO recently. Yet the market could not care a stuff about this company's management.

Currently two of their biggest holdings are NCM and AGO.

SSC

Does anyone read RB's articles? Crazy if you don't especially since it is free. It is educational and better still, it is so profitable!

I topped up SSC when he re-presented the stock recently. It had tumbled to 1.3c. Today after less than a fortnight later, it is 1.9c. RB does not just tip, he also gives you the reason why he recommends the stock.

Of course, not everything he recommends rockets upwards but he has made me a lot of profit especially those bought when the market is in the doldrums.

Free articles

I canceled a newsletter and I often don't read mineweb's articles. Why? When you see a heading like "How to pick gold stocks" or "Which gold miners to invest", you would think the writer would save you the hassle and name the companies. But you will find that it is just a general article and you are expected to subscribe, with payment. Yet there are many websites that will give you free tips.

My favourite is RB's Pure Speculation with The Australian. He is my favourite.

POG and DOW

These are now very clear opposites. In time of stress, POG goes up. When Dow is up, the money moves back into stocks.

At the moment, the European, Japanese and USA debt problems are not going to disappear any time soon. So gold is not going to fall before USD1600 per oz for a long time.

But a gasman can be wrong!

BSR

West African gold miners are famous for good announcements when their tenements are in the right areas. But BSR has disappointed in the past when the JORC resource was announced; ie smaller than anticipated. But the drilling is not completed yet. So I have been topping it and it is nice to be 'vindicated' in my faith in geology.

At the height of recent turmoil it dropped to around 5c. I collected some at 5.1c. And after a great drilling result yesterday, it has moved temporarily to 6.2c. Investors often boost up the share price and then over the next few days, it drops down.

VOR

Gone into trading halt pending announcement. For several days before the trading halt, the share price has been rising. Most people suspect, there have been buying before the general public knows what the drilling result is. You don't need to be a laboratory analyst to recognize certain mineral ore. If you are an experienced driller, you can recognize native copper (or high copper content ores). You would tell your old aunties, the mates you owed favors to, your mistresses or girlfriends who you want to get special favors and your close family members.

Especially, if the drilled core is long and thick with copper. And duplicated in several cores, suggesting lots of mineral. We will see....

Presumably no one has bought VOR but it is difficult to recommend it because it has been rising so far. And then falling so fast. And now rising so fast! The best stocks to buy are those sold by idiotic sellers when the fundamentals suggest they are idiots.

Gold stocks

Again, my portfolio was rescued by gold stocks. The market fell a little on Friday but I managed a nice gain. This trend should continue on Monday because the POG went up since. However, this parallelism does not always apply.

There are still some good gold stocks to consider. CGX has not jumped much considering it is a producer while AZM is very hesistant. CGX struck processing problem but this should be rectified by now. However, the market has never been partial towards it.

When the PNG government has finished toying with its recent mad idea regarding who owns the rights to the minerals underground, then the miners there can start moving forward again. For me, Indonesia and PNG are the most exciting areas.

I bought AUK recently; again at the instigation of RB. http://www.theaustralian.com.au/business/opinion/miners-bet-on-more-grasberg-gold-in-indonesia/story-e6frg9ex-1226098186912 Since the 20/7/11, it has gone up by more than 40%. In the last 3 years, its annualized increase in share price is over 100%pa. How can you ignore a result like this...

http://imagesignal.comsec.com.au/asxdata/20110804/pdf/01204417.pdf

To give you some balance, I also bought WWI but it has fallen nearly 30% but luckily it was a much smaller parcel. There has been no drilling announcement from WWI. Overall, I have made significant gain with these two purchases in a crumbling market.

Big loss

It is quite phenomenal how the markets have plunged in the recent months. However, relative plunge is never so bad. What is awful is if your portfolio drops a lot and others either rise or fall only a little. In Australia, we are insulated by Asia. Europe is in deep shit yet its currency continues to be highly 'valued' and its service overpriced and arrogant.

Governments after governments in Australia are only interested in holding power for 3 years with no foresight to plan for the longer term. The last major long term planning was by Paul Keating with his vision for superannuation. All we do now is dig up our natural resources and sell them without value adding, other than concentrating the mineral if it is not direct shipping ore.

I have less issue with the MRRT if it goes into a sovereign fund where the government of the day CANNOT touch it because it is for the future generation. Nope. Uncle Wayne and Aunty Julia are waiting there to distribute it like communists... from the past. Modern communists are capitalists!

GMM

The drilling has started recently. Soon, you will know whether it is pure hype or real phosphate. This one is a calculated gamble. If the discovery is good, the share price will leap. The Russians have been near there and uncovered deep potash. This deposit is near its market... China.

What is sad is how low the share price has plunged. Sad? Sad, that I am suffering a loss but glad that I can top up as soon as I have spare cash. I don't think the result will be coming out soon; maybe another month.

BPT

This is one of the most under-rated oil and gas explorers. It has estimated 2 tcf of shale gas in Cooper Basin recently after fraccing (under Bob Brown's nose). 1 tcf of gas is roughly worth USD1 billion. I have been topping up at below 80c. I first bought into this company, a very small parcel at over AUD1.50 per share to indulge in its SPP but that was overpriced (from memory) so I didn't participate.

And very recently in Egypt in the midst of the Arab Spring, it has uncovered oil. How big is this deposit? No idea but the company is 'pleased' and testing its volumes and commerciality.

Yet, the share price has not really moved much over the last few years. It has improved in the last 12 months, but the movement does not correlate well with its discoveries and its status as a major shale gas explorer in Central Australia. This stock will light up as a beacon for US companies looking to grab a share of Aussie shale gas. And they are coming, together with the Brits... and then at snail pace, the Chinese and even more sluggishly, the Indians. BPT has a premium built into its price because it is currently a producer. Watch those piddly ones; what I call calculated gamble stocks. Read my notes from the past...

POG and Dow

Em... Dow was up and POG went up too. This is confusing. Perhaps, it is because the USA is going to print more USD to further stimulate the economy. And hence POG, with its 'inherent' value went up, too.

The best time to splurge is when others are fearful (WB's modus operandi, after his homework). Warren Buffett spent USD5 billion to buy Bank of America recently. He got it for USD3 billion cheaper. I am hoping I did the same on 8/8/11 when I went on a rampage topping up my gold producers.

My most interesting transaction was for LSA. Between midJuly and midAug this year, I bought 4 parcels; topping up with each fall in share price. When it plunged to 70c while POG was still rising, I squeezed my cash reserve to buy the last lot. I am not able to thank the idiotic seller. The PE ratio is near 1. Lastest share price is 88c. There is still a lot of gold in its mine in Chile and more to be uncovered.

On Monday, I expect a lift in the gold sector. I wonder why WB is not tipping some cash into the big gold producers. The truth is the small ones are better value and WB has too much cash. Many explorers are rushing into production. Of late, there were ADU, PRU and SBL. And a few more cranking up their throughput.

Pity the PNG government is so erratic. Otherwise, that nation floats on gas and oil, and its soil is riddled with gold and copper. Australia should have usurped the territory! Production takes a long, long time to materialize but the rewards will be spectacular. However, I do hope these companies will show some social responsibility by investing in the locals' future. For anyone interested, have a look at KGD, HIG, GOA, FNT, MGO (which I hope to buy back one day), HGO (in Irian Jaya) and some other Indonesian miners along the same belt of gold and copper. Aunty Julia and Uncle Wayne do not live there and would be considered to be undesirable aliens there.

Gold producers

When most of the producers announced their profit, the price of gold was way below USD1400 per oz. When I went on a rampage recently in early August to top up my gold producers, it was below USD1700 per oz.

When the POG fell recently from its peak, the doomsayers came out in droves... while others suggest it is the correction you had to have. Flying over USD$1900 per oz was sheer madness. But watch the POG again today. It is on the move once again. However, if the Dow opens up, then it will tumble towards USD1700 per oz again, or even lower.

ADU is going to close off its hedging book and most gold producers now are unhedged. So next financial year, if the POG remains over USD1600 per oz, there is plenty to crow about.

Gold as a hedge

Dow is down, POG is up. It looks like gold is being used as a hedge by some investors. ASX will usually follow the Dow like a puppy although it has been behaving rather independently lately. But with European stock exchanges falling and the SPI down significantly, we are still a loyal puppy.

However, I expect gold to ride up again after the 'desirable' correction.

TPT

http://www.ntnews.com.au/article/2011/08/24/255691_nt-business.html

Here is a calculated gamble. If you invest a small parcel, it could balloon out into a nice big one that you could not have afforded.... when/if it finds gas in huge quantity.

But it loses, then you have to go back to doing your normal job and re-accumulate for another tilt at another calculated gamble.

I hold ordinary shares and options in TPT. There is so much optimism in it that my options have risen by more 10 times. During the recent financial tumble, this stock stood out like a beacon. If that article is true and drilling confirms its hype, then what is 107 tcf of gas worth when 1 tcf is about a billion dollars worth? Today its market cap is AUD33 million. That means the market is pricing it for failure to find anything off NT and Morocco. Unfortunately that is usually the case but the reward could be phenomenal if drilling is successful. If you invest in TPT, you can't tell your spouse until it rockets upwards because 107 tcf of gas have been found... and don't forget to buy me a dinner! Actually 1 tcf will do nicely. Of course, if it fails, then inshallah! And don't complain to me as it is a gamble... a calculated gamble. Afterall, I have more invested in this stock than you unless you are a bigger calculated gambler than me. Just look back at MMR.

LRF

Just read a newsletter from LRF. What a miserable share price! But this stock is for me to top up rather than sell. Why? Because the market undervalues it. The discount to NTA is very bad. I am always on the look out for value.

The two biggest parcels are AGO and NCM. This would make the management so many times better than most others. Yet, the average mum and dad would not know this company. Sad. Next time, my cash accumulates, this stock will be high on my list for topping up. If I am getting value for me AND I have no need to sell, then I love buying under-rated stocks... with intrinsic value.

WOW

Some idiotic analysts are paid lots of money to give their "expert" financial opinion. One that I read recently suggested WOW for investment. I bailed out of it in the last 12 months. I just looked at its share price chart for the last 3 years. Pathetic.

Why these idiots continue to recommend stocks like that makes you wonder how come they are paid so much! WOW is also lagging behind Coles.

One accurate forecast makes this man a guru

Just one accurate forecast, and the press thinks this guy is God. He obviously does not read the bible. The gold used to buy horses in King Solomon's time has nearly the same value today (according to an article by Alan Kohler). Here is an extract of his opinion:-

"The great sage himself - seer of the financial crisis, gloom-n-doomster extraordinaire - Nouriel Roubini thinks today's gold investors are "sheep or lemmings".

Either way, gold is a dumb thing to buy, says he. Because it's a bubble, plain and simple and always.

"Since gold has no intrinsic value," says Dr.Doom, "there are significant risks of a downward correction."

Oh sorry - that was him back in December 2009, not August 2011."


Gold has an intrinsic value, created by the financial world because there is nothing else as good or reliable as a value indicator. It is relatively rare and very difficult to purify (mining and processing). You cannot manufacture or print it. It can be a bubble but it is not always a bubble. Tulip was once a bubble. So let a simple gasman with no accounting or economics background educate the famous American professor.... because since that 2009 statement of his, POG has gone up and up by more than double. If the price falls, gold will not be economical to produce for a lot of mines and so the supply will fall. And when the supply falls, the POG will go up again. That simple, Professor.

POG tumbled

Anything over USD1700 per oz is an extremely profitable rate for most of my gold producers. Gold stocks might pull back a bit more if the Dow continues to improve. Strange how when the POG falls, gold stocks fall too! Yet the reverse is not always applicable but it provides opportunity to top up for me.

But sensible people will realize that "the Feds will help" is no long term solution to the problem in the USA. Printing USD by pumping money into the economy is a stupid approach. If you continue to print money to pay off your debt, eventually your money will have Zimbabwe value.

Hence, I doubt POG will drop below USD1600 per oz for the near future. Some of the gold producers were talking about profit based on USD1500 per oz.

CNLO SSC

This stock behaves oddly with CBA's fingers everywhere. It explores phosphate in Tunisia. It used to look for O&G in Australia and then changed tack.

At the high of the recent fall in market confidence, lots of investors were dumping stocks. I never expected to top up CNLO at 16c but a desperate seller sold. Another idiotic seller. Since then, this stock has been rising and today, I earned bragging rights with the share price at 24c.

I haven't even paid for my second lot of SSC (bought at 1.3c) and it has already hit 1.8c.

Why won't people listen to RB? He gives out free articles....

POG tumbled

For me, that is a correction we had to have. It would be reckless if the POG kept going up. Well, it came down because the stock market in USA had climbed.

USA is still going broke. Manufacturing is down and house sales has fallen. The longer term prospect is not good no matter how the Feds manipulate the economics. Printing more money is a crazy solution.

So the trend for gold will still be up. But for the time being, ie today, gold stocks will fall. There are plenty of fund managers with very short term memory.

TPT

Suddenly, in the midst of tumbling stock markets, this one is turning up like a rocket. Why? I have no explanation. But if it is because of inside information about its drilling success, then it is foul play. Unfortunately, most offshore drilling results are disappointing even when surrounded by successful oil discoveries. I have been though a few now. Still waiting for one huge gusher... you only need one successful big one out of many. My most optimistic one was in Sydney Basin which turned out to be non-hydrocarbon. Next is in Georgia, then off Kenya and finally off Namibia.

Perhaps, Central Australia is a better hope. Just ask the USA government!

POG

What is happening recently has got to be a 'failure of confidence' bubble. POG cannot rise like that perpetually. But at least it is a hedge against markets tumbling everywhere. There comes a time when physical gold should be sold to the last to the 'pyramid' buyer.

If you ask me when, it is inshallah!

SSC

Gone into trading halt. No idea why. But before it went off the screen, it jumped in share price to 1.8c. Look at my entry on 19/8/11 regarding phosphate. More importantly, look at who I credit my 'skill' at investing to. I always have a ear or rather two eyes for RB.

First lot bought at 1.6c, and then I topped up recently after reading RB's article at 1.3c.

Thank you RB. I subscribe to The Australia but his online article is free. Anyone who invest
AND does not read his articles is a fo.. who has too much money to throw away.

PRU

Add another feather to its cap. It is now a gold producer; first pouring today. Nice! And good timing, too.

SXY

With such a sexy abbreviation, it is not surprising that SeXY is doing so well. This is a stock I first bought in 2007 and continued to top up till 2009. In a down market, it has currently given me about 150% profit.

My brother brought it to my attention and noted I have never discussed this stock. It used to be VPE. I bought only a tiny parcel to qualify for the cheaper SPP in late 2007. In fact, I bought 2 parcels under 2 entities. One has been sold to realize a fast buck after the SPP. The other parcel, I kept and topped up, regrettably only once more. When a stock keeps rising, I keep thinking I have missed the boat but more boats keep arriving! So I wasn't hiding it. This also applied to EXT. Anyway, most of my readers (if any) hardly ever buy stocks that I posted in my blog. So far, my information is free.

Like a lot of gas explorers, if hydrocarbons are discovered, the value flies. But a lot of them have potential to be huge companies based on geology, limited drilling and seismic studies. Even the USA government is aware of the phenomenal quantity of shale gas expected to be discovered in Australia. Yet, a lot of these stocks, like the early US shale gas companies, are worth only a few cents. Read this, BHP paid USD12 billion to buy a shale gas company in the USA; takeover just completed. BOW will be taken over by PetroChina and Shell; I am onto positive territory now with it. Australia is going cheaply and BHP is buying expensively in the USA. Yet, Aussies are mostly indifferent to their own shale gas potential in their own backyard... where there is no farmers. And Bob Brown hasn't landed there yet.

SBL

Dow is up a little. That is how it should behave, not wild gyrations.

In the meantime, POG has gone further up, getting very close to USD1900 per oz. This kind of rapid climb feels very bubbly. But there is no economic standard for valuation better than gold, based on its economics and its history. When an investor buys, it is in oz or kilo. When a central bank buys, it is in tons. There is only that much gold produced. You cannot print gold like the USD.

SBL has just started to produce gold last quarter and is ramping up production by improving its gold processing plant. Meanwhile, it is exploring to increase its JORC resource. Why it is falling in market cap, I have no idea how you explain the idiotic selling other than idiots selling.

I read SBL's presentation recently and saw a chart on EV/ozAu for various West African miners. Again, it showed VKA as the cheapest. http://imagesignal.comsec.com.au/asxdata/20110817/pdf/01208076.pdf Yet since I bought VKA, it has fallen by more than 50%. So from cheapest to cheaper cheapest!

And also in ABU's presentation, I bought PXG. Now a profit. I also bought MOY using the same strategy and it has fallen just a little. I like cheap stocks.... with good values. http://imagesignal.comsec.com.au/asxdata/20110810/pdf/01205897.pdf

But none of these cheap gold stocks are producers. However, if the explorer-but-non-producers continue to fall while POG continues to rise, you can be sure a big gold company (producer) will pounce on the golden cygnets that will soon lay the golden eggs.

GMM

The exploratory drilling has started. And GMM had fallen in share price. Don't know what it is today. Lots of positive hype so now we just have to wait to see whether I have been duped!

But if thick layer of potash is found, then this will be a wow stock.

Herd mentality

I could have told all the idiotic buyers of CSG stocks today what fools they are. Just because a company with deep pocket is buying BOW, suddenly these investors can see that those stocks are undervalued. Tomorrow or rather next week, their memories have faded and they will start to sell the sector. Such typical brainless activity... using mostly other people's money to play with and getting paid handsomely.

I am concentrating on gold producers mostly. Why? Simple arithmetic. Just SIMPLE arithmetic.

With 2 years of schooling, my father was investing in a company that pays better dividend than interest from the bank. He could not see the logic of putting his cash as a deposit. Market was down at that time and everyone was dumping except this hardly 'literate' old man. And everyone in the family was asking him to refrain from investing in the stock market but he had his own reasoning. Today his wealth could look after a few of his descendants superannuation. Like me, he likes simple arithmetic.

SBL

At 1.6c, it is ridiculously low for a gold producer. So I upped it to 1.7c and collected another parcel of SBL today. Just why these idiots are selling, I have to ask their primary school arithmetic teachers. POG has gone up to USD1868 per oz. And SBL is talking about cranking up its production.

BOW

Watch CSG companies fly! BOW was unwanted for a long time. Yet its inground value is high. You need someone with a deep pocket to come before idiots around realize that they have been selling too cheaply. BOW has been offered over $1.40 per share and the share price on Friday was 88c.

Australia is going cheaply! Europeans should come here and buy two Australias for next to nothing. And then sell them to the Chinese or Indians.

MNC

Huge copper strike today of the porphyry type, ie low % but over 1000m thick, typical of South America's copper deposits.

The market will probably go down today due to sentiment but if MNC falls then those sellers are thinking with their turds.

Recession?

For countries with a huge debt, a recession would be a murder, pulverized to death. And for Europeans, it would mean further erosion of European relatively high standard of living. The Yankees would continue to live on bigger debts. Japanese (and Kiwis) would struggle to recover from the natural disasters.

Eventually, China and India will crumble, too.

Would that happen when it is a matter of banks should be doing what they normally do. People are piling into cash deposits and gold is being used, temporarily as a "stable" alternative. But then when so much money get sucked into gold, I doubt if gold can retain its status as a value indicator.

Hence, governments of major trading nations cannot sit idle and watch the recession goes global. It won't be a GFC-tpe disaster but if no one wants to trade, then the world economy will fall. Will that happen? I am still hunting for gold producers!

SBL

http://www.signaturemetals.com.au/pdfs/CPSSecuritiesResearchNoteMay11.pdf

Inshallah! Only worth under 2c on Friday; in fact only 1.8c with a market cap of AUD42 millions. On Friday, it actually rose 0.2c from 1.6c.

If you look at the broker's report, you will notice that SBL is planning to increase production to 100,000 oz of gold per year. At a profit of over USD1000 per oz, you can work out the simple arithmetic here.

On Monday, if it is still 2c or under, it will be irresistible.

Phosphate and 'cheap' gold producers

http://www.theaustralian.com.au/business/opinion/world-hunger-good-news-for-some-as-demand-grows-for-phosphate/story-e6frg9ex-1226114816384

RB has made me a lot of money with his logical assessment. His Pure Speculation article is almost altruistic. No one is always right but what I find fascinating is years down the line, it was the right thing to invest in!

When the market was down yesterday, in the morning, I dropped my SSC buy price to .013c. Well, this is the only stock I collected in the last week. I am watching next week closely and closer.

There is hardly any idiots selling gold producers cheaply. Wait, keep a close watch on LSA, OYM, SBL and ADU. The most fascinating is LSA; market cap is AUD$43 million of Friday close, sold about 10,000 oz of gold in the previous quarter (extrapolated to 40,000 oz per year), unhedged, cost around USD850 per oz to produce, current POG is USD1853 per oz. Go and work out the arithmetic yourself. I have already done it a few times; in fact, I have bought 4 parcels recently.

http://imagesignal.comsec.com.au/asxdata/20110801/pdf/01203122.pdf

LSA is still exploring... No miner would dig into a ground unless there is enough gold to sustain the processing plant.

Markets tumbling...

ASX leads again. And the Dow followed like a puppy!

Europeans are in trouble. But because Europe is a huge economy, collectively, the impact is widespread. It is in decay. Too many years of superiority complex, hence grossly overvalued. Haven't people learnt from history?

China once regarded anything outside its border as barbarians.

Of course, my portfolios tumbled due to market sentiment. But based on my simple logic, my gold shares have performed very well. The investors are starting to realize the value of gold and what it means to invest in producers. My gold producers are not a big percentage of my overall holdings. But at least, I have move into gold in the last year.

The other sector to watch is shale gas. Today in Eureka Report, there is a big article on this. But for those who subscribe to it, notice that there are hardly any reference to the Central Australia miners.

ASX... the Leader of the Pack

True to form. Wall Street was down yesterday but the ASX was up. This morning, the Dow was up (but Nasdaq was down due to poor Dell's result). The Aussies are showing the world market how to behave.

POG is up. The Madman of Venezuela had a bowel prep in Cuba and discarded his brain. He is nationalizing his gold mining. What a wonderful leftist idiot who does not read history! At least, he caused the POG to go up yesterday.

AUD is steady or slightly down. Still it is above USD$1.05 so I bought more stuff from Amazon; music CDs (featuring Oum Kalsoum, Priscilla Ahn, ) and Blu-Ray movies and operas.

PIROA and ABU

Beats me!

Decent announcement and PIROA got belted. And after I bought, it fell another 3c. If you didn't pick any at 27c, it hit 29c at close.

In the mean time, ABU also produced repeated good announcements, yet the share price just won't jump. Of course, both these stocks have to produce a better than expected JORC resource to convince the market. PIR had disappointed once before, like CDU.

I bought my first few lots of ABU at a very low price so I have profited from it but the share price should be much higher. And if the JORC result is 'beyond' good, then it will be a star performer.

Aussie Shale Gas

http://www.proactiveinvestors.com.au/companies/news/18723/baraka-energy-and-resources-eyes-first-well-drilled-by-petrofrontier-corp-in-georgina-basin--18723.html

This is the second attempt. The first by BPT came up with a 2 tcf of shale gas. If BKP is also successful, then expect an explosion in share prices of Central Australia shale gas explorers. If not, then ooooops! There are US government and Aussie government reports that point to the right direction but pointing and drilling may give different results. This is where you do a calculated gamble. Why would scientists be paid to do rubbish assessment?

ASX... the Leader of the Pack

Yesterday, the Dow went up. ASX usually follows like a puppy. But not recently! It has been the leader! In fact, showing the Yanks the direction to take. Today, it went up first and then promptly plunged and remained behind because of WBC result. So far the FT and DAX are down. And the Dow Futures is down too!

PIROA went even lower still after I bought. Some investors were expected miracle from the latest drilling result. I have no problem with missing the trough. The POG is coming up again and AUD is below USD1.05.

PIROA

I can't understand this. The announcement today is very good, not brilliant but very good. And the share price went down. The option fell to 30c by more than 10%. It is irresistible. I am depleting my cash reserve. So who are these idiots who are selling? Never mind; you just got to love them. Wish there are more around!

MOY

Just before th market went awry, I bought MOY based on its cheap EV/ozAu valuation.

http://imagesignal.comsec.com.au/asxdata/20110810/pdf/01205897.pdf

And today, another article appeared.

http://www.proactiveinvestors.com.au/companies/news/18651/millennium-minerals-rm-research-places-buy-008-price-target-18651.html

I hope the article is correct as it would be nice to make money out of MOY as I had made a huge loss in the past. Hype does not equal gain but one can live optimistically!

Hindsight

A few articles have now appeared in the press and cyberspace about those who were "brave" or bold enough to plunge into the market during the recent rout.

Brave? Bold? The brave and bold are usually stupid investors. What you want to be is a "calculative investor". You don't gamble with your hard earned money. I use simple arithmetic to make my decision. There is obviously no reason for the massive selldown other than panicking fund managers who are gambling with not their own hard-earned money but other people's money.

Dongpo pork

Absolutely delicious. And it is how a piece of belly pork should be cooked. I am making it today for lunch tomorrow. You have to be patient but the recipe is easy. Legend has it that Su Dongpo, a poet from the Song Dynasty, asked the cook to give the workers a pork dish with the wine. The cook thought the wine was to be cooked WITH the pork. I doubt if those workers would ever forgive either the chef or the poet if they were Aussies.

When the recipe is right and simple, it lasts a thousand years. And cooking it slowly is how an investment should be. You put the best ingredients in and you wait, and wait, and wait for the dish to 'mature'.

Aussie Shale Gas

Lloyds TSB Bank wants a role in Aussie shale gas. BPT announced a 2 Tcf resource recently from its first exploration (and fraccing). Major gas companies seeking roles in Central Australia. If you join in too late, it will be like the USA where companies seeking shale gas initially were worth next to nothing. And suddenly, worth billions. A US government report made a remark regarding the Australian potential. So expect Yanks to come swarming around. Lots of them have tasted money from the successful US exploitation of shale gas there. Unfortunately, China may have the biggest reserve of shale gas so this could be a damper.

Still, before the Chinese confirms her shale gas resource, it seems to me that this will be the next sector to boom, quiet at first and boom when more drilling results confirm the impression that Aussie shale gas is BIG. Japanese and Koreans still need our gas. POG is settling after its record bubble high so I expect the gold sector to cool a little bit.

Hardly anybody lives in Central Australia. BPT did the fraccing without even Bob Brown raising any objection.

CTP is good at hyping but nothing much is happening, ie, no further result. Picked some shares up at its recent trough at 5.9c. BKP has a JV partner that is making noise. There is also shale gas in Northwest WA, too.

JRV

My brother Siong posted me this link

http://www.kitco.com/ind/CriticalMetalsReport/aug092011.html

I have not read the article before but the reasons for buying JRV are still the same. I know almost next to nothing about scandium other than what I did read in wikipedia a long time ago.

http://en.wikipedia.org/wiki/Scandium

Unfortunately, no big boys (miners or financial institutions) are interested in this pidly company. The American JV partner is rather mysterious so I don't know whether the terms are that favorable to JRV.

Still if that article is correct and Bob Brown allows the mining and processing of the discovery, then JRV could go above its current 0.4c. Yes, I own more than a million shares in it! It is almost worth next to nothing and good for testing patience.

Feasting on panicking investors

http://www.theaustralian.com.au/national-affairs/one-mans-feast-as-sharemarket-crashes/story-fn59niix-1226114114307

Thought it was writing about a gasman in Penrith area.

This stockbroker actually moved a bit late. His slow cooked pork belly would have been a little overcooked. The best day was last Monday. I went on a rampage collecting lots of mostly gold producers. Even IAU, an explorer, is up more than 10% now. And CNLO a phosphate explorer in Tunisia is up nearly 20%. I picked up some PCL at 9.3c, now 10.5c.

I was ready to pounce for more but only if there was a greater panic so I missed out on Tuesday. I was running out of cash and had to set my buy prices lower. I just love idiotic sellers. I wonder what logic do they use for selling. Perhaps it is because it is "other people's" money and they are going to be paid handsomely anyway.

Gold bubble

The markets felt because of panicking fund managers. The POG went up because of fear.

Neither can head in either directions to that extend for a long period without correction. But POG will remain over USD1600 per oz for some time. The gold producers I invested in recently will still be very profitable at that level. Most of their reporting were done when POG was way below.

Today another dead rubber cat bounce in Wall Street. But at least the traders are regaining some senses back. Senses? Not at all. Suddenly they realize that it was just a rumour about France and then good data came streaming back to the USA. Absolute idiots these richly paid money controllers. But I love them!

POG at record high

It is over USD1800 per oz. Is there a gold bubble now?

At over USD1600 per oz, most of my gold producing stocks are more than viable. Profitable. Gold bubble cannot be pricked as it will always have a value, more stable than currencies. So even if it drops down to just over $1400 per oz, if share prices of gold producers were stuck or had dropped to that level, why worry if you are not borrowing to buy?

Out hunting for gold producers again this AM!

Certainty

The only certainty is increased volatility. The bounce was that of a rubber cat.

But wait. POG is going up, at USD1771 per oz now while the Dow has dropped 247 points. AUD is still over parity, just.

Hence, the gold stocks will be more valuable tomorrow. But markets when tumbling only look at gold producers as a piece of paper to trade. So they will fall too but not as much. These fund managers, they are such clever people. They can defy simple arithmetic.

Central Australia

Within the next 10 years, there will be a big inland city in Central Australia to cater for the big shale gas industry there. Unless, unless, unless China AND India uncovers a big shale gas reserve in their own country. The chance of that happening in China is extremely high. Where there is coal, there is gas.

The first exploration of shale gas by BPT uncovered 2 TCF of shale gas. That is just THE start and the company thinks this is... just THE start.

The gas found there could compete with those in the NW Shelf! I wonder what Bob Brown is going to do. Shut them all?

Alphas

When the stock market turns upward, you want lots of alpha. If your portfolio goes up today and it only went up by 2.5% at the moment, don't bother telling the cleaners.

Likewise, when the market goes down and your portfolio follows suit by the same amount, you have nothing to feel despondent for.

My 2 main portfolios are up 5% and 6% so I have every right to gloat. But the damage has been bad so the gloating is only for one day! While my portfolios have been hit harder, the difference is I buy when the market is down. Those stocks I bought on last Friday and Monday have gone up by around 5-10% today. No desperate idiotic sellers on Tuesday so I missed out on the trough.

Anyway, this could be a dead rubber cat bounce. But I doubt there is a depression around the corner. China and India are still powering ahead but slightly slower. And Japan needs a lot of raw materials from Australia for reconstruction following the tsunami and earthquakes.

BPT

Today it has a great announcement regarding its shale gas in Central Australia. Well, the share price moves but does not correspond well with the value of the gas discovered. If another oil company tells the ASX that is has uncovered 300 million barrels of oil equivalent, the share price would have rocketed.

http://www.asx.com.au/asxpdf/20110810/pdf/4209n4hq25mqwr.pdf

And this is only the start of its shale gas exploration. Australia the Saudi Arabia of shale gas?

Watch CTP (huge tenements in the middle of the country where no one wants to go to, possibly the largest of all mining companies in Australia), ICN BKP, OBL, TPT....

Top few hundred companies

Some fund managers, especially the big ones, are restricted to investing only in the top 200 companies. Then some others are index-huggers; do nothing but buy and sell according to the index. Fools park their money there; lazy people paying lazy people lots of money to "look" after their investments.

A fund with lots of capital invested cannot dabble too much with small companies because when it purchases or sells a stock by millions of AUD, it affects the share price drastically.

Hence, small caps are the realm of boutique stock brokers and crazy investors like me. But when it comes to performance, there are like rockets; movements in either direction are very exaggerated.

I have stopped touching big companies for a long time now because.... why compete with the big fund managers? Their charts are very lethargic with heavy inertia. On the balance, I have better research work on the small caps than lots of city brokers. And most of all, I like very simple basic arithmetic.

ASX... the Leader of the Pack

When DJI went up by 60+ points, the ASX tumbled heavily. The next morning DJI crumbled after the downgrade of the USA government credit rating to AA+. Then another big crunch came to the ASX, and the DJI fell heavily too!

Then yesterday, all Asian markets tumbled but the ASX changed course and became nearly 1% positive. Guess what, the USA and Europeans followed!

Australia - Leader of the World Markets!

HAV

http://imagesignal.comsec.com.au/asxdata/20110525/pdf/01183614.pdf

This is another grossly undervalued miner. Unfortunately, unless you PRODUCE, the market don't take you as seriously.

I put a low price for it so if I collect some HAV, I would be happy.

IGR

The MD of IGR also bought when I bought; i.e. same price at 46c! Maybe, since we think alike, I might qualify as an MD of a gold miner!

http://www.proactiveinvestors.com.au/companies/news/18485/integra-mining-managing-director-boosts-holding-with-on-market-purchase-18485.html

I find it incredible that there are fund managers selling gold producers when basically nothing has changed in the gold world other than a rise in price and AUD has dropped a bit from USD1.10. Please don't sack any of those managers. How else am I going to buy shares cheaply?

Crazy market

Someone with a deep pocket is listening to me. Worry about debt will cause economy to slow down which will make the debt problem worse because of deleterious effect on recovery.

But this is not 0911 nor is it SARS where everything locked down. AAA and AA+ difference is no big deal. The world is moving on. The PIIGS can stay in a sty while the rest of the world should just carry on.

Suddenly the market took a turn in the afternoon. POG went higher to over USD1750 per oz while AUD recovered a little to USD1.02. I put very low buy prices so I didn't collect any more shares today. I worked on the premise that if those idiots are so desperate to sell, I would lap those shares up. Yesterday, I collected CNLO at 16c, a drop of >30%. Today it is 19c.

Those gold producers that I bought yesterday when I went on a rampage have all done well. But how long is this recovery? LSA went to 72c so one parcel was okay but the first parcel bought at 78c is still a loss. But why worry? LSA market capitalization is AUD$40million and it produces gold revenue to USD$70million per year. The gold cost around USD850 per oz to produce. So USD900 per oz is profit! That means the PE ratio is around 1.

LSA

LSA had a placement for 82c per share with a warrant for another share at CND$1.20 per share. Somehow the market (or rather some idiotic sellers) didn't like it. When it fell to 78c, I topped up. But when one seller appears at 70c, it was like red rag to me. Within a short while, I bought more at the low price.

This is a company generating huge amount of revenue relative to its market capitalization. The PE ratio is so low that it is almost a joke for a gold producer. I must be reading my figures wrongly or the market is totally indifferent to small gold miners.

Today, there is no seller below 78c but the buyers are not offering over 70c either. Inshallah!

Have a read of this article which I have posted before (now even better value for money due to fall in share prices, falling AUD and rise in POG to over USD1700 per oz!):-

http://www.proactiveinvestors.com.au/companies/news/17920/asx-gold-producers-cga-mining-lachlan-star-dragon-mining-integra-mining-silver-lake-resources-17920.html

Same issues

Plunging world markets because the Dow is still big brother. But look at the price of gold; it has gone up! While AUD has fallen to just over USD1.01. The lower AUD is better for Australia but the average Aussie is totally ignorant of that.

When I invest in a stock, I look at the future. You need to trade a commodity/service at a profit. And if your profit is going up, and you are not selling your shares, it does not matter what the market capitalization is as long as a profit (+ dividend) is generated. We are talking about real profit and real dividend.

While I am running low on cash again because of the splurge yesterday, I will be looking for bargains again today. But I doubt gold producers will come as cheap. There will be people shorting stocks but I am not into short term investments so it will not matter to me if share price falls drastically. In time, they will rise again.... as long as there is a profit. My riskier stocks will plunge more but often they rise faster when the markets turn.

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

The price of gold is holding up at over USD1700 per oz tonight. And AUD remains under USD1.04. Those idiots who sold gold producers today obviously can't do simple arithmetic. If you are one of those people with a fund manager managing your super, chances are they are paid by you to sell me your gold producers cheaply to me. So thank you!

Tomorrow, share price will fall again but I am not interested in short term movement except to pick up bargains.

ASX

What a whack!

But the price of gold is up and AUD is down. And so the value of gold producers are up. That is right, PRODUCERS is the key word.

Short term, the fund managers are dumping everything indiscriminately. I have picked up IAU, DRA, RMS, SLR, KCN, LSA and SLR. All producers except IAU. PCL is an explorer. CNLO fell by >30% so I picked some shares too.

That is it, the cash is exhausted. So no more buying tomorrow.

POG and AUD

POG is up to USD1713 per oz while AUD has gone down to USD1.0317.

That means POG in
AUD has gone up higher still. If your stocks are not hedged, have no debt and the cost of mining is measured in USD and they are producing gold, you will love these idiots who are selling gold producers in the market. I have picked up LSA... twice today. One idiot is selling it for 70c.

Buy buy buy!

I cannot believe the excuse for selling in the ASX today. I dropped all my buy price and still collected shares in RMS, KCN, PCL and SLR. 3 gold producers (2 of them paying a dividend) and 1 oil explorer. Last Friday, I picked up BSR (non producer) and IGR (producer).

I got them closer to the trough. Unfortunately the DJI Future is pointing to a major fall but why worry? POG has jumped to $1695 per oz while AUD had tripped below $1.04. I chose gold producers and I couldn't resist PCL. Oil offshore in Brazil where it is joined to Africa when it was one piece of land. The same applies to gold in South America where it joins West Africa a long, long time ago.

I might be wrong with my logic as those fund managers are supposed to be cleverer than me when it comes to "fund management". But I have always made more money buying when those people are dumping! I only know that my basic arithmetic is better than them.

KCN

http://imagesignal.comsec.com.au/asxdata/20110802/pdf/01203474.pdf

Nearly 20% fall for a gold producer. Rare dividend producing mining stock. Possibly the best safety record among miners. Finding more gold. Adding more companies.

And big tumble recently. If you look at the market capitalization in the presentation and compared it to Friday's, then you know this has got to be another oversold gold PRODUCER.

You cannot expect KCN to double or triple your investment like some of the smaller explorers. This one is mature, stable and lower risk. Its newly acquired tenements in Australia and not so recent ones in Chile could outperform though. But I am mostly looking at its Thai operation... and potentially the Ag mine in NSW. With its good management, I don't expect my investment in KCN to tumble unless idiotic sellers dump their shares. Long term, I can sit pretty while POG is rising or stable. This has got to be one of my closely watched shares on Monday. Another one is RMS.

http://imagesignal.comsec.com.au/asxdata/20110803/pdf/01204086.pdf

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

When the ASX plunged on Friday, POG fell to around USD$1650 per oz while AUD came down more. And today, it is USD$1661 per oz. So these well-paid idiots sold off gold producers, cheaper by 5-10% just because the broader markets fell. In theory, those gold stocks should be more valuable. If those fund managers know who their fathers are, they should ask their dads to take them back to primary schools to relearn basic arithmetic.

Unless POG falls on Monday, I intend hunting for more gold producers. I topped up IGR (at 46c just before close) and BSR (5.1c) because they fell more than the market did. BSR's SPP at 5.5c might be suspended. I am hoping those idiots, my pals, will keep selling!

BHP's PE is so low now that it would be stupid for a big Chinese company not to make a bid for it. Why grumble about price of Fe when you can get the producer cheaply?

Dow minor recovery

Who are these idiots who sold down massively yesterday? These are the same idiots who look after the funds that mums and dads pay their super contributions into. They don't trade with their brains; just follow the market sentiment and they get paid millions.

Italy and Spain can get stuffed along with the PIG. These Europeans just don't know how to undervalue themselves. The days of colonization are over. And the Yanks just have to know that there are 2 new superpowers emerging.

ASX fell

The world is still the puppy for the USA.

If Italy and Spain want to go bankrupt, let them be. They are overpriced nations. Go to China or India, and you will know what is real value for travelers. Europeans still think they are the colonial masters.

Today, I collected BSR at 5.1c and IGR at 46c. One is an explorer and the other is a producer. When both fell more than the general market, I bought them. LSA is in trading halt so I could not top up on it.

I received a report from a broker in the city and it would appear like they can't see how this fall is sustainable.

On Monday, if the market falls again, I will look forward to topping up more! Dumb?

Dow fried

The Dow was fried last night. But the price of gold is still over USD$1650 per oz against a falling AUD. So gold producers are still good. Today, for me, will be a great day to buy but the employment figures could send the Dow lower tomorrow.

ASX fell

Strange day to fall when the Dow went up. And why fall when the AUD is down. Most Aussie companies trading overseas should see their value rise!

Gold is doing nicely. I was at work this afternoon when the market started to fall. I got a tax refund from the ATO. Surprise! I am not fond of getting a refund. It means that money should have been mine last 12 months but the ATO got to keep it and earned from it.

That means I have a bit more cash to hunt for wounded good value prey. But it is two full lists tomorrow. OYM is producing gold but the market dislikes the small gold companies. I don't!

WHN

http://www.asx.com.au/asxpdf/20110804/pdf/4206657dvkcmb2.pdf

Here is one for a flutter. What I call a calculated gamble.

If you win, it is big.

If you lose, it disappears, never to be heard again.

Full of hype but it can be true if the oil rig hits oil which can be extracted. I put a small amount in it so I will never be rich nor poor.

OYM

Strange. A producer of gold and expanding its production and the market is also oblivious to it.

Read its presentation today via the ASX announcement this AM

GBE

One of the most incredible things about GBE is how unresponsive the ASX is to its announcement. It can be bloody good but who the heck is GBE and what do they do? Nobody with money reads its announcements?

As a consequence of market apathy and too many idiotic sellers amongst its shareholders, I am at nearly 25% loss. But I will hold while there is a very bright prospect. Yes, I would top up but my preference is gold producers.

BOW

This CSG company has been in the doldrums. After participating in its SPP, it has been dismal. When STO made an offer for ESG, suddenly the market woke up to it.

And now a major bank is acting as an intermediary soaking up 5%. This is a sign of prospective takeover activity but you don't know who is the potential bidder. It is coming!

Diggers & Drillers

http://minesite.com/news/diary-of-a-private-investor-at-diggers-and-dealers-day-two-speed-dating-in-mining

KCN is great but it will not perform spectacularly unless it strikes a new big lode. Still it is a producer and pays a dividend.

RMS is starting to pay a dividend too.

I used to own IGO but sold when nickel was down. I knew about its gold but it wasn't as valuable then.

One of my bragging rights is GOR. Our Man in Oz told me about it nearly a year ago. And he has made me a lot of money out of this stock. I bought before "others" were aware. Any reader of mine cannot say they were not told because they didn't read my postings! If you want to be spoon-fed when it comes to investing... you have to pay a lot for that. And I am not qualified to spoon-feed anyone nor am I interested in that.

Psst... AGR

http://imagesignal.comsec.com.au/asxdata/20110728/pdf/01201193.pdf

In June, a placement at 82c was made. I bought at 59c just recently and it is now 57c. The market for AGR is at its door. A potash explorer that has come down in price? I love those idiotic sellers when I am looking forward to buying more of AGR.

Bad economy?

Markets cannot keep tumbling down. It starts to become valuable.... if the economy is not as bad. After Sept 11 and during SARS epidemic, the world contracted its activities. People don't fly, trade between country fell, conferences are cancelled, price of lobster fell.... Now that is real bad. Not what is happening currently. The USA is living above its means and creating wars that the world cannot afford by dragging in her allies. And of course, Greeks are lazy in Greece and Europeans have overvalued themselves.

Hence, I told my wife yesterday that the Dow will rally today. Also the AUD cannot rise forever; overseas investors will eventually pull out their money from the land of milk, honey, iron and coal.

There won't be spectacular runs either until the USA stops being crippled by its debt or China's internal economy is strong enough, not to have to rely on exports. Both are a long way off.

In the meantime, it will be gold, gold and gold. The Thai and Korean Central Banks have been buying billions of dollars worth of it to stabilize their currencies. Euro and USD notes might become cheaper than toilet paper. It is difficult to use plastic notes in the toilet.

PXG

http://imagesignal.comsec.com.au/asxdata/20110704/pdf/01194501.pdf

It is worth only AUD$15 million. It has around 1.3 million oz of gold in its ground. The estimated cost of mining is AUD$850 per oz, i.e. not cheap. POG is USD$1667 per oz today. AUD$1=USD$1.07. Do you know how to work the arithmetic or do I have to take you to a primary school to realize the value of PXG?

If Italy collapses tomorrow, PXG is "worth" even more! Even if the ASX falls! If the SP of PXG falls again tomorrow, I will just have to top it up even if it is not a producer. It has not stopped exploration yet.

ASX

It is more than 2% down but I am not feeling miserable. My portfolios were buffered by gold producers. Because my spare cash is not plentiful, AND because my collection of gold producers were mostly up, I didn't buy anything.

I am down 1.5% so for a risky strategy, I think it is still "alpha" for me today. So I am not feeling miserable even though I haven't shaken off my cold. Most of my bad downs were my blue chips. I had a great uptick from PCL.

ADU

http://www.asx.com.au/asxpdf/20110803/pdf/4205q9p821jljw.pdf

Go figure!

It produced 'over the forecast' 26,000 koz of Au per quarter at USD$540 per oz cost. Today, POG is at USD$1660 per oz. That means it generates over USD$116 million per year profit after the cost of mining per year for a stock with market capitalization of under AUD$350 million. It hasn't finished exploring yet. And POG is expected to go up further.

Aunty Julia and Uncle Wayne do not live in West Africa and Uncle Bob is unknown there.

CDU

http://imagesignal.comsec.com.au/asxdata/20110727/pdf/01200764.pdf

Do you believe or do you not? Many a times, CDU produced wonderful drilling results but when a JORC compliant resource is estimated, it is below expectation. The arithmetic seems to have been 'miscalculated'.

Some copper mines in South America are huge but while the thickness and deposit are big, the grade is pathetic. The gold in CDU's Wilgar deposit has one at 1m at >600g/t of Au but you don't know how long this vein is. As more drilling is done, you get a better idea but the grades have been phenomenal.

Obviously, few (especially the big boys who control many apathetic investors' money) are buying the CDU story so the share price has not reflected recently good announcements. Unfortunately for me, it is not a producer yet so it is low on my priority. But if the price continues to tumble against a backdrop of good announcements, I am prepared to pump money into it again. Already did so once recently.

Dow down... but POG and AUD good for gold producers

My logic will have no bearing on the performance of the ASX today. Thousands of fund managers will perform like lemmings today and just sell. These are the "experts" at money management but I call them long term twits. Foolish and indifferent investors pay lots of money to feed them and put them in expensive offices and exorbitant cars.

So if you have spare cash today, look out for the gold producers. Has to be GOLD and has to be PRODUCER or producing soon.

The POG leapt overnight to USD$1660 per oz. There is no error in "USD$1660 per oz". And AUD is down below USD$1.08. Looks like the USA is in the financial dunny.

Yesterday I bought coking coal CLR and two cheap gold stocks MOY and SGQ. All high risk investments so don't dabble in them. All coal products and gold are priced in USD. But today, I will hunt for a plunging gold producer, preferably one that I already own. When I sold yesterday, I had leftover cash after the recent purchases :-)

Cheap EV/ozAu

Last time I used the cheap EV/OzAu valuation to buy a stock that I know nothing of, was in April 2011 when I was reading ABU's presentation. I bought PXG after a short research. After 4 months, PXG has rewarded me with a 27% profit.

Using the same logic, with spare cash after jettisoning some politician-interfered stocks, I bought MOY after reading ABU's latest presentation. But my calculation gives a different figure but it is still very low at AUD$27/ozAu. In the past, I have made a huge loss out of MOY because I bought at peak and sold at 5.8c. Today it was 2.2c buy but it closed at 2.1c. Sometime ago, I attended the CEO's presentation and he sounded very promising. But luckily I delayed buying the stock back! I had bad memory of MOY!

SFR

Charter a plane and fly a bunch of fund managers and reporters to your mine to highlight how good your company is. And voila!

But if you are a plodder and only reveal your goodness by announcements via the ASX, then you can be f*(&ked. Today, in the midst of red, SFR jumped because the blindfold has been removed. But as a contrarian, I hope more of those people in THAT plane stay blindfolded for the other stocks that I plan to buy!

I am onto 140% profit with SFR (excluding earlier trading profit) which is not actually brilliant considering I was on SFR email list long before I became a shareholder. And because I didn't have enough dough, I had to sell some of my original SFR shares at a higher price ($3.64 but bought at $1.86, 7 months prior) to buy the SPP (at $3.20) in March 2010. Of course, I would have been smarter, retrospectively, if I didn't sell any. But there is only that much money one has and borrowing to invest is generally not my scene. My margin loan is trivial and easily serviceable. Never be greedy and borrow to the hilt to invest. It is more stupid than dangerous.

Gold producers

How many more idiots can we have in the stock markets?

POG is up again, AUD is down and price of gold producers are mostly down!

Someone should send these kids who manage investors' money back to kindergarten to learn very, very simple arithmetic.

But wait! Don't! Keep them looking after fools' money!!! I want to buy more of those shares before people realize how much profit those gold producers are making.

Gold producers

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=132668&sn=Detail&pid=92730

Mr Brent Cook has 25 years experience as XXXX, XXX, and XXXXX. Wow!!!!

You only need to go to primary school to work out what he said in the interview. My late father went to a school for only 2 years and he would have figured that out in his younger days.

I emphasize the word "producers"; not "explorers". But an impending producer will qualify as well. It is incredible how nice some idiotic investors are when basic arithmetic is THE only tool you need to work out the investment strategy. I buy from these people! You only need to hold the shares long enough for these sellers to be bought out.

You can only make cash profit if you sell something and you can only make big profit if you sell at a big margin when it comes to gold.

MOY and NKP

Whenever politicians are involved, it is always bad news for a stock. Once a high flyer with great prospect, when local politicians kick up some fuss, you can almost be certain that bribes have not been paid... adequately.

After some deliberation, I got rid of NKP which has promised a lot but cannot deliver due to problem with local politicians and the law. South Africa is not the best place to invest due to Black Empowerment policy. Like Malaysia, it enriches a certain sector of the "natives" only. The more political power you yield, the richer your children get.

From now on, I will leave South Africa alone.

I made a tiny profit but after accounting for the duration that I owned NKP, it is a slight loss.

Why MOY? Well, I read in ABU's presentation at the D&D meeting in Kalgoorlie that it has the cheapest EV/oz Au. Its gold is only worth under AUD$10 per oz (but I calculated it at AUD$34million/1.24million oz = about $27/oz).

CLR for KGL

Local politic is extremely important but it is a factor that is difficult to calculate. When I spoke to the CEO a long time ago, he was confident the government was keen for the project to get going to show to the world that Kyrgyzstan was serious about investment after the people's revolution. All his words point to a speedier progress for the gold mine.

But the local landholders (ie the rich people) were worried their source of cheap labour would disappear into the mine. Politicians also need to be bribed. So with violence and threats, no effective police supervision, and claim of possible water contamination, etc, etc, the project was virtually killed. So I sold off KGL today and bought into hard coking coal. Thermal coal is everywhere and electricity can be generated by other energy sources but hard coking coal is not replaceable for making steel.

After reading an article yesterday in AFR about CLR with its potential for takeover, I bought it with the money from KGL. I am also tempted to top up CEO but I will wait with the leftover cash.

BDR

If you go to minesite.com, you will see "things" happening in Kalgoorlie, possibly Australia's biggest drinking hole at the moment.

http://minesite.com/news/diary-of-a-private-investor-at-diggers-and-dealers-day-one-gold-takes-centre-stage

And there is a little ending note regarding BDR. The news is all good for this stock... but why isn't the share price reflecting its good fortune? It is loaded with cash, too. The discovery of Fe and Au in Brazil has been continuously good yet the share price does not reflect the quality and extrapolated quantity of the find. Already, there is a JORC-compliant resource estimate. These drilling results just add onto it.

Still, few people want it and even more fascinating are the idiotic sellers getting rid of their stocks. Dow went down today after the debt level issue was settle and POG went up again while AUD fell back a little to below USD$1.10. Why people won't buy BDR is a big puzzle for this pea-brained gasman! My latest top up late last week was at 85.5c per share. It went down the next day!

ABU

When this company makes an announcement, the market is often indifferent or with disdain. That is what happened to today. POG fell a little today but it is still over USD$1600 per oz.

While the grade is not wow but the thickness and the existing of one big lump do not seem to sway investors. Maybe there is something some sellers know that I don't. Well, wait another year and see what happens to ABU share price. I keep calling others idiotic sellers but maybe they will have the last laugh. But I like to think simple arithmetic principles will prevail. If you find more gold, your company market capitalization should increase.... not fall!

It is also true that short term, the market does not operate on logic. My average buy price is 3.1c so at 4.6c, I am "contented".

American politicians

Is it that difficult to predict a deal will be done at the last minute? If the deal fell through, the Republicans who have a lot of money tied up in Wall Street are going to suffer a huge loss each. The average Yankee will have to pay more for borrowing. The cost of everything will go up and the economy will stall faster. And the Chinese will start parking their money elsewhere.

Best time to buy was the two trading sessions before today!