SBL

Just put a buy at 1.1c. The placement recently was at 1.5c. I had topped up at that price just before the placement. Even at USD1600 per oz, gold is still very profitable to mine by SBL. Especially, since AUD fell below USD97c.

Recently, there have been a few stocks paying dividends, including WES, BHP, WOR, RIO and a few smaller stocks. It is still wise to keep the blue chips.

BOW

Just before Xmas 2010, I bought into the SPP for this stock. It then sank like a lead balloon. I cannot believe my eyes that such a well-endowed CSG stock could crash so badly. But suddenly, when a big company like Arrow wants to take it over, I am onto a sweet profit. There are so many under-valued Aussie stocks. You need foreigners to realize how cheap this country is.

AGO

I sold a lot of AGO shares when I first received them because my portfolios were top heavy with it. But now it is way below my sold price so I am seriously thinking about topping up on it. While the markets are in a turmoil, this company is selling even more iron ore and still profitably.

Calculated gamble

I was reading Eureka Report and noticed one of the writers used my term "calculated gamble"!

It was referring to DYE. Here is another Aussie invention that few people want. I do and I should be topping up on it. One day, some big companies will notice it. Its product produces more energy than photosynthesis. Point taken?

GUF

Coal is gold. While Greenies are screaming at coal being mined, they are also screaming at uranium and oil & gas.

Most renewables cannot as yet provide adequate energy. The Greens should cycle and/or walk to work. Bob Brown will just have to kayak across the Bass Straits.

The best coal stocks for me to consider buying or topping up is TVN and GUF. I bought some GUF today. It has two of the best addresses at the moment - Mongolia and Galilee Basin in Queensland. But it looks like the markets will fall again tomorrow so I might have bought too soon. However, I rarely buy for the short term so it doesn't matter much.

POG

While POG has come down, I noticed it has support at above USD$1600 per oz. What is even better is, AUD is down so the value of gold has held up well downunder.

The market is going to be extremely volatile. Unlike the plunge in August, with this recent turmoil, everything points to panicking response by investors and continuing financial problems in Europe, USA and Japan. China is the bigger worry as Australia's wealth is tied up to China's health.

Unless it is an absolute bargain, I will just sit on the side.

The Dow initial performance

I watched the Conspirators last night and when I checked the Dow when it opened, I was amazed it went up by 100 points. Sure enough, when I woke up, it was down 179 points. All the financial problems are still there. Lazy Greeks, indebted Yanks, Japs coping with natural disasters... and China winding down. Currently, the real cause are European politicians who are not receptive to criticism for ineffectual effort. And Obama doing a lousy job; good with the gap but appalling with his fiscal/Middle East policies.

Because commodities were used as financial football (hoarding to create a bubble), the sell-off can be vicious and abrupt. While bubbles can be inflated rapidly, the reverse can be overdone too. Big central banks hold gold for its perceived value. If all sell at the same time, gold would drop precipitously. But if gold is held behind vaults, then the price will rise. There is only that much gold produced every year unlike USD which can be printed. It has a long history as a hedge. The current turmoil is in a dynamic phase. I suspect gold is being sold off to realize cash; as well as commodities. When one massive sell starts, the rest have to be follow so that it is not the last one to sell.

http://www.theaustralian.com.au/business/markets/gold-silver-dive-in-cash-rush/story-e6frg91x-1226150966393

Me? I daren't touch the market at the moment. Sell and it will rise. Buy and it will fall. Good time to do more gardening! But always on the look out for bargains!

WHN

Everything points to a great future but most drilling rigs end up with no hydrocarbon. You have great seismic studies, great analysis by "experts", great efficient drilling (not common!), great hype and great management... but you need real result at the end of your exploration.

For those wanting a flutter or even to trade, WHN is fantastic. There are prospective billions of barrel of oil in the waters that surrounds Seychelles. It is only over 1000km from Somalia so there is pirate issue too. But if oil is found, then you can never afford to visit these islands again! But I can...

Some of you may remember PCL. It has exactly the same history. WHN has some major companies pouring over its seismic studies to see whether it is worth doing joint ventures. PCL has already collected a few big firms to pay for the exploration in exchange for a share of the spoil.

Alpha today

Collected some alphas today. Yesterday, I daren't touch the stock market because it is just impossible to logically predict which way the markets would go. Investors were dumping physical gold to realize cash. And Yankees were repatriating their foreign investments back into USD. Of course, I have no evidence of any of these activities but you hear about them and those are the reasons I suspect why POG fell and USD went up. You would have expected the opposites to occur.

The Chinese and even worse still, the Indians, need a lot of infrastructure work. The Japanese are reconstructing after the terrible natural disasters. Then there is Brazil and soon Indonesia with infrastructure spending. I cannot see how commodity prices can vaporize. The Kiwis are too minute to matter. The recent sell off must be the work of hedge funds which invested heavily in commodities.

Just remember, the POG is 27% higher today than a year ago. So while it plunged recently, gold miners which produce gold ingots are still very profitable.

Alpha dissipated

Wow! If I am on extreme margin lending, this would be my worst day. Luckily I am not.

Has gold been a bubble? Of course, it has risen too quickly but for it to plunge, it is sheer panic. At a low price, mines will close and supply will fall.

Is this GFC Mark II? Greek problem is too small a factor but it is causing a lot of concern due to contagion effect. No one wants a repeat of the Great Depression so it won't happen. I will be watching the market closely tomorrow because bargains will appear.

Lazy Greeks

http://www.theaustralian.com.au/national-affairs/state-politics/printer-works-nights-to-save-on-off-peak-power/story-e6frgczx-1226144908457

If you can find Greeks (in Greece of course) working like this Aussie, there would have been no Eurozone crisis. If I am a printer and run my own business, I would change to be born in the year of any nocturnal animal!

China

Where will China be heading to?

In a democracy, when things are bad, the voters have to realize that they choose the government. In a communist nation, the Communist Party knows what is "best" for its citizens. Manufacturing is down in China. Can you imagine what would happen if millions and millions of Chinese are out of a job and paying off their bubble property?

The Chinese government has lots of money in reserve. When jobs are lost in the private sector, the government will have to create work for its people. The infrastructure needs a lot more upgrading and development so I see a prolonged demand for commodities. Again, some funds invest in hoarding commodities to create a bubble. These will be sold to cover their losses.

These thoughts are not research based. They are from logic in my grey matter. AUD will fall (good news!), commodities will fall further, ASX will fall more but sooner or later, the Chinese and Indians will need to invigorate their own internal economies and stop relying on the Yanks. Lazy Greeks will remain lazy but they don't buy anything from downunder.

POG tumbling

Why did POG fall? Here is one explanation. Investors sell their really valuable assets to cover their losses elsewhere. So gold is dumped to realize cash to cover for the losses in other investments.

Same thing with the USD going up in value when it should be going down. Americans sell their overseas assets to cover their debt in the USA. So they need to buy USD.

But surely you can see that all these movements are temporary. I see POG going up again because it can hold its value long term and the US government is printing USD which eventually will fall in value.

Am I too simplistic in my thoughts?

Markets tumbling...

When markets tumble, usually POG holds. But it hasn't been. However, that does not bear logic. If Dow continues to fall, money has to be parked somewhere. USD can be printed. Euro is having problem due to lazy Greeks. And now the Italians are joining in the game. Japanese are caught up with the havoc from the natural disasters. And now China is slowing too.

So where do you park your cash? Retailers are not jumping with joy. And currencies can be printed or manipulated. There is not enough gold for central banks and there is not enough for investors either. I have no answer except to postulate that a gold bubble will surface.

Valuation

Last time I went on a binge, it was so easy to decide. The ASX 200 plunged and took everything down. Meanwhile, the POG was exploding upwards. Why should gold producers be penalized. Hence I bought mostly gold producers. And even with the markets tumbling, those stocks are still profitable but not gold explorers which are still non-producers.

There are at least two current gold producers in my portfolios which the market is ignoring... SBL and BSR. Some find more gold and the market is still ignoring them!

Risky investments

My investments are high risk. A good example is oil explorer. If no commercial hydrocarbons are found, then the stock vaporize... like NGE and FAR.

Gold did well today, relatively speaking on a massively down day. AUD dipped below parity. POG went down a little but in AUD, it is still okay. Overall the gold sector did okay. In fact if it isn't for gold miners, my average would have gone down lower.

POG and Dow

Dow was down massively last night. And so was POG. But Dow dropped more so gold is still a hedge. Not only that. The AUD is near parity with the USD so that makes gold even more valuable downunder.

So expect the ASX to plunge today. But I am sure gold sector will once again be my 'saviour'.

LYC

A big US firm downgraded a pending REE producer from buy to hold so LYC got shot as well. Now we know why it plunged. Strange though. China is curtailing its export of REE. The price has come down a bit because of world economy faltering. LYC will be the first new stock to sell REE.

LYC

This one plunged more than 15% today for no reason. LYC even had to inform the ASX that fact.

I can't see why it should fall as well. Because some of my rights application were knocked back, I have a little spare cash. I pumped that into LYC at $1.245. After that purchase, the share price started to move up and it closed at $1.28.

AGO

http://minesite.com/news/how-much-is-atlas-iron-really-worth

Nothing is guaranteed in investment. You invest based on chances, and you make a calculated gamble. For those who bought GIR, you would be laughing all the way to the bank. It is my biggest jump in value. And now AGO is making a claim that the profit will start to roll in, resulting in further rise in share price.

I have no need to sell any more AGO shares. I was too top heavy with AGO after it bought over GIR. But it would be crazy for anyone to sell off totally shares in AGO; one of the best run companies in Oz.

PIROA

The best time to buy is when the market is panicking. I was cool as a cucumber when I picked up this option at 30c on 16/8/11. It dropped further and I felt quite stupid. But like many purchases I had done in the past, when the investors are dumping stocks like lemmings, those stocks become very profitable.

Today, in a market plunge, my PIROA showed the biggest rise, up by 7c to 46c. The next best performer on a miserable day is AZH. So if it wasn't for my gold stocks, I would have performed worse than average.

Gold stocks

Luckily for gold stocks in my portfolio. Otherwise I would have done much worse today.

There are still good buys. Try KMC and SBL. These are producers! IAU is an explorer and falling too.

Good news week

I just read the weekly update from Proactive Investors. It is incredible that so many of my stocks are featured in it with good announcements:-

1) KMC increasing its resources by 68% at one location, and HEG looking to boost its gold resource
2) RMR with new prospective geology
3) LSA, DRA, PIROA, GRY, MEI, IMA, ABU, ERL with new hits
4) SLR increasing the number of gold mines

And outside of Proactive Investors, my HUN is being taken over. It is nearly up 100% in just over a year.

It should have been a good week for me but because markets are punished and then central banks pump money into other banks causing POG to fall but markets generally to rise again... so my portfolio didn't perform as well. Next week should be a better week as POG will start to rise. As Alan Kohler pointed out, the money pumped in by central banks is only a temporary solution.

TVN

Normally when you announced that you have found thick seams of coal, you are talking double digits. For TVN, it has been announcing over 100m thick seams, yet nothing credible is occurring. Perhaps, the experts know that the non-coking coal is trashy or unusable; that kind of analysis is beyond my capability. It is in Mongolia, the new El Dorado for mining stocks.

I am waiting for a big coal producer to come and grab another cheap Aussie explorer. Peabody is next door. And Chinese companies don't know what is cheap.

Everything is up

Something is wrong this AM. POG is up, oil is up, AUD is up, Dow is up, SPI is up and even Europe is up. There should be some incompatibility. My conclusion is that the markets are confused.

But I am not.

China and India are trading big with Australia. Greeks are still lazy. Yankees are still spending without cash. And Japan is wallowing in misery. Not much gold is produced as it is difficult to find a new huge productive mine.

Hence POG, POO and AUD should be performing well. Yesterday, I collected all the 1.5c SBL I bid for. On Monday, I expect it to go up because the POG has leapt over USD1800 per oz again. So what would I buy? If they stay low, I still think SBL, KMC and MKE are cheap and ignored by investors. Ignorance or ignoring?

Alpha

Today, I expected my portfolios to be pulverized. Why? AUD is up over USD1.03 and POG is down, below USD1800 per oz. I have a huge chunk of gold stocks and most of my recent investments were mainly in the gold sector.

Nope.

I collected alpha today at close! And I expected more as resource for KMC has been upgraded by 68% yet its share price didn't move. That means it is even better buy in the longer term. I also collected all I wanted for SBL at 1.5c. My MKE remained below my buy price. All are good value stocks but only SBL is actually producing and selling its mineral.

ASX 200 climbs

Generally, a good day for most in the market... except me. My portfolio is laden with gold stocks. So when POG is down to below USD1800 per oz, you can expect the gold sector to fall. Because the central banks have more money to throw around, the stock markets rose. But all the financial problems that existed yesterday, still exist today.

Hence, I see this as a temporary set back.

Stock market rally

Seems the markets rally because central banks pump more money into the banks. Not because the stocks have become more profitable. Not because economies are doing well. All the basic problems are still there. Greeks in Greece don't want to work hard. US still spends like there is no tomorrow. Chinese yuan is still undervalued. Japan is still struggling after years of bad economy and recent natural disasters.

So markets jumped because banks got more money to lend? Hence gold fell. I am a patient investor.

BPT

For a long time, nothing seems to go right for BPT. What I paid for seemed silly. But I have always had great faith in this stock because of its tenements. In the recent months, it seems to do no wrong. And as shale gas becomes hot investment in the USA, it is starting to rub into Australian stocks, too. Altogother, between 2 portfolios, I have bought this stock 7 times. The early ones were often with lament because the share price never rose much but kept dipping below... and went even lower!

URA and GTE

When URA spun off GTE, the latter dwindled down to almost nothing. But if you had the crystal ball at that time, you would have bought every single share in GTE you can lay your hand on.

So far most of GTE's rise has been speculative. Sometime soon, I will have to cash in some shares as it has risen so much since I first bought into it.

And who would have predicted that the parent company would fizzled to almost nothing while the baby bloomed! There is nothing brilliant about my investment in GTE; a large chunk is luck. However, the later parcels were bought because idiots were selling them off when preliminary surveys suggest very good chance of mineral hits.

PIROA

http://www.asx.com.au/asxpdf/20110915/pdf/421315kn30rwgj.pdf

When oil explorer drills, usually no hydrocarbon is found or too uneconomical to extract. But in West Africa, it is so uncommon for nothing commercial to be found. And if it is an infill drilling, it usually produces better than expected result.

So today, PIR leapt in price. I topped up PIROA after the previous good announcement at 30c on the 16/8/11. PIROA hit 36c this AM.

MKE

I am always on the lookout for el cheapo. MKE fits the description based on

http://www.hotcopper.com.au/asx_announcements.asp?id=340155

It is the cheapest stock by acreage valuation although nothing has been found yet... but expected to find.

Today, I sold IRD (rose over 200% since purchase) to fund my dalliance with MKE. IRD has already risen a lot and I doubt it will rocket again like it did. The prospect for MKE might be better.

KMC

Wow! It has fallen by more than 10% since I bought my first parcel last week. Today, I picked up my 2nd parcel at 10.5c. The ASX has turned... down this arvo.

Look at the figures. POG is hovering over USD1800 per oz and AUD has fallen below USD1.03. KMC is generating a lot of revenue from gold. If history repeats itself (like for LSA), then I am likely to buy another parcel but I will have to beg for spare cash from my wife!

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

Once again, Dow went up yesterday, POG is up and AUD is down. So all this should point to gold producers going up in price. Not quite happening. I have very little spare cash so I can only sit and watch idiots selling! Only if the idiots are extremely desperate, then I will buy but otherwise, I have just enough for some SPP and Entitlements.

SGQ

Ah... so funny!

This stock issued entitlements recently at 15c + free options. But few investors were interested because markets were plunging everywhere. It has great prospect!

So I didn't just take up all my entitlements, I even applied for more new ones. Because of a large shortfall, I am hoping to collect all that I applied for. I will know soon. Today, it is trading at 20c.

I not only love idiotic sellers but I also love chickens! I ate what they left alone.

ABU

This stock has gone up over 100% over my average buy price.

http://www.brr.com.au/event/86515

What I cannot comprehend is that only one of my readers have bought and traded in this stock. Unbelievable! Luckily for me, my blog is my diary. If I am a financial advisor, I would be tearing my hair out.

http://www.asx.com.au/asxpdf/20110914/pdf/42128wv1knh0yc.pdf

LSA

When I first read about this stock, I simply cannot believe the market is ignoring it.

http://www.proactiveinvestors.com.au/companies/news/19609/lachlan-star-delivers-23m-at-605gt-gold-at-toro-deposit-within-cmd-mine-19609.html

The market cap was just over AUD$40 million, before recent placement to raise more capital. It produces 45,000 oz per annum of gold at a cost of around USD$800 per oz. Today it announces a richer gold lode (infill drilling) than previously known, plus more. The total JORC resource is 1.4 million oz. Nothing adds up! That is, you are paying almost nothing for a lot... So naturally you ask why isn't James Packer or Warren Buffett buying?

During the recent share market plunge in early August, I bought this same stock 4 times within 3 weeks. Bet no one followed me! While it is not my current most successful purchase during that period, I would say that it will have to be my most astute investment. Someone wrote and asked me what should he invest in. I said LSA at 70c is ridiculously low but I bet he never touched it either!

PXG

PXG has 1.3 million oz of Au and has just signed an MOU with KMC to process its ore at 300,000 tons per year. At average 1.3g/t of Au, that would generate at least 10,000 oz of Au. PXG's market cap is $17 million. POG is around $1800 per oz. If the cost is USD$800 per oz, then you are looking at around AUD$10 million net revenue per year for a company worth $17 million.

My calculation must be wrong for this stock to be so cheap!

China completing Marco Polo's job

China is buying Italy. Well, Italy's debt. Soon, Italians will be eating spaghetti with chopsticks.

That is the reason for Wall Street rise towards the end of trading. When someone buys your debt, you become the property of that person. I don't think Sophia Loren realizes that.

ABU and SBL

Here is how the market behaved irrationally. With a drilling result in a new area, at over 26m at 5.53g Au/t, the share price drifted lower along with the broader market. How idiotic is that?

I am sitting on a bid for SBL at 1.5c. Could have got some at 1.6c but I am not desperate for it. Tomorrow if the markets abroad continue to fall, I might even drop the price a bit more. There have to be more idiotic sellers!

With such a drastic fall, there must be a few margin lending calls today. Never ever borrow to invest unless you can service the debt with ease. I can service mine easily because my wife would not let me have all her cash!

ATN

Here is a little bragging right.

The market fell by 3.7% at close. I have 0.2% alpha! It is miserable of course! I did one trade today. ATN fell by >50% because of a lousy drilling result. Because my buy price was extremely low, I picked up 100,000 shares at 1.8c. I tried to sell at 2c but failed. Near close, I got rid of it at 1.9c so here is my bragging right... I made $60, after cost of buying and selling.

All the surrounding drilling sites have suggested that this should be a gold bonanza but nothing is for certain in life. So having taken a calculated gamble and lost, I made a small gain instead because my buy price was the trough! There is a god....

GTE

On a day when the ASX 200 fell by 3.5%, one stock stood out like a beacon. There is no recent announcement of significance. Yet why did it rise by 4.5% today?

All around GTE, a few tenements have announced good Cu discovery. The first cab off the rank was SFR, which has just started moving earth to mine the direct shipping ore. But there is simple no reason why the share price has moved so much and it is not a small volume of trade either.

My conclusion is that something fishy is going on. Takeover activity rarely happens until after definite discovery. And drilling has not started yet. Someone obviously knows what is going on.

HUN

In the midst of a huge plunge in the ASX, there is one bright spark. HUN is being takeover by Banpu today; just announced. Australian stocks are going on the cheap. The management has sold out. With so much more coal to uncover but no one wanting to value HUN higher, the board has recommended that shareholders take the cash offer at $1.80 per share.

I might have made over 90% profit (both parcels bought in Aug 2010) but I am still not happy about the sell out. I am a patient long term investor but I must be one of few.

SBL

The Dow plunged so hard on Friday that I suspect, today, even gold stocks would go down because many fund managers are lemmings. Hence, I just altered my buy price for SBL to 1.5c. I have quite a lot of loss making SBL shares already so I am not desperate for more. But I am looking forward to desperate sellers. For a recent gold producer, it is crazy for investors to sell.

ASX is still a Dow puppy

Dow has not just fallen; it has plunged. But the POG is still around USD1850 per oz. While it has parred back a little, the AUD has also fallen to below USD1.05. Hence there is still good value in gold.

What is truly disappointing for me, personally, is that local investors are discovering the value of the gold sector. Good that the prices have gone up relative to the other sectors but it means that I have little opportunity to top up at bargain price.

If my readers have not bought any gold stocks in the recent months, you truly have my sympathy. It is blatantly obvious. In fact, most of my postings have been on gold PRODUCERS or pending ones. Sometimes even what I bought recently fell... but with thanks to renewed appetite for gold stocks by slow investors, most of those stocks have turned green. One good example is BSR.

By the way, little opportunity = SBL if you don't know how to read in between the lines. There are still plenty of idiots selling the stock, which has only just started pouring gold. These sellers have their brains packed daily into their recta. I have just put in another bid at 1.6c. Maybe the company is having problem with its processing plant but that would only be a delay.

Europe

I agree with the ECB official who resigned. The Greeks are in a quicksand. You try to help them out but they don't even want to hold your rope properly. Why throw another rope after another? And the Greeks are not the only ones but they look like the worst lot.

Australian Greeks should volunteer to run that country.

Because that official resigned, the markets tumbled. Brilliant thinking. Just one official and most fund managers sold off their stocks. One thing is sure when there is so much volatility and the markets tumble... POG will go up.

S&P rating

If you want to know how lazy fund managers are, just look at listings by S&P's today. If you are removed from its tables, your share price will fall further than what it has fallen to. And vice versa. So stocks like STB went up recently because more potash was found. After inclusion into the S&P 300, its share price jumped for no other reason.

The fund managers just track the listings. That easy! And they get paid millions and then super bonuses for being puppies. Yet the dogs who work hard, physically, get low pay while brainier people, like engineers, scientists, doctors do not come anywhere close to what these finance people can make. When markets tumble, don't expect them to give back their bonuses nor do they cut their pay.

TPT

The hype is fantastic if it is proven. This stock has been rising and rising. Nothing has been discovered yet. Like many explorers, the seismic studies are all very promising. But unfortunately usually nothing is found; no hydrocarbon. When it has risen 'enough', I will sell some to recoup my capital cost.

BDR

I have been watching this stock because the rise is never sustained with any good announcements. I rephrase that. I have been watching this stock because the rise is never sustained with bloody good announcements. Yet why do idiotic sellers appear after a few days following each bloody fantastic good announcement?

Who cares! I topped up at 77.5c on 6/9/11 and today it is 86.5c.

POG and Dow

There are so many fund managers who live by the day. Dow up so they sell gold to buy equities. Today you can see that Dow was down and gold was bought. It has been so obvious all this ups and downs have been trending overall downwards because of debt and poor economic performance in the USA, Europe and Japan. Yet those dills who handle a huge amount of money, just function on a day to day basis. I would have no problem with that except that they handle Joe Blogg's money and they get paid big salary and get huge bonuses.

POG dipped for a short while

Now you know why!

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=135074&sn=Detail&pid=31

At the end of the day, you can actually eat FROM gold.

PRU

Some of you did buy PRU. Surprise, surprise!

http://minesite.com/news/perseus-heads-towards-production-of-400-000-ounces-of-gold-in-west-africa-but-the-real-upside-remains-in-exploration

Note the author. Our Man In Oz is one of my top three tipsters. He gives you reasons why you should consider his chosen stocks. And what the future holds for the companies.

MNC

It is quite unbelievable that a stock with so much Cu could be treated with so much disdain by the local market. This one is big but hasn't started producing yet. Its Cu deposits are like those found in Chile, not rich grade but thick.

Nothing much will go on if you buy this stock... until a big boy comes to take over it or if it starts to produce the minerals for sale.

http://minesite.com/news/drilling-at-metmincos-los-calatos-copper-project-continues-to-come-up-trumps-ahead-of-a-resource-upgrade-next-year

CTP

http://www.centralpetroleum.com.au/files/downloads/energynewsbulletin-central_petroleum.pdf

The MD of CTP is so good at generating bullshit that he cannot substantiate. It has been going on for so long. If his hype is true, why can't he prove it? The bullshit might not be bullshit but he keeps churning up all this reports and articles, some paid by CTP. Yet if it is so good, why can't he find the gas and oil that he raves about. If the company is going to fold because nothing is actually there, I prefer to know it sooner.

WHN

Here is a gamble that paid off. But it could also disappear into the thin air. There is a huge amount of hype surrounding this stock. As usual with O&G explorers, the company gets an "expert" to tell the market what the potential is in its tenements of the Seychelles. Huge at best, most likely unrealistic.

In a short time, it has gone up >50%. But until the drilling results are out, nothing is certain. The bad news is most drilling result in nothing... Because this stock is a calculated gamble and is only a small parcel, the loss is tolerable. If you are going for a ride, expect a fall rather than spectacular gain.

Justification for rise of the Dow

According to the reports, the Dow went up because the German High Court said the German government can bail out Greece. What kind of justification is that for the Dow to rise? The debt is still there. If Australia is becoming a bankrupt and China agrees to put some money downunder... the world starts to invest again in the USA. Bizarre but these financial idiots are controlling most of the world finances! And paid handsomely for making such brilliant decisions.

My plot is simple. If a company makes, or will make, good sustainable profit, then that is the stock to invest in. Watch out for debt and fake dividend. Fake dividend is where the company borrows money to pay dividend.

Today, the gold stocks will fall. But POG is still over USD1800 per oz. As RB said, there will be a lag between POG and value of gold sector. Only when the profit figures are shown, then only those slow learners will realize that the gold sector is profitable. Yet it looks so obvious. Especially with KMC and LSA.

Gold as a hedge

Tomorrow, gold stocks will fall. Why? Dow Futures are up so a lot of short-term investors will sell gold to buy equities. These people live day to day. The root problems in USA, Europe and Japan have not gone. Australia is shielded by China and India; it is digging up its inheritance to sell to them. No Australian government has foresight looking beyond 3 years.

I am gloating about BDR today because it is rare that stocks that I buy jump the next day. But I have many good reasons to top up BDR. And I had simple arithmetic calculated to tell me why I should buy KMC; a gold producer, mostly ignored even when highlighted by my favorite tipster, RB. Mamma Mia!

TPT and other O&G explorers

http://www.proactiveinvestors.com.au/companies/news/19353/tangiers-petroleum-reveals-zeus-prospects-huge-potential-19353.html

Like a lot of oil & Gas explorers, they come up with hype. But why spend so much money on seismic studies if there is no truth in them. I have had at least eight major failures now; NGE, CTP, OEL, NDO, TAP (sold), MEO, MMR and FAR. AWE, KAR and ROC were failures too after initial success. In HDR (taken over by Tullow), the big hit in offshore Mauritania turned to be a small hit when the oil started to flow much slower than anticipated.

But then you only need one big hit! TPT has been rising and rising and even got a speeding ticket from the ASX. No drilling success yet; just hype.

NGE is interesting. It has hit a high pressure area now....

Alpha

Collecting alpha is far more important than matching up market performance. So today, one nearly matched up at 2.4% and the other outperformed at 3.3%.

For a while now, and I have no explanation other than investors recognizing value, TPT (oil & gas) and TRH (potash) have been climbing and climbing. And someone must have realized what a great stock BDR is. Yesterday, I bought at 77.5c (not the trough!) and today it is at 83.5c.

One of the cheapest gold stocks has to be VKA. When I bought it not long ago, it was already amongst the cheapest. And it went down further in price. It isn't a producer and won't be for a while. But it is in West Africa.

http://vikingashanti.com/wp-content/uploads/2010/07/Paydirt-ad-ADU-preview.pdf

I learnt about VKA when I read how cheap it was in another stock's presentation. Today, it had a little spurt but I am still at a loss with it.

KMC

I saw KMC running up on Monday. So I gave it a miss but I still put in a bid at 12c. Today, for a strange reason, the ASX is up but gold stocks are not performers. KMC fell so I picked a small parcel up today. Currently it is at 12.5c so I am still on a little profit!

http://www.theaustralian.com.au/business/wealth/gold-miners-are-sitting-on-a-pretty-penny/story-e6frgac6-1226128337586

RB and I are mates in thoughts. His first stock recommended in the link is KMC. The rest are very familiar because I own them! When you look at what KMC is generating in revenue and what it is worth in market capitalization, you wonder whose brains are fucked. I kept thinking... am I missing something?

BDR

Yesterday, an idiot sold BDR at 76.5c. I collected only a small parcel at 77.5c, was not expecting any. This AM because the market turned, it opened at 82c. I would dearly love to meet the seller and ask "WHAT was the reason for selling yesterday?". And buy the seller a cup of coffee to thank him for his generosity. Pity you can't transplant some grey matter into the head but why would you want to do it and deprive yourself of idiots! I am sure there are other buyers out them who think I was one, too!

The earth has moved in BDR's tenement in Brazil. Auscenco was given the contract to built the gold processing plant. So hopefully by early 2012, this will become a producer.

Puzzling

Dow is down 100 point but was rising toward the close. AUD is down. POG and oil are down. Yet the SPI is up! Even the Hang Seng and Nikkei are up. Someone has found a pot of cash and buying equities? Never that simple!

SXY

Maybe someone thinks I am an idiot to sell SXY but I needed some spare cash to buy SXY entitlement. So I sold at 41c and bought at 35c. I decided to take profit (bought at 13c) and use the cash to buy more SXY but at 37c... and BDR. When the entitlements and new shares have been allocated, you can be sure of some investors making a quick buck by selling.

BDR

So many, many, many good announcements, yet memories are so short. By early next year, BDR will be producing gold. Well, at least that is how I read the activity report.

The share price goes up and then moves down after a while. So today, with 1.5% drop overall, how can I resist topping up when it fell by more than double the average? In fact, I collect a small parcel at 77.5c and that isn't the lowest. I always wonder which idiot is selling!

A golden bubble?

If gold simply goes ballistic, then it is a bubble. But if gold slow marches upward, in the presence of crumbling markets and debt crisis, then you know it is used for hedging. But the boundary between a hedge and a bubble can be indistinguishable after a while. That is when you need to sell because the last one in, will be the idiotic buyer. How do you tell when hedging is transforming into a bubble? Inshallah! You don't, but stay on in the party for a while. Balloons need to be inflated for a while before they burst.

"Experts" are saying USD2000 per oz will be reached by the end of the year. Well, at the rate that POG is marching up, that will be breached with a blink of the eye the moment another set of bad data pops up in Europe or USA.

POG

Currently, there is nothing else to invest in other than gold and silver... and occasionally potash, phosphate, oil & gas stocks. Industrials are not doing well in the ASX. If you look at the reason for investing, it is for profit, or prospective profit.

So if some idiots are selling something that is worth more or will be worth more because it is increasing in value (ie becoming more profitable), then why not relieve them of their misery? Unfortunately, these type of idiot are getting fewer. In fact, getting smarter but the source has not dried up. Yesterday, DRA fell. It is a PRODUCER and explorer. And very successful at the latter. My "problem" was I went on a buying binge on 5th to 10th August and depleted almost all my spare cash.

It wasn't a real problem because I have made mostly nice profits out of those buys. But surprise, surprise, surprise, IAU has gone down! I should have noted it has not started producing and won't be for a while.

This AM, POG has gone a few cents or few dollars over USD1900 per oz. At least this time, it is a slower march upwards. Strange that gold bullion is on sale in the USA but the Dow is closed for Labor Day.

Gold gold gold

If it isn't for my gold stocks, and TRH, then my portfolio would have been without alpha today. My alpha is not positive but rather less negative. You cannot override market trend. There is a good reason for market to fall today but gold is proven to be a good hedge.

Physical gold is too hazardous to keep. I prefer my stocks in cyberspace. My penchant for gold stocks has started to pay. Not only are they positive on down days, they are also uncovering more gold.

Someone is buying up TRH. The value has been going up and the management has no explanation for its rise and rise. If you look at the in-ground value of its potash, then you can understand why.

POG and gold miners

Today is one of the best days for hunting gold producers. Dow was down, massively. POG was up, massively. AUD came down, slightly.

So the sentiment will be down but there will be quite a few gold hunters like me around. After tasting how good gold miners taste in the last few weeks, they will be a few more like me around.

KMC has been highlighted by RB so it will jump before the market opens. SBL is still largely unwanted even though production has started. CGA is ignored because of processing plant problem.

My decision today is whether to sell some gold explorers and put the money into producers. I hate selling because the explorers often find more gold! LRF gave me a nice dividend last week so I have a little spare cash to play with. "Little" means a lot of discipline and consideration is required before I lose the spare cash.

OLE

From olive grooves to West African gold exploration. Hence a management change soon and a name change to reflect its transition. In the midst of a collapsing stock market atmosphere, this one is offering its shareholders new shares issue.

This is not the only stock wanting new capital to be injected into the company. Recently, I ignored the BSR rights at 5.5c with options. I topped up even more shares than my rights at 5.1c but now it is worth over 7.3c. I have no crystal ball and no desire to possess one. The brain is usually more accurate.

GTE

There have been some spectacular rises for stocks around this area, especially after drilling results were released. SFR as we know was worth only a few cents but when a rich copper lode was discovered, it went ballistic. This maybe the tip of a copper iceberg.

Yet when you look at geochemical/VTEM studies, done to give a higher chance of success with expensive drilling, you will realize that the biggest hottest area is within GTE's tenements. In the recent months, this stock has been hovering around a particular range while some neighbors have gone skywards. Market is ignoring its preliminary scanning studies.

I acquired GTE when it was spun off from URA. URA is only worth 10% of its value although it had a massive spurt recently due to its manganese ore production. But why worry about a falling stock when its offshoot has become one of my top 5 biggest stocks? Once upon a time, not many years ago, GTEO was worth less than 1c, now 16c. My last top up of the ordinary shares was a year ago now. Unfortunately, the history of equities is full of "easy come, easy go" events. If nothing is found when GTE finally drills into its ground, then it will vaporize. I have not sold any GTE yet.

SGQ

This is what I consider to be a 'frivolous' stock that I bought on the spur. It was a ProActive Investor recommendation. It is looking for gold in a new area in WA with good hits around it. And BHP is involved in its nickel prospect.

http://www.proactiveinvestors.com.au/companies/news/18301/st-george-mining-to-get-busy-exploring-east-laverton-drilling-to-commence-18301.html

When it offered its rights, most of its shareholders don't want it. I did and I offered to buy a lot more. Because of the short fall, I will be collecting the whole lot I asked for. So, am I stupid and brave or dumb and brave? When it finds gold, then only can I say "neither", just "Calculative and brave". Inshallah!

Ag stocks - SVL and IVR

For those who do not know Mandarin, yinhang means a bank. And yin is silver. Until 19th Century, Ag is a major precious commodity in the Middle Kingdom.

It is interesting that Ag has risen more than Au yesterday. IVR has changed direction in what it is exploring for and because of a fantastic Ag discovery, announced yesterday, I am now onto the 'green' zone in CommSec for this stock. That has not been the case for a long time because this stock (used to be SNU) was bought in 2007. If it hits another Ag lode, then it will fly.

Not my SVL; down >20%. This is one stock I should now ponder about topping up.

Unfortunately, neither stocks are producers. "Producing" is far more important at the moment.

US Job figure and POG

Gold makes a good buffer against a falling Dow. It has not hit the peak yet. There will be more troubling news from the USA. If you look at Australia's manufacturing, it has been decimated by cheap Chinese imports. The Chinese government is happy for its citizens to work for pittance. Of course, that 'pittance' is still a lot more than what a Chinese worker would earn 10 years ago.

POG is nearing USD1890 per oz. One more very bad performance from Dow, it will fly over towards USD2000. The Yankees cannot keep spending on credit. And Greeks have to work harder and for longer and for less... like the Chinese and Indians.

My blue chip stocks are left alone. I have been investing mostly in gold producers and they have not disappointed me much. Explorers do not excite the market as much unless they uncover lots of gold (eg AZH) or will be producing very soon. NCM rose under 5% since year start while POG has gone up by >20%. Can you understand that? Not so much why people are not buying more of it but rather why idiots are selling its shares.

Watch gold stocks on Monday!

Alpha

When the world markets are tumbling because big brother (USA) is tumbling... it is nice to collect alpha. Like everyone else, my portfolio fell today, too but it was cushioned by gold, silver and phosphate stocks. The POG this evening has risen to over USD1870 per oz while AUD is still under USD1.07.

If the Dow continues to fall over the next few hours, you can expect the ASX to follow suit on Monday. But with POG flying again in the opposite direction, I will lose money as well but less than many others. Em, I hope!

IVR

This has been such a loser for such a long, long time. It used to be SNU, seeking uranium. We know what happened to the price of uranium.

After it changed to IVR, it has never had a joyful history until very recently. Suddenly it starts to stride ahead because of rich Ag discovery. The grades are excellent so it leapt by more than 100% today by 9.2c to 18c per share. Luckily I never sold this parcel!

I get the nicest feeling when a long standing stock finally lives up with its expectation. From loss to loss to loss to loss, today, it has suddenly become a profit. And this is in the midst of a 65 points fall in the ASX 200.