BPT

I can't tell whether it is top up to 5.9% or whether this AM, there is a new "significant" shareholder with 5.9% but it appears to be the latter.  This is not a small holding anymore because BPT has become a big company.  USB has bought it on behalf of a client.  Is this a prelude to a take over?  There will be a few postings in Hotcopper, I am sure.

What I don't understand is why the market has been so blaze about BPT's recent announcements, which to an ignorant geologist like me, are superb.  Maybe someone with a deep pocket is reading my blog!  As usual, when someone wants a big chunk of a stock, suddenly others want it too.  Hence, I expect BPT share price to go up today.  But the sentiment is down because of Spain.  The US economy hasn't been doing that well but stocks on Wall Street and Nasdaq are making bigger profits than expected.  That probably explains why the DJ has been climbing.

AUD

Today, the Reserve Bank is expected to drop the interest rate. Whether it is 1/2 or 1 per cent is a matter of when.  Yet, the AUD has remained resilient, staying at over USD1.04.  I am surprised.  Hence, it isn't that Aussie interest rate is falling but the Feds is printing more USD.  Currencies that are tied to the USD have dropped in value as well.  The yuan should be up, yet it is following the USD.

ASX in the near term

Tomorrow, the interest rate will have to fall.  The Australian economy is being strangulated by the relatively high interest.  AUD is also too high in value.  If you want to change your dough to other currencies, why wait?  But then the market would have already factored that in.

My portfolios have been very disappointing but I am not a short-term investor.  POG cannot keep rising as investors will sell.  Neither can it drop much because central banks will buy to boost their reserves.  Also it costs a lot of money to explore, mine and purify the metal.

BPT

It found more than 1km in total of gas saturated layers and then with a single fracking process, it stimulated 500,000 cf of gas flow a day, anticipating more with further fracking and cleaning up.

Yet the share price has not moved forward since these announcements.  Are fund managers so brilliant that they interpret those figures different from me, and other Hotcopper participants?  I managed to get a top up at $1.40.  This is the same as the recent rights issue which I missed because I was in China.  I bought more than a tiny parcel this time as the announcement was too good an opportunity to miss.  The share price actually dipped that day, with no beneficial effect from the announcement.

Placement

What is the fastest meanest way to getting screwed in the ASX?  A placement where you are not a participant.

I just had SIH on placement and the share price has fallen markedly.  This is the most unfair aspect of the stock market.  In allowing some privileged people to get their hands on placements to raise money with minimal time and effort for the company, it fucks the other shareholders.... including me.

Rare Earth Elements

REEs are not rare.  The main problem is to find a rich clump of it.  And the clump has to have the lucrative elements.  After that, you need to mine it and to be able to ship it somewhere to process the product to the specification of the buyers.  Purification is apparently tailored for both buyers and the type of rare earth that is dug up from the ground.  Environmentalists start to raise its concern before the mine starts and even more active before the processing begins.

Once I owned ARU, bought at $1.60 in 2007 and sold at a loss at just over $1 a few months later.  It went higher after that.  But now it is under 30c.

Once I owned LYC, bought on the cheap and dumped at a nice profit due to political interference in Malaysia.  Could have made a lot more but then I would not have sold if there was no disruption to its plant in Kuantan.

I still hold ALK but this one will evolve first into a gold miner and then use that cash to slowly develop its other assets, including REEs.  At least it is in the green zone... just.

Necessary "evil"

The Feds cannot ignore the stock market.  If the market plunges, the economy will follow suit.  Superannuation, wealth and spending money for a lot of people are tied up to performance of the stock exchange.  While the economy is the priority, ignoring the market is unwise.  Hence, today, the DJ climbed, POG went up a bit and AUD rose too.  Meanwhile, Apple is doing very nicely out of a 4G phone that cannot be used in Oz.

On a day like today, it is hard not to collect alpha but it will be ephemeral.  China depends on the US and Europe for a huge chunk of its export.  The latter is mostly sick.  I still believe that gold, a relatively useless industrial metal, will provide good value hedging without having to invest in foreign bourses.  Also oil (not so much gas) explorers, when they discover the liquid gold, will explode.  Unfortunately, it takes a long time to drill, especially offshore.  Expensive, too.

Meanwhile, I will continue to give gas...  Wife was happy with the EXT cheque.  Australians still selling cheaply.

Gold reserves

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=150086&sn=Detail&pid=31

With 12 countries buying up gold in tons to serve as a hedge for their currencies, you really wonder what those idiots are doing selling down their gold stocks.  What is it that these people know that others (including central banks) don't?

At the end of this financial year in June, I have been asked by my city accountant to draw a pension from my super fund.  There is a tax advantage in going old!

Lap dogs

The Europeans (including the Brits) have become true to form American lap dogs.  If you look at the performance of their bourses, it does not matter how it has been performing until the US market opens.  Then it follows it like a magnet.  At least the ASX has a spine.

POG was up at close and the AUD is stable at marginally below USD$1.03.  These two have been relatively stable, yet you suspect that in the longer term, the financial institutions are expecting gold to plunge.  Why else would gold stocks be sold off?  And meanwhile, shale gas stocks are not in favour again.  I haven't seen anyone announcing a total of 1km of gas saturated layers with one drilling; BPT got punished for that!

Sn and Ag

http://www.proactiveinvestors.com.au/companies/news/28045/silver-and-tin-highlighted-as-new-critical-electric-metals-28045.html

When you read the logic and you read how much of these metals are mined, then the longer term prospect must be good.  But real investment is for the longer term.  I have collected tin and silver miners but I haven't been doing well.  However, they make good collector's items.  Don't bother with overseas miners; those in the ASX should be just as good.  After all, it does not matter where you buy the metals from.  The price is the same.

BPT

It intersected a total of 1km of gas saturated Permian zone... and the share price went down.  I put it very mildly:  What the fuck is wrong with the ASX investors?

http://www.proactiveinvestors.com.au/companies/news/28047/beach-energy-intersects-gas-saturated-permian-zone-in-moonta-1-28047.html

I collected my small parcel at $1.40 and it closed at $1.395.  Who is going to wake up to how good Australian explorers are?  Most Aussies are too busy with sports or getting ready for the public holiday tomorrow.

Gold Miners

An article by the mining editor of The Australia shares my opinion.  At the Eureka stockade revolt in 1854, there were thousands of Chinese gold diggers but with rampant racism, none were allowed to own a mine.  This is 2012, the Canadians and Asians are moving into the 3 biggest gold mines in Victoria.  If investors in Aussie gold stocks want to sell them cheaply due to market sentiment, I would buy them too.  Sentiment makes the brain go soft and stupid; thinking with the heart is different from thinking using basic arithmetic.  The fall in gold index is justifiable if the POG has plunged and AUD has risen... but these have not happened.

ABU

Another very bad day... but you really wonder how the market evaluates a successful gold explorer.  You need another investor (with takeover intention) to jolt the sellers.  More than 3.3 million ounce in JORC compliant resource and down it went (up first).

I am watching closely.  Always happy to relieve idiotic sellers of their miseries.

AZH

http://www.asx.com.au/asxpdf/20120411/pdf/425jyr8q2s1lwh.pdf

Considering the number of good announcements, you just cannot understand why investors are selling and selling this stock. With another good round, the share price only went up by a little. Some buyers are hard to impress but it is idiotic sellers that concerns me.

FML

In the March quarter, its gold output has increased. Yes, this is a PRODUCER. The market cap is AUD212 million. At over 47,000 ounce, it would generate a profit of at least AUD40 million. If you extrapolate that to a year with steady production, it would give at least AUD160 million.

Can you imagine how stupid the market is to value this stock at below a PE of 2, with more gold to come? I used (market cap)/(annual profit) to calculate the PE ratio. The Chinese would be highly interested! Both to own a cheap gold stock and to acquire its know-how and staff.

http://en.wikipedia.org/wiki/P/E_ratio

I used to use this method of calculating for LSA and kept topping my holdings. I will do the same for FML if the share price continues to languish. Read what I wrote in capital letters? LSA is also a PRODUCER. PRODUCER.

Gold stocks

I have read lots of comments from lots of analysts who cannot comprehend why gold stocks are so cheap. I am glad they are so cheap! My last top up was ABU at 4.6c.

What is amazing this evening is the POG is up to USD1650 per oz and AUD is below USD1.03. The Chinese will soon own ALL Aussie gold miners! How dumb shareholders can be!

ASX performance

Australia is a minnow in world markets. Hence, it is susceptible to general sentiment. My best hedge is still gold. Whether you are trading in Timbuktu, NY, Tokyo, Mumbai, Dubai or London, the POG is the same. And the common denomination is the USD. So why pick up unnecessary hassle of investing in stocks in another bourse?

It is very puzzling why when the POG is over USD$1600 per oz and AUD stable at around USD$1.02, my portfolios have been punished. But I am a patient investor.

POG

If you look at Pure Speculation by RB, you will see what I mean about Chinese companies buying Australia's assets on the cheap. Why pay gold at market price when you can take over an Aussie miner for pittance, mine the gold and send the metal back to China? The EV/oz of Au is so cheap! There is already one bid in the market...

The start of many to come. I am happy for my portfolio to be take over but in the long term, the nation is selling its family silver or rather gold.

ABU

When DJI and POG fell this AM, I dropped the buy price for ABU to 4.6c. I collected the small top up today. With POG falling, AUD down and DJ Futures dropping by more than 100 points, I expect further falls in the value of my portfolio tomorrow.

BDR

At depth of >300m, it has hit more gold. Not a new lode but extensions of previously known ones. My last top-up was in March 2012; a very small parcel. I bought because the market has chosen to sell down this stock and it has been dishing out mostly good announcements. Why do investors sell? Inshallah!

http://www.asx.com.au/asxpdf/20120403/pdf/425dy7804v6wnn.pdf

NGE

While it is embarrassing to have suggested NGE as a stock of the future, its real value is seen outside of the ASX. Its joint partner (Talisman) has taken in a joint partner (Mitsubishi). Hence the 50% that NGE already own and has not changed, should increase in value.

http://www.proactiveinvestors.com.au/companies/news/27180/new-guinea-energy-to-receive-lift-following-mitsubishi-and-talisman-energy-deal-27180.html

Yet the market has only marked it up a bit. If the in-ground "anticipated" value of the tenements is reflected in the share price, NGE would be worth many times more. So, I will sit and wait. After all, I have already done one top up in Dec 2011 at 4.6c. Yesterday, it closed at 5.8c.

IMA

This is a bizarre stock. Multiple good news but the CEO has not instigated any mining. Yet ILU made a lot of profit from zircon last year. The price of zircon is falling though.

I put a not-too-low bid for IMA at 34c and managed to collect some yesterday. This will help bring down my average buy price. This is one of those stocks where you have to wait patiently for years to see results. Their tenements in WA and SA have been scoring well but not the share price.

Logic diminishing

Gold used to be a hedge for world events; a safe haven, a stable "value" beacon. Yet recently, it seems to reflect the markets! RB was lamenting about it in Pure Speculation.

So today, the USD fell against good US data regarding manufacturing output, DJ went up and gold went up by 0.5%. Europeans are now US poodles and follow it like a hapless puppy.

Positive manufacturing data from China will mean the ASX will behave like a sharpei.

Portfolio "loss"

I was asked by the accountant I sleep with, why her portfolio has suddenly crashed. Took me a while to respond. The market hasn't been kind to my mining stocks and I have rarely topped up my blue chip or industrial stocks. I might be a contrarian, a brave-and-dumb investor with no accounting background and invested a lot BEFORE the GFC, but I can't be that bad.

Well, the reason for the more than average plunge was because EXT is no longer traded. CommSec automatically remove it from my portfolio. I bought it for a song at 9.4c. Because the company became a uranium sensation with more and more uranium uncovered in Namibia, the company made consolidation of 10 shares into 1. Hence, I paid the equivalent of 94c in 2006. I am now waiting for my check from a Chinese company which has taken over EXT for $8.65 a share. A small parcel was bought as an entitlement in 2009 at $7.75 a share.

I never recommended this stock because even I couldn't buy more of it in the earlier years because it kept rising out of my comfort zone.

AWE

Once upon a time, I used to own a lot of AWE. It was a very promising stock but a string of failures with persistent drilling resulting in dry holes and missing hydrocarbon saw the share price falling. It has producing oil fields but you need new reserves.

Luckily, I sold most of my holdings in 2007 for between $2.60 to $3 when I wanted cash to invest in other stocks and because I didn't like repeated bad news. It isn't a bad company but the people responsible for drilling need to be replaced. How long can an oil company sustained a long string of dry holes?

I have been tempted to discard all my small remaining AWE shares since it has become a significant loss. Most were bought for around $2 and one parcel was acquired when AWE bought over ARQ. But last Friday, optimism in this stock must be rising... the remaining shares are close to break even so I am glad I didn't discard them.

Resources and the JSE

Many, many years ago, when the POG was racing up, the share prices of gold stocks were languishing in the JSE, in the country which was the biggest gold producer. This apparently went in opposite direction for a year. Markets often behave like lemmings but a lemming actually has a brain. These big fund managers seem to have no grey matters and do not believe in simple arithmetic.

When the gold producers started to announce their profits, then it became "black and white" evidence that they are actually doing well. There was a long delay before the share prices reflected the increasing profitability of producing gold. The unsynchronized and delayed rise in gold stocks was then maintained for a long period. Once money is parked there, there is a cost in moving it out and there is inertia.

Today in Pure Speculation, RB laments the fall in share prices of oil and gold stocks, with sympathy for the shareholders. I see it differently. For me, this is THE best time to accumulate. But people have to be aware that one of my characteristics in investment is to be a contrarian. Plus, you have to pick the stocks carefully. Producers or near producing stocks are my preferred buys. For oil, I go for explorers with big boys who are JV partners AND paying for the exploration cost, or where oil has been found or have very good prospects.

I was very surprised that PRU has been falling so I have topped up on it. In the meantime, some oil/gas explorers are having "interesting" time... CTP share price has risen but another capital raising (most likely placements rather than entitlements) is on the card and TPT jumped 25% in the LSE on Friday but under a trading halt in the ASX. I have missed many opportunities to top up TPT because the share price kept rising! I am also reluctant to buy when hordes are moving in... and sometimes I regret not buying! A good example was EXT, now history.