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.