AMX

http://www.asx.com.au/asxpdf/20120530/pdf/426ks5wmbpzdtl.pdf

When you read a presentation like that, you wonder why idiots are selling.  Of course, in the short term you rely on other idiots to sell lower and then buy the shares back.  However, in the long term, there is just no logic.

Because I have to save some cash, I am not topping up anymore.  However, if there is good gold stock to consider, this is an excellent stock with an EV/ozAu at under USD65/oz and more expected to be uncovered.  Its JORC resource is at around 3 million oz!

WHN

This kind of stocks is unpredictable and comes with a lot of hype.  But it is very reminiscent of PCL.  Nothing usually happens and share price moves anywhere until there is more hype and then it bursts into the scene when neighbors hit oil or lots of gas.  The scene only become publicized when a big oil major moves in.  This group of big companies do not take on small explorers unless they have studied the tenements properly.

I have been accumulating when the stock markets plunged but that parcel is now a loss.  It is very tempting to accumulate a bit more!

http://www.proactiveinvestors.com.au/companies/news/29436/whl-energys-seychelles-permits-confirmed-to-have-world-class-multi-bllion-barrel-oil-potential-29436.html

PCL

When I collected another parcel of PCL in mid-May 2012, I wrote this would be one of the best buys at 13.5c.  And today, I am right; it is at 17c.  This is without any drilling result.  But tenements in that area are scoring well....

Simple arithmetic

POG up by nearly 1% and AUD trading below USD$0.98 but the DJI dropped 0.6%.  The SPI is also down by 13 points.  Well, this means on Monday, the ASX All Ords will also fall but I will collect alpha because I am heavy on gold stocks.

AGO has also fallen badly and there is talk of a cheap takeover by the bigger boys.  As it is now close to $2, it is time to look at accumulating this stock again.  The management is superb.  Problem is I am running out of cash and new contribution will be diminished after June 2012.

SIH

I topped up on SIH recently but I only got a tiny parcel at the trough. Hence it was very expensive because of brokerage.  But for the remaining units, I changed the expiry date to the following month.   I could not get any more SIH but luckily the stock market had a mini-crash and I picked up the remainder.

Normally, with a placement, you are screwed.  But this time, the placement was only marginally before my buy price.  Hence I have actually done well out of SIH... relatively.  I hate placements!  They are the most unfair way for a company to raise money.  It implies the management can't care a stuff about the smaller shareholders.

My good friend RB

In his Pure Speculation column yesterday, RB was speaking the same language as me.  The way the market is behaving is just plain silly.  But who cares when I can get to buy stocks on the cheap!  Great thing about RB's article is, he lists companies that you can buy.

Reversal of stock market fortune

... but don't believe in it!  Not yet.  The Europeans are not out of the woods yet.  All problems remain.

However, stock markets and economics news have the same sinusoidal curve but the phases may be different.  I don't consider the lazy Greeks to be THE cause but like the butterfly that flapped its wings in Amazon, it could be the start of the recent domino effect.

Other than gold producers and energy explorers (with good tenements) which have fallen in price, it is difficult to recommend anything.  You just don't know which way the markets are going to move.

Many bad news

Bad news prevails... yet the market went up today.  My only bit of good news is the POG has moved towards USD$1600 per oz.  Yet lots of gold stocks are not doing that well.

POG

Gold price is rocketing up again.  Hence share prices of gold producers are on the rise too.  Why people sell those stocks recently puzzles me a lot.  Who advises them?

Notice AUD has fallen below parity (making the rise in POG even more spectacular).  This is only a hiccup.  When the Greeks (in Greece) are discarded into the rubbish bin to rot, the AUD will rise again.  But there will be banking turmoil for a while.

Gold

When it drops too much, buyers appear.  In the eighties, Alan Bond was competing with the Japanese for expensive art works.  Japanese had too much money and were spending exorbitant amount of money on anything.

The Chinese hasn't got that kind of money yet but that will come.  Already, it is boasting more than 100 billionaires and that was a few months ago when I read the report.  What they are buying at the moment is gold.  I think the Chinese has overtaken the Indians as the biggest consumer of the precious metal.  Someone is selling a lot of gold but it is being soaked up.

My point is which gold producer to buy?  I wish ABU would allocate some effort and dough to production.  Meanwhile, there have been praises for PRU and BDR.  I have topped up on both but not PRU recently.  Its cost of producing is falling!  Even at USD1540 per oz, it is still making over USD1000 per oz.  And its gold production is rising.  Yet, there are so many idiotic sellers!!!

BDR is starting production in August 2012.  No communist Wayne Swan in Brazil.  Australia would become another Greece if these idiots run the country for much longer.

KMC

Many years ago, I own MIM shares.  Xstrata bought a significant chunk of it and took over the control of its management but not the company.  Then it issued new shares at a higher price than the market.  Few shareholders took up the offer, neither did I.  When Xstrata ended up with a larger chunk of MIM, it seized control of the entire company and paid off the existing shareholders a pittance.  MIM then went on to make Xstrata huge profits.  This a takeover without having to pay a premium.  Why the ASX allows such maneuver?  Xstrata in my opinion is a corporate beast after that event.

Today KMC did a similar trick but the big difference is, the share stopped trading at 4.9c and new shares were issued at 1c.  Less than 20% of the rights were taken up.  The prospectus showed that some people on the board will be entitled to grab those shares....

At least this stock offered the new shares at a much lower price than was prevailing and GAVE the shareholders the real opportunity unlike Xstrata.  I struggled on Monday to pay for my allocation.  Netbank crashed that morning!  And the amount was not small; 3 new shares for every 1 current share. I don't what will happen when it re-lists on the stock market.  Share prices have been tumbling so I think KMC would fall below the issue price.  Those who participated in full will have less pain.

Interestingly, those board members have names sounding like Malaysian or Singaporean Chinese.

Scoring myself

The markets are still heading for its troughs?  You never know when it is going to occur or reverse.

Judging from recent performance, what I bought about 2-4 weeks ago have plunged further.  Luckily, I sold DRG at 38.5c to buy JIN at $1.45.  Well JIN is at $1.35 (gambling stocks remain stoic in bad times!) while DRG has plunged to 23.5c.  So I consider that a plus.

What is bad though is mining stocks like AZH, BPT, NST, AVA, KGD and MKE.  However, I expect a turnaround.  Greece, a pesky fly, cannot hold the world at ransom.  And the Communist Party in China cannot survive massive unemployment in China and it has a huge reserve.  While manufacturing is down in China, activities will be propped up by the government, sparing Australia a severe downturn.

Of the recent buys on the market, I was absolutely delighted with getting PCL (one of my bigger recent buys) at 13.5c (today 15c) and anticipated that it will be one of my best buys during this recent dip.  Hence I have dropped the bid price of FAR even lower as I don't need to hedge as much,ie,  buying 2 stocks prospecting in the same area.  Incidentally, based on MY OWN research, I bought PCL at 1.3c and 2.9c in April and September 2009.  I am not always that lucky.  Nor clever.  Cleverness is usually defined retrospectively.  Oil slicks in tenements do not always translate into oil discoveries.  An awful example was MMR.

Oil and gas

The POO has been falling, with thanks to the Saudis.   It is the biggest producer with the biggest capacity.  It has come to realize that if you let POO rise high, while in the short term, you make more money, in the longer term, alternatives will develop and oil consumption will fall.

At the same time, so much shale gas (and oil) is extracted in the USA that the price of gas has fallen and the USA is not using as much imported oil.  Transferring gas is not economical, requiring liquefaction first.  But that will come. 

Hence all mineral and energy stocks are affected.  Most financial institutions are only interested in short term performance.  When everyone's worth is falling, it is not a disaster for my investments.  However, in the last 3 months, it has fallen more than average.  Like in the past, with catastrophe, my portfolio do badly but when markets turn, you can almost see daily rises.  I am there for the long term and with low debt ratio, I can afford to sit and watch (and buy), without the threat of bank wanting a margin call.

I still have FAR sitting on my radar...  East Africa has been very successful for quite a few company prospecting.

Interesting remark from my finance minister...

I was asked why Greece triggers such a virulent and devastating effect on world markets by the treasurer of Club Mulgoa.  I said I don't know why and that is why I am buying more shares.  So maybe, my ignorance is the indicator of my stupidity!  But if a smart economist can clarify me the big picture for me, then I would sell my stocks.  Greece to me is a pesky fly that deserves Mortein.  The citizens are so used to being parasites that the Euro Zone is mad (FITH is a better acronym to describe it) to want to preserve status quo.

I will have to stop collecting stocks because one should not spend even on bargains when the cash is dwindling.  Of the stocks I collected recently, I think ABU, BDR and PCL will serve me best.  It is impossible to find the trough so I expect my stocks to fall further before a correction takes place.  I am only a small debtor so I have no financial stress.  And the wife has been kept busy by the 2 pups.

POG cannot keep going down.  Central banks have to maintain its value so they will be buyers eventually.  It is difficult to find the metal, difficult to mine it and there isn't that much around and getting harder to extract.  Best of all, you cannot manufacture or print it... unlike currencies.

More stocks added...

People would think I must be mad!  The markets are still dropping further so I picked up another stock.  This PM, it includes ABU.  All because of the impasse in Greece?  A tiny irritating pimple and the whole body is suffering.  Why do financial institutions put so much significance on lazy people?  I read that Spain and Italy are not exactly poor; just a big debt each.  Same thing with Japan where the government owes a lot of money.  But Japan is not poor either.

Because of imputation credit, GST refund, buybacks and whatever, I am due a big refund.  I am relying on that cash now otherwise, at the end of this fiscal year, I would have to sell some stocks in order to pay for our pension.  This is taxed at 15% so it is better than normal income.  I have been busy buying stocks.  Probably not wise but I cannot see the logic of selling.  Chinese government cannot allow unrest to occur so it will pump its spare cash into the economy to stimulate it.  There won't be a crash landing in China even if Greece goes belly up.  Actually, I hope Greece gets kicked out of the Euro zone or becomes bankrupt... End of story.

Madness... still buying!

Just because the Greeks don't want to work, the markets crumble?  I heard an Irish writer talking this morning.  He said the Irish acknowledged that they are to be blamed for the excesses.  The Greeks?  They still don't want to swallow the bitter medicine, nor do they want to acknowledge that the government they voted in, the businesses that borrowed beyond their means are run by Greeks and the loan they took up, are their responsibilities.  And people have to work to generate wealth.... and not retire early.

I still picked up another two parcels this AM.  SIH and better still PCL.  In East Africa, its JV partner is discovering more and more hydrocarbons.  I am putting a bid in for more but I am also depleting my cash and having to beg from the wife!

Crazy me... idiotic buyer

Am I crazy?  Or am I THE idiotic buyer?  I put in low bids for YTC and BDR (and a few others) and collected the small parcels.  YTC is getting good hits and finding more.  BDR is starting to produce gold in August and finding more gold.  Yesterday, it was CHN and AXE (lower than placement/SPP price).

Most people would stay away from the market but I am scouring around for bargains.  Meanwhile, my portfolios have been severely punished because they are full of small caps.  Back in 2008, I was in the same situation.  I don't borrow to invest and my debts are miniscule, so I have nothing to worry about.  And best of all, I don't have any expensive children.  And dogs don't ask for much; 2-3 feeds a day and lots of cuddles and patting, plus a warmer place to sleep during mid-autumn.

Greece

Is Greece a beacon?  A symbol?  Yes, it is... a symbol of laziness, a symbol of wanting the good times without taking the bitter medicine, a symbol of lack of resolve for past excesses....

It is really only a pesky fly in world economics.  Even the Greek cuisine is nothing to brag about... the Turkish version is probably more interesting and tastier.  Someone told me that the Greeks are just the Turks of the West.  The Turks have a better economic performance.

So, why it affects the world stock markets like it is the heart and soul of trading nations?  Is there something in Greece that is extremely vital that I don't know about?  NOTHING.  "                   "

Hence, I see no reason not to continue to invest. in tumbling markets  Eventually, Greece will be booted out of the Euro zone.  Not because of the current impasse but because of the people who elected parties that do not want to be accountable for past excesses.  Greece is a Third World nation, populated by people who think they belong to the First World.  If you want to know the real hardworking Greeks, go to Melbourne or anywhere in Australia.

Lessons from the past

In 1997, at the height of the Asian Financial Crisis, all the smart people were telling my father to refrain from investing in the stock market.  He continued to defy "words of wisdom" from people around him.  His argument was those stocks will be paying more dividends than the interest from capital put into the bank.

I don't think I have my father's wisdom.  But the world has not collapsed.  It is taking the Greeks too seriously.  It is a pesky fly and should be swipe out of existence, economically.

AXE

Graphite is the next hot item.  AXE raised money recently at 30c.  I missed out, having forgotten.  But today, it dipped to 28.5c.  I picked some up at 29c.  Not that smart but better than the SPP!

CHN

Can people count?  CHN has fallen to just over 20c a share.  The Chinese are going to pay them $80 million for its mine in Eritrea.  That is 32c per share.  I topped up today at 20.5c, just a small parcel.  Does it have debt?  About $1 million.  I know that 32c-20.5c=11.5c profit, ie I pay 20.5c for something worth 32c in cash.  That is more than 50% profit instantly.

CHN has other tenements, so these come free!

Am I ignorant or sellers are idiots?

Mauling at the market

If I entered the tiger enclosure at Taronga Zoo, I would get a milder mauling than in the market.

Pity I don't have spare cash to spend or rather wife won't let me...   The financial world is not coming to an end.  A few lazy Greeks and the stock markets are plunging.  There is no logic there.  Sooner or later, it is going to reverse.  The question is when is the trough happening.  For me, I like to invest when people are dumping.  They are even dumping gold.  Yet gold cannot be printed or manufactured.  Plus, central banks are hoarding them.

One stock that was highlighted by Our Man In Oz is CHN.  It is going to be loaded with cash due to a takeover of its Eritrea gold mine.  That cash per share is going to be 50% higher than its share price, yet the share price fell yesterday!

http://minesite.com/news/chalice-gold-starts-afresh-with-a-fistful-of-dollars-a-host-of-exploration-targets-and-a-share-price-trading-at-a-discount-to-cash

KGD

The market has gone crazy.  Greece is such a tiny pesky fly.  All it needs is swipe to squash it yet the world pays so much attention to it.  As a consequence of its terrible election outcome, it will be a bankrupt nation.  France, Italy and Spain are not poor countries; they just have large debts and won't be bankrupt.

Today markets around the world have been plunging and even gold, a safe haven, has plunged, too.  Today, I picked up KGD and it has fallen even further.  And I picked up NGE the other day.  JIN, a gambling stock, was picked up a few days earlier... and has not fallen much!

POG plunged overnight

POG is dependent of supply and demand.  Warren Buffett is right that gold is useless from an industrial perspective.  Yet, because of 'intrinsic' value, jewelers want it.   And even more importantly, the central banks want it.  Its intrinsic value is because you cannot manufacture or print it.

POG has remained over USD1600 per oz for some time now.  If it drops further, the central banks will buy them up to maintain the value of their current stocks of gold.  And the POG cannot rise too high either because investors will sell to realize its value.

The amount I can contribute to my super has been and will be cut down by the Labor government so cash is not easy to generate in that portfolio any more.  It is impossible to pick the trough with so many financial crises around the world.  Hence I will sit around for a while unless a lowly price bid materializes.

ABU

The non-executive chairman just spent $44K topping up his holding in ABU at 4.4c.  The price has gone even lower!  Isn't that ridiculous?!  You really wonder what idiotic sellers are doing.  This stock has hardly issued any bad announcements and it got clobbered recently.

NGE

Last Wednesday, I attended a Proactive Investor seminar in the city.  There were 3 stocks that I was interested in: YTC, NGE and CXM.

NGE has a JV partner in PNG.  A Japanese company invested in that JV partner, Talisman (from the USA).  You wonder why it didn't just sign up with NGE.  The price that the Japs paid means NGE should be worth a lot more.  Hence I put in a bid for 5.8c.  Today, when the market plunged, I picked up those shares with no regrets.  Luckily I dropped the buy price lower!

I had also lowered the buy price for YTC and CXM, too.

West African miners

I have collected enough West African miners.  The havoc raised by investors' loss of confidence is mind boggling.  Today RB in Pure Speculation laments the drastic falls in share prices of these stocks.  And reminded his readers how progressive these stocks actually are.  I hold AMX, PRU, GRY and AZM.  All down but if I have more cash in hand, I will want to top them up, especially PRU because it is a PRODUCER.

And away from West Africa, a stock like ABU being dumped in spite of a JORC compliant resource of over 3 million oz of gold, with more to be uncovered.... what are investors thinking selling down a good stock like this?  Today, AUD is nearing parity with USD and POG has limped up to over USD1640 per oz.

Short term investments have no logic but in the longer term, basic arithmetic should prevail.  I have hardly any debt for investment, and commitment for major expenses, hence I can sit out the crazy market.  Of course, European, US and Japanese crisis are not over yet.  But gold has not plunged and AUD has remained steady.

Monday routing

On morning the ASX will tumble.  But the POG has gone up to over USD1640 and AUS has fallen to below USD1.02.  You really wonder why gold stocks are being sold off.  I have to keep some cash ready to draw a pension before the end of the year.  Otherwise, I would go for some over-sold gold stocks.  Some which emit bad news deserve to be punished like RMS.  But ABU?  AZH?  PRU?

Bad news all round

Spain in trouble.  Greece and France voting without using their brains.  China faltering.  USA selling their coal in the international market as shale gas is now plentiful.

And worse news of all... Wayne Swan who should be Cuba's or Venezuela's treasurer is handing down a budget, with every intention of killing off the entrepreneurial spirit of Australians.  Robin Hood sounds romantic but when it comes to economics, he is a fool.

However, POG is still over USD1600 per oz and AUD has fallen below USD1.03.  I still cannot understand why gold stocks are jettisoned.  I am keeping or topping up mine.  Interestingly, I bought a gambling stock JIN but it too fell!  Gamblers gamble in boom times and in recessions.  I haven't touched any non-resource stock for a long time other than with rights issue and compulsory dividend reinvestments.

AZH

Some stocks keep rising... and I miss topping up.  AZH kept rising, and then kept falling for no obvious reason.  In fact if you read its most recent quarterly update, there is no reason for selling other than market sentiment against gold producers.  I have already done some recent top-ups at a much higher price.

So when it fell heavily today, I topped up at 57.5c.  Pity it isn't producing yet.