Gail Kelly

If you like a woman with brain, then this should be one of your pin-up girls.  Why not?  WBC has just moved into my top 10 stocks in my super portfolio.  I have accumulated this stock over the last 4 years in my super fund, and significantly when the market ditching it during the GFC period. Australia has the safest banking business in the whole world so I didn't worry about my bank stocks.  And as my late father said, if it pays good dividends, it is a profitable business... especially if the return is better than the interest on deposit in that bank.

However, not every parcel of WBC shares has turned the corner.  I did buy some during the Greek crisis at over $25 a piece.  In the meantime, I have collected great dividends.  Most men will do well to sleep with Gail Kelly in their minds...   At least, she thinks for you.

Shale Gas

Lots of articles have been written about Australia's untapped wealth in central Australia.  In the USA, a slow trickle by small explorers has turned into a major investment ground for the big big boys.  And even the big Chinese state-owned companies are moving in for a bite.

But in Australia, it is only in the radar of very few big boys.  Yet STO and BPT (probably the biggest of the gas explorers/producers in that region) have been relatively stagnant.  I consider myself lucky that someone dumped their BPT shares at $1.175 for me to pick up a small parcel on Friday.

POS

Perhaps no one noticed.  The ratio between Au:Ag is historically around 50.  Today POG went up by over 2% but POS went up by over 4%.  It has been lagging and playing catch-up.  At least Ag has industrial use although in ancient China, it was the financial yardstick until the 19th Century.

My lone Ag investment SVL has plunged 66% so I don't have a good record there.

My first Au investment was in oz ingots.  I made money because I bought and sold at the right time in 1980.  But investments in Ag and Pt have been abject failures!  So I am sticking to Au ingots or Au stocks.  Au coins have too much premium on its Au content.

POG

The man has spoken but not too clearly.  The market thinks he will be starting his printing machine.  So gold price jumped.  AUD went up and market indices turned upwards.

As I said, don't buy a yo-yo, just watch POG!  With a rise to nearly USD$1700 per oz, my portfolio will certainly do well unless some other bad news springs up.  However, how can printing money improve world economy in the long run?  As RB says, this will cause a TEMPORARY improvement.

Gold differs from other metals because it has virtually no industrial usage.  Hence its trend follows a different logic.  It is also beyond my understanding but I know that if gold is worth USD$1600 per oz and it costs USD$1000 per oz to produce a 1 oz ingot, then the profit is USD$600.  Sadly, it is unbelievable how poor the profit statements have been from a lot of big gold producers.  These managements should be sacked for not comprehending simple arithmetic and producing the no-brainer outcome.

Lampreys...

The Feds has not announced whether it is going to feed blood to the lampreys.  So they sulked and walked away from the markets.  Strange how the market optimism is based on Ben's printing press.  I must be very poorly educated in economics.  But economics is not a true science pursuit, more an arts subject.  You give your reasons for the predictions AFTER the events, or more often than not, you just keep quiet when you are wrong.  And get a pay rise if you are right.

ROL

http://www.asx.com.au/asxpdf/20120830/pdf/428ccylqd8lgbj.pdf

For those who cannot read Bahasa, "Batu Perak" means "Stone Silver".   As the Malay and Indonesian language (which is basically the same) has the adjective after the noun, it literally translates into Silver Stone.  But the problem is... Indonesia.

Commodity Blip?

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=157890&sn=Detail&pid=102055

You wonder how knowledgeable this tipster is.  It is certainly good for BHP shareholders for it not to proceed with extra expensive mine development.  Afterall, most Australians would not move to a job and there is a huge premium in shifting people to workplace, not just the wages but also the cost of FIFO.

If the tipster is right, then he would be suggesting investment in developing resource stocks.  In some way, the impending 'recession' in the mining industry is wonderful.  When the demand for labour exceeds the availability, the cost of development skyrockets.  Those that have got their projects running must be delighted, especially if they were able to contain the cost.  But even producers are not spared the wrath of illogical investors.

In a few weeks time, PCL will know whether it is a billion dollar stock or worth just a few rupees.  One failed exploration drilling (paid for by its JV partners) will see it banished to the cesspool, even though it has multiple exploration sites.  When you read the hype, you would think it is impossible to fail....   and what with Apache, Tullows and Origin farming-in onto that block.  These big boys do not spend millions without scrutinizing the seismic studies.  But then, I have had lots of failures in the past!  I just need one more highly successful one to over-compensate!

AQO

It announced today that it thinks its Cooper Basin shale gas could be >20tcf.  That is worth billions of dollars but the stock is worth only $7 million.  I have put a low buy on this.  A broker gave me an allocation of this stock and for a while it was good until it drilled and found a dry hole.  Then onto another unproductive hole and the market dumped it.  But it isn't the end of the story....

Good forecast figures

If you want to know how illogical the market is, just look at BPT and PRU.  If they had forecast bad figures, the market would have savaged the share price.  But with good announcements, these stocks fell!!  Looks like a lot of these sellers never had fathers who taught them basic accounting principles.  I was busy at work plus my cash is down to minimum for my super portfolio with very little contribution allowable and I need to pay a pension to the "members", i.e. me and my wife!  Otherwise, BPT is worth topping up.

PRU - good article

http://minesite.com/news/perseus-ramps-up-gold-production-at-edikan-even-as-construction-at-a-second-project-is-about-to-get-underway

But good article and progress does not translate into rising share price.  That will come for patient investors.  At the end of the day, it is production of gold that counts and the profit generated.  However, you cannot expect a mature stock like PRU to jump unless there is a take over or it finds a lot more gold.  I like the slow and steady rises of some stocks.

AZM RRS RMP - disappointing announcements

When AZM announced its JORC resource yesterday, even I could tell that this stock is going to be punished.  It is a bit like CDU last year.  There was a lot of hype but the final figure did not match the expectation.  But sometimes market fails to realize that there is more drilling results to come.  At the moment, the market is not in the mood to tolerate any disappointing news.  AZM will have a lot to show before its share price recovers.

This morning, RRS and RMP will be slaughtered... even though RRS had declared that its "main" interest is in Trinidad.  The drilling in Puntland... nothing but possible oil there.

Tin

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=157639&sn=Detail&pid=31

You just got to love Indonesia.  As an investor of some stocks that got burned, I am always a bit twitchy with the government and the legal system there.  In theory, it should be profitable but suddenly you find the government popping up in your business.

If what is reported is true, then tin miners outside Indonesia should do well soon.  That is theoretical, too.  I have KAS and VMS but neither are profitable!  Neither are producers yet, though.

CDU

I have bought 16 parcels of CDU and the best ones were those with good drilling results but the market no longer trusts the chairman.  Come one day when the JORC resource was announced, it was far below what the chairman has been hinted and there was delay after delay with the presentation of that vital information, I bought one of the parcels when the share price plunged and then sold shortly after when the share price rebounded.  It then went down but I managed to make a small profit out of minimal work.

If the price of copper does not plunge, then when production starts soon, I can expect a mark rise in the share price.  My worst purchases were at the beginning in late 2006 and in late 2009 and early 2010.

Good luck to those who stayed with this stock.  The roller coaster ride has been fun.  I had my disappointments and excitement with CDU but I expect this next phase with production to be less volatile.  If there is a takeover, then it would be the final sweet ride.

AGO

I collected AGO via GIR.  GIR gave me a huge lift in my nett worth from equities.  Luckily, I didn't want to be top heavy on AGO so when the opportunity arose, I sold several parcels at over $3.30.  I can't tell you whether the other stocks that I had bought with that cash has done well or not because I have not entered what I contra'd against from the sale of AGO, except by inference.  I am pretty certain that they are many losses although I note two big (maximum) parcels of SPP in AZH at 19c, now 43c, bought at that time.  The law of average does catchup.  VKA was bought around that time and I am sitting at a big loss with it.  Neither would I sell VKA as it will eventually rise.  In fact, I just bought more VKA at 10c a piece with my entitlement.

Movements above average

Sometimes, a particular stock moves beyond the average.... but you have no idea why.  Those that are playing catching up, those under a take-over rumour, those with good announcements, ie those with a reason for out- or under- performing, you can explain the movement.

When the market is down, and a stock jumps, then you know it is odd.  If it is up, then you can't complain about the puzzle; delighted but bewildered.  But sometimes, it is the other way around and it makes you scratch your head in annoyance.

AZH haf been tumbling badly.  It was in my top 10 stocks for a while but then some investors dump their holdings.  It had plenty of excellent news but when it became just "good" news, it was savaged.  The premature condemnation of this stock is bizarre when it hasn't even finished all its exploration.  With gold stocks back in favour recently, this one gave one of my portfolios a very nice lift on Friday, with lots of alpha into positive territory, net.

PXG, VKA

I learnt about this stock in 2011 April while reading ABU's presentation.  It featured in one slide showing EV/AuOz graph.  This one was very cheap so I bought for its value.  And then I bought some more in Nov 2011 as more favourable exploration result came out.

Today, it is muted to be a takeover target but this is just a rumour.  However, like ABU, it has been making all the right noise but the market seems rather reluctant to assign a real value to it.  Yes, the same applies to VKA (very cheap on EV/AuOz valuation) but I am sitting tight on both.  PXG is a gain while VKA is a loss.

Recent buys...

I have always maintained that the best time to buy is when people are selling in droves with no good reason to sell other than due to market sentiment.

But one can never have total success.  Some notable falls have been KMC, BPT, NGE, SIH, AXE and YTC.  Nothing disastrous except for KMC.  If you invest in Indonesia, you are affected by dirty politics where you are enticed to invest but the rules change AFTER the investment.  NGE should be valued a lot higher because big boys who invest in NGE's JV partners are paying a lot more to be a partner of a partner!  BPT will rise when its announced expected rise in profit actually materialize.  I should be topping up more AXE as graphite is new black gold but my super fund now have very little cash.

Against that I had good scores with PVD, SXY, ABU and BDR.  The market could fall further but I look forward to buying shares that are dumped cheaply.  Today, I put a buy on AUCO and hope to pick up options on the cheap.  I also put a buy on EXEOA but I have no expectation of success!

BDR

In March 2012, its share price went down to a trough.  When a stock keeps announcing good news..... ????? the share price keeps plunging (especially when the POG is within a USD$1500 to USD$1700 per oz band with the AUD relatively stable too).  What kind of logic is that other than having lots of idiots on its share holder registry?  I was happy to relieve those idiots of their misery.  I bought at 67c.  And then I was made to feel like an idiotic buyer!

The share price continued to fall.  In May 2012, it announced that gold production could start in August 2012.  When it got to the real trough, I bought some more at 52.5c.  And again, it continued to fall.

I trusted my own judgment and logic.  The big neighbouring miner has stepped in and offered to take up its iron ore and this will offset the cost of gold production by about USD$200 per oz.

On Friday, it closed at 82.5c.  The bulk of my BDR shares were bought at 25c in 2010.  But those bought in 2011 are still just under the water surface.  Overall, I have a 70% plus paper gain over 2 years.  I am hoping that with more exploration to be done and production commencing 'some time' soon, the share price will start to move upwards again.  But of course, you can never stop idiots selling on the cheap.

WHN

This one is for the gambler.  But if the seismic studies suggest oil, then is it still a gamble?  It will move a lot only if a neighbour scores a hit with its drilling or if a big boy takes a real interest in their equity or tenement.

It is also a good one to trade.   Good news will leave to a spike in its share price... often to tumble after a few days.  But of course, if another good news hit after you sold, then it is bad news for you!

After Proactive Investors Forum

I put buys on a few stocks that were presented in the recent Proactive Investors Forum in Sydney but I don't need them.  As usual, I am happy to help idiotic sellers offload their holdings.  Because I don't need them, I am happy to sit and collect or not collect.  I bought a chunk of PVD (14% up :-) since purchase) after the previous forum in May 2012 and I expect to make a bigger profit.... soon.

It is very difficult to predict which way the market will move although on Monday, it will rise as SPI has already predicted.  But whether it is sustainable is a different issue.

What I have done, tonight, is I bought more options in GTE from entitlements.  I still cannot understand why it is putting central Asia exploration ahead of the one in WA which is near SFR's discovery.  Maybe, the management knows that while the exploration suggests the deposit could be bigger, the drilling will reveal... dirt.  My optimism lies in its recent exploration result in Kazakhstan.

New floats

The best new float this year is PVD.  After attending a Proactive Investors Forum in May 2012, I felt compelled to buy because it had a very similar strategy as TPT and PCL.  TPT has fallen but I am still on a 49% profit bought nearly 2 years ago.  The cheap TPTOA options (issued at 2c as an entitlement) is now at 21c.  I am at 14% profit with PVD.

Nothing has been found yet but the tenement is big along Morocco.  It is waiting for one of the big boys to move into into offshore venture because it does not have the capital to drill on its own.

Only 4 stocks from the floats this year are above water, the rest are drowning.  I am interested in those that are near the bottom or at the sea bed!

Doom and gloom

Lots of news like that around.  The USA has not started printing money but the market there is expecting that to happen so the DJI rose yesterday.  The Chinese ports are piling up with goods that can't be sold; factories are churning out stuff that people can't afford to buy, and some are curtailing production, raw materials have been stockpiled.  Japan has been in the doldrums for a long time and now picking a fight with Chinese and Koreans over tiny islands.  Greeks still not taking the bitter medicine.  India is facing economy slow down with an unpopular government.  Middle East has always been Middle East, an endless squabble arising every few seconds.  African is full of tribalism generating an endless squabble every few seconds, too.

In the midst of all this, the current government has imposed MRRT and Carbon Tax.  Brilliant!

Just when you think you should sell... you will find takeover fever might emerge.  I had been pondering whether to take my profit with AGO as it keeps tumbling.  Iron ore price has been falling in line with China's quandary about the steel industry.

I have nothing to advise other than to watch the price of gold.  My own portfolio was recently cushioned by gold stocks.  But when all markets are down, gold usually eventually follow suit.  

Gold

If the price

WPL vs OSH

I bought WPL in 1996 so it has been a long term stock.  For a long time, it was worth a lot more than OSH.  However, with small cap stocks, if you pick them well, they grow to be bigger.  Now the OSH valuation is approaching WPL.

Also in the mean while, the valuation of PCL and PIROA in my portfolio have exceeded that of BHP and RIO!  Yet, the directors of those companies earn much letter than those in the big miners.

These are some of my good stocks; they are plenty of dogs as well!

Uranium

It has been some time now since I read any article about Russian source of enriched uranium.  It has been supplying cheap uranium to the western world for nearly 20 years!  Imagine if these bombs were to be exploded somewhere in anger.

In 2013, there will be a shortfall in production.  New production mines take a long time to set up.  I prefer no nuclear energy but I am a pragmatist.  Try telling the French, Chinese or even the Japanese that they cannot use this technology.  I don't have the answer but I would still invest in uranium companies if they are profitable under strict conditons.

QE3

Isn't it pathetic that the DJI has fallen overnight because of doubts about the US government printing money?  It does make sense because after printing, you will have more money to throw around.  It reminds me when I was a kid watching my father signed cheques for payment.  It was fascinating that he could just settle accounts by writing words into a pre-printed piece of paper.  The point:  Those investors were like me when I was a kid...

... at least my father's cheques never bounced and he had the capital to account for his "printing".

Tullow Oil and PCL

When a big oil explorer and producer like Tullow Oil discovers a billion barrels of oil, its share price moves up a bit.  It represents 'some' of its oil but when a small explorer like PCL hits oil, it represents the 'sum' of its oil.  The share price will increase by folds rather than by percentages.  There has been a lot of optimism at their Kenyan offshore prospect.

Having invested in PCL for such a long time, with multiple top-ups, I am prepared to sit and take whatever comes.  Big JV partners with good track records do not participate unless the prospect looks good, and they do look carefully before parting with their money as drilling in deep water is very expensive.  Just ask WPL...

PCL is currently one of my biggest profit spinners.  Best of all is I did my own research to buy or top-up :-)

Tullow Oil was a result of a takeover of HDR.  Since I have a British bank account, I decided to take up its shares.

LYC

I bought LYC between 2006 and Sept 2011.  The highest was at a SPP of $2.05 in April 2011 when my application was scaled down drastically!  When it fell after that, I purchased more at $1.245 in Sept 2011 to make up what I missed at the SPP offering.  But in December 2011 when politics started to intrude into LYC processing plant in Malaysia, I bailed out at $1.27 average.  Today it is 66c and likely to fall further if there is no resolution.  That would not happen until AFTER the next election when the Alliance government might even lose for the first time since independence from GB.

Sounds like a good buy at the moment when the beast is wounded.  But don't get involved yet.  The beast is likely to be stabbed a few more times even though it has won in courts. It still cannot get the licence to operate.  Not yet.  Processing rare earth elements is dirty business....

Merger between IGR and SLR

When SLR announced the takeover of IGR, the latter went up and the former went down.  This is typical as good gain for one means the other party has paid too much.  But quite a few critics think it is a win-win situation because of proximity and saving.  I am of the same opinion.  So today, when you look at the share price of both stocks, you know the market is now agreeing unlike its initial response.

As I hold shares in both, I was delighted and knew sooner or later, my opinion will prevail.  Much of it is because of the quality of management in both stocks.  It could also be a reflection of the recent rise in POG.

Gold

If the price creeps up slowly, I feel comfortable.  It has been flying up again.  That means a drastic fall will come.

Today, of course, my portfolio went up much higher due to the fact that it is overweight in gold stocks.  But it will also mean that tomorrow if POG tumbles, mine will recoil hard.  The longer term POG is dependent on demand-supply balance.  However, in the short term, it is impossible to predict and it affects the valuation of my portfolios immensely.

Sometimes stocks are bought because of good write-ups all around, with great prospect.  But no matter how good the stock is perceived to be, the share price is dependent on what investors want to pay for.

Last night, at the Proactive forum, a guy asked the same question that I asked the CEO of another company: Why do Chinese companies pay a huge premium to buy their equities in Aussie companies?  Why not just takeover the stock?  I met this guy who asked the question and told him that it is because of politicians, like Barnaby Joyce.  He jumps up and down when Chinese company takes over an Australia company.  But he does not make any noise if it is Brits or Yanks doing the same.

Proactive Investor Forum

I like what I heard last night from the 6 companies that presented.  Virtually all of them.. but most do not require purchases soon.  Their share prices will only fire up later.  Market is not interested in future performers; it wants profit NOW.  Of the 6, I hold shares in 3 of them.  I have made profit out of DYE before when an American guy pumped a lot of money into it but he had bailed out.  Then it was a downhill course...

POG

It has been moving up in notches in the last week.  Well, there is no obvious reason why.  So, if you look at the recent trend, you can also expect a plunge.  This is virtually the only commodity that is going up.  Nickel is too but it is so far off its peak.

As my portfolio is loaded with miners, I think there will be a slight upturn first (based on SPI), and then a fall.  However, I will be cushioned  :-)   BHP is going to look a little sick though.

The big mining boys

Once RIO, AGO and BHP used to feature prominently on my super portfolio.  Because of buyback programs in RIO and BHP, and because I was top heavy on AGO (having made a lot out of GIR, before and after it was taken over by AGO), I have sold some of these shares off.  Luckily I haven't bought back many of those shares.

They are slipping down within my top 10 parcels in my super fund.  Speculative mining shares have crept into that list, like CTP, PIROA, PCL and CDU, displacing some blue chips.  Those looking to enter the top 10 includes ABU, SIH, PRU, AVB and AZH, with WBC moving up.

VKA

The rights which closed on 20/8/12 were issued at 10c plus one free option.  When the share price went up to 11c, I expected it to be manipulated to get recalcitrant investors like me to take up the offer.  And then, I expected it to fall below 10c.  Nope.  It hasn't happened like that.  The share price stayed at 11c but there isn't a lot of trading in this stock.  However the price of gold is inching upwards.

CDU

This AM is a milestone that CDU has passed before.  It went just over $4.  Production of minerals is going to start soon as it moves from a pure explorer to a producer.  Many exciting or silly events have passed.  As it becomes a "mature" stock, there is less room for the dramatics.  I have no intention of topping up in the near future as it is likely to move sensibly with fewer idiotic sellers available to me.

The next share price jump will be a result of a predator or a spike in copper price upwards.

BUT

Just like ABU, when a good announcement is made, the share price either moves up a bit or remains indifferent.  And then a day or two later, the optimism just vaporizes.  I have perused write-ups in the past about BUT as an up-coming star among African explorers.  This is another one of those gold stocks where my intention is to sell for a profit if a crazy buyer comes along but if it continues to fall after good exploration results, then I intend to accumulate.  Just look at the POG, it is moving over USD$1620 per oz again.  But for how long?  Only Allah will know...

BUT is nowhere as good as ABU but it has come down from its peaks.  I will still prefer to park my money in ABU.

CBA

CBA went down hard this AM.  Then I realized it was going ex-div.  But it went far below the dividend.  However, by around mid-day, it recovered and fell at less than the dividend.

This stock has not performed as well as speculative shares but it is stable and give EXCELLENT dividend.  I am looking forward to collect mine.  I have 3 parcels, legacy of my holdings in State Bank of NSW.  The dividends are delightful from the banks!

MEL

Today, it jumped >40%.  With no announcement.  My immediate interpretation is that either it is because the NSW government is allowing shale gas extraction AND fraccing.... or there is takeover activity.  Why not?  This stock is so cheap when you look at its tenements and what it has discovered.  Perhaps, the Chinese companies have heard me..

ABU

It is absolutely predictable.  Up because of good announcement and then some idiots sell their shares to return to zero the share price rise today!

The grades and lengths of strike (trenching) are wonderful.  I still don't think it is an error in how I interpret the figures but I am not a geologist.  The veins have been identified so mining should be easy as they are on the surface!

VKA

My brother reminded me of the VKA rights last week.  At 10c, there was no advantage other than the free options attached.  However, this is one of the cheapest gold explorers in the market based on EV/ozAu valuation.  But it isn't a producer, so the market is not interested in it.

By the end of the day, there is obvious market manipulation to get it over the 10c market to get hesitant investors like me to fold me.  I did but mostly because it was cheap.  But if the share price fell, then I was going to buy a small top-up parcel on the market.

BUT

This morning after the market has opened, I decided to look at good announcements from other stocks.  This one caught my eyes with its good exploration result in Tanzania.  As it was early in the trading hours, I bought a small parcel with the idea of selling it in the afternoon if it ran up quickly.  When I paid 10c, I noted the price went down.  That is nothing unusual as it is impossible to get the trough.

But it went higher and finished the day at 10.5c.  I don't intend to hold this stock for long as it is only a small parcel and it is expensive to trade, relatively.

ABU

When you look back at every announcement from ABU, majority have been phenomenal.  In the 19th Century, it would have sparked a gold rush to Tanami Desert... with many deaths, of course.

However, if you ask me why even after being crowned the Best Emerging Mining Company at Kalgoorlie during the Diggers and Dealers Forum, AND producing good exploration result after good exploration result, the share price remained at a plateau until about a week after.

And of course with today's announcement http://www.asx.com.au/asxpdf/20120820/pdf/4283sr3vtbyr4h.pdf you will find greater interest.  But like every other good ABU announcement, the share price will subside until the next good one comes along.  ABU is full of idiotic investors!

AKM

AKM found lots of coal in Mongolia.  Lots.

But the problems are many.  First, you had to deal with a poorly educated Mongolian politicians (until one took over, and he holds a MBA from Harvard) who have to scream nationalization to win poorly educated voters, then you have huge infrastructure problems from mining to transporting it to your customers (with different railway gauges and inadequate ports) and then you have to deal with one and only principal customer... Chinese government.  Selling to Koreans and Japanese is a good idea but getting the coal to them is difficult.

Hence, for a long time AKM was giving me good paper profit but now it has gone slightly underwater.  Reality has sunk in.

AVB, significance of 6.8c close on Friday

I think I used to be smarter or more fleet-footed.

On 21/9/2010, I bought 100,000 AVB at 4.9c.  The next day, it announced a good copper find and the share price went up to 7.4c. I sold that parcel of ordinary shares (after one day) and made a very nice profit.

I used the money to buy options at 5.3c, to be exercised in March 2012 at 1.5c.  Hence, the option+exercise price was 6.8c, ie, lower than the ordinary share price on that day.  Unfortunately, AVB has been up and down since then but last Friday, it hit 6.8c again.  Because Vale is interested in AVB's banded iron (interspersed with gold bands), the market is starting to notice AVB.

The above is just one section of my AVB shares.  I bought ordinary shares at mostly at 2.0 and 2.1c in August 2010.  So I have a very nice profit out of this stock.  But I did buy a smaller parcel of options at 13.5c when AVB went ballistic.  This is a relative big loss but in absolute term, overall, I am still at more than 200% profit over 2 years with AVB.  And expecting more... as the exploration is only in small parts of its tenements (but the best parts).

Uranium

When uranium was rising in price, the date to note was 2013.  The Russians were duped into selling uranium from their decommissioned warheads to the Yankees for a song.  At least, they are honouring the contract.  Come 2013, the rate of production of uranium will be below consumption.  Already PDN's production is locked up by an advance payment.  The richest uranium mine in Canada has not produced any yet since it was flooded a few years ago.

In the meantime, markets are only interested in short-term performance and uranium stocks have been mostly decimated or punished for the falling uranium price (consequence of Fukushima, of course).  But nuclear energy continues to be developed elsewhere.  Even Japan had to restart one nuclear energy generator.  While I haven't got many uranium stocks, unless exploration progresses to production (takes years!), there is little chance of capitalizing 2013.  After Fukushima, very few articles were written on uranium stocks as an investment.  It is a very much a four-letter word....

STO and BPT

http://www.theaustralian.com.au/business/mining-energy/new-industry-born-with-santos-shale/story-e6frg9df-1226452924252

You might not be able to read the link unless you are a subscriber to The Australian.  Why STO is so low in price especially recently baffles me.  It has been a takeover subject for a long time, it produces products that people want (oil and gas) and it has been known for a long time that it has a lot of acreage in Cooper Basin where a lot of gas exists... and it has been successful at hunting it.  And now actually producing it.

Why does it take articles from newspaper, and a relatively good profit (ie "above expectation") before the market takes note?  Because I don't have spare cash to throw around, I have been very reluctant to top up STO because its share price kept falling.  You would also think that by now, one of the big boys would have snapped it up for peanuts.

It is more thrilling betting on small explorers with good grounds and prospect.  So most of my recent investments have been on "funny" stocks.  Just to name a few PVD, PCL, ABU, WHN, SXY, SIH... but the volume of trade has diminished as the market sentiment is very negative.  Since I can never pick the trough, I just continue buying but in lower frequency.

O&G in Australia

http://www.proactiveinvestors.com.au/companies/news/32494/australian-shale-and-tight-gas-hits-milestone-as-norwest-energy-exoma-energy-increase-activity-32494.html

If every word is true, then I would be a very rich man.  Most hypes turn out to be just flatus or bubble.  So I have to carry on working.  Unfortunately, in the real world, the more that is discover, the cheaper the commodity becomes.... like shale gas in the USA.  And China is purported to have the largest reserve underground!

Banks and miners

Because banks and miners are my main components, I had a good day at the stock market.  But on the horizon, things are not that rosy.  AUD will remain high so return on overseas investments by Aussie companies will not do well.   And economies in Europe, Japan, Indian, China and the USA are not making good progress.

I don't trade in bank shares.  Nor do I participate in DRP due to complicated capital gains tax calculation in future.  But what I have, I hold.

You wonder why suddenly some investors are prepared to pay so much more for their stocks today.  Some leaping over 10%.  I rarely buy on days like this.

Some of the good news are BPT and STO have started producing gas from their shale gas deposit, STO making a bigger profit than expected, WES getting a nod and ANZ upping its profit by 10%.

AVB

Today, it got a speeding ticket from ASX but it has an explanation.  Why it takes so long for the market to recognize its value, I have not idea.  It hasn't even explored every inch.  It has Vale next door, interested in its iron deposit.

ABU

Hear ye, hear ye!

Someone IS listening to me.  And if it is the same buyer, something is happening to the share register of ABU.  How can it be that the announcements have been that good and investors are selling?  Absolute idiots!  And to top it, this stock has been awarded the Best Emerging Mining Stock!  Absolute absolute idiots!

Today, it has risen to 4.7c....  and in my opinion, that is still too low for a company with more than 3 million oz JORC resource.

ABU

Someone rich must have overheard me ranting and raving about how crazy the market is in the way it treats this stock.  It was even acknowledged in the recent Diggers and Dealers Forum in Kalgoorlie yet the share price remains relatively stagnant.  Why would fellow miners reward it the Best Emerging Company and choose not to buy its shares???

Today, there were some serious buying.  Maybe Lee Ming Tee reads my blog!  But he does not need any ABU to remain a billionaire.  I missed out at 3.7c as it got to 3.8c a few days ago.  Never mind, I did pick some up at 3.9c in May 2012... my 14th parcel.

Dividend generators

As I move closer to 60, it is time to ponder what stocks to hold.  A long time ago, a wise old man told me that I should only buy stocks that give consistent, large and incremental dividends.  Why?  It means it is a profitable business.  This chap only went to school for 2 years and only had newspapers to guide him.  I should also add that the dividends must be paid out of profit, not the capital nor debt.

These few days, I have been getting dividend announcements by the blue chip stocks.  While I had been accumulating resource stocks, I have rarely sold off any of my bank stocks or big miners.  Of late, the speculative shares have not done well even when good announcements are made.  Stocks like SIR and HOR are just lucky to confirm their impression of good mineralization.  Most drilling results turn out mediocre or nothing even with nearology to back up their hype.

Some very cheap stocks are not desirable by the market so they wallow.  A good example is VKA which has one of the cheapest EV/Oz of Au valuations.

I have a couple more years to ponder but in the meantime, I will have to start shifting to more stable stocks... with real and good dividends.

ABU

ABU was awarded the Best Emerging Company award at the Diggers and Dealers Mining Forum recently at Kalgoorlie.  Yet, the share price has plateaued.  It is quite amazing how good the grades are but investors are still selling the stock.  Why such good grades and length of strike do not turn on buyers is beyond me.  Maybe, it is because my limited knowledge of geology and how to interpret those good announcements will make me a fool in later years.  Trenching can result in biased sampling especially if it is highly selective and not representative, and the wide of the vein is actually very narrow but not highlighted.  However, more than 3 million oz have been included in the JORC resource at just one tenement with many more areas in many plots to be explored.

GTE

SIR announced a good nickel find, and the share price went ballistic.  And continued to rise.  GTE found a lot of copper in Central Asia and the share price jumped, but not ballistic, and then started falling again.  Yet, it also has a larger area of suspected mineralization in WA compared to SFR, near the Degrussa deposit.  I don't understand why it is not drilling there first.  If a huge rich copper deposit is found in WA, SFR might even offer to take it over!

I was lucky that I bought GTE when it was down in the dumps so it will have to fall to almost nothing before I am at a loss with it.  Management must have other ideas in its head as to why it is exploring Central Asia ahead of WA.

POG

In spite of the turmoil around the world economies, the POG has remained above USD$1500 per oz for most of the time while other commodities (other than grains) have tumbled.  Unfortunately, big gold companies couldn't get their act together with either declining extraction, failing productivity or some other management issues resulting in poor profit results.  Yet, you would think that gold producers should be lapping it up.  Some of my gold stocks are either starting production shortly or have been producing recently, but the share prices are yet to reflect their prospective profit.  At least IGR has improved recently but that is because of a takeover by... another of my "like" stock SLR.  Some like CGX has even announced better production recently and are marked down even with good projected figures.

Fertilisers

Many years ago, I worked with a very nice but laconic surgeon (retired a long time ago).  He said he has never seen a drought that does not end.

The Yankees and the Indians are suffering under severe drought so the price of grains have shot up.  No rain means fertilisers cannot be applied.  Hence, while grain prices are very high, no one is buying potash or phosphate.  But as Dr Dinning wisely said, the cycle will repeat and the rains will come.  As usual, the best time to buy is when the market is down, the stock has good potash/phosphate prospect and you have patience.

Do people work in Europe?

In Australia, from Xmas to Australia Day, the economy winds down.  But you can still get things done and shops are still open.  Therefore it is not surprising that there is a crisis in the European economy.  The French are mostly on short hours and  significant shops are closed.  They all want short working hours and high standard of living.  Only prostitutes can do that, consistently and historically.  Even then, only when they are youthful when their bodies are still highly desirable and can be used repeatedly.

CBA

You often wonder how the big analysts estimate the profit of the big companies.  And usually, they are about right.  Hence CBA's result, announced this AM, is not that surprising.  Still it rose because of the nice dividend... I suspect.  The dividend yield is higher than interest from fixed term deposits.  Even my father knew where to park his money, especially when the dividend is consistent, increasing and based on profit.  The 4-pillar banking policy is not going to change overnight.

ABU

When a good announcement is made by ABU, either it goes up a bit, stays up a few days and then starts to fall (like today) or it remains indifferent.

Why the share price trend does that?  I don't know the answer but I can tell you that if I am wallowing in cash, I know where to pack it when good stock tumbles.  Remember, it won an award recently at a miners' conference in WA recently for being outstanding, yet....

But if I am tight and cannot afford to gamble, I would always park the dough in any of the big four banks.  The dividends have been good from them, consistent and increasing.  Watch CBA this week!

LRF

Surprise!  Even the Ferret in GSJBWere has noticed LRF, making a comment today.   Its NTA was $1.08 in June 30 and market has gone up by 4% since.  So even with the unit rising to 63c, the columnist still thinks the unit price of LRF is too cheap!

LRF

While the management of this fund is good, the market takes a different view and has been marking it down severely.  In fact, a private equity fund took advantage of it and held the management to ransom by forcing it to pay it market rate.

Last Friday, it has opted to move out of the ASX and to allow its members to sell at market value minus cost.  And will continue to do that at fixed frequency during the year.  That means if you had bought recently at market low, you will laughing all the way to the bank.  The discount to NAV is something like 50%.

Monday

This Monday, the ASX will rise and then fall.  Well, that is my prediction.  Until the Feds show convincingly that it is indulge in QE3, the Chinese situation will determine Aussie outcome.  However, the Chinese government cannot let China slip into a recession, leading to rising unemployment.  The chaos would mean the downfall of the Communist government.  Already, inflation is under 'control'.

Commodity prices have been falling, except for gold.  Oil has not moved much recently either.  Hence, I am hoping for a decent performance from my portfolios.  One portfolio that I rarely changes is the one still held in GSJBWere.  Luckily, the big components there are CBA, WBC, WPL, ASX and OSH.  Most have not fallen back, in fact, the banks have risen strongly.  WPL is the worst but there is a green light for it.  Unfortunately, other stocks in that portfolio has fallen badly.  KZL has disappeared, ie gone bankrupt.

PCL

Spudding is imminent at the L8 block offshore in Kenya.  PCL has taken on farm-in partners (big boys from US and UK) who will pay for most of the exploration cost.  WPL had lost US$100 million drilling in a dry hole around that area and had to pay the Kenyan government to exempt them from drilling a second hole as agreed upon.

Tullows has stated that the chance of success is only 15% so it is a 'reasonable' gamble.  Just before MMR started drilling off Sydney, the share price climbed, anticipating success after so much hype.  So, in 2 months time, PCL could be worth less than toilet paper (which can be used once at least) if the best hole fails.  Success will see it flying over Mars.

DJ... the Yanks are still the principal determinant

All these talks about the decline of the USA are too premature.  But it is definitely the truth now that China is a dominant factor in world market performance.  What is certain is the uncertainty in virtually all the markets around the world, and it is mostly bad.

Yet, towards the end of trading in Wall Street, the market suddenly turned upwards.  All news are generally bad.  Perhaps some trading computers are expecting QE3 to commence.  Maybe the mint in the USA is starting to warm up and someone heard it... so the SPI is benefiting too, up 17 points.

I am only buying when idiots are dumping their shares.  I picked up some PCL at 13.5c, just slightly above the recent trough.  I couldn't believe someone would dump those shares.  My low bid for ABU has expired and I doubt it will ever hit 3.7c again unless there are some really, really bad news coming up.  But life is full of idiots!

BDR

http://www.theaustralian.com.au/business/wall-street-journal/anglo-american-in-tucano-project-tie-up-with-beadell-resources/story-fnay3vxj-1226446770717

When a big boy becomes interested, you get some rats suddenly joining the ranks.  While BDR has been rising again lately after a big tumble, you can expect an announcement like the above to attract the attention of speculators.... and slow investors.  If you look at how much gold BDR has postulated, then the share price should have been much higher!  The JV is more for the iron bands in the Brazilian deposits.

ABU

http://www.proactiveinvestors.com.au/companies/news/32182/abm-resources-wins-best-emerging-company-at-diggers-dealers-32182.html

At last some recognition.  But hopefully, investors will start piling in.  It is really puzzling why the share price is so sluggish and kept moving backwards.  The upward rises do not correlate well with how good the announcements are.  And then the share prices drift downwards again after the excitement of the announcement dies down the next day!

But I am not a trader of this stock.  I am hoping a plan to start PRODUCING will be forthcoming.  If gold is not sold, there is no real profit to be made.

Oil & Gas explorers

This kind of stocks is high risk investment.  Over the last 2 months, in one portfolio, I have topped up on SXY and WHN and bought PVD after a Proactive Investors seminar.

In a falling market, a plethora of good announcements counts very little.  After I topped up on SXY (bought below the price of a rights or SPP issue), its share price has been drifting downwards.  Yesterday was the first time, it went over my buy price.

WHN?  Nothing is going to happen until it announces a powerful JV partner pouring cash into it or one neighbouring explorer finds hydrocarbon... in decent quantity.  It has drifted way below my top up price.  It can wait.

PVD is still staying above my buy price.  It too will behave like WHN.  Both have large acreage, both have produced good hype (seismic studies are convincing) and both don't have the cash to drill on their own.  The good news is big boys have moved into those areas but nothing much is happening... yet.

Bank shares

While the Four Bank "monopoly" exists, the banks will be profitable.  Banks will only remain strong if they make good profits.  Depositors are less likely to see their savings disappear into thin air.  And investors will continue to collect dividends which are more rewarding than term deposits.

I had been investing in WBC but my last 3 top-ups have been loses although the dividends have compensated for the fall in share price.  I have no regrets.  I rarely sell off bank shares, mostly accumulating.  In the past, it was DRP (very complicated when you have to calculate the capital cost in later years) and whatever SPP that existed.  With recent rise in bank shares, both my ANZ and WBC are now in the green zone while CBA continues to power ahead.

My CBA were gotten on the cheap because I bought into the second tranche when it was privatized and picked up more CBA shares when it took over State Bank of NSW.  We were SBNSW customers for a long time; we were given priority when it was privatized.

My late father knew the value of a stock... if it gives good and consistent dividends.  Hence, his largest parcel was Maybank.  His biggest investment was during the Asian Financial Collapse; it has paid off.  You have to salute this man from a pauper peasant/potter background with only 2 years of schooling, making a living out of even poorer people in a rubber plantation with 10 children and an illiterate diligent wife to feed.

PVD

At the last Proactive Investor seminar that I attended, I got to speak to the CEO of PVD.  I told him a lot of my oil and gas explorers are full of hype and often fail to find hydrocarbons.  Of course, this kind of investment is high risk.  I asked what is the likelihood of success... around 20%.  So it was worth a "calculated" gamble.  I have made a lot of paper gain with PCL.  He said his tenement is huge relative to Hardman's old tenement where it found oil (Chinguetti) off Mauritania.

Also there is opportunity to trade while negotiations are undertaken for JV and while the market is digesting its value.

Today is probably the first time this stock has given me a paper profit.  In fact one broker has rated it nearly 4 times higher!  If it indeed finds the total amount of oil it believes is there based on independent assessment, then the stock will easily fly well over $1.  When I first bought into PCL, it was around 1c and most of my purchases were under 10c.  I am hoping to repeat the PCL performance with PVD, WHN and TPT.

Market responses

If a bad announcement is made, the stock is savaged.  But good announcements often bear no consequences.  BPT, NST, PRU, OYM and CGX made announcements predicting good increase in production/profit, and the market virtually takes no notice of it.  AOQ had discovered 2 dry fields when drilling, so it has been pounded.  RRS didn't discover oil but water and its share price has been savaged.

ABU made great announcements but investors must be becoming indifferent to it.  I have still got a buy at 3.7c so I might still be lucky.

With less contribution allowable this year, my super portfolio is going to diminish in size due to pay-out.

ABU

Another good announcement, yet the rise in share price does not match.  It is true that the gold are in veins and not a big solid deposit.  But with such good grade and consistent reporting, it is still beyond my understanding why this stock has not run up.

IGR and SLR

SLR is taking over IGR.  Friendly.  So SLR dropped and IGR went up.  IGR is a producer and finding more gold so SLR is getting value for money.  I own both but in separate portfolios.  Best thing is both are excellent stocks and when amalgamated, could be more economical.

GTE

http://www.asx.com.au/asxpdf/20120806/pdf/427vtsl9bln881.pdf

I have not looked at the price of GTE but I forfeited my options recently (they expired; the exercise price was higher than the market price of the ordinary shares).

But today, with an announcement that good, the share price is bound to rocket upwards.  It hasn't explored its tenement next to SFR's Degrussa deposit. 

MAT

I invested in MAT for its shale oil tenement in North America but like many resource stocks, it has tumbled.  It is not worth selling because its assets are good.  Recently, the big mover in mining sector is SIR with a new zone discovered near Esperance with easy access to a sealed road.

MAT got a speeding ticket from the ASX and I didn't know why either until I read its response.  It is because of "nearology".  It has tenements adjacent and very close to SIR's discovery.  Where it was until recently a bad loss, it has now almost break into the green zone again.

And because of nearology, it has decided to fast-track its exploration activity around that area to take advantage of the new information.