Member Info for Daisan

Getting spanked at the moment. Difficult to blame the futures trading on Comex for this as well as it started in the far east overnight although it has gained some momentum. This latter is likely due to a bit of a rally on the stock markets today with both European and US markets rising.

I know that AVM is very sensitive to the price of gold but this seems to be in the process of unravelling all of the gains that this has made on the back of the gold price rise of the last few months. Given that gold has only given back 4% from its recent highs, isn't this a bit of an overreaction? If gold falls more, and there is certainly an argument for a more extended pull back than we have had so far, is this going to go back to 4p?

Banter, Not even sure I can find a 10 year chart on AAZ! I can't for the life of me remember when AAZ floated or at what price. As I recall it was 2005/6 and it was a LOT higher than the current price so I can well imagine that it looks like it is forming a 'W' given the fact that it was single digits in 2009 and 80ish in 2011. I think that the more significant thing is the high gearing to the gold price evidenced in 2011, so if the gold price goes up in the next few years (I am confident that it will) then AAZ should rise to at least the levels it saw in 2011 and at its float.

To be honest the situation at the moment is markedly different to Dec. 15, the most obvious thing being that gold is 20% higher but probably the most significant thing is that the USD is at key support and the COT report, which was extremely favourable to gold in Dec., is now at extreme levels against gold. As gold has pretty much been following the yen higher this year, the USD either has to break key support or gold decouple. Either of these is possible and certainly have historical parallels. However, gold decoupling would usually be supported by a significant rise in VIX which we are just not seeing at the moment. This week will be interesting as there are some speeches by FED members, including Yellen, which will either reiterate a more hawkish stance, in which case I would expect the USD to respond, or soften again, in which case it is likely to fall. Any significant firming of the USD will put pressure in the short term. In the long term we remain in an environment that is very favourable to gold and one that does not require the dollar to collapse against other currencies.

By years ago, I meant the previous mining bull market. A friend of mine bought into Karelian. As far as I am aware he is still in it. I don't see that much has changed there and I tend to think that geologists are a pretty good idea for explorers! Anyway, good luck on that one. It is small and highly illiquid (just PJ's sort of company) which means any significant buying at all will shift the price. But as with all of these things, it may well be a problem to sell should the anticipated improvement not come about.

The FED has a choice between screwing gold or screwing the stock market. If they raise then the stock market, which is completely overvalued on pretty much every criterion, will soften and probably crash but the dollar will rise and this will put pressure on commodities. At least initially but gold could well be the beneficiary of a crash. If they don't raise then the dollar will crash, the stock market will rejoice for a while and commodities, especially gold, will go up. Despite the US election I am expecting a token raise soon (in June), a stock market sell off and commodities to drop for a while, including gold, but that gold will come roaring back to continue its bull market. There is the possibility of the drop in gold being quite sharp and nasty to get rid of the speculators but that will create a serious buying opportunity in gold and pretty much all gold stocks. Even those without gold but with 'gold' in the name!

Lennie, You are obviously an artist! If you could post all of you investments perhaps the rest of us could use that as a contrarian signal. Although I suspect that most of the rest of us have done the same at some stage or another.

OK. Maybe not forever but you know what I mean. It is always frustrating watching other shares rise whilst your money is sitting non-productively in a stagnating if ludicrously undervalued share. I notice POLY has popped over £8 this morning just to rub it in further! The spread is big but you can buy for 5.5p and sell for about 4.7p rather than the 4.5/6 quoted

I was sort of hoping you weren't going to say that. I looked at it years ago and it screamed 'avoid!' to me. Strange company KDR with Rio Tinto's 'magic book of data'. You want to compare the directors of Karelian and CGNR. And search for a geologist! A mining company without a geologist. TWO mining companies without a geologist! There is a lot of medical knowledge on the board though. Looks a bit too much like jobs for the Professor's mates.

I think any rise will basically change the mindset with regards the dollar and get people thinking about interest rate differentials between the US and the rest of the world. Agreed at some point the world will realise that all the currencies are rubbish and gold will soar. Diamonds are interesting. Have you got any exposure Korg? I have some in DCP which I rate highly or at least will do once they can finally say they are self sustaining and stop using shareholders as a cash cow!

NicotineNelly, Unfortunately I don't have a crystal ball so I can only go on what I believe to be the likely scenario. Also unfortunately, the answer to your question is 'that depends.....'. The key points are what are your time frames and what do you see these investments as. For a long time frame I believe that the environment for gold is extremely positive irrespective of a Brexit vote. You cannot have a debt situation in the world without it requiring some form of 'reset'. I cannot envisage any form of reset that isn't positive for gold in the long term. In the short to medium term it is much more difficult to read! I still see challenges for gold which could see it challenge the $1000/oz level. If that pans out then AAZ and, to a lesser extent, SHG will both be hit. In which case it will be a buying opportunity. However, the strength of gold has surprised me over the last couple of months. I was anticipating a drop before now but it hasn't materialized. It is possible that demand could become so strong that it outweighs the technicals and a potential USD bounce. It is very difficult to call and people a lot closer to it than me have called it incorrectly recently. By 'what you see these investments as' I mean a long term core holding or a short term trade. If it is the former then you should hold onto them and ride any downturn. You may even consider buying into any weakness which a lot of the gold bulls are suggesting. If it is a trade then there is certainly an argument for taking some off the table and seeing what pans out over the next few months. But you should do this knowing that if gold bounces strongly from here as some are predicting then you will have to pay more to get back in. I suspect from your post, however, that you are leaning towards a sell. When we are bullish about something, all news appears positive, whereas when we are bearish, all news appears negative. I could easily flip your arguments on their heads! Ultimately, in the short term it will be driven by sentiment whereas in the long term it is driven by fundamentals. Sorry to be so vague but it is a tough one to call at the moment.

Early days and nothing commercial about those grades. The reason being it is grade x width that counts and the widths encountered here so far are way too narrow. But the point is that they have found them at all which means the area is worth exploring. Hopefully the next set of drill results will give a better understanding of what they have found. Narrow vein bodies are notoriously difficult though but can give some startlingly high grades. I have seen grades of 3000g+/t which are always good to see and Dalradian's grades are excellent. Let's hope we see a similar body developing here.

Interestingly people usually say I am full of something. My age prevents me from remembering precisely what it is!

Personally it wouldn't surprise me if gold went to $3000/oz. Most technical analysts I read see the price as ultimately going a long way past the previous peak of $1900/oz. $5000/oz is quite popular.

Hmmm. Are you suggesting I am too old? :-) I don't agree that this requires a different model Korg. The forthcoming financial crisis is just the result of the powers that be kicking the can down the road from 2008. As a result it will be much worse. In that context I think your prediction for the gold price is way too low given what is going to come. It is pretty clear for this year that gold has been following the USDJPY rate. Until that changes dollar strength will ultimately result in gold weakness so gold strength will rely on dollar weakness. In 2008 the first sign of a severe crisis was that the USD rose and gold fell. Subsequently gold and the USD moved together until finally gold rose as the dollar fell/became irrelevant. When that happens I will be convinced that this is the real deal. At the moment it feels more like a bunch of speculators who are usually wrong (I.E. hedge funds) driving the prices as the USDJPY cross trade unwinds.

It's a thought. The biggest issue is that you can't invest in the VIX per se. Has to be short term as the funds you can invest in try to mimic the VIX using futures and suffer from high charges and inevitable underperformance.

Korg, Gold is behaving a bit weirdly at the moment. It seems to be very unpredictable. The last couple of days has seen it decouple somewhat from the USDJPY rate. Considering that this has been the driver this year, that is quite a change. It is making a bit of a run up as I type on the back of the US CPI numbers which are basically slightly higher than expected. This should be bad for gold as it suggests that interest rates may go up earlier and more than anticipated but gold chooses to go higher. This suggests that gold buying is now completely ignoring any data - bad news is good for gold and good news is good for gold. Being a mathematician by training, this doesn't sit well with me! Things don't feel like they did in 2008 when gold started taking off and miners started multibagging overnight. For example, the VIX index is pretty low which is in direct contrast to 2008. Traditionally you have needed VIX to be high to justify safe haven type buying in gold. It just doesn't feel right at the moment!

That is always the question with AAZ farran. But Q1's figures are always depressed and I suspect production for the rest of the year will meet their guidelines. Nothing is guaranteed of course but they should be make a decent amount at these gold prices.

The level of activity on this shouldn't result in the current share price movements. I won't say that the current share price is 'unfair' as that would imply something is 'fair' on AIM but it does seem wildly out of whack with the fundamentals of the company

Laptop15, The problem here was not so much disappointing results but rather the discounted placing. This is likely to cap any significant rises in the short term but longer term the potential is very good indeed. Whether you buy at under 6.5p now or leave it for a few months is entirely up to you. Of course, if gold really takes off then you may not be able to buy into this very easily or, indeed, any other gold miner - you only have to look at what has happened to AAZ over the past few days to see what sentiment can do.