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Hi VV, I think I remember you from the Acacia board. Welcome! Hopefully, we'll make some profits together in Resolute as well.
We've closed today above a buck on the ASX. I'm not a technical guy but the chart is looking pretty bullish atm.
Hi pipderdreamer,
So that's a complex question. If you want to have gold as insurance I'd recommend physical gold. For me gold is real money and putting your savings there will preserve your purchasing power while fiat money is going to its intrinsic value of zero.
However, as Buffet says, gold doesn't pay a dividend and actually it costs you to store it. So if you're looking to make a profit probably the miners are a better choice, as they are businesses that generate revenue, pay dividends etc. The problem here is that mining is a very risky business. A lot of things can go wrong, for example mines can get shut like you mentioned, there could be strikes, environmental issues, equipment breaking down, and so on. Recently gold has gone up and is close to all time highs because of the current crises while a lot of miners went down and even though they've bounced back most aren't anywhere near there recent highs. The miners can't profit from higher prices if their mines are shut!
Last but not least, I feel that the miners are still underpriced compared to the price of gold. Gold is close to all time highs and sure it can go a lot higher but I can't be certain of that. However, the miners should be at much higher share prices considering the current price of gold. As soon as things come down a bit I expect a lot of miners to re-rate higher, especially the smaller companies.
After all of that though I have to say that as a contrarian I feel a but uncomfortable with my gold investments (big part of my portfolio) and have been taking profits, as gold is so high atm. Right now I'm more drawn to unloved commodities like copper and the likes of BHP and Antofagasta just like I was drawn to gold and the gold miners in 2016. So I've been slowly moving my capital away from gold and into silver, copper and other industrial metals.
Marty, unfortunately a lot of what you said is true. At these gold prices most gold companies should be printing money. However, Resolute and many others in the sector have disappointed. Resolute has massively underperformed the rest of my gold stocks.
That said, the good news here is that the stock is very cheap atm and their mines are still operating. A lot of other miners have many of their mines closed and regardless they have re-rated a lot higher. IMO this is an example of investors/gold bugs getting ahead of themselves. I think gold has been trading together with markets lately due to the large amount of stimulus. Once this bear market rally in the general markets is over and they head lower again, I think gold and the gold miners will sell off as well. Resolute has little downside at these prices and I feel is a safer investment than most other gold miners. I've taken profits elsewhere but have kept all my shares here. Probably because I'm underwater as well but I feel that there's less risk with Resolute.
I guess that the fall of the market has affected this share as well. Tbh I've sold my position as well. I was sitting on handsome profits at 85-86 and there are so many great companies on sale right now that I just had to do it. Rio Tinto with a 9% dividend and others just seemed like to good of a chance to miss.
Good luck to the long term holders that are still around. I've been a holder since July 2017 and felt quite sad selling the shares that have done so well for me.
BtB good points. I think you're right that the timing is not right for switching into silver. That's why I've also been mostly staying away from copper. I feel long term copper will be the new oil with electrification and the EV revolution. But don't fell comfortable buying it now, especially with 50% of copper consumption coming from China!
One point I'd like to make though is that the next recession might not be the same as the last one. In 2008 we had a liquidity event and a proper crash. This time round it might be an inflation triggered recession and a dollar/currency crisis with all the money printing that's going on.
Red, I was actually thinking of selling some of my physical gold and buying silver. Silver should be at least $21-$22 per oz at these gold prices. I don't know about $5000 gold but I think we'll get to new all time highs. That said silver is very far from all time highs and seems more and more tempting atm. The contrarian in me start to feel uneasy when I invest in a commodity that's near all time highs...
I agree that the Coronavirus could be the black swan event that pops the bubble. All the money printing in the world can't stop that from infecting the economy.
If we're waiting for an inflation event to end the party then it might take a while longer. One way for this to happen is a Bernie win and "QE for the people" like universal basic income. Then inflation will move from asset prices to goods prices. And once we've got "real" inflation and people see their savings disappear and prices going up in the supermarket, there will be pressure to raise rates which could crash the bubble economy.
Another way it can happen is if oil prices explode, for whatever reason. But that looks unlikely atm, probably few years away. Still a lot of cheap shale oil being pumped even though it seems to be slowing down and the endless amount of money that was invested in the sector is drying up faster than the oil wells.
Why the big drop at the close today?
I tried to take some profits yesterday but my sell order didn't get filled. Wish I hadn't been so cautious now!
BtB, agree with what you said and would like to point out that we actually have evidence that this is happening. The Baltic dry index has absolutely collapsed in the last 2 months:
https://www.bloomberg.com/quote/BDIY:IND
It's at 434 and only slightly higher than the 2016 low of 291. It was 1558 in December. Unfortunately there's no direct way to invest in BDIY as fas as I know. Otherwise it might be an interesting proposition.
BB sorry to see you go! I understand why you are voting with your feet. I'm also down but only around 20% which for a gold stock in Africa is business as usual. I think with ACA I was down 50% at some point. So I'm not too concerned atm.
Do I wish I had put more money in Equinox Gold instead of here? Yes, for sure!! But Equinox also didn't perform in the first 12 months I owned it. So I'm going to stick around for now and feel confident that I'll at least break even and perhaps even make a decent profit in the end. As Monk said I feel management are capable and that's the most important thing for me.
I agree that the Coronavirus has supported PM prices but it's also important to keep in mind that Jan and Feb are very strong for gold seasonably. Quite often in March we see a seasonal sell off, which the Canadians call the "PDAC curse". I expect us to have another good two weeks here but things might get a bit wobbly after that...
Why the big drop today? Gold is positive for the day. My guess would be because the security issues in West Africa got some press recently:
https://www.reuters.com/article/us-mining-indaba-burkinafaso/security-problems-hit-burkina-fasos-2019-gold-production-minister-idUSKBN1ZY1BM
Roxgold which I also hold got hit 4% yesterday because of this.
Wonder why the big drop over the last few days. Are people feeling more confident now that Brexit will get finally done?
I'm not convinced, and the trade deal with the EU is a big unknown over the next 1 year. There are some tough times ahead in my opinion. I think this will be back towards a quid sooner rather than later.
Personally, I've bought shares here around 80p for the first time in a while. If it drops into the 70s I'll buy more.
On advfn I see people complaining that we've been treated as second class shareholders because we on the LSE weren't allowed to participate in the raise. Personally, I'm not too concerned and feel we have some advantages. We got the chance to buy some shares today, which I did, while Resolute was halted on the ASX.
I think trading only resumes on Thursday, and who knows what Trump might tweet in the meantime. For what I know, I could wake up tomorrow morning and gold could be at $1700 and Resolute at 80p. I'd rather get my bargain price shares now and not wait till Thursday.
I have to say that I wasn't expecting that. If they wanted to raise they should've done it last summer when this was over a quid. I thought they will use the money from Ravenswood sale to over debt.
Otherwise the raise isn't too bad, close to where the share price has been recently anyway. Personally, I've topped up here at around 60. I'm thinking that perhaps they might try to buy out one or two of the smaller companies that they have a strategic stake in, JVs, etc. Valuations are still cheap but will move higher with the price of gold eventually. Obviously they would be keeping their cards close to their chest and won't announce that and would state debt repayment as the official reason for the raise. The fact is that they are cashed up now, so there are a lot of open possibilities.
That's certainly big news! Let's see if the transaction will be completed successfully but judging from the tone of the RNS it sounds like it's almost a done deal. I'm obviously happy that the market likes the news. The price action on the ASX tomorrow will probably give us a better indication, as the LSE listing is thinly traded.
I also like Equinox and they've done really well for me. I've pretty much doubled my money in the last 1 year. I only wish I had invested more! I don't invest in exploration so Auryn is not one for me.
Wanted to comment on MAG Silver, as it's also relevant to FRES. Obviously a great resource and they benefit from Fresnillo's expertise in developing Juanicipio. As a holder in FRES I believe Juanicipio will be a massive success so MAG Silver should do really well. I see it as a leveraged play on FRES doing well. If there are issues with the start up of Juanicipio FRES will get hit a bit MAG will get hammered. And the opposite, if all goes well FRES will do well, MAG will skyrocket.
The reason I don't hold it is because I already have big exposure to Juanicipio and Mexico as a jurisdiction through my FRES position. So adding MAG to my portfolio is not really diversifying. I also don't like that there's no insider ownership on this less than 1 billion market cap company. I'd expect management to have lots of shares in MAG.
If FRES has a great run and at the same time MAG hasn't moved much I might consider buying it to get more direct exposure to Juanicipio. But for now I'd rather stick with FRES.
I agree, that's why I always have my core position in place and only trade part of my position. Not financial advice of course, but personally I wouldn't trade this with all my shares , perhaps 1/3 of the position size (in my case 1 full position size is 10% of the portfolio, and I had a full position in FRES).