Gold Mining Stocks

[skc]

Call me completely insane but I just bought some MML at $3.48.

MML just lowered their production guidance for the 3rd time in 6 months. Have you updated your valuation to suit?

Doubt it'll be over so quick. Too many goldies have cracked significant lows

Agree but probably a breather soon. Gold potentially needs to retest $1500 before really moving to the downside...
but it's just a hunch and certainly not something I'd base my trades on.

 

[trillionaire#1]

Well ,thank goodness I added some gold stocks to my portfolio

I had already triggered a stop loss on resolute and troy resources before this....eeer ,down leg.

sadly I didn't have one in place for KCN/GRY/AQG, so angry at myself .

I should be cutting my losses ,but im going to let the noose tighten a little more and see if I
can at least reduce my losses during the week.

 

[So_Cynical]

(12th-April-2013) Despite a down day for gold miners today I decided I wanted to end the week out of gold miners so I sold out of my recent buys into MML, SLR and NST and took a loss. The bulls are in control of the stock market at the moment and gold is being sold down. It will be interesting to see whether it can bounce off or at least stay on support around the 1560 mark. I don't have the stomach for gold miners at the moment though. There are less risky buy signals still popping up here and there.

Call me completely insane but I just bought some MML at $3.48.

Insane, completely insane.

There's a time and we are not there yet.

-------------------

Troy at under $1.40 would be compelling.

 

[Intrinsic Value]

Despite a down day for gold miners today I decided I wanted to end the week out of gold miners so I sold out of my recent buys into MML, SLR and NST and took a loss. The bulls are in control of the stock market at the moment and gold is being sold down. It will be interesting to see whether it can bounce off or at least stay on support around the 1560 mark. I don't have the stomach for gold miners at the moment though. There are less risky buy signals still popping up here and there.

I think there is some great value amongst gold mining stocks at the moment including MML, SLR, NST, EVN but like all commodity stocks it doesn't matter how well run the company is the market price of the commodity is the main variable.

Maybe there will be an opportunity to buy some of these stocks at cheaper prices and maybe I will buy back in at higher prices if a positive trend emerges.

Around the globe the money printing continues but their is an absence of fear at the moment.

This helped me make my decision today:
https://www.aussiestockforums.com/forums/showthread.php?t=6487&p=765659#post765659

I have been thinking of buying SLR for the past month or so but glad I haven't.

It really looks like a good long term buy at current prices.

Sooner or later all this printing of money via Japan, USA, and Europe is going to come to a head and gold will be back in favour big time.

You might have to wait a year or longer but a retreat into gold is almost a certainty as some stage given the state of the world economy.

 

[So_Cynical]

Sooner or later all this printing of money via Japan, USA, and Europe is going to come to a head and gold will be back in favour big time.

You might have to wait a year or longer but a retreat into gold is almost a certainty as some stage given the state of the world economy.

Agree...the POG fundamentals are undeniable and completely sound, Gold will rally again at some point, however we all know or at least should know by now that the market can ignore and go against fundamentals and the inevitable for very long periods of time.

 

[tinhat]

Are you fading that spike Tinhat?

The best time to fade a spike like that is when the market is "too short"...it's so short that the shorts keep covering, thus preventing the price from dropping much more. Usually this is when lots of new selling has joined the market. I'm not sure we are at that stage yet, but we'll see. I'll post a video of the stops getting hit and the long liquidation, you can judge for yourself if it was new shorts as well. Will post in the gold thread.

CanOz

CanOz - if you have the time please do (and I will try and see if I understand it).

I am indeed heartened by the news that the learned Mr Tinhat has bought back into the market.

I shall disconnect the noose from my rafter forthwith :behead::behead::behead:

MML just lowered their production guidance for the 3rd time in 6 months. Have you updated your valuation to suit?



Agree but probably a breather soon. Gold potentially needs to retest $1500 before really moving to the downside...
but it's just a hunch and certainly not something I'd base my trades on.

Insane, completely insane.

There's a time and we are not there yet.

-------------------

Troy at under $1.40 would be compelling.

I'm glad to have provided some entertainment to others today. I don't mind looking the fool if I have been foolish. That's why I post here - to learn. I just think I drank too much coffee this morning (being Monday). I seriously need to write a checklist and keep it next to the computer so that I have to tick all the boxes before I hit "Submit" with my online broker. In any case the position I took today, as foolish as it was, was one sixth the size of the total positions I closed on Friday. Patience is a failing of mine.

I did take into account that MML have continued to underdeliver but I should have waited for the release of the Chinese GDP figure which I knew was coming out today.

skc -I think that the question of fundamental value is the problem with my decision to buy back into MML too early. The fire in the mine obviously was a big setback for them. If they do get back on track and achieve their expansion plans my most pessimistic valuation would be $8 at least by the time they get up to 200,000 ounces per annum (depends on the price of gold of course). I want to be long MML in the long run. I have been in and out of it a bit over the last three years.

 

[AdamVW]

CanOz - if you have the time please do (and I will try and see if I understand it).

I'm glad to have provided some entertainment to others today. I don't mind looking the fool if I have been foolish. That's why I post here - to learn. I just think I drank too much coffee this morning (being Monday). I seriously need to write a checklist and keep it next to the computer so that I have to tick all the boxes before I hit "Submit" with my online broker. In any case the position I took today, as foolish as it was, was one sixth the size of the total positions I closed on Friday. Patience is a failing of mine.

I did take into account that MML have continued to underdeliver but I should have waited for the release of the Chinese GDP figure which I knew was coming out today.

skc -I think that the question of fundamental value is the problem with my decision to buy back into MML too early. The fire in the mine obviously was a big setback for them. If they do get back on track and achieve their expansion plans my most pessimistic valuation would be $8 at least by the time they get up to 200,000 ounces per annum (depends on the price of gold of course). I want to be long MML in the long run. I have been in and out of it a bit over the last three years.

Yeah, thanks Tinny, as they say, "the day we stop learning is the day we die". Got a question for you.

In regard to selling, I remained patient and decided not to sell my SAR. Having said that, I only have 1500, this is all a learning exercise to me at the moment. But, they are down 38% of value since I bought them about 4 weeks ago.

Clearly, there is little value in me selling @0.21 and making a loss but my question is, do you think I am right in holding onto them until the value recovers? I am confident that the company is in good shape so not likely to shut up shop so I won't loose the lot. Or, do you think, even though I have lost this much value, is it still worth reinvesting the current stock into something that is likely to start making some gains straight away, eg Financials?

Your advise would be gratefully appreciated.

 

[burglar]

... I am confident that the company is in good shape so not likely to shut up shop so I won't loose the lot. ...

Congrats! This the ultimate of hard questions.
My intent is kind, though the tone might be harsh.

Clearly, you have put them in the "bottom draw".
Now your asking if you should have or not.
This cuts to the heart of your plan.

Was it your plan to have a lottery ticket in your portfolio?
If so, all is well and going to plan.
If not, you will need to learn to use stop losses.


Are you investing, trading or speculating?

An investor probably would have avoided this stock.
A trader would have stopped out with a small loss.

My opinion, FWIW
I feel you are resigned to hold them awhile until the price returns.

 

[AdamVW]

Congrats! This the ultimate of hard questions.
My intent is kind, though the tone might be harsh.

Clearly, you have put them in the "bottom draw".
Now your asking if you should have or not.
This cuts to the heart of your plan.

Was it your plan to have a lottery ticket in your portfolio?If so, all is well and going to plan.
If not, you will need to learn to use stop losses.


Are you investing, trading or speculating?An investor probably would have avoided this stock.
A trader would have stopped out with a small loss.

My opinion, FWIW
I feel you are resigned to hold them awhile until the price returns.

Thanks Burglar

well, I wouldn't class these as a lottery ticket exactly, I think they are less speculative than that but clearly my timing was not good. The hazard of being a newbie in the game and not knowing enough about a tip when it is offered. (Note to self: remember the old carpenter's golden rule; "measure twice, cut once".)

In regard to my plan, it is only half a plan I am discovering and your advice regarding stop losses is well received. Basically, I would have called myself an investor, my plan being to wait until a stock has gained 100%, self 50% and buy something else to increase my portfolio. I haven't got to page 2 were it talks about what if stocks make a loss.....hmmmm.

So, I will get home in the morning after nightshift, have a snooze and see how the early market has faired and make a decision then on whether to sell or not. I think that stocks will rebound a little early but who knows. I would like to perhaps buy some financials but will see then.

Cheers mate,

sleep well my friend. :sleeping:

 

[tinhat]

Yeah, thanks Tinny, as they say, "the day we stop learning is the day we die". Got a question for you.

In regard to selling, I remained patient and decided not to sell my SAR. Having said that, I only have 1500, this is all a learning exercise to me at the moment. But, they are down 38% of value since I bought them about 4 weeks ago.

Clearly, there is little value in me selling @0.21 and making a loss but my question is, do you think I am right in holding onto them until the value recovers? I am confident that the company is in good shape so not likely to shut up shop so I won't loose the lot. Or, do you think, even though I have lost this much value, is it still worth reinvesting the current stock into something that is likely to start making some gains straight away, eg Financials?

Your advise would be gratefully appreciated.

Trust me - my advice is not valuable and I can't give you any anyway. I don't know anything about SAR but I would say your decision whether to hold for the medium-long term would depend a lot on their cost of production against where you think the price of gold might be in the medium term and whether you think the management are any good. Fundamental investors will tell you that the market price doesn't matter in determining the value of the company. But it depends on how much risk and volatility you are prepared to wear. And also, for a miner they are beholden to the underlying price of the commodity which they have little influence over. They are price takers - so at the end of the day it is all about forecasting price and knowing the cost of production.

Given we are talking about a few hundred dollars in value now it may not matter too much whether you sell or hold if you are prepared to forget about it for the time being. As for selling and going into financial instead, well that would be selling low and buying high. I don't know whether the financials are going to rally another 5, 10 or 20 percent but, unless you are looking for long term dividend, I don't know that financials are the right place to be looking for capital gain just now.

Stan Weinstein's "Secrets For Profiting in Bull and Bear Markets" is the best introduction I've read to trend trading and a simple method of setting stop-losses. With stop-losses you've got to maintain the discipline and take the psychological pain of sticking to them and accept that a lot of the time you will be whipsawed out of a position but that in the long run they will work in your favour. And don't be too eager to jump back in "early" like I demonstrated yesterday.

 

[AdamVW]

Call me completely insane but I just bought some MML at $3.48.

MML you say Tinny?......sucks to be you my friend LOL. :

 

[AdamVW]

Trust me - my advice is not valuable and I can't give you any anyway. I don't know anything about SAR but I would say your decision whether to hold for the medium-long term would depend a lot on their cost of production against where you think the price of gold might be in the medium term and whether you think the management are any good. Fundamental investors will tell you that the market price doesn't matter in determining the value of the company. But it depends on how much risk and volatility you are prepared to wear. And also, for a miner they are beholden to the underlying price of the commodity which they have little influence over. They are price takers - so at the end of the day it is all about forecasting price and knowing the cost of production.

Given we are talking about a few hundred dollars in value now it may not matter too much whether you sell or hold if you are prepared to forget about it for the time being. As for selling and going into financial instead, well that would be selling low and buying high. I don't know whether the financials are going to rally another 5, 10 or 20 percent but, unless you are looking for long term dividend, I don't know that financials are the right place to be looking for capital gain just now.

Stan Weinstein's "Secrets For Profiting in Bull and Bear Markets" is the best introduction I've read to trend trading and a simple method of setting stop-losses. With stop-losses you've got to maintain the discipline and take the psychological pain of sticking to them and accept that a lot of the time you will be whipsawed out of a position but that in the long run they will work in your favour. And don't be too eager to jump back in "early" like I demonstrated yesterday.

Yeah, woke up after my nightshift snooze to find someone had driven a macktruck through my cornfield of SAR shares. So, nothing to do now but just let them recover.

 

[Ves]

Doesn't SAR have a cost of production of $1,600 per oz?

 

[Boggo]

Guys, seriously.
Go here, you get cheap food and drinks, much better form of gambling
http://www.adelaidecasino.com.au/casino/welcome

 

[burglar]

Doesn't SAR have a cost of production of $1,600 per oz?

Average cash costs $AUD971 per oz @ Dec 2012

Ohh!!! You were just kidding ... right!?

 

[wadesansom]

Macquarie Gold Ltd Floating

So I am a new investor, and I have been rather drawn to the floating of the Macquarie Gold Ltd - The company is a subsidiary of Macquarie Group.

I applied for 8,000 shares for $2,000 @ 0.25 cents per share. The cutoff date was last Friday (12/04/2013) but has now been extended until sometime in July. I assume this is because they have not received enough public investment.

I am just curious as to your thoughts on the newly (to be) listed company on the ASX and if you would recommend investing in them.

I am a uni student with an investment property, I am keen to start on the ASX, but have limited experience or knowledge. $2,000 is not the end of the world to me, but it would be a big of a "kick in the nuts" to lose - what I'm saying is I can afford to lose it, but I do not have much disposable income to play with.

Thanks.

 

[Ves]

Average cash costs $AUD971 per oz @ Dec 2012

Ohh!!! You were just kidding ... right!?

I don't research or buy mining stocks, but the difference between the figure you have quoted vs the one in this article is compelling:

Take Saracen, a small WA goldminer whose all-in costs have been pushing $1600 an ounce. While those sorts of production costs rightly ring alarm bells, part of the cause lies in the fact the company has been spending up on expansion of its Whirling Dervish mine, which will ensure greater production as early as next year.

Read more: http://www.brisbanetimes.com.au/bus...l-the-pinch-20130415-2hw3k.html#ixzz2Qanl0wVO

Does it mean that margins now are low but won't be forever?

 

[Uncle Festivus]

If you are serious about Aussie gold stocks this could be handy -

http://goldnerds.com.au/

 

[tinhat]

I don't research or buy mining stocks, but the difference between the figure you have quoted vs the one in this article is compelling:



Does it mean that margins now are low but won't be forever?

The gold miners quote cash cost per ounce of gold which only tells part of the story. Cash costs generally include credits for non targeted metals too (such as copper and silver) which reduced the reported cash cost. Yet these "credits" that reduce the reported cash cost of course are subject to market forces and don't really subtract from the cash cost at all. Total costs (direct and indirect) can be significantly higher.

There are a lot of things you need to take into account for a miner on top of their reported cash cost. Capex spending of course. Mine life. Generally a miner's marginal cost of production will increase into the life of a mine as they need to spend more money to dig up lower grades of ore as the mine life gets extended. Results can be lumpy due to hitting lower grades, having to remove overburden. Then there are exploration costs. Then there are the many risks posed by the natural environment with mining - flooding, land slippage, etc. Then there is the processing. Forecasting what grades of ore are coming out of the mine, stockpiling and scheduling which grades of ore to use to maximise the the efficiency of the processing plant.

So cach costs only tell one part of the story and there can be a lot of factors that can move around the cash cost during mining and processing.

In the case of MML which I follow quite a bit, for my back of the envelope calculations, I estimate total costs per ounce of gold produced to be cash cost (which I throw a 20% contingency onto) plus 50%. So, I use an estimate for MML of total expenditure per ounce of gold produced at US$450.

If the price of gold stays down for long then we can expect a lot of miners to either shut down or to turn off mine expansion and capex. I don't know what the true cost of production for Aussie gold miners is but I believe they are high compared to overseas producers and Australian producers probably don't represent a very large proportion of gold production?

BTW - I just found this:

http://www.theaustralian.com.au/bus...re-than-reported/story-e6frg9df-1226557753077

 

[Intrinsic Value]

I think I remember somewhere that SLR's cost of production was around 400 an ounce.

The whole problem is that with commodities you are a price taker so there is always a risk that prices can fluctuate a fair bit.

SLR is looking even more attractive today down to 1.30 something.

I still thinik it is a good long term buy as even if gold goes to a 1000 an ounce they would still be making a profit.