24 August 2016
Gold sector is in correction mode. As I discuss here, in this frothy and still expensive market, I like to focus on companies with solid moats. The following meet that standard:
→ Gold Mountain (GUM; $0.265) is being acquired. They have a nice little project in Canada. The arbitrage upside is as much as 20%. Moreover the merged entity will have a very tight share-structure. This is my low-risk, high-reward investment, making it my favorite at the current share price.
→ Jubilee Gold Exploration (JUB; $0.61): JUB has gone up quite a bit since I wrote about it here and here. JUB has a very nice inherent value. The problem is that insiders own ~90% of the stock, making JUB extremely illiquid. Moreover, minority shareholders have virtually no—if at all any—control over the company, given very high insider ownership. JUB does not even have a website. Were these ownership risks not there, JUB could easily still be my top pick.
→ Novo Resources (NVO; $1.10): I recently wrote about NVO. Also, here is a very good explanation of NVO written by Bob Moriarty. NVO has gone up quite a bit in the last couple of days. I would look for weakness to buy.
Additionally, here are a couple of companies that offer high-risk, high-reward situation:
→ Rusoro Mining (RML; $0.30): Using simple math, one could see that it was not going to be easy—if at all possible—for RML to ever make money. They had to sell gold to the Venezuelan government at a fraction of the international price. The project was “fortunately” expropriated. They have recently won an arbitration case against the government. Based on my quick calculation there could be as much as 400% upside. But the big problem is that in my view it will be very tough to get money out of the bankrupt Venezuelan government. Hence, I see RML as a GAMBLE, a high-risk, high-reward play for a small amount of my investment. Moreover, I never see such companies as buy-and-hold investments. I TRADE.
→ Thunderstruck Resources (AWE; $0.075): They are in the process of acquiring full ownership of their large project in Fiji. The company has a very good investor base and hence strong financial backing. It is hard to put a value on AWE, but it has a rather small market capitalization, and tight share-structure. I see AWE as a high-risk, high-reward investment.
Disclaimer: All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. The sole purpose of these musings is to show my thinking process when analysing a stock, not to provide any recommendation. I will not and cannot be held liable for any actions you take as a result of anything you read here. Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this site, expressed or implied herein, are committed at your own risk, financial or otherwise.
All Rights Reserved.
The Information presented in Proven and Probable is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS FORUM WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all Information available on or through this forum AT YOUR OWN RISK.”