Gold remains one of the most discussed investment themes of the year,
with the price of the yellow metal bumping up and down between $900 and
$1,000 an ounce — and I hold some gold and some gold mining stocks as
well, but it is, in any decent economy, a terrible investment. I
consider holding gold to be a way of setting aside savings and ensuring
continued buying power if the US dollar should falter significantly or
inflation should seize upon us … though neither of those seems like a
strong near-term possibility, I do like to be prepared.
That’s the
physical metal as a savings vehicle, and as a store of value — and for
that purpose I think most folks are probably better off holding a
portion of their savings in gold and silver. But it has never felt like
an investment to me — the point of investing is to let your money grow,
to compound and build upon an initial outlay of capital. Gold mining
companies can be investments, because they can turn your capital into
something more valuable, and continue to produce more gold every year if
they’re run well and are lucky or skilled prospectors.
But the metal? Not so much, it just sits there, has no way of
compounding, and generates no income. And most gold companies are
expensive if you separate them from the fact that they mine gold — PE
ratios tend to be massive because these firms, whether or not they show
a current profit, are valued based on the estimates of their reserves
and their extraction costs, discounted by whatever degree by extenuating
circumstances or fears, such as political risks, permit approval
processes, etc.
So I decided to go looking and see if there were investments that
might provide some current income and the possibility of compounding
value, while also being based to some degree on gold prices, thereby
possibly giving a good defense against inflation or currency crises.
There are a few gold companies that do pay dividends — Royal Gold (RGLD),
which owns royalty positions in various mines around the world but
doesn’t actually mine itself, pays a teeny dividend of just under 1%,
more or less in line with big mature gold producers like Newmont, Agnico-Eagle,
Gold Fields, Anglo Gold Ashanti, most of whom pay a dividend of between
.3-.8%. It is perhaps significant, since it signals extra cash
generation and it has the potential to grow one day, but it doesn’t
excite. I like Royal Gold, and it might have the potential to raise its
dividend in the future because of its high margin potential, but it’s
not currently really generating income.
You could also use options to generate income — but that requires a
fair amount of trading and it isn’t for everyone. Selling covered calls
is generally considered the safest way to do this, so you could buy
shares of one of the large gold ETFs or gold miners and sell covered
calls against your position. Going by the GLD ETF, there is some
potential in that — you could buy 100 shares of GLD for $93.50 right
now, and sell a September $95 call for about $2.10, which gives you a
potential profit, if the shares go up or stay steady, of about $3.60 for
two months of holding GLD. That’s a return of 3.8%, which doesn’t sound
that high, but you could theoretically do this same transaction perhaps
five times a year, so it could provide a meaningful annual return. You
might miss out on big spikes in the price of gold, but you would do
reasonably well if gold goes up steadily and continually, or stays
roughly flat.
And the other thing that came to mind was convertible bonds. This
gets into a whole different way to calculate returns, and the universe
of available investments in the mining sector is tiny compared to equity
investments or standard bonds, but it might be worth a look.
I searched the FINRA bonds database for convertible bonds in this
sector, and only came up with a few matches — but they both look at
least a little bit interesting. One is from an established producer, one
from a somewhat financially strapped firm with huge potential.
The first is a convertible bond offering on Kinross Gold — a big
producer, equity market cap about $14 billion, with a forward PE of
about 27. The stock pays a dividend of about .4% right now, so right in
line with the big gold miners on average.
And they do have one convertible bond offering that pays a very small
coupon and has an out-of-the-money conversion option. Here are the
details:
CUSIP: 496902AD9,
information from FINRA here.
Maturity: 3/15/2028, senior unsecured note.
Coupon: 1.75%
Trades for just under the principal amount of the loan, which is the
amount that you’re due at maturity, so this one does not carry a big
current yield, the last price was right around $980 for $1,000 of
principal, so your yield is probably 1.76%.
But the reason to look at this bond is not the current payout, it’s
the convertible — this bond can be converted into 35.1173 shares of
Kinross Gold common shares, and I didn’t see any time restrictions so
this conversion is probably always available as long as the trigger
events have been hit, like the stock trading at higher price levels
(double check that if it’s important to you).
As I said, this one is out of the money — but if you are interested
in Kinross, this is a possible way to get exposure to the upside with
what is probably a significantly reduced downside. This is a bond and
according to the information on Fidelity’s website (again, check this if
it’s important to you) you can put it back to the company at five year
intervals (roughly) for the principal amount. I haven’t read the
prospectus, but at the current share price the conversion value of this
bond is about $720, so you’re essentially paying $260 to protect your
downside (if the mine falls apart and Kinross goes broke, you’re in
front of equity holders in the line to get repaid — and Kinross has very
little other debt) and get a perpetual call option on the shares for
almost 20 years, with a small yield to go along with it.
So that’s one possibility — it’s more of a stable bet plus a long
term call option than it is an income-generating investment, but I found
it intriguing, maybe worth a closer look.
The other one that caught my eye is a bit more
speculative, with a much higher yield — NovaGold also has a convertible
debt offering, one that they put to the markets just over a year ago at
close to $95 but that collapsed in price, for a short while traded down
around $25, and last trade about in the middle of that range, in the
high $60s. I’ve written about NovaGold before, it’s been a newsletter
favorite for a while, chosen by the likes of Stephen Leeb, and it is a
bit capital constrained at the moment — investors seem to fear that they
might have to issue more equity or sell part of their resources in order
to fund their continuing development of their major projects.
But if you lend them money, you have less to
worry about when it comes to dilution — it’s a lot harder to dilute a
bond. Here are the details for this convertible bond offering, which, in
fairness, might not be easy to buy from many brokers (it’s not very big,
and it certainly doesn’t trade every day).
CUSIP: 66987EAA5 (FINRA
info here)
Maturity 5/21/2015, convertible senior note
The last price for these bonds, according to
FINRA, was $675, and annual interest income is $55 (5.5% coupon on $1000
offering price), so the potential income yield is a bit over 8%. The
effective yield is well into the teens, though, because the bond should
be due to return $100 at maturity in six years (assuming you don’t
convert it into shares).
Here are the details on conversion from their SEC filing:
“The Notes have a semi-annual cash interest coupon of 5.5% and are
convertible into the Company’s common shares based on a conversion rate
of 94.2418 common shares per US$1,000 principal amount of Notes,
equivalent to a conversion price of approximately US$10.61 per share
(equivalent to C$10.77 per share based on March 19, 2008 closing rate),
subject to adjustment. The conversion price represents a 35% premium to
the closing price of our common shares on March 19, 2008. Subject to the
satisfaction of certain conditions, the Company may, in lieu of
delivering common shares upon conversion of all or a portion of the
Notes, elect to pay cash or a combination of cash and common shares. The
Notes will not be redeemable by the Company prior to maturity”
Now, NovaGold (NG) shares have just about fallen in half since this
convertible was issued, which is a large part of the reason for the
collapse in the price of these convertible bonds — and the investor
fears about NG’s need to raise more money probably come into play here,
too, though as long as they remain a going concern and continue to own
their very valuable mining rights I would assume that the coupon
payments should keep coming — they don’t have much other debt, and it
seems likely that they’d raise money with equity rather than debt if
gold prices continue to perfom well.
So one risk for these convertibles is that the share price never gets
up to a level where it’s worth getting the common shares (the shares
would have to better than double before 2015 for you to get a kicker
from equity appreciation). Right now, the conversion value is about $391
at a share price of a little over $4, so you’d need the shares to get to
a bit over $7 before 2015 for the conversion to be worthwhile, or to
better than $10 for the conversion price to be better than the $1,000
principal value of the bond.
After looking into a few different offerings along these lines, I
must say that this NovaGold one is the most compelling one for me
personally — it’s clearly a bit risky, since NG is not yet a major
producer (though they perhaps have that potential, with large reserves),
but I like the fact that this is trading as a distressed bond but seems
to be backed by very valuable mineral rights, with what looks like a
pretty strong senior position thanks to the fact that NovaGold’s balance
sheet is almost all equity. I don’t know enough about the company to
jump in, and I’m not sure these bonds would be easily available through
my brokers, but I can say that I’m tempted.
Just to be clear, I own some gold and silver miners and bullion, and
I do own shares of Royal Gold, but I do not otherwise have an investment
position in anything mentioned above (and will not for at least three
days) — and this is, of course, not a recommendation that you run out
and buy these bonds or pursue these strategies, the information above is
a snapshot and could be incomplete or have accidental errors, if you’re
interested in these kinds of investments please carefully review the
terms or discuss them with your investment adviser, particularly if
you’re not accustomed to buying bonds (I almost never invest in bonds,
so I’m not an expert).
I’ve been following Nova for several years and finally bot in last year
- too bad I didn’t wait. Their attraction is 50% ownership of two very
large mineral deposits - Donlin Creek(Au) and Galore Creek (Cu-Au).
However, both are located in remote locations in AK and BC, meaning high
operating costs. Donlin Creek is the furthest along, only need to get
permits (a very big only). Nova’s main problem is lack of capital,
although both jv partners are large miners (Barrick and Teck), so that
helps. I figure at some point they’ll be bot out by their partners since
they don’t bring anything to the table except their mineral rights. The
bond looks very interesting. Realize that Nova may have very little income
in 2015. Default risk is if permitting experiences endless delays with no
foreseeable revenue. The state and natives are cooperative, but the feds
could be a problem.
Thanks for the informative article, Travis. Your comments about gold as
an investment were spot on. As an insurance policy against rampant
inflation, a collapsing currency or political turmoil, there is none
better than gold. However, moving forward in this economic environment,
most investors should not expect to get rich by investing in the precious
metals. That widow of opportunity has long since passed having presented
itself several years ago between 1999 and 2002. I remember back in early
1980 as gold breached the $800.00 dollar per ounce barrier, the original
gold bug Howard Ruff stood on his soapbox and proclaimed for all the world
to hear, “We will see $1,000 dollar gold, we will see $1,500 dollar
gold….indeed we see $2,000 dollar gold.” Obviously, that never came to
pass. If fact a couple years later, Howard sheepishly wrote to his
subscribers and warned that “Gold was sick and getting sicker”. Will
history repeat itself??? No one knows for sure but there is a good chance
that the price of gold will remain range bound for the next year or so
before moving slowly downward.
Travis–No comment, but Currency Capitalist “Buy currencies with as
little as $100.00 and get the same profits and protection as the big
guys.” #2 “Use the simple “”floodgate Tactic “” that can turn a measly 1%
currency move into an explosive 200% gain.” Thank You Stephen Rimar
Gold won’t rise as much as “they” want you to believe. The dollars in
in contrarian with “their opinion” one of the strongest currencies in the
world. The Euro wil collapse (I’m Dutch, we haven’t a United Euroland,
like the States). Who can buy gold nowadys? The unemployd people in the
row for a food program? And the big consumers in India won’t buy it at all
with too high prices. Gold will soar imho, stay away and wait after the
steady drop. My old mother told me not to do what anybody else already
does…
Happy Friday, friends! Today for
your Friday File pleasure I'm taking another look at gold -- this time, in
response to a
True Income teaser and, in part, as an update to an article about gold miner
bonds that I wrote last Summer. The full File
is below for your convenience, or you can access it on the Irregulars site at
http://www.stockgumshoe.com/premium/irregulars/?p=180
** “Buy Gold for $1″ — Outside the Stock Market**
Today I’ve been getting a lot of questions from folks about the latest teaser
for Mike Williams’ True Income newsletter from Stansberry & Associates.
The ad is a pretty brief one, compared to others, and it focuses on something
that I’ve written
about before in this space — corporate debt.
Yes, I’m afraid I just went out and revealed the deep, dark secret before even
sharing the tease with you — True Income is a corporate bond newsletter,
mostly
junk bonds, and this latest tease about buying gold companies “outside
the stock market”
for a dollar is clearly a teaser for investing in the corporate debt of mining
companies. The $1 bit refers to commissions,
different brokers work in different ways, but there are some brokers who will
charge you $1 per bond (usually $1,000
face value per bond) by way of commission, though for most brokers the
actual commissions from bond transactions are still
earned on the spread, the market is less transparent than the stock market,
and most brokers do the trades internally,
so they’ll buy the bond from another investor and sell it to you for a
slightly higher price than they paid.
Not that this makes a huge difference if you choose the right bonds, but if
you’re a small investor and put just
$500-$1,000 into each
corporate bond investment, the “real” commission friction that your
account faces will be a bit
more than a dollar.
So we hear that there’s a gold
mining company that is going directly to investors, and offering a
guaranteed return of principal and a
semiannual payment — that’s not unusual, that is pretty much what every other
corporate bond offers
(though the “guarantee” is basedon their ability to pay and not go
bankrupt, of course).
They give a few examples of extremely profitable trades in similar kinds of
vehicles, including the debt of Gold Reserve (GRZ), the
company that has been extraordinarily volatile because its assets are in
Venezuela, and NovaGold
(NG), another small gold exploration company that for quite a while was
failing to enjoy the success of other gold miners. When these companies were
depressed the fear was that they would go bankrupt if their primary assets,
these potential mines, didn’t come to fruition,
so the debt, like the equity, waspriced to imply that there was a decent
chance that they’d go under.When things turned
around in both the gold and credit markets thoseworries turned around in some
ways, and pretty dramatically repriced
those bonds to reflect their enhanced creditworthiness.
So which gold miner is Mike Williams looking at now? We don’t getmuch in the
way of clues, unfortunately — and corporate
debt can be hard to find and invest in, particularly for relatively small
issuers.I wrote about a couple possible gold mining bonds that might be worth
a look for folks back in July
<http://www.stockgumshoe.com/premium/irregulars/?p=151>
(including Kinross, and that previously noted NovaGold bond), but readers told
me that both were pretty tough to buy from
some brokers. If you did manage to buy NovaGold’s debt at that time you’d
be sitting on a capital gain of 25% or so,
as well as the continuing coupon payments and convertibility features.
But on to the next one, right? Again, the clues are limited … but this is what
we’re told:
Coupon payments will be due on Apr. 31, 2010,
Nov. 30, 2010, Apr. 31, 2011,
Nov. 30, 2011, Apr. 31, 2012, and
Nov. 30, 2012. Which indicates, though perhaps doesn’t necessarily
guarantee, that the bond’s term ends in
November 2012, at
which point you’re supposed to get back the principal, or the “face value” of
the bond.
And this is the wording of the tease:
“As I write this, Mike has just contacted us about a gold company
that’s recently opened its doors to investors.
“As you can imagine, the rush to get in has already started. He
estimate at least 2,300 people are already in. And we may have only a
short time left before the company’s needs are met… and the
opportunity closes.
“You see, this company isn’t a gold explorer looking for some
“pie-in-the-sky” gold strike. Instead, it’s a gold producer,
with large gold reserves which they simply can’t get out of the
ground fast enough.
“Because of this, they need more equipment… more manpower… and
more capital to speed up operations. And if you’re willing to help
them, they could reward you handsomely.
“Even better, in addition to your capital return (which is set right
now at 100%), the company is legally bound to provide you with income
checks for the next 3 years. How much you’ll receive, of course,
depends on your particular situation… And as I mentioned, I can’t
promise you that the gains you’ll see will be like the ones we’ve
experienced over the past year.”
OK, so as I said, thin clues. And I found only one reasonable
candidate, though it’s certainly possible that there are others. I
think this is probably the
Nov 30, 2012 convertible bond offered by Golden Star Resources —
here are the details:
CUSIP: 38119TAC8 (sometimes gets the ticker
GSS.GB
in some systems)
Senior Convertible Note, 4% coupon.
Not rated (meaning, they didn’t pay the ratings agencies to give thebond a
rating of BB or AA or whatever it might have been).
My guess (and it is just a guess), given the current yield, is that this
would probably be rated somewhere at the bottom of
investment grade or the upper tier of “junk” if it did get a rating, but
from a quick look it looks like this issuance is essentially
the only long term debt outstanding for
Golden Star.
Last price: $87.39 (per $100 in principal — these usually trade in
increments of $1,000 of principal).
Five year note, issued in November, 2007 (”recently,”
per the
teaser? All depends on your perspective) and maturing
November 30,
2012.
Golden Star Resources is a Colorado company whose operations are focused on
producing gold mines and
processing facilities in Ghana (the former “Gold Coast” colony of the British
Empire, in West Africa), along with some additional exploration targets in
Ghana, elsewhere in Africa, and in South America. The ticker for the common
stock is GSS in NY, GSC in Toronto if you’d like to research the company
further.
So why do I think this is the match? Well, it’s the only gold miner I can find
with a bond maturing
on November 30, 2012 or anytime near then — though the coupons
(semiannual interest payments to bondholders) are actually payable
on May 31 and November 30 of each year, not April and November.
Frankly, however, I am a bit suspicious of that part of the teaser — it
strikes me that it would be odd to have a bond that paid semiannually in April
and November, since May and November would be the logical picks for that
maturity (six months apart).
And the bond did fairly recently trade up to close to the principal amount,
which is what I assume would be meant by the “capital return set at 100%” in
the teaser — it might be that this spike in the trading coincided with True
Income subscribers being told about the bond, but I don’t know that for sure.
The bond is also convertible, so when optimism rises about the stock, the bond
should rise in price as well — and GSS did get over $4 in December.
So this Golden Star Resources
bond, assuming that you could convince your broker to find it for you
(any broker can find it using the
CUSIP, 38119TAC8, but on a quick check of the bond platforms from Vanguard and
Fidelity it’s not one that has enough volume that you can trade it online
through those brokerages — you’d probably have to buy a higher minimum amount
and call the brokerage to place a trade), pays a coupon of $4 per year on each
$100 in
principal value.At the current trading, the bond sells for about $87
per $100 of principal, so that’s an effective annual coupon yield for the next
three years (there are six payments remaining) of about 4.6%. But the kicker
with most debt that’s trading at a discount to the principal amount is that
you’re repaid the principal in the end — so at that final payment you get
repaid $100 (not necessarily in cash, more on that in a moment) for “lending”
$87, which is why, when you throw in that final repayment of principal in
November of 2012, the FINRA calculation has the real annual yield to
maturity at about 9% (you can see FINRA’s data page on this bond here <http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MzgxMTlUQUM4>
).
So that’s decent, if not utterly remarkable — if you’re looking for 2-3 years
of good “guaranteed” yields you could go with this,
if you like the chances that Golden Star will make good on its debts … or you
could go with something like one of the many MLPs (LINE comes to mind) that
pay solid yields in this range, have predicted continuing high yields for at
least a couple years, and offer some chance of compounding that value in the
years to come, along with a bit of
tax advantage. Being an
MLP unitholder (or a Canadian
royalty trust, or a depressed REIT that might also yield as much)
doesn’t give you anywhere near the guarantee you get as a bondholder, of
course — nor do you get to be in the front of the line in front of all the
equity holders if the company collapses and the bondholders share whatever’s
left.
But perhaps the most interesting aspect of this bond, whether or not it ends
up being the one Mike Williams is teasing, is that it’s also
convertible — each bond ($1,000 of principal) is convertible into 200 shares
at the bondholders option, and at maturity the bond will be repaid, at the
company’s option, either with the full principal amount in cash or a number of
shares equaling the cash value at the
then-current market price (actually, at 95% of the recent average price in the
month before the maturity date, so perhaps at a bit of a
discount).
So in reality, if you buy these shares you get a decent yield to maturity —
but if gold skyrockets you could see some significant
upside as well. In order to make it worthwhile to
convert your bond into shares right now the stock would have to be over $4.35
or so …which is roughly 30% higher than the current price but right around
where the stock was back in December at the 52-week high (and actually, 30% or
so is just about the same premium that the convertible traded at when it was
issued in 2007).
Is Golden Star Resources the first choice you’d make in betting on the upside
for a gold stock? Probably not, but neither would it be the last. It is a
current producer in a mining-friendly country, with increasing production and
additional resources to explore. The
common stock trades at a
forward PE ratio of about 12, they’re not currently profitable but analysts
expect a big jump in their revenue next year with increased production. And as
far as the downside goes, this
convertible bond issuance represents essentially all of
Golden Star’s debt, as
far as I can tell, so unless there are some secured lenders (mortgages, etc)
the holders of these
convertible bonds would be in great shape at the front of the line of
creditors if it ever came down to that. Of course, if gold falls back to $300
an ounce Golden Star Resources’ assets won’t be worth much … but at the
current gold price, they’re certainly worth far more than GSS has
borrowed from investors (and, maybe, from you). So there you have it — one
more idea, courtesy, perhaps of Mike Williams, for getting exposure to gold
without being all the way at the edge of most folks’ risk tolerance. Have a
great weekend, everyone!
Happy Friday, my dear Irregular friend -- today, as always, I'm
releasing my Friday thoughts in the Friday
File, this time about a
very small company that I think is being touted by Chuck de Castro ...
and that, in all honesty, has me personally intrigued and thinking
about taking a wee taste with my own money (I haven't yet done so, of
course, and may never). The article is on the Irregulars site
(http://www.stockgumshoe.com/premium/irregulars/?p=177)
for your
convenience, or I've also copied it below if you prefer your screeds
in email. Have a wonderful weekend!
But while some of those picks still look interesting, and performance
has certainly varied, he’s now pushing a completely different kind
of company. He’s got his eye on a small pharmaceutical stock with an
anti-scarring product in clinical trials, and since it doesn’t
obviously fit in with his Penny Oil
Speculator or Penny
Mining
Speculator newsletters he’s selling this recommendation on its own
for a cool $500.
Can we figure it out without shelling out that cash? Well, your
friendly neighborhood Gumshoe loves a challenge — and
this Friday
File is a nice spot to mention the stock, since it appears that
it’ll be a really teensy hard-to-trade stock again, no need to get
the dramatically larger free Stock Gumshoe audience revved up just
yet.
We start, as always, with the clues. Here’s how de Castro pitches
the basics of this stock:
“When JP Morgan, Goldman Sachs,
Fidelity, and
Union Bank of
Switzerland, invest big dollars into a little-known
biotech company,
you have a situation that screams money.
“This is a tiny pharmaceutical company that developed a drug that
can almost completely erase stretch marks and scars from burns, tummy
tucks, stitches, and Caesarean sections.
“The company’s scar-erasing drug is based on a very simple and
interesting observation. When a very young child gets a cut it heals
very quickly, and often without scarring. But the same cut for an
adult heals slowly, and often leaves disfiguring scars.
“So the two scientists at the head of this company started exploring
why. They examined the blizzard of hormones, proteins, and enzymes
that are released by the very young when they get a cut. They compared
it with the blizzard of hormones, proteins and enzymes that are
released when an old fartski like me gets a cut.”
As an aspiring old fartski myself, I can’t help but wonder whether
he’s just showing his age by referring to the “Union Bank of
Switzerland” … or if he’s trying to throw the Gumshoe off the
scent by searching for a bank that virtually everyone knows as UBS.
But that’s neither here nor there. How about some more specifics
about the drug or the company?
“The drug has already passed two rounds of clinical tests in 10
different European countries. It’s coming down the homestretch on
the third and last clinical test….
“The shares are currently selling for about 45 cents each. After the
drug is approved, I think shares will quickly go to $1.50, and longer
term, to $4.50.”
Hmmm … pretty thin, right? Well, let’s fire up the Thinkolator
anyway … I think this stock must be …
Renovo Group (trades primarily in
London at RNVO, also
on the pink
sheets at ROVOF)
If you do decide to research this further and buy shares, use the
London price as your benchmark — it closed this morning in London at
29p (pence), which at the
current exchange rate rounds off to 47
cents. The shares last traded on the pink sheets at 50 cents, it’s
not unusual to see investors bid up a little bit for foreign pink
sheets shares, but if you’re a trader also keep in mind that it’s
not unusual to have to accept a lower price if you want to sell these
kinds of shares — there just isn’t that much volume. To get the
fairest price, always try to place orders when both London and NY
markets are open at the same time, first thing in the morning.
So who is Renovo? This is indeed a young company that was founded by
two scientists, Mark Ferguson
and Dr. Sharon O’Kane. Ferguson
remains the CEO and O’Kane was the
Chief Science Officer,
but it
appears that she’s resigning from the company next month — several
other board members and executives have also resigned over the last
year, and the board has shrunk considerably in sympathy with the
company itself, which has spent the last year doing some significant
cost-cutting to make sure the cash burn rate of the firm allows them
to remain in good shape until at least the middle of 2011, when
results from the phase III trial of their
lead compound are
expected.
And that compound, Juvista, seems pretty clearly to be what de Castro
is teasing. Here’s how the company describes it:
“Renovo’s lead drug candidate for the reduction of scarring,
Juvista, is a therapeutic application of human recombinant
Transforming Growth Factor β3 (TGFβ3). TGFβ3 is present at high
levels in developing embryonic skin and in embryonic wounds that heal
with no scar, but by contrast, is present at low levels in adult
wounds that scar.”
Which, as I read it, is a more complicated way of saying, “heal
wounds like a young child instead of like an old fartski.”
And this compound has been through two rounds of clinical trials and
is in Phase III — though whether you call that the “homestretch”
or not is a matter for some interpretation, they expect to get the
first results from the current trial sometime in the first half of
2011. And yes, at the current burn rate they have plenty of funding to
make it there — in fact, the stock is feared enough that as of last
Fall they had a bit more cash on hand (65 million Pounds) than the
market capitalization of the company (55 million Pounds — about $88
million), with a current burn rate that they say will leave them with
25-30 million Pounds in cash when the Phase III trials for Juvista are
released in mid-2011.
The institutional investors measure up to the tease, too — JP Morgan
and
Goldman Sachs both have significant holdings in a variety of funds
that they manage, though both have seen their holdings drop a bit
recently (Goldman at one point owned more than 10% and it’s a hair
below that now, JP Morgan’s position is about half that size), and
both UBS and the Fidelity
Small Cap Stock fund own (or have recently
owned, at least) more than 5% of the shares.
The big deal for Renovo so far is clearly Juvista, though they have
some other compounds coming up behind, and a possible cosmetic product
that they’d like to license this year. But most of their money has
come in because of Juvista, including most critically their deal with
Shire plc to develop and commercialize Juvista worldwide except for in
the European Union,
where Renovo continues to hold commercialization
rights. In exchange for that deal they got a huge $50 million equity
investment from Shire and an upfront payment of $75 million, both at a
time when the shares were trading at close to 200 pence back in
mid-2007.
After that, the shares collapsed on the initial response to some
“failed” trials — making this definitely a “fallen darling”
of a stock. Extraordinary things were expected from
Renovo three years
ago, and while there seems to still be some potential for those great
results the enthusiastic shareholders have left. Here’s a good
article about the company’s phase II failures
<http://business.timesonline.co.uk/tol/business/industry_sectors/health/article3479317.ece>
(in mole scarring and breast reduction scarring) … and, lest we put
too much weight on those shareholdings by Goldman Sachs and JP Morgan,
here are the extraordinarily optimistic
target prices from their and
other analysts at the time:
“Goldman Sachs added Renovo to its ‘conviction buy’ list and
reiterated its 18-month price target of 389p, predicting a return
potential of 190 percent.
Panmure Gordon reiterated its ‘buy’
note, with a target of 120p. JPMorgan gave it an ‘overweight’
rating and a target of 134p.”
The optimism is due to the potentially massive market, those 42
million US surgeries per year that de Castro mentioned in his article
(and roughly the same number in the EU). During headier days, biotech
analysts were saying that the potential market for Renovo’s
anti-scarring treatment ranged from $4 billion to $12 billion, with
even the low end of that meaning that Renovo, just from Shire
milestones and royalties in the US alone, should have seen its share
price explode. The company and the analysts consistently mention the
“botox model” in saying that they see a “real” medical,
insurance-covered business for anti-scarring treatments following
major surgeries, as well as a cosmetic and consumer-paid business for
plastic surgery, varicose vein surgery and the like. The company
claims that Juvista has “no near-term competition” and that this
is the “First in class pharmaceutical for prophylactic improvement
of scar appearance in the skin.” It is relatively inexpensive to
make, and they have the ability to scale up manufacturing.
I’ve never heard of the company before today, but the stock is
starting to look like an appealing speculation — albeit one that
might not have a catalyst for a while. Unless any deals they make to
advance development of Juvidex catch attention this year (that’s a
cosmetic ingredient that promotes skin healing, apparently), there
shouldn’t be much news out of the company in 2010. Juvista is
clearly where the company’s future lies (or dies), and we probably
won’t hear any more about that for at least a year. If (and that
could certainly be a big “if”) the Phase III trial goes very well,
perhaps they’ll apply to the
FDA, which would bring the next payday
for Renovo, they get another $25 million if an application goes
through for Juvista, and up to $150 million if it gets approved. The
larger amounts would come after that if Juvista actually becomes a big
drug, with potential milestone payments on sales of up to $525 million
and royalties — as well as whatever they can bring in from the EU
market, either by partnering with someone else or getting it approved
and selling it there themselves.
So where does that leave us? With a relatively cheap company that
addresses a large market and has a pretty lucrative deal in place for
their lead product … assuming, of course, that the product pans out.
That gets me intrigued, I’ll be looking into this one a bit more and
may be adding it as a little speculative flier in my portfolio, one
that I might be able to ignore, not set a stop loss on (not that I
often use those anyway), and wait to see how it does when their clinical trial results
come out in 2011.
Renovo may again be a bust, of course, and it’s also possible, given
the limited clues provided, that I’m wrong about de Castro picking
this stock. And we’ve already seen how this stock performs when the
clinical trials disappoint, just look at the stock chart for early
2008, and know that the stock’s crash back then could be magnified
if it occurs after a pivotal phase 3 trial like the one now underway.
Still, the size of the market, the potential of the product even if
the end market ends up being much smaller than “all surgeries”,
and the financial condition of the company (ie, they shouldn’t go
broke before the clinical results are announced) make me think it
might be worth a tumble. If you’ve got an opinion on the stock or
product, as always, feel free to let us know.
I do not own these shares now, and per my trading rules I will not
trade in any stock mentioned for at least three days — and for
personal portfolio reasons, if I do buy into Renovo it will probably
be farther down the road than that.
If I wasn't keeping a close eye on my email box over the
weekend, there would have been some risk of overflow --
and if you've never had spam all over your floor, trust
me, you wouldn't like it. The main culprit was the hot
new teaser from Luke Burgess for his
Hard Money Millionaire
newsletter ... and the goldlust it inspired in so many
readers. And of course, it didn't hurt that gold spiked
up a bit again this morning -- and whaddya know, after a
weekend of heavy touting the stock took a huge jump at
the open today.
The first week of the new year gave us a nice
cross-section of teaser temptations -- an Indiana Jones
story of hacking through the woods to witness the
world's biggest gas well test, a top secret special
dividend that may or may not happen, mysteriously named
alternative energy investments, and predictions of
earth-shattering returns for breakthrough technology
companies. It's almost enough to make you want to get
out of bed on a cold winter's morn.
For our Friday look back I pointed folks at rare earth
minerals once again -- it's a hot area for many
investors, and the source of many of the questions I'm
getting this year. The older articles I pointed you to
were a
survey of
a bunch of Rare Earth'ers from Dr. Stephen Leeb,
and the somewhat older look at
Greenland's rare earth's riches -- that
Greenland teaser, in particular, still keeps popping up
in my inbox every couple days (and both of the Greenland
stocks I mentioned in that one have already almost
doubled since November).
If you're among the merry band of Irregulars and didn't
receive your Friday
File email, you can also always
access
that commentary on the members-only site here
(sorry, those emails sometimes get blocked by big
providers like Comcast and AOL).
On Thursday, Patrick Cox was back in the saddle, touting
some tiny breakthrough stocks that could define the
wealth of a new generation -- he's predicting six events
for 2010 that could "reshape your future," and the two
that he focuses on most both rely on one little company
and their February 5 announcement that could shiver our
timbers.
Before that, it was a look at the alternative energy
"Fredonia Reactor" and the little Michigan company
that's supposedly going to build the grid that gets the
electricity to where it needs to go. They call this the
"Smart Electric Co." -- and what is it, you ask?
The
answer is here.
And how about the "Largest One Day Dividend in Stock
Market History?" That's the promise from one newsletter
tout, who thinks that a biotech's deal to sell some
drugs will lead to a big cash payout for investors.
Click
here for hte details on that one.
While we're on the topic of largest and record-breaking,
the "welcome back" after our holiday break was a
Guinness stock -- not the beverage, unfortunately, but
the world record folks, this company set a record with a
recent natural gas test, and Matt Badiali was there to
tell us about it, and speculate on the riches that might
flow when this natural gas gets shipped to China, Japan
and elsewhere.
Click
here for that article.
Disclaimer: Nothing in this email or in the
linked articles should be considered to be individual
investment advice. You should speak with your financial
advisor and understand everything fully before
committing money to any investment. Most issues of
this email newsletter include advertising, and it should
not be assumed that the presence of an advertisement
means that the product or service advertised is endorsed
by Stock Gumshoe or Travis Johnson. For full
disclaimers, disclosure information, and privacy
policies please see the prominent links at the bottom of
each page at StockGumshoe.com.
2009 TRAVIS TRACKS DOWN STOCK & DIVIDEND
STATEMENTS THAT SEEM
TO GOOD TO BE TRUE. THANKS TRAVIS!
At No Charge. His "Irregulars His "Irregulars" cost - Join the
Irregulars!
All Hail Fredonia and their Mighty Mega-Profits Reactor! -- Stock
Gumshoe Daily Update
It's been a fun week already, and we're still just
getting started -- today it's a look at the Fredonia
Reactor, which unfortunately has nothing to do with
Duck Soup, and
the mightly little company that will be connecting this
reactor to the world, with, according to the Oxford
Club, gigantic profits to follow.
George Huang's FDA
Report is getting a lot of mileage from a stock
that they think could issue the largest special dividend
in stock market history -- as you'll guess, it's a
biotech company, and Carl Icahn is in the picture. Want
to know who it is?
Click here
and I'll share what details I can dredge up.
Earlier, to get 2010 off to a fabulous start we looked
at a teaser from Matt Badiali -- apparently he went
halfway around the world, hacked through the jungle, and
risked life and limb to bring us the tale of a natural
gas find that's been recognized by the Guinness Book of
World Records. What's the company, and the story?
Click here
for the details.
Disclaimer: Nothing in this email or in the
linked articles should be considered to be individual
investment advice. You should speak with your financial
advisor and understand everything fully before
committing money to any investment. Most issues of
this email newsletter include advertising, and it should
not be assumed that the presence of an advertisement
means that the product or service advertised is endorsed
by Stock Gumshoe or Travis Johnson. For full
disclaimers, disclosure information, and privacy
policies please see the prominent links at the bottom of
each page at StockGumshoe.com.
I'm delighted that you've subscribed to this free
daily newsletter, but did you know that you can also
join the Stock Gumshoe Irregulars?
Joining
the paid membership gets you a subscription
to the Friday File
and the monthly "Idea of the Month" analysis, plus the
warm, fuzzy feeling you'll get from supporting all the
work of StockGumshoe.com.
Happy New Year! It was nice to be off the grid for a
few days, but I do get a special warm feeling in my
little Gumshoe heart from returning to the work of
deciphering teasers for you -- here's hoping that this
new year brings more fabulous ideas and more tales of
adventure and intrigue, and that the promised profits
just beyond the reach of our fingers finally get close
enough that we can grasp them firmly in our meaty paws.
Today, to get 2010 off to a fabulous start, we're
looking at a teaser from Matt Badiali -- apparently he
went halfway around the world, hacked through the
jungle, and risked life and limb to bring us the tale of
a natural gas find that's been recognized by the
Guinness Book of World Records. What's the company, and
the story?
Click here
for the details.
--------------advertisement---------------
IN ONE HOUR OF TRADING YOU CAN MAKE MORE MONEY THAN
MOST PEOPLE DO SLAVING AT A DEAD END JOB ALL WEEK
LONG...
I didn't believe it either
until I saw the proof with my own eyes...
Have you spent any time at the
Stock
Gumshoe Reviews site lately? I've been off
for a week or so resting the Gumshoe Thinkolator, but
your fellow readers have been dishing, spilling, and
delighting with their opinions about the finest
investment newsletters in all the land --
click here
to see which ones rank at the top now, or to let us know
what you think about any investment newsletters you've
ever subscribed to. Thanks!
Disclaimer: Nothing in this email or in the
linked articles should be considered to be individual
investment advice. You should speak with your financial
advisor and understand everything fully before
committing money to any investment. Most issues of
this email newsletter include advertising, and it should
not be assumed that the presence of an advertisement
means that the product or service advertised is endorsed
by Stock Gumshoe or Travis Johnson. For full
disclaimers, disclosure information, and privacy
policies please see the prominent links at the bottom of
each page at StockGumshoe.com.
I'm delighted that you've subscribed to this free
daily newsletter, but did you know that you can also
join the Stock Gumshoe Irregulars?
Joining
the paid membership gets you a subscription
to the Friday File
and the monthly "Idea of the Month" analysis, plus the
warm, fuzzy feeling you'll get from supporting all the
work of StockGumshoe.com.
This acct "irregulars", is owned by the writer FlashG and is shared with
readers for their personal usage. Not sure how long writer will be allowed to
share it as the originator charges a fee for this subscription. The writer will
do a weekly post from the subscription. If you want it daily join Ken Strong's
"The Irregulars".
Gumshoe Headquarters is closed down for vacation. We may respond to
some emails or sneak in a comment or two, but don't expect new content until
2010 -- Happy New Year!
"December Idea of the Month: Steady Income with select CanRoys
, until that corporate conversion, a nice near-12% yield).
As of this writing, I do now own shares of any company mentioned
above, though I do own units of an unrelated MLP that was not specifically
mentioned (Boardwalk Pipeline)."* Ken's Stuff.
Very Helpful. I appreciate the fact that you don’t hype things and want
to up me to a few thousand bucks !!
Count me as a regular Irregular for years to come !
Great article. I see a growing future for Natural Gas because of the
lower pollution compared to coal and the potential conversion of older
electric power plants to more gas-fired operation. In this regard I would
expect companies who make equipment for this conversion to prosper faster
than the gas suppliers, pipeline operators, etc. particularly if more
regulatory pressure is put on the large electric utilities. I sure would
like to see some information on who makes this kind of gear. Thanks for a
great website.
First of all, thank you so much to those of you who took
advantage of our special "Gumshoe gives back" charitable
contribution pledge and joined the Stock Gumshoe Irregulars
over the weekend -- the response was spectacular, and we'll
be able to make big donations to two worthy charities after
I tally up the final amounts and the last paper checks roll
in ... a wonderful way to start this Christmas week, thanks
again!
But now, to today's teaser -- when there's a short-term
promise, and a shouted
headline that we must buy TODAY, I have a hard time
resisting a look at the ad -- and what do you know, today
it's from our old friend (or perhaps fiend, depending on
your perspective), Louis Navellier. He's even conjuring up
the image of the "tea party" movement to sell his
newsletter, which is a stretch indeed ... but what's the
stock?
Click here for
the details and I'll tell you.
Or if you missed any of the action last week, read on ...
--------advertisement-----------
Staying on top of trend changes and momentum shifts in
your stocks can help you protect your capital -- but it's a
lot to watch.
Trend Analysis,
from the team that runs MarketClub,
will do
this for you for free, every day. Trend Analysis is a
daily email analysis tool that gives insight into
exactly what your
portfolio is doing.
For more advanced tools, including the valuable Smart
Scan to find winning stocks in any market,
learn more
about MarketClub here.
--------------------------------------
On Friday I republished an older Irregulars
Friday File article
on the free site, all about a biotech teaser from Steve
Christ that he's still promoting quite heavily --
you can see
that article here. And the "Idea of the Month"
for the Irregulars went out on Friday as well, so if you
missed the email (or joined up after it went out), you can
access that on
the Irregulars-only site here.
On Thursday, we looked at a pick from Marin Katusa at
Casey's Energy Report,
a newsletter that I don't think I've ever covered before.
They say that there's a new stock, just IPO'd earlier this
year, that is now getting to a place where you can "back up
the truck," and it's run by a resource investor who's so
successful that he's been called a "broken slot machine" for
spewing out cash for investors. So who is it?
Click here for that article and I'll share the details.
The folks who run marketing for the Motley Fool are not shy
about endorsing a stock as their "Number 1" pick -- I've
probably written close to a dozen articles over the years
about teasers that claimed one stock or another was #1 --
the #1 Value, the #1 Stock to buy before oil rises, the #1
inevitable megatrend, the #1 Stock for 2008, the #1 global
stock for 2009 ... you get the idea.
But on Wednesday they bragged that they had the "#1 Stock,"
period -- perhaps this will sell a few more subscriptions
for their Stock Advisor
newsletter? I don't know, but I do know that I read
the ad and I can identify the stock from the teaser clues
they provide,just click
here for that article and I'll explain it as best I can.
And it seems likely that everyone in the investing world has
now heard of Peter Schiff, whose
Crash Proof gets a lot of credit for establishing his
prescience as a doomsayer about the dollar and the US debt
problems -- and while he's a broker, not a newsletter tout,
he does have a free newsletter in which he teases some
investing ideas every now and then. The best performing
stock I've ever written about was from a Peter Schiff tease,
so I always try to give them a look -- this time, he's
looking at two natural gas companies,
click here for
the details.
Finally, way back on Monday, we got the chance to dig into
the latest teaser from Dr. David Eifrig -- he has used his
medical background and his investing experience to scout out
the company that makes the "Algorithm Gun", and he thinks it
might make you rich (that is, if you consider 1,000% returns
rich) ... turns out, it's a stock we've written about
several times over the last couple years, but we'll take a
fresh look --
click here for that article.
Disclaimer: Nothing in this email or in the linked
articles should be considered to be individual investment
advice or a recommendation to buy or sell securities or make
any other specific investment or financial decisions.
Comments, analysis, and ideas in this space are based on the
opinion of the author and on research that we believe is
accurate, but there is no guarantee that it will always be
so.
You should speak with your financial advisor and understand
everything fully before committing money to any
investment. Most issues of this email newsletter include
advertising, and it should not be assumed that the presence
of an advertisement means that the product or service
advertised is endorsed by Stock Gumshoe or Travis Johnson.
Submitted guest commentary is sometimes included in these
newsletters, and such commentary includes the opinion and
analysis of its author, not of Stock Gumshoe. For full
disclaimers, disclosure information, and privacy policies
please see the prominent links at the bottom of each page at
StockGumshoe.com.
I'm delighted that you've subscribed to this free daily
newsletter, but did you know that you can also join the
Stock Gumshoe Irregulars?
Joining the
paid membership gets you a subscription to the
Friday File and the monthly "Idea of the Month"
analysis, plus the warm, fuzzy feeling you'll get from
supporting all the work of StockGumshoe.com.
Today's free article is actually a rerun, but it's one that
previously appeared on the Irregulars site so it will be new to most
of you. It's about a teaser for Steve Christ's newsletter,
promising 66% returns on a biotech stock by next May. The stock and
the ad are essentially unchanged from six weeks ago, when I first
covered them, so since a lot of folks have been asking recently I
thought I'd share this one with everyone now.
Click here for the
article.
And before you go, a special appeal!
I try not to be too much of a pushy salesman, but once or twice a
year I make a special request for folks to join the Stock Gumshoe
Irregulars -- this is the group of paying members that keeps Stock
Gumshoe going with financial support (as you've probably noticed,
the site is supported by both member contributions and advertising),
and it's also the group that gets a little bit of extra Gumshoe
goodness -- I write the Friday File
for the Irregulars most weeks, which is either a look at something
in my portfolio or something I've recommended before, or a look at a
new teaser, and one Friday a month I post a more detailed look at
one investment for the Irregulars in the "Idea of the Month" article
(December's will be coming out this evening).
But this year I want to do something a little different -- the
Gumshoe family has had a good year, and we'd like to give something
back, so to do that and at the same time encourage folks to join the
Irregulars I'm going to commit to making donations to
Heifer Project
Internationaland the American Red Cross
that are connected to the Irregulars signups we get this weekend in
addition to the personal giving that I'm doing this year.
Here's how it will work: For every
quarterly or monthly
member that signs up between now and Sunday evening, I'll donate the
entire amount of their first payment to charity; for every
annual or
lifetime member who signs
up, I'll donate half of their payment to these two charities, split
down the middle. This counts for credit card payments made through
PayPal anytime today, Saturday or Sunday, or checks that are
postmarked by Monday.
Click here if you'd
like to sign up. (Or
click here if you'd
like to read more about joining)
And to do a bit more, I'll also be doing the same with any renewal
payments that come in during these three days -- any monthly,
quarterly or annual membership dues that come over this weekend will
also be donated (again, half in the case of the annual renewals,
everything for the monthlies and quarterlies).
Of course, I'm sure it would be a greater help to the world if you
just donated to these or other worthwhile charities or causes on
your own -- and I wouldn't presume to tell you how to support the
causes that matter to you ... but in case you were on the fence,
now's a great time to join the Irregulars and we can do a little
good at the same time. Thanks for considering!
And for those of you who are joining now or who are already members
of the Irregulars, you can look in your email for the Idea of the
Month writeup later this evening, I try to get it out shortly after
the market close but it will probably be a bit later in the evening
today ... or check the Irregulars website over the weekend if you
don't receive the email (there are always a few that get caught up
in overzealous spam filters).
Disclaimer: Nothing in this email or in the linked articles
should be considered to be individual investment advice or a
recommendation to buy or sell securities or make any other specific
investment or financial decisions. Comments, analysis, and ideas in
this space are based on the opinion of the author and on research
that we believe is accurate, but there is no guarantee that it will
always be so.
You should speak with your financial advisor and understand
everything fully before committing money to any investment. Most
issues of this email newsletter include advertising, and it should
not be assumed that the presence of an advertisement means that the
product or service advertised is endorsed by Stock Gumshoe or Travis
Johnson. Submitted guest commentary is sometimes included in these
newsletters, and such commentary includes the opinion and analysis
of its author, not of Stock Gumshoe. For full disclaimers,
disclosure information, and privacy policies please see the
prominent links at the bottom of each page at StockGumshoe.com.
I'm delighted that you've subscribed to this free daily
newsletter, but did you know that you can also join the Stock
Gumshoe Irregulars?
Joining the paid
membership gets you a subscription to the
Friday File and the monthly "Idea of the Month" analysis,
plus the warm, fuzzy feeling you'll get from supporting all the
work of StockGumshoe.com.
Smart Scan Chart Analysis confirms that
a short term counter trend move is underway. When this action is over
look for the longer term positive trend to resume. Uptrend with
money management stops.
Based on a pre-defined weighted trend formula for chart analysis, ATT
scored +85 on a scale from -100 (strong downtrend) to +100 (strong
uptrend):
Smart Scan Chart Analysis indicates a
counter trend rally is underway. It also indicates that the current down
trend could be changing and moving into a trading range Sidelines Mode.
Based on a pre-defined weighted trend formula for chart analysis, CAT
scored -55 on a scale from -100 (strong downtrend) to +100 (strong
uptrend):
Smart Scan Chart Analysis continues
positive longer term. Look for this market to remain firm. Strong
Uptrend with money management stops. A triangle indicates the presence
of a very strong trend that is being driven by strong forces and
insiders.
Based on a pre-defined weighted trend formula for chart analysis, DUK
scored +90 on a scale from -100 (strong downtrend) to +100 (strong
uptrend):
Smart Scan Chart Analysis is showing
some near term weakness. However, this market remains in the confines of
a longer term uptrend Uptrend with
tight money management
stops.
Based on a pre-defined weighted trend formula for chart analysis, FPL
scored +70 on a scale from -100 (strong downtrend) to +100 (strong
uptrend):
Nothing beats greeting a cold December morning with a bright
promise of massive returns from a small-cap stock, right? So
I've got to at least give Louis Navellier credit for getting my
heart going this morning when his email led me to expect his new
favorite garbage stock to quadruple -- yeeha!
Now, is this stock garbage? Or is that just their business?
Well, that's a whole 'nother kettle of fish --
click here to read
today's article, and I'll try to give you enough info
so you can figure out what to think on your own. And I can at
least tell you the name of the stock, naturally.
Or if you've no taste for a Navellier promise today, read on to
see if you missed any excitement last week ...
Thursday brought a Chinese stock to our attention, a pick from
Robert Hsu for his China
Strategy ... and a stock I've been watching for a long
time and, unfortunately, not buying. It's a Chinese drugstore
chain ... expensive? Maybe. Growing? Probably --
Click here for the
details.
And before that it was a big bite of India -- mmmmm, Samosas ...
Chana Masala, delicious! The first India stock we looked at in
digging through the teaser that launched
Dalal Street Insider
into our consciousness was a pharmaceutical company ... that
article, which teased "Foreign
(and legal) drug trade profits" is here.
Finally, Elliott Gue has been teasing us about mysterious 401(r)
Royalty Checks for a few days now, in service of his
Personal Finance newsletter -- what the heck are those,
you ask? Good question!
Click here for
that article, and we'll explore the mystery.
Disclaimer: Nothing in this email or in the linked
articles should be considered to be individual investment advice
or a recommendation to buy or sell securities or make any other
specific investment or financial decisions. Comments, analysis,
and ideas in this space are based on the opinion of the author
and on research that we believe is accurate, but there is no
guarantee that it will always be so.
You should speak with your financial advisor and understand
everything fully before committing money to any investment.
Most issues of this email newsletter include advertising, and it
should not be assumed that the presence of an advertisement
means that the product or service advertised is endorsed by
Stock Gumshoe or Travis Johnson. Submitted guest commentary is
sometimes included in these newsletters, and such commentary
includes the opinion and analysis of its author, not of Stock
Gumshoe. For full disclaimers, disclosure information, and
privacy policies please see the prominent links at the bottom of
each page at StockGumshoe.com.
I'm delighted that you've subscribed to this free daily
newsletter, but did you know that you can also join the Stock
Gumshoe Irregulars?
Joining the
paid membership gets you a subscription to the
Friday File and the monthly "Idea of the Month"
analysis, plus the warm, fuzzy feeling you'll get from
supporting all the work of StockGumshoe.com.
I’ve been following Nova for several years and finally bot in last year - too bad I didn’t wait. Their attraction is 50% ownership of two very large mineral deposits - Donlin Creek(Au) and Galore Creek (Cu-Au). However, both are located in remote locations in AK and BC, meaning high operating costs. Donlin Creek is the furthest along, only need to get permits (a very big only). Nova’s main problem is lack of capital, although both jv partners are large miners (Barrick and Teck), so that helps. I figure at some point they’ll be bot out by their partners since they don’t bring anything to the table except their mineral rights. The bond looks very interesting. Realize that Nova may have very little income in 2015. Default risk is if permitting experiences endless delays with no foreseeable revenue. The state and natives are cooperative, but the feds could be a problem.
[Reply]
Thanks for the informative article, Travis. Your comments about gold as an investment were spot on. As an insurance policy against rampant inflation, a collapsing currency or political turmoil, there is none better than gold. However, moving forward in this economic environment, most investors should not expect to get rich by investing in the precious metals. That widow of opportunity has long since passed having presented itself several years ago between 1999 and 2002. I remember back in early 1980 as gold breached the $800.00 dollar per ounce barrier, the original gold bug Howard Ruff stood on his soapbox and proclaimed for all the world to hear, “We will see $1,000 dollar gold, we will see $1,500 dollar gold….indeed we see $2,000 dollar gold.” Obviously, that never came to pass. If fact a couple years later, Howard sheepishly wrote to his subscribers and warned that “Gold was sick and getting sicker”. Will history repeat itself??? No one knows for sure but there is a good chance that the price of gold will remain range bound for the next year or so before moving slowly downward.
[Reply]
Travis–No comment, but Currency Capitalist “Buy currencies with as little as $100.00 and get the same profits and protection as the big guys.” #2 “Use the simple “”floodgate Tactic “” that can turn a measly 1% currency move into an explosive 200% gain.” Thank You Stephen Rimar
[Reply]
Gold won’t rise as much as “they” want you to believe. The dollars in in contrarian with “their opinion” one of the strongest currencies in the world. The Euro wil collapse (I’m Dutch, we haven’t a United Euroland, like the States). Who can buy gold nowadys? The unemployd people in the row for a food program? And the big consumers in India won’t buy it at all with too high prices. Gold will soar imho, stay away and wait after the steady drop. My old mother told me not to do what anybody else already does…
[Reply]