The Northgate Minerals Corporation Conundrum

I’ve been asking myself what’s wrong with Northgate Minerals Corporation (NXG). The majority of the gold mining stocks that I watch closely follow the movements of the spot price of gold. NXG, on the other hand, has traded independent of whether the spot price of gold was up or down. NXG has roughly traded between $2.90 and $3.50 in the last month. NXG closed at $3 and dipped as low as $2.89 in yesterdays trading. The last time NXG hit an exact low of $2.89 was on October 13th, 2006. At that time gold was trading in the $580 range. I see that while other gold mining stocks are playing catchup to their 52-week highs, NXG has languished in comparative performance.

Here is a quote from a recent article I wrote about NXG.

Today I will be using Joel Greenblatt’s investing formula for uncovering potential gold mining gems. For those of you unfamiliar with Joel’s formula, he uses only two main criteria for determining the attractiveness of a stock investment. These two criteria are Return on Capital and Earnings Yield.

Using Joel’s two criteria I screened for companies with a minimum market capitalization of $500 Million, a high ROC and a high Earnings Yield. Looking at the top 100 companies that met this criteria, I found one lone gold mining stock, Northgate Minerals Corporation (NGX). Northgate’s ROC is in the 25-50% range and the Earnings Yield is 17%. Northgate appears to be worth serious consideration and may be the next gold mining gem using Joel’s criteria.

Joel Greenblatt is the author of The Little Book that Beats the Market. In the book he discusses in detail, the advantages and strategies of using ROC and Earnings Yield to evaluate a stock investment.

I believe that NXG is a high quality company and expect that NXG will eventually normalize along with the pattern followed by most other gold mining stocks. NXG currently has more room to play catch-up to the percentage gains of my other top gold mining picks such as Yamana Gold, Inc. (AUY) or Tanzanian Royalty Exploration Corp. (TRE).

The lag in NXG’s performance may be attributed to the strong but weaker that analysts expected third quarter earnings. NXG also appears to be a day traders darling with a low price and heavy volume causing large daily percentage swings in the stock price.

My job as an investor is to uncover underexposed undervalued investments. I believe NXG is a prime example of a stock with enormous upside once other investors catch wind of this highly profitable company.

*Disclaimer: The author currently owns 10,000 shares of NXG purchased at an average price of $2.99.

Selling Yamana Gold, Inc.

On 10/4/06, I purchased 1000 shares of AUY at $7.91. Today I sold 1000 shares of Yamana Gold, Inc. (AUY) at $11.60.

My profit was $3,679.64 or 46.52%

Please view the portfolio tracker for a look at Raw Greed’s portfolio.

Raw Greed Yamana Gold, Inc. Update

Yamana Gold, Inc. (AUY) has passed my target sell price of $10.50 faster than I anticipated. AUY is currently trading at $11.10 in after hours trading. The stock is up over 40% since I purchased the stock about a month ago on October, 4th, 2006 at $7.91. I suspect that the stock has gone up a little too much, a little too fast. On Monday, November 6th, 2006, I will likely attempt to sell my remaining shares of AUY if the stock trades between $11.30-$11.50.

Gold is currently trading at $627.20.

Raw Greed Gold Update

Yamana Gold, Inc. (AUY), briefly touched my short-term target sell price of $10.50 in this mornings trading. I see AUY having a chance at crossing $11 in the next month if gold maintains its bullish trend.

Tanzanian Royalty Exploration Corp. (TRE) is lagging behind AUY in price recovery during gold’s current upswing. I expect to see TRE having a chance at crossing $7 in the next month. My short-term target sell price for TRE remains unchanged at $8.

Gold is currently trading at $620.20. In the past few months we have often seen gold trading with a $10 or greater price difference over a 24 hour period. These wild price swings have created a volatile gold market. In the short-term I see these unstable conditions continuing. In the long-term I expect to see bullish momentum stabalize in gold. I see the potential upside for gold at $640 and the potential downside to $580 in the next month. I still expect gold to close above $600 levels by the years end.

*Disclaimer: The author currently owns 1000 shares of AUY purchased at $7.91 and 7500 shares of TRE purchased at an average price of $5.74.

Raw Greed Portfolio Update

I’ve updated the Raw Greed portfolio page, as of October 31st, 2006, with all of the trades I have made since my last portfolio update on May 5th, 2006.

Raw Greed Portfolio Value, 10/31/2006 - $171,177.37
Stock Symbol	Company Name	QTY	Purchase Date	Avg. Cost	Last	Target Sell Price
NT	Nortel Networks Corp.	10000	Various	$2.31	$2.23	$5.00
UMC	United Microelectronics Corporation	10102	Various	$3.17	$3.03	$4.50
FLWS	1-800-FLOWERS.COM, Inc.	2500	Various	$6.10	$5.52	$7.00
TRE	Tanzanian Royalty Exploration Corporation	7500	Various	$5.75	$6.47	$8.00
AUY	Yamana Gold, Inc.	1000	10/04/06	$7.91	$9.91	$10.50
Notes:
Here is the trading history for my portfolio between 05/05/06 – 10/31/06: My long-term holding of 2059 shares of Taiwan Semiconductor Manufacturing Company Limited (TSM) were purchased at an average price of $9.02. On 09/18/06, I sold 2059 shares of TSM at $9.8. My profit was $1595.41 or 8.59% On 01/31/06, I purchased 1000 shares of Intel Corporation (INTC) at $21.35. On 10/26/06, I sold 1000 shares of INTC at $21.78. 21,769.34 My profit was $419.34 or 1.96% Between 02/02/06-08/08/06, I purchased 5000 shares of 1-800-Flowers.com Inc. (FLWS) at an average price of $6.10. On 10/31/06, I sold 2500 shares of FLWS at $5.64. My loss was $1160.43 or 7.6% On 04/12/06, I purchased 1000 shares of Ford Motor Company (F) at $7.20. On 08/08/06, I sold 1000 shares of F at $7.24. My profit was $29.78 or 0.41% On 04/28/06, I purchased 1000 shares of Microsoft Corporation (MSFT) at $24.26. On 06/20/06, I sold 1000 shares of MSFT at $22.63. My loss was $1650.68 or 6.8% On 05/08/06, I purchased 2000 shares of Corporate High Yield Fund, Inc. (COY) at $7.59. On 7/20/06, I sold 2000 shares of COY at $7.49. My loss was $220.44 or 1.45% On 05/09/06, I purchased 3000 shares of Navarre Corporation (NAVR) at $3.98. On 06/15/06, I sold 3000 shares of NAVR at $4.63. My profit was $1929.59 or 16.15% On 05/09/06, I purchased 2000 shares of JetBlue Airways Corporation (JBLU) at $9.75. On 05/17/06, I sold 2000 shares of JBLU at $10.02. My profit was $519.40 or 2.66% Between 05/17/06-06/20/05, I purchased 6000 shares of Yamana Gold, Inc. (AUY) at an average price of $9.28. On 08/10/06, I sold 2900 shares of AUY at $10.64 and 3100 shares at $10.65. My profit was $8,169.10 or 14.67% On 05/18/06, I purchased 1500 shares of Tanzanian Royalty Exploration Corp. (TRE) at $6.75. On 06/19/06, I sold 1500 shares of TRE at $7.71. My profit was $1419.66 or 14% On 06/20/06, I purchased 200 shares of VeraSun Energy Corporation (VSE) at $25.86. On 06/30/06, I sold 200 shares of VSE at $26.25. My profit was $57.85 or 1.11% On 07/11/06, I purchased 1000 shares of eBay, Inc. (EBAY) at $26.98. On 07/11/06, I sold 1000 shares of EBAY at $27.48. My profit was $479.17 or 1.74% Between 7/11/06-9/15/06, I purchased 10000 shares of Tanzanian Royalty Exploration Corp. (TRE) at an average price of $5.74. On 10/31/06, I sold 2500 shares of TRE at $6.20. My profit was $1139.53 or 7.94% On 08/08/06, I purchased 100 shares of Navarre Corporation (NAVR) at $3.42 and 1900 shares at 3.43. On 08/09/06, I sold 100 shares of NAVR at $3.50. On 08/17/06, I sold 1900 shares of NAVR at $4.00. My profit was $1060.66 or 15.44% On 08/14/06, I purchased 6000 shares of Nortel Networks Corporation (NT) at $1.9. I purchased a total of 15000 shares in NT on various dates at an average price of $2.31. On 10/31/06, I sold 5000 shares of NT at $2.18. My loss was $660.33 or 5.71% On 10/04/06, I purchased 2000 shares of Yamana Gold, Inc. (AUY) at $7.91. On 10/31/06, I sold 1000 shares of AUY at $9.61. My profit was $1689.71 or 21.36%