The Worlds Biggest Coin, Put $1 Million (Or Actually More) In Your Pocket

So you may be interested in investing in gold. If you’re like most people you may look at investing in gold stocks or small gold coins. If you are on the uber wealthy side you may look at putting this $1 million dollar coin in your pocket. Beware though you’re going to need bigger pants than you already own. The $1 million dollar gold coin is made from 99.999% pure gold and weighs over 220 lbs.

The coin was made in a Winnipeg Canada minting facility and is valued in Candian dollars. With a Canadian dollar exchange rate of .99727, that makes the coin nearly equivalent to a million US dollars. If the USD continues to weaken against the CAD, the coin may actually be worth more than $1 million USD over time. Another factor affecting the value of the coin is the current price of gold. Let’s look at some metrics:

220 lbs = approximately 3520 ounces
3520 ounces/$1 million usd = $284 usd per oz.

It looks like this gold coin was valued with gold at $284 per oz. Gold is currently trading for $730 per ounce. If we multiply 3520 ounces by $730 we get a value of $2,560,600. That’s not a bad investment, spend $1 million and get over $2.5 million dollars in return.

If we guess that gold will hit $800 by the end of 2008, that puts that value of the coin at $2,816,000 in physical gold. That’s not a bad way to invest in gold and you won’t need to buy bigger pants as the value of the coin grows.

For a more traditional means of investing in gold, check out my article: Investing in Gold, Watch the AMEX Gold Bugs Index (HUI).

Online Investing, Two Tech Stocks Worth Watching

I have my sights set on picking up some shares of Micron Technology, Inc. [[MU]] and Taiwan Semiconductor Manufacturing Company Limited [[TSM]]. Both stocks are down for the year. Micron in particular has been hit quite hard. A flash memory partnership with Intel should bear some results as Intel Corporation [[INTC]] gears up to market the product as a replacement for magnetic hard drives. Retail pricing remains to be seen. If pricing is low enough I see a large number of OEM’s picking up the technology. I’ve been waiting for years to see affordable flash based hard drives, also known as solid-state hard drives. The technology has many inherit advantages over traditional hard drive designs. Flash drives have no moving parts, thus are prone to less damage, heat and noise. The best advantage over traditional hard drives I see is an incredible speed improvement.

Take a look at this Street.com article, Intel Prepares Flash Attack, for a look into the Micron and Intel partnership.

Taiwan Semiconductor Manufacturing is an incredibly well managed company in an industry that has seen minor incremental improvements since the downturn in demand after the .com days.

Let’s look at TSM’s very attractive key statistics:

Trailing P/E: 16.56
Foward P/E: 13.12
ROA: 10.52%
ROE: 22.82%
Total Cash: 7.11B
Total Debt: 582.26M

TSM’s price movement is heavily dependent on semiconductor supply and demand cycles. I’ve traded TSM in several profitable trades and covered the company in depth in previous articles. TSM is the 900 lb gorilla in the outsourced semiconductor fabrication business and holds significant clout over its competitors. A strong cash and market position will help the company whether any significant downturn in demand.

I like MU and TSM in the $8.50-$9.50 range. TSM option WPDAA.X in particular seems like a good deal once you think TSM has reached a bottom. The option has nearly no premium compared to current prices of the stock.

Investing in Gold, Silver and Technology Stocks, Today’s Trades

I closed out 2000 shares of Tanzanian Royalty Exploration Corporation [[TRE]] at $5.94. I have a roughly 20% profit on that stock. I still hold a 3000 share position. I placed an order for 1000 shares of Silver Wheaton [[SLW]] at $13.40 to gain more exposure to silver. I bought 25 options in QLogic Corporation [[QLGC]] +VEBAV at $2.80 yesterday. I picked up another 10 at $2.65 today. I like +VEBAV between $2.50-$2.80. I expect upward movement in QLGC in the next year. Search QLGC in the sidebar for my previous analysis on the company.

Raw Greed Late September Traffic Statistics

Seeing the number of Raw Greed readers increase makes writing analysis and posting charts a very fulfilling experience for me. Since early September my traffic statistics have steadily grown.

FeedBurner feeds are up 13%.
FeedBurner: 250 feeds as of September 25th, 2007
FeedBurner: 222 feeds as of September 5th, 2007

Alexa ranking is up 49%.
Alexa Rank: 1,261,977 as of September 20th, 2007
Alexa Rank 2,503,698 as of September 5th, 2007

Please keep linking, bookmarking, referencing. digging and stumbling my articles to let other people know about the news from Raw Greed that you are reading.

Investing in Gold, Daily Price Action and Direction

I wrote earlier that I expected to see some profit taking in gold and silver stocks and we definitely have seen a bit of that happening. I’m guessing that the volatility in gold and silver stocks will be limited to a 5-10% swing from current prices. Shares of many miners have seen a 20%+ pop since the announcement of an interest rate cut by the Fed on Spetember 18th.

I am looking for gold to trade in the $710-$720 range for another opportunity to buy shares in gold miners. In particular, I will be watching the list of gold miners I posted in my article Investing in Gold, Watch the AMEX Gold Bugs Index (HUI). I urge readers to bookmark that page and return to Raw Greed to check out which stocks and options I may be purchasing.

If the USD Index can drop below $78, that should save the day for gold and silver bulls. A USD Index under $78 should set course for gold to break $750 and for silver to break $14.

Investing in Silver, CDE Update

For comparison, here is the chart that I posted on September 19th.

Coeur d’Alene Mines Corporation, [[CDE]] has crossed its 50 day MA, a bullish indicator. CDE has a large number of hurdles to face, mainly a history of decreased earnings and a large number of outstanding shares that has the stock prone to short manipulation. Strong gold and silver prices have been supporting CDE. I wrote earlier that we may experience a short squeeze in PM stocks and it appears that we have. CDE has a long way to go in catching up with its peers. The low trailing and forward P/E of CDE suggests that investors consider the future prospects for CDE bleak looking.

I disagree with this assessment. Here is a quote from my September 19th article, Investing in Silver, Coeur d’Alene Mines Corporation Analysis:

The fundamental growth picture looks great. CDE expects to be producing silver at a negative cash cost of 0.41 due to gold by-product credits. The figure was calculated using a price of $550 per ounce for gold and $10 per ounce for silver. With gold now above $720 and silver above $12.90 the cash cost to produce silver for CDE should only improve.

Silver is currently nearly $13.50. CDE has the opportunity to turn from a bad stock to a decent one on the heels of rising silver prices. That expectation alone is enough to create rampant speculation for CDE to play catch up with its peers.

*Disclaimer: The author current holds a position in CDE stock and options.

Investing in Gold, Watch the AMEX Gold Bugs Index (HUI)

If you are interested in investing in gold stocks you should be watching the AMEX Gold Bugs Index (HUI). Bookmark this post and refresh the page for the most current prices. I’ve compiled the list below so you can get a single updated view of all the stocks in the HUI. The HUI is made up exclusively of mining stocks that don’t hedge their gold positions more than a year and a half forward. This makes the HUI a great indication of which gold stocks are rising the most when physical gold prices are rising.

Key: Company Name, (Stock Symbol, Price, Percentage Change, Volume), Percentage of the HUI
Note: All stocks are linked to their Yahoo! Finance statistics page.

The AMEX Gold Bugs Index (HUI):

Newmont Mining [[NEM]], 16.1%
Gold Fields [[GFI]], 15.9%
Freeport McMoran [[FCX]], 10.3%
Iamgoldcorp [[IAG]], 5.5%
Meridian Gold [[MDG]], 5.5%
Harmony Gold Mining [[HMY]], 5.3%
Goldcorp [[GG]], 5.2%
Randgold Resources [[GOLD]], 5.1%
Agnico Eagle Mines [[AEM]], 4.9%
Kinross Gold [[KGC]], 4.8%
Glamis Gold [[GLG]], 4.7%
Hecla Mining [[HL]], 4.4%
Eldorado Gold [[EGO]], 4.3%
Golden Star Resources, [[GSS]] 4.0%
Coeur D’Alene Mines, [[CDE]] 4.0%

Online Investing

Raw Greed readers who invested in gold and silver stocks before the interest rate cut on September 18th have gone on to enjoy strong gains almost across the board. Investing in gold and silver are hot topics with a falling USD. While we are possibly at the start of a strong uptrend in precious metals, I urge investors to remain focused on the fundamentals. When everything is going up, it’s easy to lose track of how carefully you pick your investments when the market is down.

I always focus on a core set of statistics. Readers know I like to see cash rich, low-debt, strong ROE, and strong ROA figures.

Let’s look at an online investing buy note in Hecla Mining Company I wrote on August 9th, 2007.

Hecla’s Yahoo! Finance statistics:

Total Cash: 180.64M
Total Debt: 0
ROA: 5.73%
ROE: 23.73%
Trailing P/E: 20.36
Forward P/E: 23.18

A strong cash and low debt position means the company is in little danger of going out of business. HL can also choose to use its cash position to fund internal growth or towards outside acquisitions. Price-earnings figures are useful for determining how much an investor is willing to pay for a stock compared to earnings. In the example above, HL investors are willing to pay roughly $20 for every $1 in earnings. Trailing P/E is calculated using current earnings. HL is roughly a $9 stock and the company earned 0.44 during the previous 12 month period. You get a 20 trailing P/E for HL by dividing $9 by $0.44.

Forward P/E uses future earnings estimates. Investors will find it useful to compare P/E statistics with other companies in the same industry to determine if a company maybe under or overvalued. When you are investing in gold or silver stocks make sure to form a list of statistics that you follow. Investors often forget to consider basic statistics in light of a strong growth opportunity or during periods of industry wide bullish growth. With online investing, readers can instantly check these statistics and access blogs or communities where the story behind a company is discussed. A few minutes a day may uncover a large number of potentially undervalued investments. Since writing my online investing note in Hecla Mining Company, the stock has gone up over 25%.

If you are interested in investing in gold or silver stocks, take a look at the most recent watchlist that I’ve posted.

Lundin Mining Corporation Up in After Hours

I’m not sure what is going on with Lundin Mining Corporation [[LMC]] in after hours trading. LMC is now trading above $12.70. Compared to LMC’s closing price, that’s an over 3.5% gain. If LMC can hold onto that price going into next week, it would likely signal a new uptrend for the stock.

Lundin Mining Corporation Analysis

On August 28th, 2007, I wrote previous analysis of base metals miner Lundin Mining Corporation [[LMC]]. Since I wrote the article, LMC has gone on to score over a 20% gain in under a month.

I believe shares in the company are still undervalued. The fundamental picture for LMC looks great. The company is expanding its base metals production and expects to bring the increased production online in the current quarter. LMC is cash rich and has low debt. Insiders, mainly the Lundin Family, are also increasing their share holdings in the company, a strong indication that good things are on the horizon.

Lets recap a few brief statistics from Lundin’s Yahoo! Finance profile:

Total Cash: 388.21M
Total Debt: 47.73M
ROA: 13.01%
ROE: 22.44%
Trailing P/E: 8.1
Forward P/E: 7.19

If we look at the chart, we see a nice smooth uptrend followed by a recent breakout to $12.39. At the moment we are under the recent high which is discouraging. We may see some profit taking in the short-run.

Since the fundamentals look so strong, I expect to see LMC resume a run forward, so long as the market remains in flat to positive territory. I purchased shares of LMC at $10.19 on August 29th, 2007. My end of the year price target for LMC is $14.

*Disclaimer: The author holds a long position in LMC.

Precious Metals, Daily Action and Direction

After two days of voracious gains a pullback maybe in order, although I believe it will be short lived. I am guessing that we will see the USD Index rebound above $79 again. Gold has stayed above its 28 year high and silver is firmly above $13. If the USD Index does rise above $79, we may see a dip to $720 for gold and under $13 again for silver. This will possibly create another minor buying opportunity for precious metals stocks.

Monetizing a Stock Blog

I plan to write a series of articles covering the subject of monetizing a stock blog. If you’ve ever wondered how much a stock blog can make, stay tuned to Raw Greed as I will start to deliver monthly income statistics at the end of September. As far as I know, I will also be the first stock blogger to chronicle the tools and methods used to deliver blog based stock analysis. If you have anything you would like to see covered in this series of articles, please e-mail me.

A Big Pop for PM Stocks

If you look at pre-market action, everything is far up and the stock market is enthusiastic about strong physical prices. I expect that we may see a strong open followed by a bit of profit taking. The important thing to pay attention to is that we have broken a 28 year high for gold!

I can recommend buying on dips or purchasing a small position in a 2009 call options, if available, to gain exposure to gold and silver stocks. I expect to see continued strength throughout the end of the year. All the charts look promising and we are at the beginning of a new uptrend.

If you are interested in gold and silver stocks make sure to check out my precious metals watchlist.

Coeur d’Alene Mines Corporation Analysis

I wrote below that the effect of a Fed rate cut should produce a short squeeze on a number of PM stocks. If a short squeeze does occur there is one stock that should stand out from the crowd, Coeur d’Alene Mines Corporation [[CDE]]. I’ve written detailed analysis on CDE in the past and I believe given the future position of the company as a silver miner, a fair value for shares should be in the $5-$8 range.

If we look at the chart, MACD is in positive territory and the last time there was a bullish centerline crossover we had a nice smooth uptrend from $3.60 to $4.25. We won’t be able to draw much in terms of a current trend line for CDE until we get further into the month.

The fundamental growth picture looks great. CDE expects to be producing silver at a negative cash cost of 0.41 due to gold by-product credits. The figure was calculated using a price of $550 per ounce for gold and $10 per ounce for silver. With gold now above $720 and silver above $12.90 the cash cost to produce silver for CDE should only improve.

There has been a lot of talk about Dennis Wheeler’s failure to run Couer smoothly and I tend to disagree with most of it. Dennis is doing exactly what he should be doing, anything and everything possible to grow the companies profits. If Dennis is guilty of anything, it’s a failure to deliver shareholder value. Dennis has built CDE’s success by issuing a huge number of outstanding shares which I believe has led to a large amount of short manipulation.

As a long-term investor in CDE this is of little concern to me since I see strong fundamental value behind the company. I expect that as institutions recognize the profit potential of the company, that they will slowly start acquiring a long stake in CDE, reducing the likelihood of short manipulation. For now I see little downside risk for CDE. Investors, at the very least, should expect shares to follow the current uptrend with PM stocks.

*Disclaimer: The author holds positions in CDE stock and options.

I wrote a previous article with my top 3 silver picks if you are interested in investing in silver stocks.

Are You Making Money?

Well, when you are right you are right. I speculated on a Fed rate cut and a dramatic increase in PM prices. Both have happened. If you haven’t noticed the USD Index is under $79 and gold is inching toward breaking its recent 26 year high. I’m sure most economists will look back at this and be surprised at the speed of the USD Index breakdown.

I expect to see a short squeeze coming from all the institutional players who have held the prices of PM stocks down. These same people will suddenly rush in and announce they are long on PM’s while investors like you and I will have already setup our positions long ago.

Make sure you view recent gold investing news on kitco.com