Investing in Gold, Trust the Famous Executives

Posted on October 10, 2007 , Filed Under Stocks | Leave a Comment

When gold is as hot as it is today, it makes sense to watch the actions of top management executives who have proven track records. With that in mind, I am beginning to trade positions in Jim Sinclair’s, Tanzanian Royalty Exploration Corporation [[TRE]] and Rob McEwen’s, US Gold Corporation [[UXG]]. Both of these well known executives have been involved in the exploration and mining industry longer than most of us have been trading mining shares.

Jim Sinclair is a famous precious metals specialist, commodities and foreign currency trader.

Taken from Jim’s website:

From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volker.

He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (commodity clearing firm) and Global Arbitrage (derivative dealer in metals and currencies).

In April 2002, shareholders of Tanzanian Royalty Exploration (formerly Tan Range Exploration) approved the acquisition of Tanzania American International, a company controlled by the Sinclair family, for shares in Tan Range. Following this transaction, Mr. Sinclair became Chairman of Tan Range and now leads its efforts to become a gold royalty company.

Rob McEwen is the former Chairman and CEO of Goldcorp [[GG]].

Taken from Rob’s website:

Rob McEwen is Chairman and CEO of US Gold and Lexam Explorations and the founder and former Chairman and CEO of Goldcorp, which is the world’s lowest cost million ounce gold producer. Rob followed his father into the investment industry and developed a passion for gold. In 1990 Rob jumped into the mining industry, where he transformed Goldcorp from a collection of small companies into a mining powerhouse. Since 1993, when Rob started restructuring Goldcorp, its market capitalization has grown from US$50 million to over $10 Billion and Goldcorp’s share price has increased at a 28% compound annual growth rate.

Since July 2005, when Rob became US Gold’s largest shareholder and shortly thereafter the company’s Chairman and CEO, its share price has increased by approximately 1,170% as the company pursues its goal of becoming Nevada’s premier exploration company.

Jim and Rob both have a strong vested interest in their companies success by holding a large number of insider shares. I like what I see from both companies as they are poised to become strong companies on the backs of proven leaders.

I exited a position in TRE yesterday at $5.85 and opened a position in UXG in the past two days under $5.50. I will likely trade in and out of both companies as we lead up to an expected rate cute in October.

(1 votes, average: 5 out of 5)

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Timberland Update

Posted on October 9, 2007 , Filed Under Stocks | Leave a Comment

Timberland Company [[TBL]] failed to sustain any meaningful breakout in the last trading sessions. The market was up over 100 points today and Timberland was hovering between high $19’s to low $20’s. I sold my TBL position yesterday at $20.

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Investing in Timberland Company

Posted on October 7, 2007 , Filed Under Stocks | Leave a Comment

I’ve updated this article over the weekend.

I first started watching Timberland Company [[TBL]] after using Joel Greenblatt’s formula for identifying potentially undervalued stocks. Joel’s formula covered in The Little Book that Beats the Market, centers on picking stocks with a high return on capital and earnings yield. Although it’s not recommended to do this, I use ROE and ROA criteria for comparable statistics due to the ease of research on Yahoo! Finance.

Timberland was among a list of companies I found with a high ROE and ROA. Let’s look at the fundamental statistics I care about:

Total Cash: 97.53M
Total Debt: 0
ROA: 11.62%
ROE: 15.49%
Trailing P/E: 15.36
Forward P/E: 17.01

Timberland is a well managed company with a strong established brand name. The company has turned in a few consistent quarters of declining earnings. Timberland faces some issues about slowing growth that have created a definite cause for concern. In addition to the slowing growth, the stock market has been soft on recommending retail stocks since there are lingering concerns of a credit crunch that may drive the country into a recession. Recent declining earnings and macroeconomic concerns are weighing down Timberlands stock price.

The bullish flipside to this, is the long-term track record of Timberland’s management. To combat slowing growth, Timberland has announced that it will shut down 40 brand name stores in an effort to restructure costs. The management has demonstrated its ability to turn in strong earnings in the past and does a fabulous job at managing debt.

I’ve taken a small 1000 share position in TBL and expect to see shares in the $21-$23 range before the end of the year.

*Disclaimer: The author owns 1000 shares of TBL.

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Investing in Gold, My Thoughts on October’s Price Action

Posted on October 1, 2007 , Filed Under Stocks | Leave a Comment

As we enter the morning session, traders are being asked to digest an announcement by Citigroup [[C]] that third-quarter earnings are likely to decline by up to 60 percent. I think the announcement may drive traders to expect similarly poor earnings results from other financial firms. There may be a fair amount of profit taking as news of Citigroups announcement and analysis of the potential impact spreads throughout the day.

Due to general market volatility, I still believe we may be due for a minor correction to $710-$720 levels for spot price of gold. A pending rate cut at the end of October has kept gold strong and weakened the dollar. If we pass $750 today, we may enter a smooth uptrend for the spot price of gold. It will be important to watch the closing levels of gold in October to determine a likely direction for gold during the remainder of the year.

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

Posted on September 26, 2007 , Filed Under Stocks | Leave a Comment

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).

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Online Investing, Two Tech Stocks Worth Watching

Posted on September 26, 2007 , Filed Under Stocks | Leave a Comment

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.

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

Posted on September 25, 2007 , Filed Under Stocks | 2 Comments

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.

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Raw Greed Late September Traffic Statistics

Posted on September 25, 2007 , Filed Under Stocks | 1 Comment

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.

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Investing in Gold, Daily Price Action and Direction

Posted on September 25, 2007 , Filed Under Stocks | Leave a Comment

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.

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Investing in Silver, CDE Update

Posted on September 24, 2007 , Filed Under Stocks | 1 Comment

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.

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

Posted on September 24, 2007 , Filed Under Stocks | Leave a Comment

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%

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Online Investing

Posted on September 23, 2007 , Filed Under Stocks | Leave a Comment

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.

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Lundin Mining Corporation Up in After Hours

Posted on September 21, 2007 , Filed Under Stocks | 1 Comment

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.

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Lundin Mining Corporation Analysis

Posted on September 21, 2007 , Filed Under Stocks | Leave a Comment

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.

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Precious Metals, Daily Action and Direction

Posted on September 21, 2007 , Filed Under Stocks | 1 Comment

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.

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