Gold Stocks at Panic Levels When Compared to Gold


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Mike Swanson's picture
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Gold Stocks at Panic Levels When Compared to Gold
jimslulu
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I enjoyed reading this

He has great conclusions, sees some future return to PM stocks, and has provided plenty of ammunition to substantiate that position.

Go one step further, just what "event" is Mr. Hamilton describing (he doesn't) that will change the complexion of this digging industry? What single thingy? he doesn't' dwell on some scenario that might make this return imminent, just that it is gonna happen.

My postulation is that of virtually a whole industry surrounded/crippled with non-allowed new general mining permits, with these obstacles extending far beyond simple, tried and true "old" procedures.

Time alone is crippling the junior miner. 10 years for a simple permit to begin? For what? Why? Overcome the 10 years, then along comes the Indian Nations, or some judge allied with the green left, and the time uncertainty is again expanded. Some of these miners have already waited years.

---Running out of money, as well the funding necessary to start up, these are just two of a slew of major problems with the huge time factor presently required.

My view, if/when the permitting obstacle is overcome, this will be the "event" Mr. Hamilton is anticipating. Maybe just one good potential miner being allowed to start up from scratch, I think it possible that might trigger a return of investor's to PM stocks.

----Do you suppose some Republican House/Senate control might open this door? I certainly suspect it would help.

Meanwhile, oil beckons. Some of you are missing a fantastic opportunity.There is a boom occurring, and it is going right over the heads of many writers, AND investor's.

---An example of a penman who writes a weighty tome on all things Republican, Paul Krugman, the liberal Republican antagonizer and Nobel Prize winner, (let's see, Obama also "won" this prize, didn't he(?)), wrote a piece recently in the NYT. The Denver Post, the NYT's sister parrot, published the article today---called Paranoid fantasies grip GOP---sorry, I can't find the online article. There was a comment about domestic oil production.

Krugman's said "---and America, which accounts for only about a tenth of world production." What a crock. This man is poorly informed, and is following the mantra of our pseudo leaders.

Obama needs to go to some of these boom towns like Casper, Wyoming. He made similar recent statements. Simply untrue. To be coming from our Leader, a misstatement like this is alarming. He should know and offer truth on such a fundamental issue.

The following article is worth reading. It indicates the beginning huge scope of just what is happening. Best of Trading./jimo

http://www.greeleytribune.com/article/20120324/NEWS/703249981/1051&Paren...

dlst2
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>Krugman's said "---and

>Krugman's said "---and America, which accounts for only about a tenth of world production." What a crock.

The 10% figure? Too high? Too low? I've read the same figure in a few places recently.

Closer to 9% here: http://en.wikipedia.org/wiki/List_of_countries_by_oil_production

As of 2006: http://www.infoplease.com/ipa/A0922041.html

CIA has it at around 10.5% (I did the math): https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...

jimslulu
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Saudi Arabia, Russia,

Pump oil out of the ground and distribute it. We here take a large percentage of that oil, convert it into a value added product, and then put it back on the world market. Value added exports to the rest of the world amount to a hefty percentage of our "consumption". Mostly plastics, but a lot of specialty chemicals, etc. I saw a number, I think outdated, of around 10% value added, of world demand. If you look at our demand versus supply (consumption), we are close to static, around 50%. This mostly fuel.

If we haven't already surpassed balance, we will soon-- be a net exporter. This balance refers to N. America, not just the US.

The 10% production figure is simply wrong. It is very close to 50%. Your 10% number doesn't take into account just what happens to the oil. Your Wiki/CIA both figures suggest consumption, not true. The chemical industry here is a huge user of oil products, their value added, which then find their way around the globe. The 10% number suits the agenda of people like Obama and Krugman./jimo

dlst2
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Jimo, I think the original

Jimo, I think the original 10% "production" claim that you disputed was only about getting oil out of the ground.

abeoquendo
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Jimo,

Your view on why mining stocks are lagging is probably sound, however, the catalyst of higher prices most likely will not be fundamental thingy, like the removal of drilling obstacles.

The core reason behind higher prices for the miners is the metal they mine. As long as Gold remains in a Bull market, sooner or later miners will catch up. Is as simple as that, and so "unreasonable" as that.

Once the general public becomes aware that Gold is in a Bull, which tends to happen in the later stages, they'll jump in, and at that point, PM low prices will offer an added incentive.

I think this reasoning is behind most Gold Bulls perception and predictions.

Of course, you have to agree with the fundamental reasons of why Gold is still in a Bull market, and that so far, there are no fundamental changes that could bring the Bull to an end.

So you think that we are at the beginning of a Bull market in oil, then?

Best, Abe

jimslulu
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Abe

I really don't argue against owning PM's, the stock or the physical stuff. I simply believe there is a huge opportunity in O&G at present. And greens are cutting off the legs of the miners.

Nothing is getting done. I blame it on the greens. Of course, they desire to do good, but they think the various new forms of energy they are touting are the only way, and that the sky is falling. So they have to push for green. That is just so wrong.

Yes, I do find appeal in the oil patch. And, yes, I would describe the potential of future production here in the states (first here) as a bull. There is so much oil around worldwide, I was startled to see a large list of horizontal wells being drilled in parts of Europe that have never claimed any hydrocarbons before. Now, they are anticipating production.

Forget about world situations which we have no control over, and just look at general Fundamentals. If peace, reduced world tension, going forward can be anticipated, the energy price could certainly drop, based on ample supply alone. Since we are the big kids on the block, I would anticipate increased profitability/expansion to begin here at home, then continue perhaps elsewhere. Keep in mind the size of this oil shale here in the states alone. One third to one half of the US is involved.

My Fisher rep sold HAL in my account this AM. I asked why---they are still filled up with litigation over that Gulf oil spill. He did buy Financials, JPM, BCS, and MS with the proceeds instead of putting it back into some other O&G issue.---The account is way over loaded with the O&G issues at present./jimo

1kenjcorse2
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Oil and Gas Investment

Jimo:

Could you share some specific information on what you are doing in regard to investments in this area? I've been dabbling a bit in the ETF USO, but that's about it. I'd like to know more and increase my investments in this sector.

Thanks

jimslulu
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What To Buy

I'm like a lot of others on WSW. Stock price, the lower the better, is most appealing. Generally for me, the Fundamental thingy, the types of management, the cash in the company pocket, and what they are doing with it, I tend to follow that. On the real cheapies, of course, you gets what you pays for. I get burned on some of these, so put very little, about $1-2k usually, to limit my potential loss. I do try to identify good info on the company, esp. the leases they own, but this can be quite non-productive. Sometimes, the small is small because what they are trying to sell to the public is a bunch of fluff. And, I do think small CEO's do a better job of lying, or better, stretching reality.

Trying to find good oil shale plays outside of the Services Sector, Services would be my first choice. ---An ETF is probably "good" here, but some of the bigs are not mineral rights rich, important; location of their oil leases as well (I think, but)--- because of the immense size of the potential arena to be potentially drill-able---seismograph crews going back into the '30s identified this huge shale deposit. The immensity of it is known. That's the first job my dad right out of school, running a seismograph crew, these crews mapping virtually the whole of the US. ---The resulting logs/intensity of the ping when doing seismograph work identifies oil/shale structures, so the identity is there.

The immensity of the size is mind boggling.

---I had a nice farm in S. central Nebraska, didn't own the mineral rights, and thought it might be beneficial---you could see surface shale deposits in the area, could even "smell" them--- there was a petroleum "smell", though I never really corroborated that. Also, I had 3 pivots on the farm, and had to make a ditch to take care of drainage when irrigating in one field. The ditch, about a mile long, had an oil scum on the water surface when I was running my pivots. Again, possibly from some other source, but I had a shallow oil deposit in my mind. Traced down the rights and as usual, the local banker had picked them up ~1950. For next to nothing. My inquiry, he offered to sell me the 1000 acre ownership for $5k. In essence, I think he was telling me he didn't want to sell. This was before fracking and oil shale, about 1992. I'm pretty sure I could have made a couple bucks off those rights today.

So far, I have resisted my usual penchant for under $1 stocks, limiting them to just a couple. One has gone up a bit, another, a S. American one I caught on WSW, I sold for a loss. I am beginning to believe the whole of the world is the "oil shale" playground. It appears that big.

If you play with an ETF, consider the general nature of deep sea oil, the litigation continuously agitating some of these larger, more aggressive companies---mentioned the other day, my Fisher account bailed on HAL. This, specifically because of litigation and the BP spill. Litigation certainly sucks investor profitability out of these companies, giving it to lawyers and governments instead. You and I are left sucking on an empty teat.

So, to me, there is appeal in individual companies, ones with direction toward oil, ones operating in what geologists are calling the "bread basket" at this time---start in Texas, yep, go north to the Canadian border. E/W 3-4 states all the way up. Action in that area is primary now. To buy an ETF, I would argue you get the "good" with the "bad". ----Natural gas is NOT the play. NG is just in too plentiful supply, and my suspicion is it will stay that way for perhaps a long time.

---so, if these huge fields start coming into production, wouldn't you expect the general price of oil to also drop substantially? The cheap nature of getting it to the refinery? Very little shipping costs, etc.? There is some NG in virtually all the horizontal wells I can see around here---that might be the appeal in the fracking going on in this old-timer here, called the Wattenburg field. Vertical wells up till now, drilled back in the '50s, and low volume producing ever since---I've been told it is really the Bakken (the desirable oil shale formation). This Wattenburg has piping in place to accept NG, so nothing is lost. The new horizontals are being drilled in close proximity to the existing verticals. I'm assuming it is the same formation (depth) now that is being fracked. This is going on all around me. Greeley is suddenly a hub for a large number of the bigs. A number are putting in regional headquarters in this area.

Recently, I mentioned some frack wells being drilled 40-50 miles away from any sort of other discovery. These used to be called Wildcats. In my Texas youth, going to some Wildcat with my father, it was totally different---then usually, only a few miles from some known field or known producer, and a sharing of the risk on a dry hole between a number of participants in the Wildcat.---Today here, there is a huge distance between wells in this area around Greeley for a Wildcat type well. This best indicates to me the enormity of what is going on. These wells are discovering---SSN seems fearless in their Wildcatting. They own a bunch of good (I think) leases. Finding oil waaay out there. They do take on risk partnership on some of these.

Also, some of these smalls have a huge amount of owned leases, so you have to want some company that has a future; the leases suggest that future to me.---to invest in an ETF, you lose the ability to make various choices surrounding thingies like that. You take the HAL's with the non-litigant.

I think Elliot has done an excellent job of spotting/knowing quality in this field. Listen to Elliot, his comments. Other than my RES and SPN, both Services stocks which I think have potential, so higher ownership, I have NBR (also in Service stocks, profitable for me) which I added to recently (now 300 shares), I own some Canadian's--TIDZF (profitable, bot at $.63), SSN, (I bot at $2.36) an Aussie company operating in my general area, and good with info on their work, good leases; PDS, down some from my purchase price of $10.74; CETEF, a newer listing on the pink sheets here, thinly traded on the pinks, but strong in Canada, so anticipating other US investor's buying, me buying at $7.39; CYSVF, bot at $12.65, same logic as CETEF; CXUSF (Canexus Corp, CUS.to), a supplier of some of the chemicals needed to frack, good profits, good guidance; still thinly traded on the pink sheets.

---In ~2005, WSW was full of small miner talk. Mikey was touting a number of them, also had Lance, Gerald and others throwing out names. Yes, even Gerald traded a few penny stocks then.

I accumulated 40-50 small miners, did sell some that were what I considered losers, but didn't get my feet too wet with any one stock; at least until I saw some performance out of them. I did keep my trading portfolio around 40-50 stocks. And, I would add to my winners over time. Anybody remember Blue Pearl, which finally became TC? What a great stock. At that 2005 window, these kinds of stocks were in the dumper, not in favor with American investors in general. As volume built on some of those penny Canadians, as additional investors (I think a lot of them from the US, wanting to get into mining issues on the cheap), many of my owned issues took off. I was especially playing the Canadian miners, originally low volume. There were some 4-letter Nasdaq symbols also, but mostly F (for foreign) ending stock symbols traded here. I did extremely well using this simplistic procedure. Thanks Mikey, thanks WSW.

I think this same kind of situation exists right now on O&G. There are a ton of Canadian issues really on the cheap. Listen to Elliot. He knows a lot more than me on what is good/bad. I do tend to buy/hold longer than most of the WSW crowd. If i can find any bad info, I do dump. But right now, this Market looks primed for O&G the same way miners were primed in 2005---I think it is NOT common knowledge just how huge the O&G Fracking is; when it becomes apparent, good companies are going to be bid to much higher levels. Sorry about the rambling.

My bottom line---I am believing in the tomorrow of general O&G, capable/headed to much higher profitability. Earnings season is upon us. I'm hoping profitability in the Services group. Anticipating this. The highways are filled with these guys 50 miles out in all directions. Unbelievable the fancy rigs these guys are driving. Oil has lined their pockets. Hope this helps. Best Of Trading./jimo

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