Medusa Share Discussion Threads

[atlantic57] 14/2/2016 16:04

Hi Blue,
Thank you for that.
Yes i only lost money that i had made as profits.
i follow larry Edelson in his real wealth report.

He has interesting views on Cycles but actually tipping individual stocks he does
not seem to be so good.

Cheers

[bluelynx] 14/2/2016 14:58

Hi

Atlantic

I also have suffered quite considerable losses from 2011, about 65%. But with this recent move in the gold price overall since 2000 I'm at break even in nominal terms, so not so good really. But if gold resumes it longer term bull market things could soon improve.

I understand from what you said previously that you are also breaking even despite a 90% loss so you are still in the game so too speak, so we are much the same really. We live to fight another day.

With regard to the other shares I hold; I don't have the time to do detail research, so apart from MML I just subscriber to Gold Stock Analyst, and hold their recommendations. This saved me from any really bad wipe-outs, that is until recently! Then came along their recommendation of Rubicon Minerals. Which was a total disaster. Briefly, they did start production but soon after they 'discovered' that the gold resource was way below what originally was estimated, go figure! I had been averaging down and I double up just days before the bad news broke.

They recommend a number of popular royalty companies quoted on the TSX Franco Nevada etc. They also tip some midcap and some more risky ones like Rubicon, but as I have been slowly selling my dividend paying shares and buying these recommendations overall I am not doing too bad. Despite the £20K loss on Rubicon!

Regards

BL

[polaris] 14/2/2016 13:37

Hi Justin,

Just a personal preference that i trade now rather than LTBH. Volatility is a trader's friend, as long as you get on the right side of it! ;-)

I think we all agree that should gold stabilise at this level or continue to rise that all gold plays will reap the benefits.

MML is only listed on the Oz market and so misses out on some exposure. This was a choice of the management to cut costs, though IMO it has limited exposure to a wider shareholder pool. My only route to this market is via CFDs. I am sure i am not alone.

regards,

Paul

[atlantic57] 14/2/2016 13:34

Hi Blue,
i hope you are `well my loss of 90% capital is well documented on these boards.
i also fundamentally misjudged the ability of central bankers to kick the can down the road after 2008.

However regardless of where we are in the gold cycle whether its is a strong bear market rally or the foothills of a major bull market, it does seem evident that central Bankers no longer have the power to soothe markets.

What are your Current favourites in the gold sector.
cheers

[bluelynx] 14/2/2016 12:58

Justin

Thanks, that's a compliment coming from such an eloquent and knowledgeable poster as yourself.

As you say all we need is for the price of gold to stabilise at the current level, which I personally regard as cheap given the many difficulties the world economy is facing at present, and MML will move quickly higher to a more justified valuation. The risk reward is outstanding in my view.


BL

[justinjjbuk] 14/2/2016 10:56

BlueLynx

You beat me to it in your response and you hit the nail on the head.

If gold hadn't collapsed back down below $1,100, stories of management incompetency would never have arisen. It is relatively easy to manage a company in a market where demand for your product is booming (and its price rising), but much more difficult when demand is heading south.

I am not saying mistakes were not made, and I have been frustrated as the rest of us. But if gold had stayed at, say, around $1,600, the development of the new projects would have been far advanced and the 280k oz target would be far closer.

As to Paul's assertion that this is not a market for long-term positions but one for trading, I think this is wrong. It's true that at an early stage of a bull market, it is sometimes possible to work your way down the quality curve if you are an astute trader. You buy the blue chip names, then switch into the second tier and finally buy into the low quality 'hope' stocks. I've done it myself many times but in different contexts.

However, I don't think that this strategy is wise in our case due to the extreme undervaluation of what the market perceives as the low quality plays. Usually, at the bottom of the cycle, extremely low valuation is associated with bankruptcy risk. So in effect, stocks trading in the tens of cents are often valued as options.

In our case, however, you could buy MML with no bankruptcy risk whatsoever even at a gold price of $1,060 (its end 2015 value). Yet, here was a company with rising production, rising free cash flow (as we saw in Q4), no debt and $16 million of cash on the balance sheet. MML was not a near-bankruptcy basket case.

I think the market reached its super pessimistic valuation through extrapolating the last-four-year fall in the gold price far into the future. In effect, you could arrive at MML's market valuation by extrapolating a yearly decline in the gold price by $50-100 or so for the next five years. If you did that, then perhaps MML would be justified at 30-50 cents.

This is a classic example of Warren Buffet's characterisation of 'Mr Market', in which he imagines the market as a cantankerous old man who is prone to wild mood swings, from super optimism to super pessimism and then back again.

So why wouldn't I trade the market? Because I think the divergence in valuation between the better quality Aussie names (Newcrest, Evolution, North Star) and the lower quality names has never been bigger. And for that reason, as it dawns on the market that the gold price will not continue falling forever, the revaluation of the lower quality names will be explosive. For this to happen, the market doesn't have to believe that the gold price will go up from where we are around now ($1,200-$1,250 or so), but just think the gold price will not keep going down.

Once the market decides that a gold price of $1,200 or above is for real, the valuation of MML will move from that of a potential bankruptcy candidate to that of a highly profitable going concern. That should cause its stock price to quadruple in value alone (ignoring future AISC improvements and any value from the undeveloped finds). Good luck to any trader trying to catch that move once it starts. As I've said in a previous post, the best strategy is to strap yourself in and settle in for the ride.

Justin

[bluelynx] 14/2/2016 09:55

Augustusgloop was right! Well to the extent that the Bear market in gold for the last 4 years plus has made him right, but that none the less is a good call.

The very considerable drop in the gold price from $1,900 to $1,040 ment that gold miners could not avoid missing their predicted growth of production as mine expansion plans were shelved.

The high gold price back in 2011 in my opinion lead to poor decision being made by many gold mining CEO's, as they lost sight of mining cost efficiency to concentrate on growth. Therefore they quickly found themselves in trouble with inefficient high cost production and a fast falling good price.

Now management have made great strides in efficiency improvements which have lowered the AISC which were a must just for pure survival.

But now with a rising gold price and much lower AISC we seem to have the complete reserve of the situation that existed back in 2011 when the gold priced peaked.

A further plus factor is that the all powerful FED back in 2011 could do no wrong and would back stop all Assets Prices, now it would seem that their many market interventions and manipulations have failed hence the sudden rush by investors to buy gold, hopefully this will continue but there are no guarantees, we have had a couple if false dawns but it looks extremely positive this time.

Gold Bulls 'could' now have the perfect storm, and with a rising gold price may be even Augustusgloop will be a Gold Bull!

[nielsc] 14/2/2016 00:11

Chipperfrd,

It is great ABX is up and running. I remember you expressing concerns that they might just be bought off. Thankfully nothing like that has come to pass.

Listened to the Andrew Maguire interview that followed TC's. Was interested to hear him talk of a gold reset, which would most probably happen on a Friday where allocated bullion would be settled in cash. A default in effect. With gold, I presume, opening on Monday at a vastly different price.

Cheers,
Niels

[cyberbub] 13/2/2016 18:00

At the risk of repeating myself, the management might be a little uncertain at the moment, but *if* gold stays above $1200 then I don't think it will matter. A p/e of 2 in that situation would be excessively negative, IMO.

NAI

[roguetreader] 13/2/2016 16:09

Paul
Always enjoyed reading your posts and wish you well with your investments elsewhere. I'm still invested here so 'still believe' it can be be turned into profitable investment. My personal view is that management and mine position has improved significantly over the last year, but I am keeping a wary eye on management going forward as I am not wholly convinced given the most recent changes.
RT

[polaris] 13/2/2016 12:02

I can answer that straight away - no. I have always been watching but i sold out long ago on the back of the serial disappointments and it is hard for me to trade the Oz market effectively.

Even when GD came back, he was only there to put the house back in order, which i think he did. Now we seem to be going back to the bad old days wrt board and management. The advantage now is that gold appears to be on the advance and so there are potentially very large gains to be had in a lot of battered miners.

I'm glad to see that MML finally started reporting all-in costs, as i think this gives a much more reasonable view of the ongoing operation than the strict cash costs.

Love him or hate him, Augustusgloop made some valid points. I crossed horns with him on many occasions and each time the company failed to deliver. At that point, i effectively crossed to the other side, by selling and thank him for making me realise that i was viewing things with rose tinted spectacles. Sometimes a contrarian view is necessary to add perspective on ones investments.

There is still a long way to go from here and that early potential (from when i got involved back in the early 2000s) has never been realised. Where is the 200k production, the path to 400k production that i remember with the large truck and shovel operation at Bananghilig? Also, what happened to the copper prospects?

MML may have seen its nadir but i'm not convinced this management has the experience or drive to line anything other than their own pockets.

regards,

Paul

[chipperfrd] 13/2/2016 11:24

Niels,

Thank you for the tip-off regarding the ABX startup. It is great news although I expect it will take a while for them to build volume on their exchange. Still, every producer that sells Au/Ag product there instead of into the LBMA will help to change the stranglehold of the cartel - and about time to!
Chip

[deka1] 13/2/2016 10:46

Yes Neils, I wonder if there is a connection between the challenge posed to the TBTF Banks/ institutions to manage their derivative commitments during the GFC of 2007- 2009,,and the rise to over 1900/oz in gold.
Does the attempt at unwinding these positions effect the ability to control the precious metal prices to an extent, the system is not yet in as much trouble as it was back then, but it could get there if the market rout continues ,if it does might we see a similar effect on the PMs.

[arja] 13/2/2016 08:44

interesting trigg comment
Flight to safety not only led to a sell-off in the Yuan but has spiked demand for Gold. If you can't get your capital out of China to buy real estate in Vancouver or Sydney then the next best alternative is to buy gold. Spot metal prices brushed aside expected long-term resistance at $1200/ounce, reaching highs of $1250. Expect some retracement, but gold should find support at $1200. Completion of a higher trough would confirm a primary trend reversal.

[nielsc] 13/2/2016 07:30

Morning deka1,I'm sure the big producers will be very interested. Should happen soon.Remember the First Majestic letter to the CFTC.http://www.zerohedge.com/news/2015-06-03/one-largest-silver-producers-world-slams-cftc-about-silver-market-manipulationCheers,Niels

[deka1] 13/2/2016 04:30

Neils hi , I wonder how many miners use it ,I think that's what would help to change the status quo with the LBMA re the price fixing

[nielsc] 13/2/2016 00:11

ABX has gone live.
Interview with Tom Coughlin on tfmetalsreport.



Great stuff.

Cheers,
Niels

[atlantic57] 12/2/2016 20:59

Okay I would say that abc caution is reasonable. It is to early to say we are in a new bull market.
It may be a strong bear market rally. Time will tell.

I don't know the answer .

However at some point the can that was kicked down the road after the 2008 financial meltdown should lead a strong bull run in gold .

At the very least the strength of the rebound since 01/01/2016 suggests that we could be ready to start the journey Of a major bull market for gold

We will soon know

[bluelynx] 12/2/2016 19:16

Justin

I'm glad you've also had a good run.

It's good that you don't see too many indications of over bullishness and as if to prove this long comes abc125 quite reassuring.

Thanks for sharing your thoughts.

BL

[justinjjbuk] 12/2/2016 18:58

BlueLynx

Well done on the good start to the year. I have had a great year so far as well.

I also agree with your contrarian view. But at the minute I am not coming across many rabid bulls like me.

None of the technical newsletter writers who are featured on Kitco Commentaries are uber-bullish. The most bullish only go as far as to say that the bottom in gold may now be in. But their general stance is like abc above; i.e., they say let's wait and see, or say they kind of don't believe in the move in gold but they may be wrong, or they say that yes this is the end of the bear market but they want to buy in only after a correction.

I think that by the time they commit to a straight-out buy call with no caveats the rally will have finished its most explosive phase - which for contrarians is just as the world should be.

Justin

[abc125] 12/2/2016 18:13

we'll see. I have not seen enough evidence as yet.

[4marlin] 12/2/2016 18:02

The bear market in gold is over imo.