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30/10/14
08:58
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Originally posted by chuk
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Jid, it might sound like I'm biased but I don't believe I am. First of all, I'm not sitting on a large profit or on a loss for that to influence me nor have I been in for long. Secondly I've sold plenty of stocks the minute that I have decided that I no longer like what I see, even after holding for a couple of years. Just recently I sold MML after thinking I was going to hold longer term on concerns over what the qtr result might bring. I was ready to buy back in if the qtr was ok but it wasn't and I have stayed out. I have sold plenty of stocks in the past that I held for years either because of some development I didn't like or because the sp has reached my target and I have found better value elsewhere. I rarely have held a stock more than a couple of years (shame about that with Andean resources!). I don't fall in love with any stocks despite what I'm told here. If it sounds that way, it is because I see a hell of a lot of positives and very strong value here. That usually works out out very well for me.
The Swiss gold referendum IMO probably won't go through but if it does I completely disagree with you on the effect. With the examples you gave;
Gold repatriation may or may not lead to future purchases.
Central banks announcing 30-100t purchases will not necessarily have much impact because they don't announce if they will keep buying and how much.
If a bank announces it will buy several thousand tonnes of gold, that would be an entirely different situation. Hedge funds and other investors would almost certainly front run on that amount in the same way they bought bonds ahead of the Fed when it announced QE and the same way investors sold gold before its lows in 2000-2001 when central banks had told markets of their intentions to sell.
As for;
(6) Large documented inflows to China though HK and Shanghai
(7) Large recorded outflows from UK to Switzerland and onward (assumedly) to China
(8) Head of SGE commenting in a speech last month that 2kt was bought by Chinese consumers in 2013 - double WGC estimates
This probably will eventually break the camels back but it won't be to push gold down, it will be to push it higher when Western selling finally does dry up, the price begins to rise on the reduced selling and the Westerners want to buy again on a resumed up trend. I'm not going to try and time that but I'm not expecting POG to suddenly fall on strong Chinese demand.
"I read recently that 80% of explorers that get to development fail as they develop their mines (this from ASX and TSX.V research)"
I have not seen anything like that in stocks I have invested in. Perhaps the trick is to invest in the ones with outstanding (BSR) or at least strong feasibility studies based on conservative assumptions. Then you won't get caught in the ones that fail. I can only recall a couple of recent cases of developments that failed and those were due to the POG collapsing as those projects came on line. SLR's Murchison was one example. Their cash costs were hundreds of dollars above the current gold price. BSR's will be a fraction of the current gold price and debt will be extremely low relative to cash flows. The most important risk I have seen for developers with strong projects is govt risk. Two examples were KGL and NKP. Both strong projects but Kyrgyzstan and South Africa political risks played out to indefinitely delay or kill the projects. Senegal is a very different and far safer country and is pro development. BSR just informed us that the govt has maintained police precense to make sure illegal miners stay off the leases. This has been ongoing for around 6 months and makes clear the govt's pro-development stance. Pick your stocks well to avoid those with the 80% chance of failing on development.
"Thus BSR is entering the riskiest phase of its evolution."
It is also entering the phase where most of the appreciation is seen in the share price of resource companies. That is what interests me as long as the risks are low.
I wouldn't be holding if I couldn't see very strong upside in the sp with a POG assumption of $1200. I can see strong upside at $1000 gold.
Might need some luck if you bought yesterday for a quick trade with POG down last night but I'm not in for a quick trade on this very undervalued stock.
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"Just recently I sold MML after thinking I was going to hold longer term on concerns over what the qtr result might bring"
Actually not that recently! I sold before the June report which was the one that made the price collapse. The last qtr report was no better so even after the price has collapsed by something like 70%, I still have no interest in buying back in. I wasn't in love with MML and I'm not in love with BSR but I do like BSR's assets and I do see very strong upside so if that's how you define love then under your definition (not mine) you can say I love it.