My 1st Million At 33 – yes, you can do it too

After selling out NG at $15.50 right after acquisition bid of $14.50, I went back in to pick up my original stake at a higher price of $15.77 about almost 2 weeks ago. I usually update my portfolio pretty faithfully, but since this was a purely gambling bet, I held off of updating my portfolio.

Why NovaGold? For those who are not familiar with any gold junior companies, Novagold is probably the top three in the juniors that have a very substantial gold reserve base, and is probably the one of the closest to production, starting in 2007. According to my available data, only NAK has a reserve base (42 million ounces) significantly exceeding NG, while the other ones are either very close or below NG’s reserve at 29 million ounces (KRY has 22, IVN has 21, and KGI.TO has 19 million ounces). While there are many reasons for different valuation on these different ounces, due to geography, quality of recoverable reserves, etc. the bottom line is that these are very significant gold reserves. As an example, comparing to a high quality intermediate size production company AUY (recommended by Cramer by the way), it is trading at about 3.45 billion market cap, with about 10 million recoverable ounces.

I’m betting that the value in NG is far from being fully realized by “restocking” all of my shares. By some measurement at ResourceInvestor.com, NG could be valued at $73 a share. While I don’t expect to fetch this kind of value, I’m guessing that $20 or somewhere close to it should be a reachable goal. Friday’s announcement by ABX to waive the minimum tender condition is another proof of its undervalued bid at $16 cash for NG. And certainly that has caused NG to again trade above the acquisition bid price. ABX is one sneaky fox that has outbidded NG’s on Pioneer Metal by going sideway acquiring related interests, and attempting to circumvent to get to Donlin Creek project. And let’s not talk about the 3 to 4 billion dollar loss on ABX’s gold-hedging book that has few people paying notice, plus rumors (or fact?) on serious land claim issues at 25 million ounces Pascua Lama project.

Please do your due diligence before buying any stocks, especially in this very volatile PM sector plus in a smaller junior company.