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  • Archive for November, 2009

    Dubai induced panic in a low-volume sell-off

    Posted by Frugal on 27th November 2009

    The volume is extremely low today. Anybody buying or selling out there needs to be very careful. The market will not reveal its true direction until Monday.

    I believe that if there is a pullback, it would be more healthy. I still don’t see markets going down big time yet, despite my overall bearish stand. The real stress may come first or second quarter of next year, when banks can no longer hide the ongoing resets of option ARM mortgages. For now, the levitation act performed by Wallstreet may continue for awhile.

    I will definitely be a buyer in the gold sector if it pulls back. Tech sector may be another good choice, ASSUMING that Xmas sale is good. The weak sectors will continue to be separated from the general markets, since capital around the world is still chasing quality stocks to avoid inflationary assault.

    Hang on tight. Greed seems to be still the word of the day.

    Posted in Market Pulses | Comments Off

    Thanksgiving doorbuster sale has begun

    Posted by Frugal on 27th November 2009

    This is the first time that I’ve ever tried to “bust the door” for black Friday sale. I went to Toys R us to get legos for my kids. The sale started at midnight, and I was 30 minutes late since I was going through global stock market news due to Dubai debt panic. Stocks are down 3% to 6% around the globe, and US will open with hefty losses too. Gold has already sold off in Asia by $50.

    Anyway. At 12:35am, I arrived at ToysRus, and parked my car at a really far away location since the entire parking lot was basically full. Starting from the door, I kept walking to get to the end of line. It took me about 5 to 10 minutes of walking to get to the end of line, which is about 500 feet away. The store itself was full of people already, as I could see thru the window, and there are probably some 200 people outside waiting to just get into the store. I asked the person who was at the end of line, and confirmed that the line was indeed for Toys R us. Man, I couldn’t help but laughed. This is just crazy! Thirty minutes after the sale begun, and I probably won’t get into the store for another 40 minutes.

    Realizing that the lego items that was on sale was most likely sold out already, I decided to go home instead. As I drove away from the full parking lot which was designed & allocated for 3 other big chain stores like Toys R us, I also noticed that all other stores are still closed. Boy, all the cars there were mostly for Toys R us, except for a few early campers at other stores.

    I’m not sure where the recession is. Looks like the Thanksgiving & Christmas sales may not be too bad. If you want to look for bargains, you will have to find a way to beat others to store. I think I’m going to try online. Bing search engine is providing cashback for various stores. At Walmart.com thru Bing, you can get 15% off. Maybe that’s an easier way to get to your bargains.

    Happy Thanksgiving.

    Posted in Frugal Ways | Comments Off

    Review on the new gold ETF GDXJ & GDX

    Posted by Frugal on 13th November 2009

    GDXJ was debut this Wednesday. Both GDX and GDXJ (the junior companies) are offered by Van Eck.

    Here are the links to the company site for GDX and GDXJ. The complete weighting of the components are listed below:

    Fund Holdings of GDX as of 2009/11/12

    Number

    Holding

    Ticker

    Shares

    Market Value

    % of net assets

    1

    Barrick Gold Corp

    ABX

    18,718,639

    $783,749,414.93

    14.49%

    2

    Goldcorp Inc

    GG

    14,249,524

    $614,011,989.16

    11.36%

    3

    Newmont Mining Corp

    NEM

    9,475,288

    $470,353,296.32

    8.70%

    4

    AngloGold Ashanti Ltd

    AU

    6,999,199

    $304,045,204.56

    5.62%

    5

    Lihir Gold Ltd

    LIHR

    8,569,682

    $265,317,354.72

    4.93%

    6

    Cia de Minas Buenaventura SA

    BVN

    7,114,374

    $263,587,556.70

    4.87%

    7

    Yamana Gold Inc

    AUY

    21,130,631

    $259,484,148.68

    4.80%

    8

    Randgold Resources Ltd

    GOLD US

    3,203,698

    $255,110,471.74

    4.72%

    9

    Kinross Gold Corp

    KGC

    13,436,964

    $252,883,662.48

    4.68%

    10

    IAMGOLD Corp

    IAG

    14,744,197

    $251,536,000.82

    4.65%

    11

    Gold Fields Ltd

    GFI

    16,291,819

    $229,714,647.90

    4.25%

    12

    Agnico-Eagle Mines Ltd

    AEM US

    3,748,931

    $223,736,202.08

    4.14%

    13

    Eldorado Gold Corp

    EGO

    16,025,187

    $207,205,667.91

    3.83%

    14

    Silver Wheaton Corp

    SLW

    13,420,202

    $199,692,605.76

    3.69%

    15

    Harmony Gold Mining Co Ltd

    HMY

    17,100,638

    $175,452,545.88

    3.24%

    16

    PAN American Silver Corp

    PAAS

    3,501,327

    $82,036,091.61

    1.52%

    17

    Royal Gold Inc

    RGLD

    1,636,283

    $81,715,973.02

    1.51%

    18

    Coeur d’Alene Mines Corp.

    CDE US

    3,026,689

    $63,378,867.66

    1.17%

    19

    New Gold Inc

    NGD

    15,532,015

    $59,176,977.15

    1.09%

    20

    Silver Standard Resources Inc

    SSRI US

    2,878,399

    $56,071,212.52

    1.04%

    21

    Hecla Mining Co

    HL US

    9,493,058

    $50,692,929.72

    0.94%

    22

    Gammon Gold Inc

    GRS US

    4,993,219

    $49,233,139.34

    0.91%

    23

    Seabridge Gold Inc

    SA

    1,505,674

    $35,142,431.16

    0.65%

    24

    Golden Star Resources Ltd

    GSS US

    9,492,472

    $32,369,329.52

    0.60%

    25

    Aurizon Mines Ltd

    AZK

    6,375,413

    $30,219,457.62

    0.56%

    26

    Northgate Minerals Corp

    NXG US

    10,274,632

    $30,207,418.08

    0.56%

    27

    Minefinders Corp

    MFN US

    2,376,917

    $23,674,093.32

    0.44%

    28

    Great Basin Gold Ltd

    GBG

    13,386,929

    $20,883,609.24

    0.39%

    29

    Nevsun Resources Ltd

    NSU

    5,149,665

    $14,882,531.85

    0.28%

    30

    Tanzanian Royalty Exploration Corp

    TRE

    3,603,954

    $12,469,680.84

    0.23%

    31

    Cash

    6,655,296

    $6,655,380.14

    0.12%

    32

    Vista Gold Corp

    VGZ CN

    1,705,026

    $4,569,469.68

    0.08%

    Fund Holdings of GDXJ as of 2009/11/12

    Number

    Holding

    Ticker

    Shares

    Market Value

    % of net assets

    1

    Coeur d’Alene Mines Corp.

    CDE US

    56,910

    $1,191,695.40

    6.42%

    2

    Silver Standard Resources Inc

    SSRI US

    51,510

    $1,003,414.80

    5.40%

    3

    New Gold Inc

    NGD CN

    251,160

    $972,587.72

    5.24%

    4

    Hecla Mining Co

    HL US

    177,285

    $946,701.90

    5.10%

    5

    Gammon Gold Inc

    GRS US

    89,085

    $878,378.10

    4.73%

    6

    Alamos Gold Inc

    AGI CN

    80,610

    $808,060.57

    4.35%

    7

    Silvercorp Metals Inc

    SVM CN

    117,615

    $712,342.27

    3.84%

    8

    Semafo Inc

    SMF CN

    187,800

    $707,530.16

    3.81%

    9

    European Goldfields Ltd

    EGU CN

    95,100

    $648,543.09

    3.49%

    10

    Golden Star Resources Ltd

    GSS US

    175,590

    $598,761.90

    3.22%

    11

    Northgate Minerals Corp

    NXG US

    192,960

    $567,302.40

    3.06%

    12

    Kingsgate Consolidated Ltd

    KCN AU

    65,010

    $548,420.73

    2.95%

    13

    Jaguar Mining Inc

    JAG CN

    52,200

    $545,176.21

    2.94%

    14

    San Gold Corp

    SGR CN

    185,925

    $530,226.29

    2.86%

    15

    Aurizon Mines Ltd

    ARZ CN

    112,455

    $528,783.59

    2.85%

    16

    Novagold Resources Inc

    NG US

    97,935

    $509,262.00

    2.74%

    17

    Andean Resources Ltd

    AND CN

    229,485

    $503,424.58

    2.71%

    18

    Gabriel Resources Ltd

    GBU CN

    147,360

    $444,139.06

    2.39%

    19

    Minefinders Corp

    MFN US

    43,560

    $433,857.60

    2.34%

    20

    Allied Nevada Gold Corp

    ANV US

    38,055

    $428,499.30

    2.31%

    21

    Ventana Gold Corp

    VEN CN

    38,040

    $420,147.07

    2.26%

    22

    Rubicon Minerals Corp

    RMX CN

    99,240

    $411,744.96

    2.22%

    23

    Great Basin Gold Ltd

    GBG CN

    251,820

    $393,900.33

    2.12%

    24

    Lake Shore Gold Corp

    LSG CN

    92,505

    $355,567.89

    1.91%

    25

    St Barbara Ltd

    SBM AU

    1,032,395

    $343,436.08

    1.85%

    26

    Kirkland Lake Gold Inc

    KGI CN

    38,685

    $332,075.92

    1.79%

    27

    Avoca Resources Ltd

    AVO AU

    194,325

    $333,011.01

    1.79%

    28

    Fronteer Development Group Inc

    FRG US

    79,110

    $328,306.50

    1.77%

    29

    Romarco Minerals Inc

    R CN

    245,175

    $327,383.28

    1.76%

    30

    Medusa Mining Ltd

    MML AU

    77,745

    $284,326.89

    1.53%

    31

    Detour Gold Corp

    DGC CN

    20,685

    $271,275.45

    1.46%

    32

    Gold Wheaton Gold Corp

    GLW CN

    759,960

    $217,452.43

    1.17%

    33

    Dominion Mining Ltd

    DOM AU

    55,260

    $202,474.00

    1.09%

    34

    Real Gold Mining Ltd

    246 HK

    127,500

    $194,484.35

    1.05%

    35

    Colossus Minerals Inc

    CSI CN

    37,230

    $187,135.39

    1.01%

    36

    U S Gold Corp

    UXG US

    61,875

    $167,681.25

    0.90%

    37

    Avocet Mining Plc

    AVM LN

    97,665

    $156,218.24

    0.84%

    38

    Lingbao Gold Co Ltd-H

    3330 HK

    210,000

    $81,009.51

    0.44%

    GDX is a tracking ETF to GDM index, a mining index determined by Nyse. The component weighting cannot be determined by Van Eck. Unfortunately, the top holding ABX at 14.5% is probably one of the worst choice. ABX recently announced to dehedge its gold forward sale, which was costing ABX some 4 billion dollars. ABX is also rumored to be the accomplice of gold suppression scheme together with JPM & Fed. The other components in GDX that I don’t like are AU at 5.62%, GFI at 4.25%, HMY at 3.24%, all are deriving 100% or significant gold productions in Africa. As the gold prices zoom upward, mining gold in an impoverished (relatively speaking) continent will tend to be problematic. I expect more labor and theft and political problems. Also gold production from Africa is declining as a whole. With the exception of GFI, which has expanded its production to other continents, the other two companies are definitely not my preferred choice (especially HMY). GFI is probably the “cheapest” company among major gold producers that one can buy, since its mine life is still quite long. HMY may have the highest leverage to gold price, due to its very high cost basis. At later stages of gold bull market, HMY could easily come back with a vengeance despite the terrible management. Although one may consider shorting out those components when owning GDX, I hesitate to do that. The other company that derive its production from Africa is RangGold (GOLD) at 4.72%. This has been one of the company that has baffled me, easily outperforming all other components, without me owning it. Definitely one should not short this component out.

    Onto the new GDXJ, top components (CDE, SSRI, HL, SVM) are taken by all silver mining companies instead of gold mining companies. That’s 21% of the GDXJ. My ongoing concern about investing in silver companies is that they will couple to the general stock market a lot more than gold mining companies (at least initially). In a deflation, gold/silver ratio will zoom upward, relatively depressing the price of silver. I would have hoped to have less silver components. By the way, junior companies or small-cap stocks also tend to get depressed more in a downwave. Regardless, CDE and HL (and MFN) don’t seem to have good management in shareholders’ interests, raising big amount of capital at the recent zenith of 2008/2009, diluting a big percentage of their stockholders. I suspect that the deals were hammered out with hedge funds in the Wallstreet who have shorted all these companies in the backroom. With a big short ratio, it was simply not possible to cover those short position via open market purchases without driving up the stock prices. And what is the chance of having so many companies silmultaneously raising capital all the the absolute zenith of the stock market?

    Most of the rest of the GDXJ components beyond top ten are not familiar to me. And that is the beauty of investing in an ETF, not needing to know every individual company. Assuming that gold bull market continues, GDXJ will eventually outperform GDX, with much higher volatility. I expect the rallies in both will be kind Read the rest of this entry »

    Posted in Gold/Silver | 1 Comment »