GOLD COMMENTS…BEAUFIELD, KINCORA, NIOGOLD….
What are our requirements for the gold mining stocks to start an exceptional performance that our analysis suggests will soon occur? Well, minimally a $1400 Gold price, plus severe weakness in the industrial stock market (Dow Jones and S&P 500) and more true physical delivery demanded for gold purchased, for example it cannot be left at the New York Fed for “safekeeping.” Safekeeping?
But what has emerged with the manipulation and central banking maneuverings is what may be one of the greatest opportunities to buy gold and silver mining shares at some of the most undervalued price levels in history. We use gauges such as “in-ground asset values per share” and technical and cyclical analysis to arrive at the “undervalued” conclusion.
“My company’s stock is undervalued,” that’s what we are told all the time by companies’ managements. The fact is that many if not most of the stocks that we monitor are very undervalued.
We are in a period that offers a superb opportunity for exceptional capital gains in mining stocks. I wrote an article in 1991 where I stated that “90% of investors lose money investing in mining stocks for three reasons in general: 1-they invest in mining stocks after they have already moved up in price. 2-they never invest in mining stocks when they are selling at very cheap prices and 3-They will not sell shares when they are up in price. Of course, there are other reasons such as that investors don’t analyze and research what a company has in reserves, resources, potential and management. I know, it takes time..…and patience is required.
Author, diplomat, inventor, physicist, politician and publisher Benjamin Franklin wrote over two centuries ago that “ he that can have patience can have what he will.” That goes for the gold market as well…..two centuries after Ben Franklin’s wise advice.
Too many investors also fail to note the cash positions of the companies. Most importantly, they don’t monitor the management in their personal buying and selling of the companies’ shares. It is reported within 2-3 days of an insider purchase or sale in Canada and the United States. All the evidence is available on-line and free but few want to put in the research effort and patiently wait for developments. I cannot understand that as it required less than two minutes to check a company’s officers and directors activities. Several bottoming Cycles for gold should be coming together over the next two months. In our view, there are “sales” going on in Canadian mining stocks and all are welcome….but as always, few take advantage to accumulate when stocks are so cheap.
I said in July 2013 that many mining stocks where making their price bottoms. I was not basing it on technical analysis or cycles, but rather that the majority of the companies were selling their production well under their “all in cost” of production. That is a helpful, but early fundamental indication. If you own a store and you sell a coca cola at .10 cents and your cost is .25 cents for that coca cola, you are losing money. That is gold mining today! Demand for gold bullion is rising and production is not increasing as the cost of production is so high today vis a vis the price of gold. You cannot ask companies to continue production at a high level when the more they produce, the more they lose. What is needed is for gold to move to the $1400 to $1450 level to ignite the investor interest. That’s coming in our view.
BEAUFIELD RESOURCES (BFD.V) is a Canadian resource exploration company. The Company has diversified properties with exposure to gold, base metals, and iron, located in Quebec and Ontario. Beaufield is selling at the bottom of its multi-year price range and has a very experienced and quality management and exploration team. It currently has a cash position of approximately $4,000,000 with no debt. Of interest is the fact that officers and directors and “friendlies” to the company own a substantial percentage of BFD shares. Their exploration programs are ongoing; they are not waiting for the price of gold bullion to increase as they are active right now. The three year price range saw a high of .35 cents and a low offer of .04 cents. In the current .05 cents to .06 cents range, risk oriented investors might pay attention.
KINCORA COPPER (KCC.V) is a Canadian listed exploration company. Its key asset is its Bronze Fox deposit located in southeast Mongolia along the Oyu Tolgoi copper belt and near the now well-known Oyu Tolgoi copper-gold project which has already seen investment in its development totaling over $7 billion. Kincora has declined in price from the .40 cents level in 2011 to its present .06 cents while the major international mining companies and government solve a disagreement over taxes. All of the Mongolian based mining and exploration companies suffered as well and saw their prices decline by the same large percentages.
We see the potential in KCC as does Kincora’s own management. Kincora’s management and directors have been heavy insider buyers of the shares over the last two years including a large proportion of the private placement. The key issue is that Kincora controls a large amount of land that offers exceptional potential on one of the fastest developing mining areas in the world. Mongolia, with a population of three million people needs large investment of foreign capital to achieve its potential of enormous economic growth. The delay has cost the Mongolian economy in lost growth coupled with a severe decline in the value of its currency. Today, Mongolia’s resources still offer enormous potential for its citizens and investors, but decisions are required.
In 2013, Kincora completed an initial exploration program which we emphasize is on one of the fastest developing mining areas in the world. The bottom line? Work is ongoing and with Kincora at such low prices, it merits our attention. It is our belief that Kincora will move forward successfully soon-with Mongolia. Kincora has been the last remaining listed copper junior in Mongolia without a strategic partner and recently entered into an agreement granting exclusive rights to carry out potential joint ventures and other investment engagements with respect to Kincora’s wholly owned Bronze Fox project. The name of the partner corporation has not been disclosed as yet.
NIOGOLD “NOX” is a Quebec based exploration company that we have been following on a research basis for over two years. If we examine what Niogold has already, it is impressive. Niogold has 2,100,000 ounces of 43-101 gold resources. Drilling is ongoing and we expect resources to increase as exploration continues. Using the same resource valuations that we used two months ago ($15 per ounce for in ground resources) just for its Marban Block, gives us $31,500,000 for the value of the Marban Block in today’s bear market. As well, Niogold has over $4,000,000 in cash and marketable securities.
When we analyze the Niogold price chart, we find that two key technical indicators that we find quite useful “money flow “ and “on-balance volume” suggesting that the stock is being taken into stronger hands. In the .20 cent to .25 cent range, our analysis suggests that NOX is undervalued. Its need? $1400 to $1450 gold! That will change things.
Overall we are quite positive on gold and silver mining and exploration stocks, we believe that we are in the final stages of the bear market. The bottoming began a year ago and continues. Stocks? “When prices are high, they run to buy…..When prices are low, they let them go.” That never changes! Thank you, K.C.
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