Happy Investing in 2012

Happy New Year and Investing in 2012!

As an example of what you may expect, if you get in on my email list, here it is, a recent commentary:

=======================================================

Goombarh 73 - February 2, 2012

Good Morning,

It is time to get back to business folks, if you are interested in the stock market.

Since October, the general markets have recovered significantly.  The S&P500 is now at 1333, whereas the high was 1370 for last year, the highest since the 2008 crash.  That is if you were in the general markets, your portfolio should now be close to the highest since 2008, if you are an average investor.  Here is the headline from Bloomberg this morning:

http://www.bloomberg.com/news/2012-02-01/global-strategists-abandoning-bearish-views-after-missing-rally.html

This means there is a lot of big money, still on the sidelines that will come into the markets later and assist with driving things upwards.  Also, this is a presidential election year, and no, the president will not allow the economy to falter during his re-election push.

For myself, I invest in the riskier small cap resource stocks, and no I am not back to the highest since 2008.  The barometer for my portfolio may be the TSXV index which is at 1640 presently, a good distance of 33% off from the peak of 2464 achieved in February 2011, the highest since 2008.  In fact, I am a good 50% off from my own peak achieved in about March 2011.  What I hope to have learned from this latest episode of the markets gyrating downwards, is to take a portion of the winnings off the table, when the market is good.   This is a very important lesson to take to heart.  Preserve the cash, and redeploy later, when the markets are down.

Now back to business, the markets are moving upwards and the investor needs to be in and positioned to be able to reap the possible future gains.  Let me refresh myself as to my goals and market positioning guidelines.  Following are some guiding market thoughts collected over time.

Goombarh Strategy 2012

1.      Know something that will be valued higher in the future.

a.       shale oil - Bakken, Kurdistan oil (held back with politics)

b.      Folded porous carbonate structure allowing high producing level -Shoal Point Energy (SHP, SHPNF) - huge multi-billion barrel oil prospect; oil tests coming in 2012 and running right now.

2.      Track the trend of a commodity that is moving higher or may have a future shortage.

a.       oil, and metals; take a look at Zinc

b.      potash - Ethiopian Potash (FED, ETPHF) - shallow open pit capable deposit; 43-101 coming.

3.      Consider that the general markets are in uptrend before investing.

a.       S&P now moving upwards.

4.      Leverage carefully.

a.       Warrants, and such

b.      Petroamerica Warrants (PTAWF)

5.      Lower priced stocks move higher with easier gains.

a.       TSXV stocks, explorers and developers with solid management and properties

b.      Developers becoming producers - Silvermex (SLX, GGCRF) - producer growing larger, Great Basin Gold (GBG) - solid management and will come on stream with two producing gold mines, Westernzagros (WZR, WZGRF) - Sarquala producing 5000 barrels per day, Mil Qasm test and Kudimir 2 are coming in 2012.

6.      Consider marginal players, with bad news factored in and a change in outlook.

a.       Marginal stocks have the highest gains in a turnaround. - Petroamerica, (PTA, PTAXF) - turning into producer.

7.      Consider that market judges on growth prospects rather than absolute value

a.       market is not rational and will move on hype; so consider when to get out!  Already have getting out in mind, when you are getting in.

As to what is exciting recently, take a look at Shoal Point Energy.  Here is the chart from yesterday:

SHP has broken out and is now at .40 cents.  Here is a link to their latest corporate presentation:

http://shoalpointenergy.com/pdfs/SHPAGM%20Presentation%20Jan%2026,%202012.pdf

I am sitting on my hands (not selling), and if it is not too optimistic, this stock may be a possible home run.

Petroamerica (PTA, PTAXF) may be readying themselves for a big run. 

Ethiopian Potash (FED, ETPHF) has crashed lower, possibly on the decline in sentiment about potash pricing and sentiment about Ethiopia as being safe place to invest in, but they are presently drilling and should have a 43-101 within 6 months.

Westernzagros (WZR, WZRFF) is being accumulated by persons unknown and are awaiting news from Mil Qasm and Kudamir 2 (being drilled by Talsiman Energy).  This is a good longer term stock in my opinion.

Silvermex (SLX, GGCRF) will move with Silver prices higher.  They have strong management and will be able to deliver on their promises of increased production, but it will take more capital and time.

Oh, attached is my latest take on Great Basin Gold (GBG, which I have posted on Seeking Alpha.  This would be my safest longer term play.  Great management and gold production coming on-line. 

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

http://seekingalpha.com/author/marco-g/articles

===============================================

To be on my email list, send your email address to goombarh at gmail.com.  It is that simple, and I will not disclose your address to anyone.

Goldcorp Warrants (GG.ws, TSX:G.wt.g)

Goombarh Flash 18,  Feb 25th, 2011

===============================================

Good Morning,

Though I have been a critic of Goldcorp, I am not against making money on this glamor stock.  They released terrific results yesterday, and as I have said previously, they are doing the right things with divesting low grade Osisko and buy high grade Andean.

Note the chart above, their soon expiring warrants are seriously lagging the stock, probably funds divesting after  year end with close expiry in June 9th, 2011.  There are 8 million of these critters and they have become seriously leveraged to the stock price ~ 16. Goldcorp warrants (GG.WS, TSX: G.wt.G) should move with the stock price upwards and with the Gold price upwards and maybe peak in May before expiry in June. Pricing is sub $3 presently and strike price is $45.75 Cdn which is the price right now.  Therefore, no value in warrant except as an option should the price move upwards beyond $49 Cdn, then these warrants become breakeven.  Beyond $49, each $1 stock moves, the warrant should move $1 also giving a 16 to 1 leverage.

This is definitely risky as if GG doesn't move up, then you lose your whole investment.  However if GG moves to $62, $52, then you have a double.  I have bought and am holding.

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

Great Basin Gold: Follow the Flood for Fortune

Great Basin Gold: Follow the Flood for Fortune

Introduction
Timing is critical for making investment decisions. Sometimes the timing seems so fortuitous as many factors coalesce into a critical juncture. Such is the case for emerging gold producer, Great Basin Gold (GBG), to be commencing production during this run up of the precious metals bull market.

Situation Analysis
GBG undertook a $145 million dollar financing in March 2009, right in the midst of a major dip of confidence in the stock market. The fact that Great Basin Gold was able to finance during the downturn speaks volumes about the credibility of the company, but never-the-less this financing added 115 million shares that caused an overhang in the stock price. So the GBG stock price has experienced great volatility this summer and fall, churning up and down without a consistent direction or pattern.
The stage for GBG has been set as shown in this years chart of their stock price following.

Figure 1: Chart of GBG.to showing the trading within the symmetrical triangle. Source: Cdnbeau posting on TradingChief.com.

Note the up and down movements in the stock price describing the upper and lower bounds of a symmetrical triangle, heading towards an apex solution in December of this year. The gyrations certainly looks similar to a coiled spring that is about to be released. On Tuesday, December 2, 2009, GBG exhibited a breakout of the bounding triangle and shot up for a 7% gain on high supporting volume. This chart is signaling that an opportunity is available here.

Trend and Timing
Before going further, let us step back and examine some environmental and other timing factors:
1. Is the general market in an up trend?
Yes, one can say that the general markets are buoyant and are still in a continuing up trend recovery from 2008. The general markets need to be trending upwards for supporting a movement upwards.

2. Is the precious metals market in an up trend?
Yes, the precious metals market are certainly bullish. The price of Gold has recently crossed the $1000 USD barrier and has successively breached $1100 USD and just surmounted $1200 USD on December 1, 2009. Great Basin Gold is a producer that will announce increases in new Gold production.

3. Are the seasonal tendencies right for a movement upwards?
Yes, the timing is exactly coincident for the year end pruning and adjustment of institutional portfolios. Institutions should look favorably upon Great Basin Gold’s prospects as they add to or increase their portfolio. The markets are ready for a “Santa Claus” rally.

4. Is Great Basin Gold ready for a movement upwards?
For a more detailed answer to this, I refer the reader to my previous report on Great Basin Gold accessible here. Yes, Great Basin Gold is just turning the corner into becoming a viable mid-tier gold producer. They are test mining at their Hollister mine in Nevada and are on track to produce 110 k ounces this year. Their Burnstone mine in the Witwatersrand Basin in South Africa has completed their underground development work and is constructing the surface plant to be ready to commence milling operations in June 2010.
Great Basin Gold is entering production at a confluence of positive trends and timing.

Great Basin Gold Opportunity
Next is how to capitalize upon this perceived opportunity. The basic play would be to invest in some shares of GBG. An interesting and possibly more lucrative way to leverage this situation is with tradable warrants for GBG. They were issued at the same time as the $145 Million financing. A copy of the TSX bulletin announcing the trading of Great Basin Gold warrants is posted here. See the table below for the specific warrant details.


Great Basin Gold - Warrants

Figure 2: Great Basin Gold Warrant Details. Note that the life of the warrant expires on October 15, 2010; that is beyond that date, the warrant becomes useless.

These GBG warrants are especially appealing presently, as they are in the money, the GBG shares being above the $1.60 (Cdn) exercise price. The GBG.wt.a warrants were bargain priced at 40 cents (Cdn) on December 2, 2009. As the GBG shares closed at $1.80 on that date, the warrants have an intrinsic value of 20 cents (Cdn) and provide the investor with a 4.5 to 1 leverage. The writer does not expect this value situation to remain this way for long.
A further attraction of leveraging with GBG warrants is that the company Great Basin Gold is an extremely attractive takeover candidate. The writer wrote an opinion on GBG being an acquisition candidate posted here. Using the warrants for leverage gives the investor control of more shares with less initial capital outlay. This would play to the investor’s advantage should a takeover situation appear.

Warrant Quotation
A delayed quotation for the warrants is available from the TSX site.


Figure 3: Quotation for GBG.wt.a from TSX site.

Also, a delayed quotation may be obtained from the Advanced Financial Network site as follows.



Figure 4: Quotation for GBG.wt.a from Advanced Financial Network site.

Warrant Trading
Should you be new to warrants, the following are two sites that have warrant information for your perusal.
1. Precious Metals Warrants
This is a site run by Mr. Dudley Pierce Baker that has a free section and a pay section. There is a useful educational section that describes the various aspects of trading warrants.
2. Canadian Warrants
This is a Canadian free site that provides various tables of tradable investment warrants.
The warrants trade in Canada on the TSX exchange. For American investors, TD Ameritrade is reported to facilitate your trade seamlessly with their counterparts in Canada. If you use other trading facilities, you may have to trade via telephone. Do not ask your broker if they can do it, just be assertive and state the Warrant Cusip number along with other details of the warrant that you wish to trade.

Conclusion
To sum this opportunity up, a sage writer once penned many centuries ago:

There is a tide in the affairs of men, which, taken at the flood, leads on to fortune.
- William Shakespeare.

The timing for Great Basin Gold to be entering serious Gold production seems very fortunate; as all the discussed factors are pointing to a significant upswing in price for the shares of Great Basin Gold. An appealing way to leverage this situation would be by buying warrants to control more shares of Great Basin Gold in the possible upside coming.

Disclosure: The writer holds a long position in Great Basin Gold (GBG)


Marco G. December 2, 2009 http://goombarhsedge.blogspot.com/
Important Disclosure
The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.