Gold Stocks? Just let investors sell their gold shares if they want to!
Wise and prudent advice? Three weeks ago I was speaking to a very successful and exceptionally wealthy investor whom I have known for many years. He has made substantial profits by investing in gold and gold mining stocks-including the small cap "juniors." As well, he was and has always been a "bottom fisher" investing in shares in mining stocks that by his own in-depth analysis are selling at price levels that make them undervalued. He talks to very few people about his holdings as he feels sharing information in an illiquid market is foolish is of no benefit to him. However,he does speak regularly to the companies themselves. Years ago I wrote a report on an overlooked mining stock and he phoned me about it, that is how we met for the first time.
He feels that the stock market which is the major investment alternative and impediment to gold and commodities stocks is overvalued. He says that the brokerage industry never changes their tune and never advises the public that better buying opportunities in stocks will probably occur at lower prices. He has no confidence in the American brokerage industry as he has seen their disastrous advice for decades. He points out that they never acknowledge a bull market in gold......ever!
What don't average investors understand about Gold? "They don't realize that finding (discovering) gold is challenging and that investing in gold stocks is very difficult. Good advice can be found but one must often look for it oneself. There are not many sources of good advice particularly in the American brokerage industry, however I do find some good advice from the Canadian brokers."
What do you think is the major cause of the price weakness in gold today?
The strength of the American stock market plus the fact that the American dollar is too strong but it should weaken soon from here. Also I do not believe the inflation numbers as I find inflation higher than reported by government agencies.
Who do you think offers the best advice on gold?
I don't know as there are so many services and people offering advice but I do find that Pierre Lassonde has been very accurate. I read many newsletters and web sites and many are quite informative. Some are too positive all the time so they are really biased to be bullish. However they do often provide some excellent facts.
What approach do you take?
After doing my research, I take initial positions in the company(s) that I like. If it goes down I will average down if the fundamentals are still positive. Declines are often a better buying opportunity than my initial purchase so I try to take advantage. I don't have all the answers, I know that.
What are the important fundamentals for a company that you look at?
All the fundamentals are important. The fundamentals are there in companies reports available on the internet. I look at shares outstanding and who owns the shares, particularly managements' ownership, companies' resources, reserves, the company's projects and their location, company's cash position, I do not want exploration companies with any debt.
Do you use technical analysis (charts)?
Yes, I look at the short and long term charts of all the stocks that I own regularly. I look for levels where some gold stocks should be bought and where they might be sold. The problem I expect is that if gold bullion goes to price levels that some of us expect my buy levels and sell levels have to be adjusted. A chart can help tell the story of a stock.
Some people say that gold should soon be at $10,000 an ounce, What do you think?
That's ridiculous at least for now. First let's see gold solidly at $1500 and $1600 and then $2000 and maybe later we can talk of $3,000.
What is the most important factor in the success of a company?
The management, I focus on how many shares they own and their salaries. I want an experienced management that has a history of success such as having developed a mine or at least brought the exploration success to levels where it was acquired or a larger mining company took a substantial position in the company.
Do you follow the "insider reports" for the managements buying and selling of their own companies' stock?
Yes I do and every day! Every single day! I have had people lie to me and once they do I will never go near any company that they are involved with.
What is the biggest mistake most gold investors make?
"Investing in mining stocks demands a lot of patience which few have. So many frustrated investors just dump their shares which may later prove to be a major mistake. It happens all the time. That's where I have had my best results, picking up shares as they are being "thrown away" by frustrated shareholders.
Whe will we see the next true bull market in gold and mining stocks?
I have no idea but it could be soon.
What gold or mining or exploration stocks do you recommend now?
As you already know, I do not share stock picks with anyone.