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Last Week's Performance*
vs. Previous Week
vs. Previous Month
YTD**
Warrants (+24mo.)
-8.6
-4.3
72.1
Stocks with Warrants
-5.1
-1.2
44.4
CDNX***
-4.3
2.8
51.6
HUI****
-2.8
-10.4
12.4
GDM*****
-2.9
-8.7
13.3
SPTGD******
0.1
-5.8
7.9
TSX
-4.5
3.7
23.6
S&P 500
-2.6
2.7
2.1
Silver
-4.1
-3.1
25.8
Gold
-0.5
-2.4
5.7

* All calculations are based on U.S. dollar equivalents

** Week ending June 19th, 2009

As the above table shows the most profitable sector to have invested in since the beginning of 2009 would have been in a basket of 24 month or longer duration warrants of commodity related companies. They are up 72.1% YTD.

There are 47 such warrants associated with 38 different companies in that category:

  • 8 are associated with 6 large-cap companies: 2 gold mining companies, Agnico-Eagle (NYSE:AEM) and Kinross (NYSE:KGC); 2 royalty companies, Franco-Nevada (FNNVF.PK) and Silver Wheaton (NYSE:SLW); 1 oil and gas company, Pacific Rubiales (NYSE:PRE); and 1 molybdenum miner, Thompson Creek (NYSE:TCM).
  • 6 are associated with 5 small/mid-cap companies consisting of Western Canadian Coal (WTN); Mega Uranium (NYSE:MGA); Bankers Petroleum (BNK-OLD); New Gold (NYSEMKT:NGD) and Minefinders (NYSE:MFL).
  • 33 warrants are associated with 28 different companies of which 22 are in mining; 3 in merchant banking and 2 in oil and gas.

Because of the dominance of the micro-cap segment the 38 stocks associated with these warrants were up 44.4% YTD which, while not as much as the exclusively micro-cap CDNX index (+51.6%), were up dramatically more than the HUI and GDM indices which are over-weighted with large and mid-cap sized companies. As such, it is evident that being invested in the micro-cap segment of the total warrant universe was an even better place to be during the first six months of 2009.

As for gold and silver – no contest! While silver has increased a very respectable 25.8% YTD gold was – and continues to be – a laggard at 5.7% YTD.

I can hardly wait for future fears of (hyper)inflation to fuel the fire under gold (and silver) causing it to increase dramatically. This will further increase the current disparity of 13:1 that the warrants discussed above already have over gold bullion. As we prepare our portfolios to reflect these coming events the expression these days should be “Got Warrants?” not the familiar gold-bug refrain “Got Gold?”

***CDNX is the symbol for the S&P/TSX Venture Composite Index consisting of 558 companies of which 44% are engaged in the mining, exploration and/or development of gold and/or silver and other mineral resources and 18% in oil or natural gas pursuits.

****HUI is the symbol of the AMEX Gold BUGS (Basket of Un-hedged Gold Stocks) Index and is a modified equal dollar-weighted index of 15 gold mining companies that do not hedge their gold beyond 1.5 years.

*****GDM is the symbol for the NYSE Arca Gold Miners Index and is a modified market capitalization weighted index of 31 gold and silver mining companies.

******SPTGD is the symbol for the S&P/TSX Global Gold Index and is a modified market capitalization index of 19 precious metals mining companies.

Disclosure: I currently own none of the aforementioned stocks or warrants.

Source: Commodity-Related Warrants Outperform Gold 13:1