Time For Gold Again

After this month's changes in my mining portfolio, I have now decided that it's the right time to invest in precious metals again. I already bought (speculatively) DRDGold (DROOY) at $0.78 and after the 10:1 reverse split, the stock kept going down. I consider $6.50 a critical level and decided to sell once that level was broken. At $6.42 my sell order was executed, while the stock ended above $6.50 again.

 

I am still quite convinced that DRDGold will manage to get its act together, but I am also certain that it is not the best stock for short term profits. Instead, I took a long position in gold at $662, knowing that there should be some support at $660 (being 61.8% retracement level). This was successfully tested and spot gold moved up to $665 today. Should gold move below $660, there is a high likelihood of a full retracement to $640 which for me would be a very bearish sign and possibly a reason to liquidate all my positions in precious metals and certainly a reason to reduce the mining share in my portfolio. But, being the positive-minded chap that I am, I added a position in Taseko Mines Limited (TGB). I actually bought back shares in TGB.

 

Previously, I had bought TGB at $2.30 and sold at minor profits as there was little news to move the stock up. Now the situation is a lot more fruitful. The company is one of the very few AMEX-listed precious metals miners that actually makes money. Taseko has successfully positioned itself as a copper & gold miner and has a good cash position with a positive cash flow. Taseko's Prosperity and Harmony mines alone should account for some 7.5 mio ounces of proven & probable gold reserves, which already makes the company's $600M market capitalization look reasonable. Add to that the company's young & producing Gibraltar copper mine and you have a clearly undervalued stock, despite its recent rise. This stock will go through the roofs in two or three years from now as the Prosperity mine will get closer to production. I think we have a winner.

 

Disclosure: The author bought TGB at $4.60 and closed his position in DROOD at $6.42.

Comments

[Sean27:]

TGB is mining gold? That is news to me. I still like the stock a whole lot under 2 bucks.

2008 Sep 29 02:26 PM

[User 30121:]

This article (?) stinks!

2008 Sep 30 08:24 AM

[User 92184:]

Where did you buy gold at $662 ????

2008 Sep 30 08:59 AM

[ronkr:]

I read this four times and still do not understand it. It was posted on Sept. 29, 2008 but the gold quotes are from many years ago. Maybe it should be proof read before posting.

2008 Sep 30 12:06 PM

[traderstraffic:]

$662 gold is this guy a insider (manipulater) giving us early warning to short gold? Did notice today all PM down with gold going with them. Maybe its time to short the gold again. The almighty dollar and the manipulators.

2008 Sep 30 12:08 PM

[QuasiYoda:]

This has suffer a minor brain freeze on the POG (Price of Gold) just substitute 8 for 6 and you'll likely have his Gold Prices accurate. Went long at 862 . . . . Taseko is more of a Copper play.

2008 Oct 01 06:05 AM

[fil:]

This article is exactly the same as one done by the same author more than a year ago? What gives

seekingalpha.com/artic...

2008 Oct 02 06:36 PM