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David Vengerov

 
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  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    I was timing my article to their Q4 production update, expecting it to be very positive as they hinted in their Q3 report, from which I quoted in my article. It would have been illogical for anyone to expect that an unexpected event would occur and their Q4 production would be LESS than the one in Q3, as opposed to being noticeably larger, as they suggested before.
    Jan 29 01:37 PM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    Antonio, even though this time a real fundamental news came out after the price had declined, I've seen many other cases when no announcement came out and the price had rebounded right back to where it was before. Thus, for the future, I don't think that it is wise to assume that every unexplainable price decline will be followed by some bad announcement from the company.
    Jan 23 06:32 PM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    Well, folks, I was quite disappointed by their production report. That's not what I had counted upon. I don't think that management was doing anything wrong -- it is just an amazing streak of bad luck with this company. I'll try to find out what "other" mining areas that wanted to use to supplement throughput until the San Mateo ramp is completed.

    Besides the unexpected problems with the gold grade, the simple takeaway from the report is that 850 tpd throughput has been delayed for another 6 months, to 1Q2014. That's not the end of the world, as in a reasonable investment world investors should think now that by the end of 2013, when the ramp is completed, Golden Minerals will be able to ramp up throughput from 850 tpd to 1150 tpd in 2014, thus steadily increasing their profit margin (and hopefully reaching the production of 3.5M - 4M oz of AgEq at the cost of $7/oz, as they had planned before). Thus, in one year, everyone will be pricing in a great next year and thus the stock price should be much higher than it is now. However, we also know that having disappointed investors so many times, no one will believe AUMN until they will announce that the completion of the ramp is imminent in 4Q2013. Thus, until that point, if gold and silver stay at the current level, I would expect AUMN to be at the mercy of computer algorithms. On the other hand, if silver starts moving up strongly, then I would expect people to start taking a deeper look at the miners, and at that point investors may recognize that Golden Minerals is performing an activity now (building the San Mateo ramp) that is clearly increasing the value of their mine (and thus the value of the company), and once that ramp is completed, the path will be cleared to a quick throughput rampup.
    Jan 19 01:24 PM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    The volatility (based on the closing price) seems to have completely died down in AUMN. The flag pattern since mid-December is complete. The can't go on for much longer. Which way will this flag break?

    The 6-month GDX chart is showing a clear descending bullish wedge pattern, and such patterns always break to the upside. If the 4Q production results for AUMN prove to be uninteresting, then, not having anything better to do, AUMN will simply follow GDX up when that descending bullish wedge breaks out.
    Jan 17 01:56 PM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    jdm -- intraday price moves have been a function of computer trading for a few years now. The purpose of those algorithms is to confuse and trick naive human traders. That's the sad reality of trading now days...

    However, if you still want to believe in TA, then take a look at the 1-month intraday chart of AUMN (on google) and notice a steady sequence of higher lows. That's the basic definition of an uptrend. The highs during an uptrend can get really out of wack when speculators try to jump in, especially for the low-volume stocks like AUMN. However, the lows are determined by professional traders/investors, who are patient and wait for "good" prices to buy. Thus, a sequence of higher lows is much more important than a sequence of higher highs when determining an uptrend.

    However, all these patterns are subject to be broken, even if briefly, by computer algorithms who may want to shake humans out of their positions. For example, check out the morning action in SIL -- it gaps down below the 3-day lows, hits all the stops that naive human TA traders placed (very reasonably, I must say), and then zooms up, closing in the green. So much for trying to win against computers in short-term trading...

    Incidentally, the whole mining sector was pretty weak today, and AUMN gained in percentage terms more than SLV, GLD, GDX, SIL, or GDXJ. So we shouldn't complain. :)

    What I really liked about today's action is that SLV closed at a 3-week high today, surpassing the closing price of January 2. It made an intraday double bottom on December 20 and January 4, and then started making clear higher lows and higher highs. The miners should catch up to this reality pretty soon, as they are still greatly lagging silver (SIL is still close to its 3-month low, WAY below the closing price of January 2). So if we have another up day for GLD/SLV tomorrow, then I would expect the miners to have a very large up day...
    Jan 15 05:08 PM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    Well, if silver rallies to $50/oz by the end of 2013 (which is entirely possible, given that the Fed will be printing $85B per month in 2013) and Golden Minerals meets or exceeds their production goals, then they will have more cash than they need :), and hence there would be no reason for them to issue new shares. Seeing the stock rise to new all-time highs by the end of 2013 is totally possible... Don't forget, folks, that they plan to finish the San Mateo ramp by the end of 2013, which will allow them to bring large trucks in and out (as opposed to using small carts in a vertical mine), which will cause their production levels to keep expanding steadily in 2014, even without the autoclave project. So their production should grow QoQ as far as the eye can see, and pretty soon the analysts will catch on to this fact and will start pricing more distant future into the stock price...
    Jan 14 01:01 AM | Likes Like |Link to Comment
  • Is The Price Of Golden Minerals Ready For Another Leg Up? [View article]
    darth_trader, EPS is different from "cash margin from operations," as it also includes depreciations, taxes, CapEx, etc. However, when you want to invest into a stock with a 1-year time horizon, you should think about what will be priced into that stock one year from now by the analysts that are looking one year ahead: at the end of 2013, the analysts will be pricing AUMN based on its expected 2014 earnings, which will definitely be much larger than the 2013 earnings they are pricing into the stock now. So I would say that it is highly unprobable for AUMN to be trading below the current level one year from now.
    Jan 13 03:34 AM | Likes Like |Link to Comment
  • Is The Recent Destruction Of Golden Minerals' Share Price Justified? [View article]
    I just saw that the volume pattern I referred to is visible only on google/finance. On yahoo/finance the volume pattern is totally different, and frankly, is more reasonable. So the above comment should probably be ignored...
    Dec 19 01:26 PM | Likes Like |Link to Comment
  • Is The Recent Destruction Of Golden Minerals' Share Price Justified? [View article]
    adawg, AUMN might hit $5.50 tomorrow, or it might take another month getting there. Once AUMN rose above the July lows on November 21, its trading volume started to expand greatly. The average trading volume over the past 3 weeks has been higher than during any 3-week period since the fall of 2010, when QE2 was announced and AUMN quadrupled in a couple of months. Statistically, it has been observed that a rebound in price that is accompanied by a large increase in trading volume tends to be the start of a long-term uptrend, and I think that's what we are observing with AUMN right now.
    Dec 18 01:00 AM | Likes Like |Link to Comment
  • Is The Recent Destruction Of Golden Minerals' Share Price Justified? [View article]
    I am back from my vacation, and as expected, the unreasonable situation with AUMN has been partially corrected. A market sector can be unreasonably oversold for a long time if a certain unfavorable perception about this sector has been accepted by the market and most of the potential investors went on hold. However, a single stock cannot be unreasonably oversold for a long time because potential investors in this sector will move from other stocks into this stock. So may the action in AUMN over the past couple of months (when AUMN dropped below $4.30 and became SUPER unreasonably oversold) be a lesson to us all.

    Doug, you wrote on November 12, when AUMN closed at $3.84:

    "When a stock is bearish and will continue to follow that trend you should be point that out and be making suggestion for people to either sell and buy at a cheaper price or hold. just buying a stock at any price just on future expectation is just plain stupid.Their is always anentry point and exit point. If one is wise enough to know those points one can make a ton of money either way it goes."

    Have you been able to buy AUMN under $3.84? Has ANYONE who followed AUMN since October with the intent of timing THE bottom of that pullback was actually able to open a large position below $3.85? Judging by the above posts, only bdkeg was able to do that -- congratulations! As for the rest of us, I hope that it has become clear that gradually "scaling in" once a stock with great future prospects becomes unreasonably oversold is the only sure way to build up a large position near the bottom of the pullback.

    Using that strategy, I was able to buy AUMN shares at $3.85 and at $3.60, not counting the ton of call options I bought when AUMN was between $4.50 and $3.85. I will hold the AUMN shares I purchased under $4 for a long-term capital gain, while gradually scaling out of the call options I bought during this pullback. My first sell limit for April $5 calls has already been hit last week -- 22 contracts sold at $0.60, which I purchased at the average cost of $0.45. I have other sell limit orders lined up for such calls at $0.20 increments, all the way up to $1.80 (so as to triple the value of my calls, which I purchased between $0.40 and $0.60). Given the extra liquidity injections that will start in January due to unsterilized bond purchases, I expect all of my sell limit orders to be hit by the end of January.
    Dec 17 06:52 PM | Likes Like |Link to Comment
  • The Settlement Delay Of MBS Purchases Under QE3 And The Price Of Risk Assets [View article]
    I am now going on vacation out of the country until December 15, and may not have internet access there. Good luck, folks, with your investments/trading, and let's hope Bernanke does not disappoint us on December 12 by announcing unsterilized continuation to Operation Twist!
    Dec 2 07:45 PM | 1 Like Like |Link to Comment
  • Is The Recent Destruction Of Golden Minerals' Share Price Justified? [View article]
    I am now going on vacation out of the country until December 15, and may not have internet access there. As a preparation for some market volatility, I have a buy limit order for 1K more shares of AUMN at $3.50, in case, as James suggests, AUMN follows a "W" recovery pattern.

    I also have buy limit orders for 3K more shares of PNPFF at $0.85 and for 5K more shares of PNPFF at $0.8 (I currently have 10K shares already at the cost of around $0.9). For those of you who are not familiar with the closed-end resource-oriented mutual fund PNPFF, I strongly recommend that you read their latest corporate presentation at http://bit.ly/Veuclh. With NAV of $1.71 per share as of the end of October, at $0.85 they will be trading at the all-time-low Price/NAV ratio of 0.5. This means that at any time they can just sell all their positions and return to the shareholders $1.71 per share right now. Besides the all-time-low P/NAV right now, they are also trading at a 7-year low price (if we ignore the panic-driven low in the fall of 2008). I don't see how a long-term investor can go wrong with buying PNPFF at the current prices.

    Also, I have a bunch of sell limit orders on April $5 AUMN calls between $0.60 and $1.80, which I have acquired between $0.40 and $0.60. So I am ready for anything the market may throw at us over the next two weeks. :)

    Good luck, folks, with your investments/trading, and let's hope Bernanke does not disappoint us on December 12 by announcing unsterilized continuation to Operation Twist!
    Dec 2 07:44 PM | Likes Like |Link to Comment
  • The Settlement Delay Of MBS Purchases Under QE3 And The Price Of Risk Assets [View article]
    Well, the previous episode of Fed balance sheet expansion showed that commodity prices explode during such an expansion: silver went up 50% during QE1, then stayed flat until QE2 was announced, then went up another 50% to the January 2011 bottom, then went sideways during OperationTwist (when the Fed balance sheet was not expanding and no new cash was injected into the system, and the silver price had re-tested the January 2011 level several times), then ran up 20% in August/September 2012 in expectation of QE3. There is no reason to expect the previous pattern to break, and hence we should expect precious metals to go up much higher during QE3.

    Interestingly, OperationTwist was also, conceptually, very bullish for precious metals, since the Fed was buying 10-year Treasuries that were yielding less than 2%, and there is no way we will have a smaller than 2% cumulative inflation over the next 10 years. So the Fed will have to sell these treasuries at a loss, thus permanently printing money. However, the market ignored this fact and focused simply on the fact that no new cash was flowing into the system, thus not bidding up precious metals.
    Dec 2 12:54 PM | 1 Like Like |Link to Comment
  • Is The Recent Destruction Of Golden Minerals' Share Price Justified? [View article]
    Here is an interesting technical piece on the price of silver, which suggests watching the ongoing increase in the open interest in silver futures, since such increases preceded the last 3 bull runs in silver:

    http://bit.ly/TA7p6k
    Dec 2 02:09 AM | Likes Like |Link to Comment
  • The Settlement Delay Of MBS Purchases Under QE3 And The Price Of Risk Assets [View article]
    Great info, Venerability -- thanks! I will keep watching the open interest in silver as Clive Maund suggests.

    If the price of silver breaks out above $37 soon, then the greatest moves, in percentage terms, will be made by the junior silver miners whose production volume is still small enough to keep the cost per oz just above the current market price. A 10% increase in the price of silver will turn those juniors from cashflow negative to cashflow positive, and possibly turn their EPS from negative to positive, which will right away attract a lot of conservative capital to them, which was previously ignoring such miners on the principle of not investing into companies with a negative cashflow and negative EPS.

    So I would suggest to everyone to make a list of the miners who are steadily expanding their production and have almost reached a breakeven point already. One company that I found and that meets this criterion is AUMN. They mentioned in their most recent 10Q form (quarterly report) that at $1500/oz gold price and $30/oz silver price they expect to generate a negative gross margin, which the Company defines as revenue from the sale of metals less costs applicable to the sale of metals (exclusive of depreciation), of approximately $1.0 million during 4Q/12. AUMN produced 120K oz of silver and 1.9K oz of gold in 3Q/12 (215K oz of AgEq at 50:1 gold:silver price ratio), which was a 27% increase over their production in 2Q/12. Since they have done a lot of mine development in 3Q which allowed them to access many new stops, their production will likely increase by at least 30% in 4Q, to something close to 300K oz of AgEq. If the price of silver moves a little higher in December and averages $34/oz during 4Q, then AUMN will have extra $1.2M in revenue relative to their conservative forecast, and they will thus turn cashflow positive in 4Q/12! Assuming the annualized production rate of 1.2M oz of AgEq in 4Q/12, the company plans to increase its production to around 2M oz of AgEq annualized rate in 4Q/2013 at the cost of under $15/oz, and then to around 4M oz of AgEq by 4Q/2014 at the cost of under $7/oz. So even if gold/silver prices stay flat for 2 years at their current levels, the company will be operating with a cash margin of more than $100M by the end of 4Q/2014. Now compare that cash margin with their current market cap of $183M, and think how many times higher the stock price should be one year from now, when all analysts will be looking forward to 2014 and will be pricing in the 2014 profits into the stock price during 4Q/2013. If, as Clive Maund suggests, silver moves to $80/oz by the end of 2013, then multiply the previous estimate of AUMN stock price by some integer K>1. :)
    Dec 2 01:44 AM | 2 Likes Like |Link to Comment
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