Dudley Baker's  Instablog

We along with several other analysts have been looking for an upside breakout in gold. Today, October 6^th we got that breakout with gold exploding to over $1040 an oz into new high territory.

I ask the question, jokingly, What Will You Do When Gold Hits $1200 an Oz, because we know that many investors are not even in the game as yet.

As many readers and investors are still saying, ‘I’ll just watch for now’, well, we have to laugh. Many (hopefully not you) will be watching as the price of gold, silver, the majors, the juniors and even the dogs and cats catch on fire. We know how this story ends, don’t we? As soon as the average investor loads up his portfolio at outrageously high prices that is when we will be approaching a top.

If we make $1200 or beyond on this move up it will no doubt be an opportune time to take some gains off of the table for those of us already invested (at much lower levels).

Our view is that this rally is not going to be a straight run up to the top (it never is) and we will have to make many decisions along the way. But always remember, you can’t sell high, if you didn’t buy low.

The low prices for gold and the juniors are now behind so investors must make some good decisions from here on out instead of just throwing darts at the board. It’s not too late; you just have to be smarter and more careful as prices continue to rise.

The good news is that we see must higher prices for gold, the junior’s, even the dogs and cats in the coming 18 months or so. Lot’s of time for you to get involved and ride this wave.

For those readers unfamiliar with our services:

·         PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.

·         InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.

We encourage all readers to sign up for our free weekly email.

Disclosures: None

October 6, 2009

Dudley Pierce Baker

Guadalajara/Ajijic, Mexico

Email: support@preciousmetalswarrants.com

Website: PreciousMetalsWarrants

Website: InsidersInsights

Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

Disclaimer/Disclosure Statement:

Neither PreciousMetalsWarrants.com or InsidersInsights.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants.  Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

The junior mining sector has been performing much better in the last few months and we have seen many of the shares prices jump up substantially in price. Investors may be asking, ‘is it too late to buy or should we sell?’

One piece of information easily available to investors is the insider activity which we always factor into our decision making process. Frequently we see articles on the merits of insider buying but rarely is there much discussion on insider selling so let us give you our spin on this subject.

Perhaps we should remember that corporate insiders, i.e., officers, directors and 10% and more shareholders are also investors. They are just like us, in that they have a multitude of reasons for which they could be selling the company’s shares. Think of any personal reason you can imagine, divorce, sending children to college, taxes, health issues, etc. Our observation has been that the insiders tend to sell early leaving some very nice profits on the table. But investors need to remember that we are investing to make money so leaving some profits on the table must be acceptable and inevitable.

What concerns us is when they ‘may be’ selling because of something negative for the company, currently or coming soon. This is virtually impossible to assess but we look for signs in their insider activity of company shares.

Our basic philosophy is; why should we as investors be buying if the insiders are selling? I hate to think that I just bought the shares that an insider has sold. While in the long run this may not be relevant I would prefer to be investing in another company.

Let’s cover two different situations for you.

Establishing a New Position

If you do not currently have a position in common shares of a company we suggest checking out the insiders buys and sells before entering a position. If the insiders are buying this should just re-enforce you decision to buy. But if the insiders are selling, this should at least give you reason to pause.

You’re excited and want to enter a new position recommended by your favorite analyst or newsletter but the insiders are selling and you must decide what to do.

Several steps we would recommend to investors:

• Look at a chart for the last year
• Have the shares moved up substantially in price
• Are the insiders selling into the rise in price
• How many insiders are selling 

Each situation is different but if the shares have moved up substantially, say 100% or more and there are two or more insiders selling, I would not purchase these shares. Let’s look for other opportunities.

Evaluating a Current Position
Let’s assume you were fortunate to purchase some junior mining shares and have seen the share price rise 100% or so but it has come to your attention that some of the insiders are selling. What should you be looking for?

• How many insiders are selling
• Did the insiders sell only one time or perhaps you see a pattern of selling
• Look at a chart for the last year 

The good news in this situation is that you have a profit but you need to make sure you do not let it slip away. You only make money when you close out your trade so be smart about it.

In our opinion, if only one officer is selling we would tend to stay with the position but watch it very carefully. If two or more insiders are selling we would be much more concerned and would probably take some profits ourselves.

If you really like the company we suggest you sell half of your position and ride with the balance which is now free as you have captured a 100% profit. If you are neutral or negative on the company now is the time to exit your trade in total, capture your gains and look for new opportunities of which there are many in the natural resource sector.

The buying and selling patterns of corporate insiders can be very telling and should be of interest to and considered by all investors as part of their investment approach.

For those readers unfamiliar with our services:

·         PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.

·         InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.

We encourage all readers to sign up for our free weekly email.

Disclosure: None

June 25, 2009

Dudley Pierce Baker

Guadalajara/Ajijic, Mexico

Email: support@preciousmetalswarrants.com

Website: PreciousMetalsWarrants

Website: InsidersInsights

Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

Disclaimer/Disclosure Statement:

Neither PreciousMetalsWarrants.com or InsidersInsights.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants.  Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

Recently we have seen several articles on the merits of tracking insider buying activity and we would like to put our spin on the subject adding our specific interest in the natural resource sector. The junior mining shares are looking better each day as represented by the CDNX (S&P/TSX Venture Composite Index) and investors need all the tools possible at their disposal.

When asked about his investment model, Warren Buffett stated, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.”

Now being greedy does not mean just jumping in blindly. Buffett is a smart guy and he will study carefully the fundamentals of any company on his list of potential buy candidates.

For many investors the idea of studying the fundamentals of a company, i.e., the balance sheet, profit and loss statements and the company’s business model, is quite overwhelming. Most do not have the knowledge or skills to do an adequate job of the analysis which is but one of the reasons why many investors subscribe to various newsletters and publications.

Perhaps there is another approach - ‘keeping an eye on the corporate insiders’.

Corporate insiders can be defined as officers, directors and those owning over 10% interest in a public company.

Think about it. Who knows better than the corporate insiders about the company’s current business climate, new products coming to market, new discoveries or production results, etc?  Insiders could be a good judge as to whether a company’s shares are undervalued and provide a good entry level for buying.

Insider Reporting Requirements

Insiders are required to report to authorities, either in Canada or the United States as to their transactions in the company’s shares, warrants, debt, etc. Currently in Canada insiders have a 10 day reporting requirement following a transaction. In the United States insiders have a 2 day reporting requirement and this information is available in various places and in different formats on the internet.

It can be a very time consuming process weeding through all of the filings. Sure if you are looking for insider activity on a specific company that is easy and readily available. If you are scanning looking for new opportunities, however? You will have a major challenge. Even if you have access to all of this data, it is a major filtering and decision making process to arrive at any reasonable conclusion. After all, most investors just want to be told what to buy, not to do all of this work.

What if there are no recent insider transactions in a company’s shares? Does this mean we should not buy the shares? Not necessarily. We need to remember that, particularly within the junior mining sector, many officers do not receive large salaries, but rather options to purchase the company’s shares. Thus, some officers and directors may already have significant positions and, therefore, they may not be currently buying more in the open market.

Another feature to look for would be private placements which are a favorite method of raising cash in the mining sector. What I suggest looking for is insider participation in the Private Placement. In my opinion, if insiders are buying in the private placement of their company’s shares this is a great sign of their continuing belief in the future prospects of the company. Usually the private placement is priced close to the current market price and, therefore, we would consider this very akin to an open market buy transaction.

The bottom line is that if the corporate insiders are buying it is usually an excellent sign for investors. In a future article we will discuss the implications of insider selling.

We encourage all readers to sign up for our free weekly email.

Disclosure: None

May 20, 2009

Dudley Pierce Baker

Guadalajara/Ajijic, Mexico

Email: support@preciousmetals...

Website: PreciousMetalsWarrants

Website: InsidersInsights

Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

Disclaimer/Disclosure Statement:

Neither PreciousMetalsWarrants... or InsidersInsights.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants.  Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.