lance sjogren

Stick with Gold and the Oil Stocks

By the way:

Investing in small Canadian precious metals companies is a little more difficult than buying stocks listed on mainstream US exchanges.

Virtually all Canadian stocks have pink sheet versions that you can trade in a US account.

It is a little trickier to trade them because the pink sheet versions do not trade enough to have accurate bid and ask prices so you have to look at the bid and ask on the Canadian version of the stock, then convert that from CAD to USD, and then you can decide what limit price to buy or sell the pink sheet version (which trades in USD) at.

Another thing is that I found with some OLBs that the pink sheet stocks do not trade well, you sometimes wind up having to pay a premium, and sometimes the number of shares is so large you wind up paying higher commissions. I had these problems with Schwab and Fidelity but I have had great success trading these with TD Ameritrade, I think it is probably the Canadian connection of TD that allows them to smoothly trade these. In fact, I have always wondered whether when I trade the pink sheet versions with TD they may perhaps actually be trading the native Canadian version of the stock and then doing the translation to show it on my account as the pink sheet version.

At any rate, analysts sometimes caution about small precious metals stocks on pink sheets because of the lack of liquidity. I have found, however, that if you do it the right way you can trade these pretty close to as efficiently as you could the Canadian stocks themselves. Of course, you can also just trade the Canadian stocks on an Interactive Brokers or Etrade international account, although when I had an IB account I found it was so confusing to figure out buy and sell prices in USD to put on my tax forms that I wound up closing the account.

Stick with Gold and the Oil Stocks

amouna:

If you decide to go into junior gold stocks, here are some suggestions:

1). Eastmain Resources. A long-time favorite of mine. They have a > 1 million ounce deposit (known as "Eau Claire" or "Clearwater") of high grade gold in the vicinity of Goldcorp's Eleonore gold camp that is being developed. Recent drill results suggest that the resource may expand considerably. Market cap is about $80 million US and they have about $20 million CAD in cash which will last them at least 5 years.

2). Sabina Silver. They have a 200+ million ounce silver deposit, which also has zinc and copper. In total metals content it is pretty high grade ore and most can be open pit mined. The main drawback is that it is far north in Nunavut, Canada, and will require construction of a road and port. However, they just announced a deal to buy a gold project from Dundee Capital which is near Sabina's deposit. The gold project contains > 2 million ounces at about 10gpt. (that includes inferred resource). After this deal is completed I believe Sabina will have something like 125 million shares (including some shares to Dundee contingent on future developments), putting them at a market cap that I believe to be something like $80 million US. They paid some cash to Dundee but should still have about $25-30 million Canadian left in their coffers.

3). Comaplex minerals. They have around 2.5-3 million ounces of good grade gold in Nunavut, it is a remote area but should be able to leverage much of the infrastructure that Agnico Eagle develops for its Meadowbank gold project, Comamplex's Meliadine project is just a bit off the path from the port to Meadowbank. Comaplex's market cap is something like $120 million US or so.

Smaller juniors I like are Ontex, Rolling Rock, Golden Goose.

The one stock I own in a precious metals producer is Silvercorp, which has a low-cost silver mine in China.


Bottom line is my bets on precious metals are on companies (except for Silvercorp) that:

1). Are exploration-only companies, and appear to have the intent to sell their property when the time is right rather than trying to develop their own mine.

2). Have their precious metals deposits in Canada, about the most politically safe country for such assets.

3). Are selling at a value price per ounce of precious metals considering grade, size of deposit, and degree of proximity to infrastructure.

Stick with Gold and the Oil Stocks

"I wonder what the Feds can do to those who own gold miners?"


I doubt they will do anything to them. Roosevelt confiscated gold, but didn't confiscate gold stocks.

It is one thing to confiscate a commodity, it is a far bigger step to start confiscating people's stock. A couple of restraining factors in my view: 1). how do they decide what is and what is not a precious metals stock 2). Confiscating precious metals stocks would create huge ill in countries like Canada. We can't afford to alienate Canada, we are going to need their oil. (and when gas reaches $10 per gallon, you will no longer hear the Democrats thumbing their nose at environmentally dirty oil from tar sands)

Keeping Our Confidence in Strong Energy Stocks

"yet the stock price action undoubtedly relates to broader issues"


How about the broader issue of the plans for the Obama administration to levy trillions of dollars of new taxes on the industry, which I believe will demolish the US oil and gas industry and guarantee that no company ever makes another dime producing oil or natural gas in the United States.

You think that might have something to do with it?


What lunatic would invest in US oil or gas companies when the federal government has expressed its determination to levy astronomically large new taxes on the industr?

Are investors counting on the Republicans taking over in 2010?

America Needs a Natural Gas Transportation Infrastructure

realist2:

I find it plausible that PHEVs would reduce overall emissions, but I am skeptical about how strong a case there is for that.

Keep in mind that hybrids are complex machines that are considerably more expensive to build than either fossil fuel only or pure EVs.

Since battery technology is progressing rapidly, I am skeptical about the advisability of society spending massive amounts of capital on hybrids, which may very well be obsolete within a few years.

Bottom line, it probably doesn't matter, because just the inertia of switching over our transportation fleet means it will be many years before we have a substantial portion of our vehicles in hybrids, and so our ability to misallocate capital to hybrid vehicles which will be obsolete in 5-10 years is very limited. Plus, hybrids do exercise some of the technologies that pure EV's will use, such as driving the wheels by electric motors, so they do serve somewhat of a role as a technical stepping stone toward genuine electric vehicles.

America Needs a Natural Gas Transportation Infrastructure

Tosser & mac, you are dead on.

George Bush was an absolutely hideous President who solved imaginary problems and ignored real ones.

Obama has some clue what's going on, at least more so than most politicians.

However, Reid and Pelosi are buffoons who don't have a clue.


That's why I say regime change is not yet complete, until Reid and Pelosi are put out to pasture.

America Needs a Natural Gas Transportation Infrastructure

"And the answer is: leave the NG stored in the ground and use free, readily and forever available renewable alternatives like solar and wind, plus grow the biofuels."


Just one problem, Jaybird- the transition to renewables will take 50-100 years.

People that don't understand the technical challenges of renewable energy have pie in the sky notions. Alliance for Climate Change was doing those TV ads saying we should demand that our politicians switch us over to 100% renewables in 10 years.

Then that ad stopped appearing. I guess the scientists and engineers told the climate change guys that they were just making fools out of themselves for proposing a timetable for renewables that is ludicrous.

Don't get me wrong. We MUST transition to renewables. We must do it as rapidly as possible. If we don't it will be lights out for modern civilization for a number of decades between the time fossil fuels become too scarce to use as a mainstay of our energy needs and the time when renewables can take over as our primary energy sources.

But there is a need to get the general public fully cognizant of how long and hard a process it is going to be to switch to a primarily renewables-based energy system.

These are the big challenges:

1). Renewables primarily intermittent sources (the main exception is hydro whose potential is already close to fully utilized).

The ways to mitigate the intermittency are:

a). Come up with mass energy storage systems. Right now these do not exist, and there are no economically viable concepts out there so far for doing this.

b). The "supergrid". Build a massive global power transmission system. Challenges with this approach include the fact that the capital cost will be enormous, there are big electrical losses associated with transporting electric power over thousands of miles (unless we can develop affordable approaches that greatly reduce those losses), and geopolitical issues may be an obstacle even if the engineering issues are successfully addressed.

c). Switch to a variable pricing scheme in which you pay low prices for power when it is available in abundance (when the wind is blowing or the sun is shining) and you pay up the yin yang when it is not in abundance. No doubt this will be part of the solution but if we have to rely strictly on this rather than a) and/or b) then we will have a much less user-friendly energy system than we have now.

2). Problem 2 is that many key energy uses require liquid fuels rather than electric power. Prospects are good to power cars by electricity, but what about planes? And what about all the other products we make from fossil fuels- fertilizer, plastic, etc. My guess is that we will have to rely on biofuels for such uses, but it appears unlikely that biofuels will be able to be produced in large quantities so they will be expensive and only appropriate for critical uses where there is absolutely no other alternatie.

Increase of State-Controlled Resources Threatens U.S. Consumers

loveoil: Alamo is right.

Yes natural gas is a more awkward transportation fuel than gasoline.

But having a big CNG tank in your trunk is not a bad tradeoff for getting fuel that is a lot cheaper and is not subject to the whims of dictators.

(or at least, the whims of dictators outside of our own country)


Besides, with the economic downturn, you can't afford to buy stuff to put in your trunk anyway.

Increase of State-Controlled Resources Threatens U.S. Consumers

Alex: You are absolutely right. The Bush/Pelosi regime has much in common with the Chavez regime.

The T. Boone Pickens Approach

Jaybird:

In my view the biggest issue with renewables is matching supply and demand both in time and geography.

This may not hit us too hard as we go to 20-30% renewables, but when we make the ramp up to 100% it will be in my view the biggest challenge ever undertaken by mankind.

While variable pricing (e.g. charge less when the wind is blowing) may allow some of the mismatch to be addressed by people doing non time-critical energy-consuming tasks during off peak hours, I believe that most of the mismatch will still remain.

We will either need giant batteries to store the output of power plants generated during low-demand periods in order to use the energy during higher demand periods, or we will need a massive global electrical grid so that wherever in the world energy is being generated, it can be transmitted to the place in the world where it is needed at that particular time.

The technology does not exist to implement either of those today.

We know how to build wind power plants and we know how to build solar power plants but we do not at this time have the technology to address the load-shifting issue.

That in my view will constitute the biggest scientific and engineering challenge in the history of mankind. Whether we succeed will determine whether human civilization continues.

The T. Boone Pickens Approach

This is what peak oilers have been saying for years:

We need to wean ourselves from fossil fuels because THEY WILL BE SCARCE in the future, irrespective of the global warming issue.

As to Al Gore, he really discredited himself the other day when he claimed we could switch to 100% renewable electricity within 10 years. (and then his organization proposed a 30 year spending program to implement that switchover!)

I have read a number of books on alternative energy, and the consensus is that very aggressive but achievable goals would be along the lines of 20% renewable by 2020 or 30% by 2030.

100% in 10 years? What is Al Gore smoking.