Canada Stocks Fluctuate as Gold Mining Companies Slips, Energy Producer Rise

Canadian stocks swung between gains and losses as energy producers rose and gold mining companies fell as the precious metal back from the four-week high.

Canadian Natural Resources Ltd., Canada's second largest energy company by market value, advanced 0.8 percent after analyst Brian C. Dutton of Credit Suisse Group AG raised his rating on the stock to "exceed" from "neutral." Barrick Gold Corp., the world's largest gold producer, lost 1.4 percent as bullion falls below $ 1120 per ounce. Copper mining company First Quantum Minerals Ltd. rose 2 percent as producers of metals used in industry rose.

Standard & Poor's / TSX Composite Index slipped 9.17 points, or 0.1 percent, to 11,700.12 at 9:51 am in Toronto for what will be the first loss in nine sessions.

S & P / TSX gain 5.3 percent in the eight days through February 19 as a stronger-than-expected corporate earnings in North America over concerns over rising U.S. dollar impact on commodity prices. Since the time of reporting earnings season began on January 11, 63 percent of the S & P / TSX and 78 percent of the S & P 500 companies that have reported have exceeded analysts' estimates.
Description: Canada Stocks Fluctuate as Gold Mining Companies Slips, Energy Producer Rise Rating: 5 Reviewer: Admin ItemReviewed: Canada Stocks Fluctuate as Gold Mining Companies Slips, Energy Producer Rise

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Thursday, April 22, 2010

Randgold Resources Limited Call Options Up 55%, Place a Stop

Team, a quick note to update you on the Call Options we purchased on the 9th February 2010 on Randgold Resources Limited (GOLD) they are the Jun 19 ‘10 $75 Calls with a strike price of $75.00 for which we paid $5.50 per contract for them. The traded today at $8.60 so we are placing a stop at $6.50 to protect our position from any sudden fall in value.

The choice of just where to place a stop is entirely up to you, our strategy is one based on protection against a fall rather than locking in the maximum profits. A stop too close to the trading price could be triggered fairly soon due to the volatile nature of these contracts. However, we will be moving the stop up accordingly should gold prices continue to head north. When we are of the opinion that this play has run its course we will move the stop much closer to the trading price and possibly get stopped out when the stock takes a breather. If you have followed us in to this trade and have a different exit strategy, then please drop us a line and let us know just how you intend to play your position as this would be of great benefit to all of readership and not just the team here, thanks.

Below is the chart of Randgold at about the time when we made the decision to make this trade.

All the best.

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Description: Randgold Resources Limited Call Options Up 55%, Place a Stop Rating: 5 Reviewer: Admin ItemReviewed: Randgold Resources Limited Call Options Up 55%, Place a Stop

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Tuesday, April 13, 2010

Gold Prices Update April 2010

We are pleased to see gold prices taking a peak at the $1140/oz level today despite the US Dollar also showing strength, touching 81.6, which we view as being positive for gold prices going forward. Silver prices flirted with $18.00/oz but slipped back to $17.92 just after the close on the NYSE.

A missive from Jim Sinclair this morning entitled: Gold Shares - Lemmings over the cliff, in which he had the following warning for holders of precious metals stocks:

Negative spin and disinformation in its various forms (en masse downgrades - quietly followed by upgrades and negative articles on gold shares with solid management, valuable reserves, and excellent financing) are no accident. Organized interests want your quality gold shares and will herd you like lemmings over the cliff to acquire them. You must stand strong with your gold - January 06 2010 and quality gold shares. Ignore the spin. The gold shares stand on the cusp of a major breakout. Three taps and out is nearly complete.

So there we have it, hang on to your favourite gold and silver stocks as the future looks bright according to Jim. We are holding firm to our stocks although, as we have written in the past, we are a little disappointed at the stocks inability to set this sector on fire. Maybe we are just not patient enough and the best is still to come, go gold go!

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Description: Gold Prices Update April 2010 Rating: 5 Reviewer: Admin ItemReviewed: Gold Prices Update April 2010

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Agnico-Eagle Mines Outlook Looks Good

The outlook for Agnico-Eagle Mines Ltd (AEM) looks good according David Garofalo, CFO, who was interviewed on BNN yesterday regarding credit conditions and sales prospects following a report by the Bank of Canada that they were the worst on record.

David gave an upbeat view of Agnico’s future stating that they had five new mines coming into production, two this year, two next year and one in coming on stream in 2010. They are hiring people and buying machinery as production will double this year and double again next year. He added that gold was being driven by fear and with the continuing debasement of paper currency which would lead to inflation etc. His take on bank lending was that they were only lending to the best investment grade companies and that credit had otherwise pretty much dried up.

Taking a look at the geo-political areas of investment Agnico-Eagle operates in Canada, Northern Mexico and Scandinavia, which in our humble opinion is low risk, although we will be watching developments in Mexico as a certain amount of unrest exists there at the moment.


We do own this gold producer and are happy to keep holding this stock but we are not buyers at this price level, the P/E ratio of 97.90 is a little on the high side for us, especially when compared with a company like Yamana Gold Incorporated (AUY) which has a P/E of 13.39. The P/E ratio is not everything but it is worth keeping an eye on.

Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.

Agnico-Eagle Mines Ltd (AEM) has a market capitalization of $7.62 billion, average volume of 4.72 million shares traded, a 52 week high $80.72, a 52 week low of $20.87, a P/E ratio of 97.90 and closed yesterday at $49.06.

Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

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As we can see from the chart above AEM has recovered well from the 2008 lows, expect some consolidation from here and wait for a buying opportunity, if possible wait for the RSI to get closer to 30 before buying.
Description: Agnico-Eagle Mines Outlook Looks Good Rating: 5 Reviewer: Admin ItemReviewed: Agnico-Eagle Mines Outlook Looks Good

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Centerra Gold Hit by Political Unrest.

Centerra Gold’s stock (CG) extended its plunge to a second day Thursday on worries that political unrest in the Central Asian country of Kyrgyzstan could disrupt operations at the company’s Kumtor gold mine.

A day after Kyrgyz opposition forces said they had seized power after a deadly uprising, the company said in statement the turmoil had no impact on the huge mine.

The statement repeated what a Centerra spokesman told Reuters on Wednesday.

Even so, at least two analysts downgraded the Canadian company’s shares, while one voiced concerns about the stability of an agreement with the government that sets the terms of Centerra’s ownership of the mine.

Shares of Toronto-based Centerra, which is one-third owned by the country, were down 9.8 percent at $10.82 on the Toronto Stock Exchange at mid-morning.

The stock dropped 11.4 percent Wednesday following reports that protesters had toppled the country’s government in a violent uprising that has so far killed dozens.

The mine is expected to produce up to 560,000 ounces of gold this year and accounts for nearly 10 percent of the central Asian country’s economy.

Concerns about the mine’s possible nationalization have dogged Centerra in the past. But the issue appeared to be resolved last year after Cameco Corp., Centerra’s former parent company, struck a deal that doubled the Kyrgyz government’s stake in the company.

Steven Butler, an analyst at Canaccord Adams, said in a note that the shaky political environment raises the risks for the ownership agreement.

“The increased political uncertainty in Kyrgyzstan will likely be an overhang on the stock price in the near to medium term, along with the risk associated with continuity of the ownership and fiscal terms applicable to Kumtor that were negotiated only one year ago,” he said.

To read this article in full please click this link.

The geo-political risk involved in mining has hit Centerra Gold pretty hard and brings into the question once again, whether its better to invest in the mining sector or the metal itself and is the leverage to gold prices worth the risk. Its something that we continue to wrestle with and at the moment we hold gold, silver and their associated stocks.

For disclosure purposes we do not own any of Centerra Gold stock and we publish every trade that we make and access to our portfolio is free.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
Description: Centerra Gold Hit by Political Unrest. Rating: 5 Reviewer: Admin ItemReviewed: Centerra Gold Hit by Political Unrest.

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