Tuesday and the Doctor is in Discussing a Mining Company He likes.
Do not construe this editorial as being investment advice as it definitely is not. We are simply discussing a mining company, Klondex, that Doc feels for him has potential. At this point in time neither Al nor Cory own any shares in Klondex.
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Bird; I believe it will possible move higher over the (minimum) the next 5 trading days based on the momentum indicators I’m watching. But you’re correct, I’m not chasing it from here since we then should get sideways to lower action. I’ve established a position and will wait on a better technical indicator in the future to get me to add.
Just my thoughts Doc. Thanks for bringing this one to our attention.
Doc thanks for covering your thoughts on Klondex. We’ve had a few good rounds discussing it on the blog recently. Since they relate to this editorial I’ll repost:
I brought up Klondex on the 8th in reference to a link that CFS had posted from Casey Research
On April 7, 2015 at 8:58 pm,
CFS says:
caseyresearch om gold:
https://www.caseyresearch.com/going-vertical/b
On April 8, 2015 at 11:46 am,
Shad says:
Well I don’t know about most of Casey’s research calls, but I thought the interview was very well done. As of for their 7 top picks, I do like the looks of Pretium Resources and Klondex Mines and have been watching both stocks for a while, so that was good confirmation.
On April 10, 2015 at 12:46 pm,
Brian says:
There are Gold/Silver mixed miners that are making money:
Klondex, for example:
4Q2104: Net income for the fourth quarter totaled $9.0 million or $0.07 per basic share. 4Q2014: 26,272 gold ounces and 400,706 silver ounces produced
On April 10, 2015 at 1:18 pm,
Birdman says:
Of course. The article noted more than 50% running at losses. Not 100%.
On April 10, 2015 at 1:27 pm,
Peter R. says:
The junior and intermediate miners have more risk than the junior explorers in my
opinion. When things are more stable in the gold and silver prices then the miners start looking more interesting.
On April 10, 2015 at 3:22 pm,
Shad says:
Yes, I am watching Klondex and they have been on a tear and are being recommended by the Casey Research team and Frank Holmes. I know many here are not fans of theirs, but they do have some brains and also influence in the sector.
On April 10, 2015 at 4:07 pm,
Matthew (ignoring Birdman) says:
Shad, I’m a fan and a critic of Casey Research. They put out lots of worthwhile stuff but I don’t always agree in the “how to play it” department.
I’ve been a subscriber for many years and get 5 or 6 of their letters.
On April 10, 2015 at 4:46 pm,
Shad says:
Yeah, I value a range of perspectives and nobody gets it right all the time anyway. What are your thoughts on Klondex or Pretium Resources that they are recommending?
On April 10, 2015 at 5:11 pm,
Matthew (ignoring Birdman) says:
I’ve always liked Klondex a lot and owned it when it had a market cap of probably one-tenth what it is now. I wish I kept it. I personally wouldn’t be a buyer here, but it does look like it’s going much higher from here straight ahead.
I don’t know PVG well but it’s chart and valuation shows less downside risk than Klondex right now. It’s too big and popular for me to get interested but I think it will do well.
On April 10, 2015 at 5:51 pm,
Brian says:
Pretium is the only PM stock I own that is not a producing mine and mill (well, Alexco, but only shuttered for a couple more months, I think). Incredible grades – like Kirkland Lake but maybe 5 times the yearly ounces of gold, once in production.
Like Matthew, I wish I had bought Klondex back in Nov14 – a profitable company with today’s gold and silver prices is a rarity. Obviously not as much upside potential as Claude, Kirkland, Alexco, Scorpio, but I started ‘nibbling” recently. It’s a stable company with a reasonable P/E. Any upside would be the result of increase profits from higher gold prices.
By the way, I have an acquaintance who works in the Yukon with PM companies. He thinks that Alexco and Pretium are potential MONSTERS – some of the highest grades in the world (silver and gold, respectively) combined with massive resource estimates.
On April 10, 2015 at 8:31 pm,
Shad says:
Good thoughts Matthew, Bird, and CFS.
Matthew/Brian I’ve actually followed Pretium for a while now and am interested in taking a position in it if we do get a pull back in pricing in a month or so, and just wandered if you followed it. Brian, that is good to hear, and while I am a fan of Claude, Scorpio, and Alexco ….. I’m honestly not that familiar with Kirkland, so I’ll check that out as well.
Glad to hear you both thought Klondex was a good company (although maybe a little overbought here).
Thanks Shad.
Big Al
Just thought it would help to have everyone’s thoughts on Klondex in one place.
Cheers!
Thanks Shad
Good point, Shad!
Thanks Doc, do you know the all in cost per ounce of gold?
It’s about $800-$850 in U.S. currency.
I really like this company (Klondex). I started building a position last week @ US$ 2.20, but am also waiting for a pullback to buy my next block.
I don’t Klondex has the reward/risk potential of Claude or Kirkland, but as (if) price of gold/silver rises, this should be a solid, steady climber.
DOC
What is the significance (if any) of the ever-tightening Bollinger bands on Claude?
Brian
Brian; it’s signalling consolidation waiting to breakout either way. I haven’t purchased any Claude for awhile but the odds are it moves down to the lower BB which is priced at about $.55. I’ll purchased just a little again at that price and then we’ll see if we break lower out of that band which wouldn’t surprise me. Then when it looks like its’ bottomed again, I’ll add again. I’m getting conservative as we move deeper into spring/summer. I’ll bet there’ll be better opportunities to purchase some of these stocks come late summer—-.
DOC
Thank you very much for your response. I seem to focus my attention on BBs first when looking at a chart, then other indicators. So, I ma trying to educate myself on the nuances.
Brian
Good for you. The more you learn and the more charts you look at, the better decisions you’ll make. You’ll start to see patterns that in most cases occur in multiple charts.
Doc, gotta disagree with you on this one. I wouldn’t touch Klondex with a 100 foot pole at its current value. It has a lot going for it but the one big risk factor from my standpoint, and it is a biggy, is there lack of reserves and resource. Klondex could have one or two really good years and then be bankrupt in a heartbeat. At a fully diluted market cap of 450million, I can think a half a dozen other junior miners I would rather put the money into. Really enjoy your commentary but I think you and Al should be highlighting companies that are not at or near their 52week highs as it stinks of self interest. Same applies to Claude. You guys should be highlighting companies that have taken a beating and are on their way back up or you expect to be on their way back up. Do you think we need commentary on the best performing miners. It is like telling me I should bet on either New England and Seattle being in the super bowl next year.
I probabaly agree regarding Klondex, but I do think that Claude is still a good bet.
By the way, there is absolutely no self interest that is not disclosed.
Sorry, didn’t mean for the “stinks of self interest” comment to come across as a shot. I should have put it another way. II really meant it as a shot at those analysts that work that way. I know you and Doc are both quality pros and one of things I appreciate most about your site is how you go about promotion (maybe the wrong term) and provide clear disclosure.
We try Peter R!
Chasing stocks high even when they dip is risky and not good advice in my opinion. That is one of the first pieces of advice that I give my friends that want to do a bit of investing and probably the first lesson we all learned when we started investing is never chase. If I am hearing about companies from analysts and commentators, the opportunity has typically passed by. This is a general rule, there are always exceptions, but I don’t believe Klondex will be one. There may be another .50 on the short term upside but my bet is it will settles into the $1 to $2 dollar range over the medium term.
Again, you could be right Peter R.
Remember, I do not own Klondex.
Peter
I simultaneously agree and disagree from different perspectives.
On one hand …Klondex is probably at the top of valuation range right now, but I would rather own a little, than none.
On the other hand … it is difficult to own miners that I KNOW are extremely undervalued, but no one else knows it yet. So, on an up day on the GDX/GDXJ, at least one or two of my picks are green. It is VERY disheartening to look at your portfolio and everything is RED, when GDX/GDXJ are up 1-3 % and GREEN.
Brian
Most of the stock sI own are extremely high Reward/Risk. But I think it is OK to own a miner that will do well when the price of Gold/Silver increase.
Agreed Brian. BTW I included some of our thoughts from the 10th on Klondex at the top of the blog. Good thoughts sir.
Argonaut would be the type of company worth discussing. I would rather own Argonaut over Klondex even if Klondex is at $2, nevermind $3.
We will take a look Peter R and come back.
I am a big fan of Argonaut Peter R. and agree. We’ve been tossing around some ideas on it recently as well:
On December 24, 2014 at 11:52 am,
Dan, calgary says:
I bought back into Scorpio and Impact today as I like their charts. Took profits too early on Argonaut Gold as it continued up today. Could be shorts filling IMHO as it had a %9 outstanding short position.
On December 30, 2014 at 11:09 am,
Shad says:
Hey Bird. There are 2 camps I am looking at. The first group are stocks that were more solid back in 2008-2010 with higher PM prices, that are lower today (even after lowering costs, expanding resources, and increasing throughput). The second group could approach its 2008-2010 lows if we have one more down-leg in Gold that breaks 1137 and takes it down to 1050 in the spring. I hope this doesn’t happen.
1) AUY (Yamana) – Old low was abut $4.63 and it got down to $3.47 on Nov 5th and $3.55 on Dec 16th. It’s up right over $4.06 today but I hesitate to think where it would head if gold broke lower still. $3.55 and $3.47 would be first support.
2) IAG (IAMGOLD) – Old low was around $3.30 and in Nov 5th fell to $1.52 and now back up at $2.63. If gold fell, that $1.52 would come back into play.
3) SAND (Sandstorm) – Old low was around $2.85 and it recently got down to $2.55. It is back above $3.53 now, but since it broke the old low recently, then that 2.55 would come back into play.
4) AU (AngloGold Ashanti) – old low was $18.25 and just this Dec 15 it got down to $7.48. It is back up now but same analysis, it could test $7.48 again.
5) DRGDF – (Detour Gold) – Old low was $3.06 and it hit $3.84 in 2013 for Dec low, and is now up around 5.37, but if gold headed back down then both levels would be support.
5) GPL (Great Panther Silver) – Old low was in the $.17-.29 range from 08-09′, but then got down to $.65 in June 2013 and $.68 during Dec 2013 lows. Recently the price dipped below these previous lows to $.57 on Dec 23. If Silver headed down into the $14′s it would test this again, and if it breached into the $12-$13 level it may test the $.29 support again.
6) MUX (McEwen Mining) – Old low was $.70 and recently touched $.92 on Dec 17th. Back up to $.1.15 now, but if PM take a leg down then $.92 and $.70 are support.
7 ) ARNGF (Argonaut Gold) – Old low $2.44 and it touched $1.10 on Dec 16th. It is around $1.65 now but could easily drop down to test 1.65 or lower if PMs have the final downleg.
So we have stocks that are already past their 2008-2010 lows and some that would be in range if there was a sell down. It will be crucial to see if we get a slow grind up, or a pop and drop scenario in Q1.
On January 21, 2015 at 10:14 am,
Dan, calgary says:
Looks like you will get another entry point soon in the gold stocks. I follow Timmins, Lakeshore and Argonaut and a few others. All are down today. I don’t fully understand gold so I keep selling my gold stocks too soon. Scorpio mining (silver, and I own some) is up a bit today once again on big volume.
On March 13, 2015 at 8:13 am,
Dan, calgary says:
I don’t own any Argonaut now but it is oversold IMHO and could finish bottoming soon.
On March 13, 2015 at 8:28 am,
Matthew says:
I also don’t own it right now but It looks very appealing. Do you happen to know of anything negative about it, because it looks like a bargain on paper.
On March 13, 2015 at 8:32 am,
Dan, calgary says:
I don’t know of anything new. Short position was 9% in Nov. and now it is 6% as of the end of Feb.
On March 13, 2015 at 8:41 am,
Matthew says:
Thanks, I’m looking at their website now. They have a lot of exposure to silver, maybe that’s what’s holding the stock back. I just might have to buy some.
On March 13, 2015 at 9:28 am,
Shad says:
I have been watching Argonaut for year now, and I think it is a great buy. It is on my short list of companies I will be taking positions in later this spring. It went up too fast, and came down twice as hard as things tanked. Still it is a great value.
On March 13, 2015 at 9:54 am,
Matthew says:
Thanks Shad, I just bought some at 1.42 and will buy more.
On March 13, 2015 at 10:01 am,
Dan, calgary says:
I nibbled too.
On March 13, 2015 at 10:12 am,
Matthew says:
Thanks again Dan. I think you were the one that first brought it up when I had a good trade with it awhile back. I will happily buy more if it goes lower.
On March 16, 2015 at 2:00 pm,
Shad says:
Hey Dan.
As for Silver these are the main companies I follow and either have, have had, or intent to take positions in during the bottom in pricing this summer.
1) Hecla is my standout favorite Silver miner. The acquisition of Aurizon made me a huge fan of the combined company, it has been fairly price stable, and I expect it to grow about 4-5 fold over the next 3 years.
2) Fortuna Silver Mines – big fan.
3) Endeavour Silver – Great company, over sold, they’ve done a great deal to improve themselves, but got punished extra hard because of the tax laws and violence in Mexico lately.
4) Great Panther Silver – Love the assets and management, and have no idea why it sold off so hard. They did have a mine uprising/riot last year briefly, but their annual numbers were better YOY, and they are poised for big increase.
5) Aurcana Corp. – Despite the disaster of market timing for their announcement of Shaftner in TX right as prices went south, and the horrible market timing of their reverse stock split to do a lame financing, I still like this company. They have done a great deal to reduce costs and have substantial base metal credits that are helping them out at present. Should go up considerably from the level it is at.
6) Scorpio Silver – Dave, I like them for a few reasons despite the rock bottom pricing: (a) Good deposits and mines, and they know how to work the mines to capitalize on the higher grade viens. (b) Base metal credits are very helpful to average out price swings in Silver (c) the have cashflow and are small producers so they can weather the pricing lows, and it makes them a potential takeover target (d) their recent takeover of US Silver and Gold was a smart acquisition, but nobody seemed to care and their price has declined during this phase, but again, that is normal for the company acquiring another. (e) They own a percentage of Scorpio Gold (I believe around 9%), and that company that they spun off a few years ago just paid off all it’s debt and will be cash-flowing soon.
7) McEwen Mining – I believe Rob McEwen to be a wise businessman, experienced mining executive, and I like that he puts his money where his mouth is. While they are a gold company, a lot of what they produce is actually silver, and they should respond well to pricing rebound, and look waaaayyy oversold at present.
8) Argonaut Gold – Same story as McEwen Mining. Gold producer, with a substantial amount of Silver, and waayy oversold.
9) Sierra Metals Inc – Silver, Gold, and base metals. Good company.
10) Santacruz Silver – sponsor on Al’s Site
11) Bear Creek Mining – Reigniting interest in their deposit and go to mine strategy.
12) Silver Wheaton – (Of Course!)
On March 16, 2015 at 2:33 pm,
Dan, calgary says:
Thanks Shad, I own Scorpio and Argonaut and still own some Cangold (take over in progress by Great Panther. They share some of the some board members).
On March 16, 2015 at 6:11 pm,
Shad says:
Great point Dan. That is yet another Merger that was just announced recently for Great Panther to acquire Cangold. I think that will be a wise move for both companies, but I think it still requires the shareholder approval
It seems like the silver space has been more active in M&A activity than the gold market, but it is a healthy sign that these companies feel they are bottom fishing for quality assets or assets that consolidate land and resources under one umbrella.
On March 24, 2015 at 11:51 am,
Matthew says:
Or Argonaut Gold, which was up as much as 51% in just 7 sessions.
On March 24, 2015 at 11:55 am,
Chartster says:
Yes Matthew, good chart!
Thanks for that. Dan too.
On March 24, 2015 at 2:50 pm,
Dan, calgary says:
I think I will play it through the $2 barrier too.
On March 25, 2015 at 10:21 pm,
Shad says:
Agreed on both Argonaut and Yamana…both are still at very low levels compared to where they were in the past (before they had even implemented the cost saving improvements they now have). Once he PM pricing improved substantially and we take out 1347 and 1382, confirming a new uptrend in gold they should do very well. However, I still believe PM prices will slide down into May, and there will be better entry points into these stocks. Their recent rallies show their strength though.
On April 2, 2015 at 11:27 am,
Shad says:
Yes. When the dollar did the double top on the 11th & 13th, I took some positions on Friday the 13th because I like tempt fate : – ) Then I took other positions on the 16th & 17th St. Patrick’s day for the luck of the Irish to send Friday the 13th a message : – )
The stocks I acquired for the 2 week bounce I anticipated were:
Sandstorm gold (SAND), Great Panther Silver (GPL), Platinum Group Metals (PLG), Stillwater Mining (SWC), Hecla Mining (HL), Endeavour Silver (EXK), and the Sprott Gold Miners ETF (SGDM).
I trimmed or sold many of the positions in them on the 23rd-25th. I still have some positions and hold about 40 companies in my portfolio in various other equities, and still have about a dozen Jr. Miners that l think make great takeout targets for a major (like Rye Patch, Exeter, Tower Hill Mines, Scorpio Mining, Wellgreen Platinum, Polymet, North American Palladium, Silvercrest mines, Romarco Minerals, Crocodile Gold, Golden Queen, Inca One Gold corp, Torex Gold, and Jaguar Mining).
I am always watching about 2 dozen other companies in the Jr space, but really tend to trade (JNUG) and (JDST) when I sense a macro change.
I also really like a lot of the mid-tiers as well and may be adding to positions in Fortuna Silver, Argonaut Gold, McEwen Mining, Yamana, Sierra Metals, Alexco, and I like the allocation inside the Tocqueville Gold Fund (TGLDX) for majors and midi-tiers.
On April 10, 2015 at 3:47 pm,
Shad says:
I completely feel ya on that one CFS as that has happened to me, but it is my hope that in some cases the new combined company will be stronger than that 2 entities prior to the merger. (like when Aurizon was acquired by Hecla).
Having said that, my biggest gains in the mining space have always been when a great Jr miner was at the right point in the cycle for a takeover, and the carnage had already been done to the shareprice. If you can spot these and get in before the merger, than while the pop is lower than long term holders like, the pop is still dramatic and can lead to huge gains.
Currently, here are some on my list of Jr Miners as potential takeover targets:
Exeter, International Tower Hill Mines, Rye Patch, GoGold Resources, Golden Queen, Torex Gold, Silvercrest Mines, Crocodile Gold, Argonaut Gold, Aurico Gold, Inca One Gold, Romarco, Orocobre, Idaho North, Bear Creek, Typhoon, Niogold, Wellgreen Platinum, Polymet, Jaguar Mining, Garibaldi Resources.
On April 10, 2015 at 3:50 pm,
Shad says:
a few of those are producers as well, but I still see them as takeover targets by Majors or Mid-Tiers.
For anyone interested in Argonaut Gold here is their April 15th press release going over their great Q1 2015 numbers. They already produced 31% of their whole year guidance just in the first quarter. Worth a look!
http://www.argonautgold.com/news_events/news/index.php?&content_id=187
On a separate topic, and re-posting:
Something from Financialsense over the WE: Ralph Acampora interview.
A must listen IMHO.
It starts at 14mn for about 15mn long – discussing US mkets, rotation, rates cycles, gold, TA vs Fundamental analysis…
http://www.financialsensenewshour.com/broadcast/fsn2015-0411-1.mp3
Enjoy – hopefully.
GL to all investing/trading.
LPG
Good interview> LPG, thanks for posting the link.
Have a good one!
Most welcome Shad.
When I come across an interview w. Ralph, I listen 🙂
Best to you,
LPG
Vantage Drilling gained another 20 odd percent yesterday on huge volume(8x average)…something is up..Must be an interested buyer.
Hey Biggus. I went and checked out Vantage Drilling and I think their share price might be climbing due to interest in them getting their balance sheet squared away. It looks like it has been under strong pressure for a while, but they are starting to buy back their own debt, and that may have a few bigger buyers getting interested.
Hey Shad, I just noticed that the CDNX has broken through the 700 level.
Yes, that is a good sign that there is a little life being breathed into the commodities and energy space lately. The recovery in oil likely played the biggest part, but miners showed some strength yesterday.
Thanks Doc. I just checked the chart and agree its going higher. Not sure I would chase it right now but rather wait for the next pullback which could come anyday. Is that similar to your strategy here?