₪ David Pescod's Late Edition June 8, 2007
GOLD:
It’s been fun in the commodity sector for much of the last two years, but not today. According to Bloomberg’s, gold is down $14.90; zinc is down $35.00 a tonne; crude oil is down $1.90 and nickel is down $3000.00 a tonne. Mind you, these corrections are all from very lofty levels.
But, there is one species of animal that’s really been suffering for the last while and that’s the gold bug. The first chart shows you that gold prices haven’t actually been doing that badly over the last year, and in fact recently, they are not that far off record highs.
On the other hand, the Gold Index shows you that while gold prices may be high, gold stocks have not been having much joy at all, with the Gold Index down almost 20% to 25% over the last six months, which of course is the bad news.
The good news is that we are hearing from more and more gold analysts pointing out that at this level, the Gold Index is soon at what should be a very strong support level. Or at least it should be.
What will get gold going again? In the past while, suddenly commodities such as molybdenum, zinc, tungsten and palladium have been much more precious than the usual precious metals.
But, we are not that far away from those support levels as the charts shows you and it will be interesting to see if it holds.
GOLDQUEST MINING (V-GQC) $1.07 -0.34
We joke with Eric Coffin that “some people will do anything to get their name on the Bullboards.” That’s a bit of a bad joke because the Coffin Brothers seem to be getting abused on the Bullboards today because they had the nerve to suggest “taking a bit of money off the table” on Goldquest Mining which is definitely one of the stories of the day.
The Coffin Brothers in their Hard Rock Analyst had suggested a while ago, buying Goldquest for their Animas project in the Dominican Republic way back at $0.28. It came up with an absolutely amazing hole of 142 metres of 2.59% nickel, 1.91% zinc and 2.50 g/t gold. But as the Coffin Brothers note on a Special Delivery on June 6th entitled Boomer, the intersection is not true widths, they’ve written.
They also point out some other good reasons to consider selling some at this time in that there’s almost 10 million warrants out exercisable at around $0.30 plus some $0.30 private placement that was done that are obviously weigh on the stock with this kind of profit looking at people in the eyes. That’s a bunch of selling pressure. But over the longer term, with additional results coming in shortly, Eric tells us today that he does like the company and management and with their array of roughly 20 products and their Animas being so well located, the story is far from over. He refers to what he and David wrote: “It’s not a bad idea to take a bit of money off the table as it nears our expected highs and be ready to reload later. That’s simply portfolio management. Let the market pay for your stock when you can.” The important thing for the moment though is calculating the true width of that 142 metres might be. If it’s only 20 or 30 metres, that still could be quite significant. And again this is just the start of work on this project. Nice pick at $0.28 boys!
CONNACHER OIL & GAS (T-CLL) $3.58 -0.05
We are off to exciting places like Morocco and the like for the next ten days, so with the market in a bit of a retreat, we go to Andy Gustajtis for a little hand holding and a check on his “Top Ten.”
Not a top three, but top ten. As anyone who has had the number of big wins he’s had in the last year from Corridor Resources (CDH) to Rally Energy (RAL) to Kodiak Oil & Gas (KOG) to Pacific Energy (PFE), he gets a top ten, not just a top three.
As we go over his list, he doesn’t seem concerned at all assuming very good oil prices and gas prices that are surprisingly bullish. Should his number one pick work out in the next two years the way he believes, we will either be retired or writing this letter from Mexico during the winter.
His number two pick looks like the next few months are going to be interesting to get paperwork done, but should that work out, once again, we could be quite happy.
His number three pick is Connacher Oil & Gas, one of his selections that lately has been acting like a dog, but Andy says bluntly, “When they start steaming, people will care.” They better!
Going farther down his list, we notice his number six is obviously dependent on higher gas prices and his number seven pick is dependent on such high gas prices that people might even care about Shale again. Should that one work out, well, we will gladly eat this Edition, although we have bought some stock just in case he’s right...
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