? David Pescod's Late Edition August 20, 2007
ANDINA MINERALS (V-ADM) $2.61 +0.06
LAKE SHORE GOLD (T-LSG) $1.53 +0.08
We have always been warned by people like Don Coxe that in this commodity revival there were going to be bumps along the way, but lately this bump has been well...something of a scale we certainly didn’t envision.
Interesting notes in Coxes’ latest Basic Points dated August 8th when he was looking at this mess in the assetbacked securities mess, he writes; “The unstated motto of the geniuses in the investment banks who designed and priced these mathematically complicated products for which open market pricing was not available was a variant of the Hallmark slogan: When you care enough to enrich the very few.”
“Capitalism’s greatest enemy has never been socialism: It has always been the privileged few who abuse free, open markets while mouthing the pieties of Adam Smith.”
“The markets are finally wising up. None too soon.”
For those who listened in to his latest call, you’ll notice that Coxe is becoming quite bullish on gold. According to one follower of his conference call of this past Friday, he writes, “Instead, the long-term solution to fixing money markets will require “fundamentals of the kind of thing which are going to require further readjustments in the value of the dollar” which will “also mean significantly higher gold prices before all of this is finally cured and we can proclaim ‘all clear for the next bull market’,” Coxe concluded.
We are nibbling at several gold stocks and it’s been a while since we’ve been on the buy side, but given his track record and given the sell off in many gold stocks of late, we are hoping it’s bargain hunting time.
ANDINA MINERALS
LAKE SHORE GOLD
BEAR CREEK MINING
PETROLIFERA PETROLEUM (T-PDP) $14.07 -0.08
BAFFINLAND IRON MINES (T-BIM) $2.86 +0.02
Who would have thought Canadian mining and oil and gas companies would be caught in the mess that was the sub prime mortgage debacle in the United States? A fine mess put together by Wall Street brokers and Hedge Funds that is now affecting the entire world.
I hope a few of them pay for those sins, but in the meantime, the number of Canadian companies affected because they decided to put their money in ABCP commercial paper for a little bit better interest rates, and paying for it now with wasn’t talked about then ... higher risk. And while we suspect much of the carnage is over with, if there has been this many surprises so far, there’s bound to be more.
Looking down the road all of a sudden the questions you have to ask from the junior miner you are looking at is first of all, do they have any money and how is it going to resolve itself with the ABCP mess? And in this new market for junior miners, do they have money in the bank or will they have to raise some?
Redcorp Ventures (RDV) has $102 million at risk; Shore Gold (SGF) has $18 million at risk and when at risk, one assumes that sooner or later, they will get their money—the question is when and under what terms?
New Gold (NGD) also has $160 million and even Petrolifera (PDP) in the oil and gas business has $36 million parked there. Ivanhoe Mines (IVN) has $66 million and Baffinland Iron Mines (BIM) has $43 million.
PETROLIFERA PETROLEUM
BAFFINLAND IRON MINES
CRUDE OIL $71.12 -0.86 (September contract)
NATURAL GAS $6.03 -0.98 (September delivery)
There are thousands of natural gas and oil platforms off the Coast of Texas, Louisiana and Alabama, 834 of which are manned and some of them were deserted over the last few days with concerns that Hurricane Dean might be hitting their neighborhood.
Instead, the Hurricane is heading straight towards Cancun (there’s going to be a few tourists glad they got a real deal for the last week in an all-inclusive, finding out they are getting more entertainment than they thought) and then it’s expected to go on and hit the shores of northern Mexico and miss the oil and gas producing areas totally.
It’s another reminder that for those betting on natural gas and sometimes oil, it’s almost always a bet on weather.
Natural gas today has its biggest drop in four years but the opposite is happening offshore Mexico as Petroleos Mexicanos, the Mexican state-owned oil monopoly according to Bloomberg, plans to evacuate 13,360 workers from its oil platforms in the sound today, reducing output by as much as 400,000 barrels of oil a day.
If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com
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