Date: Fri Jul 01 2005 12:08
trotsky (Apollo@CBLRF) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i seem to remember that the estimated wind-up value of the company was something like 70c. per share ( that was a year or so ago ) . why is the stock now rising? is it likely that something is salvageable for shareholders, or is this just short covering? in short, what are the implications of the 'reorganization'? is it the type of bankruptcy in which shareholders end up with nothing?
i'm trying to find out if the stock is worth a punt at current levels.
Date: Fri Jul 01 2005 12:01
trotsky (Hambone@NCEM) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
trading volume is usually low, a side effect of the low share float. this however only represents a problem in terms of building a position, which one is forced to do slowly. when the stock comes to life and makes a run, trading volume tends to rise sufficiently to allow one to sell without a hitch. this is the same with ALL low float stocks. however, the disadvantages one encounters while trying to build a position are more than cancelled out by the fact that such low float stocks tend to move faster and farther than other stocks once they begin to rally.
Date: Fri Jul 01 2005 11:54
trotsky (Earl Grey) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" Current bond yields all over the world are close to their lows, so bond investors are telling us that they believe the chances of a serious war anytime soon are close to zero."
i actually don't think that that's their major message here. rather they are telling us that they don't believe the 'reflation' of 2002-2005 is sustainable. the link between wars and bond prices that you are referring to only works during Kondratyev summers, i.e. when we're in an inflationary era. in deflationary eras, rising budget deficits are ignored by the bond market ( it is not war, per se, that influences bonds during inflationary eras, but the budget deficits that war produces ) . proof for this is Japan, which has seen huge growth in its government's outstanding total debt ( the highest of all industrialized nations at roughly 160% of GDP ) and annual budget deficits, which hasn't hampered its bond bull market one bit.
thus the conclusion that the bond market foretells peace is imo wrong. did the bond markets signal the war in Iraq?
Date: Fri Jul 01 2005 11:45
trotsky (frustrated, 10:51) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
nevertheless, bank credit has also grown explosively, especially in the mortgage loan arena. the US banking system now has more exposure to real estate than at any time in history. needless to say, this represents a huge threat to the economy at large, since these loans use artificially inflated house values as collateral. the situation is actually already worse than Japan's was before its RE bubble gave up the ghost.
Date: Fri Jul 01 2005 11:38
trotsky (@the Rand) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
looks like the recently built triangle on the Rand daily chart was a continuation formation ( as expected actually... ) . today it's blasting off from it, with a neat 15 cents plungeroo so far.
iow. the Rand gold price is actually going up today, once again ( USD PoG down 1.72%, Rand/dollar up 2.25% ) .
Date: Fri Jul 01 2005 11:32
trotsky (traderneal) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
calm down. of course it's 'natural'. as we have seen last week, speculative net long positions in the gold contract had built up to a dangerous level, and whenever that happens, sharp pulbacks must be expected. especially as the Fed has not only just raised its FF rate again, but has promised more of the same. and as others have noted, there is very little support from the physical gold market at the moment, as we're in the period of seasonal demand weakness.
Date: Fri Jul 01 2005 10:55
trotsky (various stocks, update) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
1. CSTL - the stock has briefly trade over $4 today - not too shabby from the $3 level it traded at about two weeks ago. however, it's a very volatile stock, and often gives back gains as quickly as they have come. this is the major caveat new buyers have to weigh. otherwise there is imo still more upside in the longer term. i won't mention my target except to say that it's very optimistic.
fundamentally the company is sound - debt free, a respectable cash balance, good earnings growth and a low share float.
dyodd of course, and icbw.
the other issue i mentioned at the time, NCEM ,has actually something to do with the gold industry, as it owns a 50% stake in the biggest manufacturer of cyanide in the US. as long as the gold boom is intact, business will boom. as mentioned before, this is a 'get rich slowly' proposition, as the stock is in a very slow, but persistent uptrend. over the past two years it has raised its quarterly dividend twice, from originally 5c./share to now 7c./share.
a 28c. p.a. dividend actually represents a respectable yield for a $6.50 stock. one gets paid while one waits for the stock to rise.
the company is sitting on oodles of cash, has no debt, has a sharebuyback program and a very low share float. it's a roundabout way of playing the gold boom...sort of like the 'sellers of picks and shovels' analogy that was so often used to describe the internet hardware providers during the internet boom.
again, dyodd, but i think one can attest to the fact that it's a fundamentally very sound company without reservation. the major risk factors are the durability of the gold boom, and natural gas prices, which are the major input cost factor in cyanide production.
Date: Fri Jul 01 2005 10:36
trotsky (Donald) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"the problem may be too much savings, rather than too little. "
this is a baffling conclusion, to say the least. i would aver that the 'problem' is a global credit bubble that is completely out of control. one must not forget, the very high Asian savings rates are matched by equally high rates of investment. for instance, China's investment ratio is somewhere above 40% of reported GDP. savings can never be a 'problem' for an economy...a lack of savings however DOES constitute a problem. the recycling of trade surplus dollars into US government debt instruments by foreign CBs hardly is evidence of savings excesses. what they are doing is run their domestic printing presses overtime ( e.g. China's broad domestic money supply growth routinely averages 20% or more p.a. ) .
in any event, if there's anything worth worrying about then it's the zero percent savings rate in the US. consumption growth is entirely debt financed, and the country is consequently consuming its capital stock at an astonishing rate. imo the pool of real funding in the US has been under pressure since at least 5 years, and this will become more than evident once the momentarily extant asset bubbles collapse and eradicate the phantom wealth that is currently used to collateralize the credit expansion. it's an exceedingly dangerous situation.
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