COMMON INVESTOR MISTAKES

1.Wrong Number of Stocks:

Too Few:

Owning only several gold stocks increases the likelihood that a problem at one will wreck havoc on your portfolio. Don’t try to “swing for the fences with just a couple… with over 1000 gold and silver stocks existing, you’re too likely to strike out, or be ignored by Mr Market.

Too Many:

Owning too many gold stocks is a common fault of those that attend Gold Shows or subscribe to newsletters with several dozen stocks on their “buy” list. Investors hear or read a good story and buy. Before long they own 20, 30 or more… far too many stocks and thus they are doomed to simply match Indexes such as the XAU or HIU. Most gold newsletters are guilty of recommending too many stocks as it increases the chances of a big win they can boast about, but it does little good for anyone’s portfolio to own all their recommendations... which is why they don’t report total portfolio results, as do mutual funds and Gold Stock Analyst.

The beauty of “10” is two fold:

First, the way numbers work. 10 is large enough that a disaster at one, even if it falls 50%, won’t cause much overall damage. On the other hand, when a Top 10 stock doubles, triples, or more, it can have a big impact on your total portfolio’s value. One never knows when Mr Market will wake up a stock, so having 10 broadens the possibility of a big success.

Second, the discipline of 10. If you find a new stock and want to buy, sticking to 10 forces you to re-examine the entire portfolio and decide if the candidate’s chances are better than the stocks already held.

GSA’s track record shows 10 Gold/Silver Stocks to be about the right number to own. And even if gold will only be a portion of your portfolio, in today’s era of $10 internet trade commissions, a $100 total transaction cost is minor “insurance” to own all of the Top 10.

While GSA covers over 60 miners, that doesn’t mean we like them all at the current price… but at a different price, or after an “event” we might. Already following the stock means that we don’t have to “get up to speed” after price changes or events and we can immediately tell subscribers to act. And, covering virtually all producers is how we compile our unique industry-wide database that lets us find the Top 10 Stocks.

2. All Ounces are Not Equal:

An ounce is an ounce is an ounce… right?  WRONG!!!  Don’t be confused by the various “ounce” totals thrown around by the companies.

The US SEC allows miners to report only one type of ounce totals, Proven and Probable Reserves. These are ounces determined by drill holes spaced close enough, as little as 15’ apart, to have a high probability that their grade results can be projected over the untested distance between the holes. Plus, the deposit’s economics have been verified by an independent feasibility study that shows the capital required to build the mine and processing facility will have a positive return. A combination of these two criteria qualifies a deposit’s ounces to be P+P Reserves.

Other ounce designations… Mineralization, Measured, Indicated, Inferred, Resource, Global Resource, etc... have wider drill spacing so the ounces are less certain to exist and/or the deposit has not been shown to be economic. For example, sea water is known to have billions of ounces of gold… but the grade is so low that it’s not economic to attempt recovery.

3. Buying entire position at once:

Just because you agree with GSA, that a stock has the long term potential to double, it doesn't mean that Mr Market will suddenly see the same upside and start buying right after you've bought. It takes time for value to be recognized.

NEVER buy your entire position at once, whether it's a new stock or establishing a position in the precious metals sector. Scale in... 50% of your final investment is the maximum to start. You may well get a chance to buy more later. If you don't get this chance, you'll have a low cost initial basis and there's nothing wrong with adding to an already winning position.

Article source:http://www.goldstockanalyst.com

Gold Eases Up on Good Economic Data

Gold traded in a tight range this week and at lower-than-normal volumes due to the Thanksgiving holiday yesterday in the United States. The price of bullion on Thursday climbed slightly due to positive manufacturing data out of China and Europe, alongside increased tension in the Middle East. Gold is considered a safe haven asset in times of economic and political turmoil. 
Reuters reported that the HSBC Flash China Purchasing Managers’ Index reached a 13-month high of 50.4 in November, while manufacturing activity in Europe slowed less than expected this month.
Both events were bullish for gold, with investors continuing to buy the metal on the hope that Eurozone economies are not as weak as had been feared, and news from China indicating fresh demand for bullion in the Middle Kingdom, which is vying against India to be the world’s largest gold consumer.

“If there is a belief that China has turned the corner, there could be more physical demand,” Reuters quoted Saxo Bank vice president Ole Hansen as saying. Spot gold was last quoted at $1,729.70, up just 50 cents from the previous day’s closing numbers. Gold has risen about 11 percent so far this year, mostly due to quantitative easing measures announced by the European Central Bank and the US Federal Reserve.
Central banks, ETPs keep buying gold
The price of gold was also buttressed this week on new International Monetary Fund data that indicates that central banks are continuing to purchase the yellow metal. Mineweb reported that 40 tonnes were purchased in October and purchases are on track to match last year’s 456 tonnes (net purchases). The main buyers were Brazil with 17.2 tonnes, Turkey with 17.5 tonnes and Kazakhstan with 7.5 tonnes. The purchase by Brazil raises the country’s gold holdings to the highest level since 2001. Germany, on the other hand, the second-largest holder of gold after the United States, reduced its holdings by 4.2 tonnes. Gold held through exchange-traded products (ETPs) is also on the rise, at a record 2,605.318 tonnes, Mineweb said, quoting Bloomberg.
Meanwhile, in India, where the gold-buying season is going full tilt, the Chhath festival in Northern India is expected to give fresh impetus to gold buying. Gold coins are being discounted up to 7.5 percent as Hindus pay homage to the Sun God. By comparison, last week Gold Investing News reported that gold sales during the five-day Diwali festival were curbed due to high prices and totalled only around 70 percent of last year’s 100 metric tons.
Company news
Eldorado Gold (TSX:ELD,NYSE:EGO) said it will not go ahead with a planned $500-million debt offering, citing “deteriorating conditions.” The Canadian company had four days earlier announced the offering of senior notes, intending for proceeds to go towards general corporate purposes, including growth initiatives.
“Deteriorating conditions in the debt capital markets led us to conclude that the proposed offering of senior notes would not be in the best interest of shareholders under the terms currently available,” stated Paul Wright, CEO.
Another Canadian gold miner, Detour Gold (TSX:DGC), is trying to raise $106 million to start production at its gold mine in the province of Ontario. When it starts in January, the open-pit mine is slated to become Canada’s largest gold mine at an average annual output of 657,000 ounces.
South Africa’s Gold Fields (NYSE:GFI) said it is no longer feasible to develop the Chucapaca gold mine in Peru into an open-pit mine. The project is a joint venture with Peruvian miner Buenaventura.
“The partners have studied the viability of a large open-pit operation capable of sustaining a 30,000 tonnes per day throughput. A first draft of the feasibility study has been completed and as a result of relatively high capital and operating costs this option would not have delivered acceptable project returns,” the companies said in a joint press release.
Future studies will focus on other options, including underground mining or a combination open-pit and underground operation. The deposit has an estimated 7.6 million ounces of gold and gold equivalents.
Toronto- and London-listed Patagonia Gold (LSE:PGD,TSX:PAT) said Thursday that it has been granted the final permit for producing gold from the Lomada de Leiva deposit in Argentina. The company is ready to begin constructing the main heap leach and production is slated for the second quarter of 2013. The mine is expected to produce an annual 21,000 ounces.
Junior company news
US silver miner Hecla Mining (NYSE:HL) expanded its interests into Nevada with a $2.5 million investment in Canamex Resources (TSXV:CSQ). “Hecla is pleased to be able to make a strategic investment in Canamex to participate in the re-emergence of a historic Nevada gold district with outstanding exploration and development potential,” Hecla CEO Phil Baker said Monday. He added, “[t]his is one of many strategic investments in junior mining companies with strong management and outstanding land-exploration packages that Hecla is contemplating as we seek to expand our exposure to under-explored silver-gold mining districts in the Americas.” The funds will be used to develop Canamex’s Bruner property in Nevada.
Cogitore Resources (TSXV:WOO) reported that drilling is underway to test the Gold Hill showing at its Lemoine project, located south of Chibougamau, Quebec.
“Results of recent chip sampling of the Gold Hill showing by Cogitore included up to 0.92% copper and 85.4 g/t gold (2.49 oz/ton gold), and 0.87% copper and 1.9 g/t gold over narrow widths. These results are consistent with historical surface sampling reported by Teck Exploration Ltd in 1999 which included grab samples up to 2.8% copper and 48.2 g/t gold, and a chip sample returning 6.3 g/t Au over 7.3 metres,” the company press release states.
Roxgold (TSXV:ROG) announced initial results from the current step-out drilling program at its 100-percent-owned Yaramoko concession in Burkina Faso, commenting that the results “confirm the presence of high grade gold mineralization outside of the existing mineralized envelope and represents a significant step out from known mineralization down plunge within the 55 Zone.

Article Source:http://goldinvestingnews.com

Gold Mining Mergers Taking Off; What it Means for Gold Bugs

Deal flow among gold and silver stocks is increasing, and we’re likely to get more consolidation in the precious metals sector. Even though spot gold is around $1,750 and spot silver is $33.00 an ounce, mining companies are running out of money.

It takes a bull market in precious metal prices and gold and silver stocks to get institutional investors to pile money into the sector. If gold and silver stocks are going up, they can sell more shares, raising money for development and exploration. But, we had a meaningful correction in gold and silver stocks earlier this year, and it took quite a bit of wind out of the sector. Gold and silver stocks have come back, of course, but new financings have been lacking, and this is why we’re likely to see more consolidation as mining companies pool resources.

One great example of this new trend is Prodigy Gold Inc. (TSXV/PDG), which is a development-stage gold penny stock. The company is at the evaluation stage of developing a large, open pit gold mine. In a friendly deal, Prodigy Gold agreed to get purchased by Argonaut Gold Inc. (TSX/AR) in a transaction worth over CDN$340 million. Prodigy Gold’s stock chart is below:

Chart courtesy of www.StockCharts.com

If the appetite for financing junior mining companies has slowed among institutional investors, companies will engage in mergers to get their projects off the ground. There is still a perception problem about investing in individual gold and silver stocks, and it’s why many institutional investors would rather just purchase an exchange-traded fund (ETF) if they feel like expressing a position in these precious metals. No doubt it is a specialized sector, similar in scope to the expertise required in biotechnology stocks.

Gold and silver stocks are still a great place to be for risk-capital, speculative investors. Right now, I’m advocating that investors wait before considering new positions in large-caps, but there are select opportunities in precious metals right now. The one thing we don’t have in this market at this time is the interest among institutional investors to pile into the sector, and that’s because gold and silver prices haven’t begun a new upward trend as yet. They’ve recovered from their recent price corrections, but I think it’s fair to assume that we’re not in a new bull market for gold and silver just yet.

Other sectors of the stock market are doing better than gold and silver stocks currently, and large investors are focused on this momentum. One of the best new entry points for gold and silver stocks was the recent spot price correction in May. Now we’re in wait-and-see mode. In order for gold and silver prices to advance meaningfully from their current levels, a major new catalyst must develop.

American Gold Eagle Coins

World’s most popular gold bullion coins

Since their introduction in 1986, more than sixteen million Gold Eagles have been sold. Because American Eagle Gold Bullion Coins (their official name) are the world’s best-selling gold bullion coins, they provide instant liquidity. Still, the Krugerrand is probably the world’s best known gold bullion coin.

American Gold Eagles come in four sizes: 1-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce. The 1-oz Gold Eagles are by far the most popular and sell at small premiums over the value of their gold content. The smaller coins sell at higher premiums.  Gold Eagles are minted at the US Mint’s West Point, New York facility.
American Gold Eagles are 22-karat gold, which means they contain 91.6% gold and 8.4% of a copper-silver alloy. Because Gold Eagles are 22-karat, many investors incorrectly believe that Gold Eagles have less than an ounce of gold. This is not so.

Gold Eagles: exactly 1-oz ounce of gold

The 1-oz American Gold Eagles contain exactly one ounce of gold, and the smaller fractional-ounce Gold Eagles contain the gold content stamped on them. The copper-silver alloy causes the coins to weigh slightly more than their stated gold contents.

American Gold Eagles

Legal Tender Gold Coins

American Eagles are legal tender coins, but their face values are symbolic, as Gold Eagles do not sell at their legal tender values; Gold Eagles sell at prices that reflect the value of their gold content plus small premiums for being coins.

American Gold Eagles: four sizes

The 1-oz Gold Eagle coins are $50 face value, the 1/2-oz coins $25, the 1/4-oz coins $15, and the 1/10-oz coins $5. One-ounce Gold Eagles come in tubes of twenty but can be bought in smaller quantities.
All four American Gold Eagle sizes carry the same design. Gold Eagles minted 1986-1991 are dated with Roman numerals. In 1992, the U.S. Mint switched to Arabic numbers for dating Gold Eagles.
If you would like to discuss buying American Gold Eagles, or would like to discuss any aspect of investing in gold, call us at 800-528-1380. CMIGS takes calls 7:00 a.m. to 5:00 p.m. MST, Mondays through Fridays.

Article Source:http://www.cmi-gold-silver.com

The Hidden Precious Metal

While everyone talks about gold and silver, at times it can pay off for an investor to get into a precious metal before everyone else does. The precious metal that shows a lot of promise for the near future is palladium.

Palladium has several characteristics that are common with gold and other precious metal commodities, plus a few unique on its own. For one, more investors are seeing palladium as a store of wealth, in addition to traditional industrial uses, such as automobile manufacturing. With the recent American Eagle Palladium Bullion Coin put into production, this has added more demand for a relatively short supply of this precious metal.

This is one of its strengths as a precious metal: the supply line is very thin and fragile. Its supply lines are tight and this draws heavy interest from large firms to junior mining stocks that mine this precious metal. Gaining more reserves by buying or partnering with junior mining stocks is one way larger firms can add to their future supply lines.

When it comes to mines, South Africa produces approximately 40% of the world’s production of palladium. The problem is that electricity is always precarious in that part of the world, with one major supplier. There have been issues with blackouts and disruptions of electricity, causing firms to temporarily halt production schedules.

Such problems and tight supplies only increase the attraction to junior mining companies that can add more reserves to the market in an area with potential low mining problems. One such interesting firm is North American Palladium Ltd. (AMEX/PAL). This precious metal miner owns several properties and two mines. Like many junior mining stocks, there are several precious metal commodities that this firm extracts, including palladium, platinum and gold.

Chart courtesy of www.StockCharts.com

One advantage when investing in junior mining stocks involved in the precious metal sector is a large possible move up in their share price. However, this also brings with it substantial risks as well, so make sure you understand your own risk profile and conduct due diligence to see if this precious metal miner fits in your portfolio.

One of the advantages of this precious metal miner is that it has significant properties in Canada. An area that encourages mining and is in close proximity to the U.S. market is always a benefit for junior mining stocks looking to partner up with a larger firm or even potentially sell themselves once reserves are fully established.

This precious metal miner has had a tough year, but it appears from the chart that the bottom might be in last October. While in a tight range, the $2.50 area has shown significant support. A move above the 200-day moving average would be seen as extremely bullish.

When looking at junior mining stocks, don’t forget to investigate where they have their properties and some of the potential problems of actually extracting the precious metal commodities from the ground. It’s no good to an investor of junior mining stocks if the property is in the middle of nowhere with electricity problems and no roads. All of these potential pitfalls are costs and erode the profits of selling the precious metal.