Where’s the Growth? It’s Here, and It’s Going to Be Here for a While

There is growth out there, but it’s becoming awfully difficult to find. We’ve seen strength in U.S. micro-cap technology companies in the latest quarter, and that’s very positive, but large-cap technology stocks are definitely hurting.

Sector-wise, there is no consistency in this stock market, but if I were to pick one group to highlight, it would be precious metals; gold and silver mining companies specifically. Even though the spot prices of gold and silver aren’t really advancing currently, they are holding up consistently, and that’s a huge bonus for gold and silver producers.

One company that just announced significant growth in its revenues and earnings is Argonaut Gold Inc. (TSX/AR), which trades in Canadian dollars on the Toronto Stock Exchange. This company was created in 2009, and operates mostly in Mexico, with producing and exploration assets. Reporting in U.S. dollars, Argonaut generated third-quarter revenues of $72.9 million, representing growth of 221% over the same quarter last year. Earnings growth for this gold producer was even more pronounced, rising 360% in the latest quarter to $27.2 million. The company produced 31,074 ounces of gold in the third quarter, but actually sold 42,534 ounces of gold from stockpiles, taking advantage of stronger spot prices. Argonaut’s stock chart is below:

 Chart courtesy of www.StockCharts.com

About a year ago, a lot of silver mining companies said that they would purposefully not sell all their silver ounces into the marketplace, in anticipation of higher silver prices. This strategy worked, and with spot silver prices well over $30.00 an ounce, you can bet that earnings growth from many silver producers will be significant over the next few quarters.

As I’ve been saying, it is difficult for companies in most industries to generate revenue and earnings growth if the demand isn’t there. This, in my view, makes the case for gold and silver stocks that much more attractive for speculators.

We’re in a stock market today that’s without trend, and has declining fundamentals, but valuations are reasonable. Weakness in large-cap technology stocks is holding the main stock market averages down, and they won’t be able to accelerate without this group.

I’m very cautious on the stock market these days, and one of the only sectors in which I’d say speculators could still be buying is gold and silver stocks. With spot prices holding up very well, and the prospect of a weaker U.S. dollar in 2013, gold and silver fundamentals remain excellent.

Article Source:http://www.pennystockdetectives.com

Penny Stock Arranges Financing, Has Large Potential Upside

When it comes to penny stocks, the companies offering the highest potential are young exploration companies that are in the early stages of development. Certainly, junior mining stocks that are currently producing revenue, while at the same time conducting exploration work, are less risky; but for the big homeruns, penny stocks that are in the very early stages offer outsized potential returns. However, investors must also realize that these penny stocks offer higher-than-average risk profiles.

Tirex Resources Ltd. (TSXV/TXX) is one of many junior mining stocks in the early exploration stage. Penny stocks in this stage are risky, but can be very large winners if they find substantial resources. The firm is exploring in Albania, amassing a property that holds what they believe to be considerable levels of copper, zinc, silver, and gold deposits. The company has rights to 553 square km for exploration and production. (Source: Tirex Resources Ltd. Fact Sheet, last accessed November 27, 2012.)

Tirex has identified 102 geophysical anomalies that need further exploration. The site has at least 17 deposits that are known, with nine of them being previously produced. Penny stocks that are exploring on properties offering a variety of potential precious metals certainly increase the possibility of ultimately developing a financially viable property. (Source: Ibid.)

Zinc is used to make galvanized steel, with China consuming almost 40% of the world’s supply. As we all know, commodity prices are based on supply and demand dynamics. While many are worried that China is slowing down, recent news that China is enacting a multi-billion-dollar infrastructure program should be on the margins of somewhat bullish. Long-term investing in junior mining stocks is all about anticipating where the market will be in the future.

The interesting fact for someone interested in penny stocks is that there aren’t a lot of pure zinc plays. This means that the junior mining stocks left will have a target on their back by bigger players looking to acquire assets. Penny stocks involved in zinc should warrant some attention for those interested in long-term investing. Junior mining stocks do have some risks if their properties don’t yield the resources expected, but the penny stocks that do perform will have the potential for extreme profits.

Chart courtesy of www.StockCharts.com

One of the biggest risks for penny stocks is running out of funding. This is especially true for junior mining stocks that need capital for further exploration work and development. Tirex has alleviated these concerns, at least over the short term, with the arrangement of a $7.7-million financing agreement. This will clear the way for further exploration in some of the new discoveries that the company has identified. (Source: Tirex Resources Ltd. press release, “Tirex Arranges $7.7 Million Financing,” November 5, 2012, last accessed November 27, 2012.)

The stock has traded in a large range over the past year. As the firm continues further exploration work, volatility is to be expected. Junior mining stocks always have a period of waiting until more drill results are released. However, considering that previous investors bought shares at much higher levels, with the recent financing in place, there is the potential for large upside reward if the firm is able to deliver on finding high-grade levels of precious metals.

One thing I do like about Tirex is that it has a huge area for exploration, which is always a positive for penny stocks and junior mining stocks specifically. The more area there is available to explore, the higher the chances are of hitting a high-yielding resource. The downside for penny stocks such as Tirex is that they’re so far from completing mine development and production that impatient investors find it difficult to hold for an extended period of time. Like many junior mining stocks, there are risks, but high rewards as well.

Article Source: http://www.pennystockdetectives.com

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

Silver Penny Stock Could Break $10.00 Shortly

When it comes to commodities such as silver, it’s extremely difficult for anyone to predict the future price. Junior mining companies that are involved in the production of silver can only focus on operational efficiencies and avoiding potential pitfalls.

If an investor is long-term bullish on silver prices, it makes logical sense to look at silver stocks, especially the junior mining companies. Junior mining companies in silver tend to overshoot to the upside and downside, so an opportune investor who is patient can take advantage of these swings. One of the more interesting penny stocks involved in silver is Endeavour Silver Corp. (NYSE/EXK; TSX/EDR).

Endeavour is one of several junior mining companies extracting silver primarily in Mexico. This company is relatively young, having formed in 2004; however, it’s extremely well run. The company has had seven consecutive years of increases in silver production. (Source: Endeavour Silver Corp. web site, last accessed November 26, 2012.)

Junior mining companies with proven reserves in silver and the potential for increases in both reserves and earnings over the next few years are quite interesting to me. Endeavour reported financial results for third quarter 2012, which resulted in revenue of $51.9 million, an increase of 34% from the prior year’s quarter. The firm produced 1,137,883 ounces of silver, an increase of 33% from the prior year’s quarter, and 11,754 ounces of gold, an increase of 139% from the prior year’s quarter. (Source: “Endeavour Silver Reports Third Quarter 2012 Financial Results,” Endeavour Silver Corp. press release, November 6, 2012.)

The quarterly financial results also show that realized silver and gold prices were far below current levels. For the third quarter 2012, Endeavour Silver had realized prices for silver at $28.72 per ounce and $1,637 per ounce of gold. The current price of silver is approximately $34.00 per ounce, while the price of gold is approximately $1,750 an ounce. This improvement in the spot price of both commodities will be beneficial to many junior mining companies, including Endeavour Silver, when reporting this fourth quarter’s results in the new year.

One of the areas to pay attention to when conducting due diligence on silver junior mining companies is the cost per ounce of extracting the commodity. For the third quarter, Endeavour Silver reported a decline in the cash cost of seven percent, to $4.70 per ounce of silver, net of gold credits. Whenever you have junior mining companies able to decrease costs, while having the spot price continue to increase, this should be a positive over the coming quarter if they are able to maintain the cost structure.

When looking at junior mining companies involved in a volatile commodity like silver, it helps to have a long-term view. Junior mining companies have significant potential for capital appreciation if the underlying commodity, like silver, resumes its upward bias. Considering the level of money printing worldwide, I think higher silver prices are quite possible over the long term. While trading in junior mining companies that extract silver can be potentially profitable, one must have a thorough and comfortable understanding of where the commodity is going, and have a long enough time horizon to handle the inherent volatility with junior mining companies.

Chart courtesy of www.StockCharts.com

Endeavour Silver peaked in the summer of 2011, and since then, it has been consolidating the massive gains from 2010. The three-year weekly chart above shows the huge move from approximately $3.00 in early 2010 to just under $13.00 in 2011. Clearly, this level of appreciation cannot continue at this rapid pace. Since then, the stock has been consolidating and appears to be building momentum to exceed the $10.00 level. This $10.00 resistance point will be crucial for the stock to be able to retest its multiyear highs.

With the underlying price of silver moving up in recent weeks, if junior mining companies, such as Endeavour Silver, can continue to maintain a low cash-cost per ounce, while also preventing operational issues, they should see strong fourth-quarter results. We still need to see additional capital flowing into these junior mining companies so that the charts could become technically bullish. In the meantime, I would suggest adding Endeavour Silver to one’s watch list.

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

Playing the Turnaround in the Chinese Economy

U.S.-listed Chinese stocks that are bouncing off their all-time lows are plentiful, and there is now a lot of value in this group. We know that China is experiencing a slowdown from its recent economic growth; this was engineered and encouraged by policymakers to contain a housing bubble. The combination of weaker business conditions and the virtual abandonment of Chinese stocks by institutional investors has created significant opportunities to try the buy low/sell high investment strategy. What’s clear is that it will take a while for China to recover from its current slowdown. It may be a little too early to take on new positions in Chinese stocks, but there are many worth following for the future.

One such Chinese stock that just bounced off its all-time low is China Ceramics Co., Ltd. (NASDAQ/CCCL). The company manufactures and sells ceramic tiles in China for exterior siding and flooring. Customers are in both residential and commercial markets. The company’s backlog of orders is in decline and it has already pre-announced weak expectations for the fourth quarter. But this is a stock worth keeping on your radar screen, because when China’s real estate market reaccelerates, so will business conditions for companies like China Ceramics. The company’s stock chart is featured below:

Chart courtesy of www.StockCharts.com

Of course, it goes without saying that Chinese stocks are super high-risk securities; they’ve proven this in recent history. But value is value, and I’d rather speculate in Chinese stocks that are down and out over any other type of strategy in this group.

Another small U.S.-listed Chinese stock that’s struggled on the stock market for the last two years is Lihua International, Inc. (NASDAQ/LIWA). While the company’s growth is slowing, its latest quarterly results were strong, and its share price is about equal with the amount of cash per share it has in the bank. Lihua’s stock chart is below:

Chart courtesy of www.StockCharts.com

As is always the case, timing is everything in the investment business. I suspect that it’s a little too early to consider new speculative positions among Chinese stocks. The group doesn’t have any momentum in this market. But I do think that if China’s economy can improve in 2013, then a lot of these stocks will turn around. There will be a time when value among Chinese stocks returns to growth, but we’re not quite there just yet.

Article source:

U.S.-listed Chinese stocks that are bouncing off their all-time lows are plentiful, and there is now a lot of value in this group. We know thatChina is experiencing a slowdown from its recent economic growth; this was engineered and encouraged by policymakers to contain a housing bubble. The combination of weaker business conditions and the virtual abandonment of Chinese stocks by institutional investors has created significant opportunities to try the buy low/sell high investment strategy. What’s clear is that it will take a while for China to recover from its current slowdown. It may be a little too early to take on new positions in Chinese stocks, but there are many worth following for the future.

One such Chinese stock that just bounced off its all-time low is China Ceramics Co., Ltd. (NASDAQ/CCCL). The company manufactures and sells ceramic tiles in China for exterior siding and flooring. Customers are in both residential and commercial markets. The company’s backlog of orders is in decline and it has already pre-announced weak expectations for the fourth quarter. But this is a stock worth keeping on your radar screen, because when China’s real estate market reaccelerates, so will business conditions for companies like China Ceramics. The company’s stock chart is featured below:

Chart courtesy of www.StockCharts.com

Of course, it goes without saying that Chinese stocks are super high-risk securities; they’ve proven this in recent history. But value is value, and I’d rather speculate in Chinese stocks that are down and out over any other type of strategy in this group.

Another small U.S.-listed Chinese stock that’s struggled on the stock market for the last two years is Lihua International, Inc. (NASDAQ/LIWA). While the company’s growth is slowing, its latest quarterly results were strong, and its share price is about equal with the amount of cash per share it has in the bank. Lihua’s stock chart is below:

Chart courtesy of www.StockCharts.com

As is always the case, timing is everything in the investment business. I suspect that it’s a little too early to consider new speculative positions among Chinese stocks. The group doesn’t have any momentum in this market. But I do think that if China’s economy can improve in 2013, then a lot of these stocks will turn around. There will be a time when value among Chinese stocks returns to growth, but we’re not quite there just yet.

Article Source:  The Chinese Economy

Try your luck with this Japanese stock

It’s good to have a little geographic diversification in your portfolio so it makes sense to have an investment linked to the world’s third-largest economy, Japan. Unfortunately, after four recessions in 15 years and one looming, an earthquake and a tsunami, investors have little interest in Japanese companies.
For years, managers of Japan-focused funds, desperate to stem the exodus of frustrated unitholders, have declared that Japanese stocks are undervalued and a turnaround is imminent.
We are, however, still waiting. It’s next to impossible to find even a modestly profitable, growing company with a reasonably sound balance sheet in Japan.
Big names such as Canon, Hitachi, Sony and Panasonic, for example, are closing factories and laying off employees.
And while analysts are more positive about the prospects for automakers Toyota, Honda and Nissan, they have their issues as well.
Demand for their cars in China — a huge market — has been hurt by political tensions. A standoff between China and Japan over the Japanese-controlled Senkaku islands in the East China Sea has sparked a boycott of Japanese-made products by Chinese consumers. Thanks partly to the dispute, Korean-based Hyundai has been taking away market share from Japanese automakers in China.
All this gloom makes diversifying into Japan challenging. We tried to find a Japanese large-cap company that was not in trouble with the help of the Google Finance stock screener. We sifted through its universe of 8,170 companies to first focus on companies with a market capitalization of at least US$1-billion and a price/earnings ratio of between five and 20, weeding out the money losers and troubled companies at one end, and the expensive high flyers at the other.
From the resulting group of 1,059 names, we sought out companies whose net profit margin over the past year was at least 5%, and whose return on equity and earnings per share growth topped at least 5% over the past five years. Finally, we asked that our candidates have a current ratio — current assets divided by current liabilities — of at least one.
Those minimal requirements left us with 283 reasonably profitable and sound names, enough that ought to have produced at least a few from Japan. But only one Japanese company, Tokyo-based Konami Corp. (KNM/NYSE), met all requirements.
Konami and its 23 subsidiaries make video games for consumers, electronic card games and other amusements for casinos, along with equipment for fitness clubs and software for websites. Konami manages fitness clubs as well.
Konami has a healthy net profit margin and strong return on equity, and its semi-annual dividend, paid at the end of March and September, yields 2.7%.
Of the 19 analysts who follow Konami, 15 see it as a buy and four say hold. Their average target price of ¥2213 ($26.67) represents a potential return of 15.4%.
Konami is best known in Japan for its pachinko machines, which are wildly popular in the country. A pachinko machine is essentially a vertical pinball game loaded with tiny balls that players capture and redeem for prizes or tokens. Since gambling is illegal in the pachinko parlour itself, players take the tokens next door or down the street to cash them in.
Even Konami, however, is facing headwinds. Revenue for the six months ended Sept. 30 was down 13.3% from the same period in 2011, and its American Depositary Receipts are down 21.1% this year.
“The business environment surrounding the Konami Group remains uncertain mainly due to the impact of the European sovereign-debt crisis and the continued strength of the Japanese yen, despite signs of a rebound in personal consumption in some quarters,” the company said in its Sept. 30 six-month report.

Article Source:http://business.financialpost.com