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I will do that, THANKS!
That's great news! Where do I get a copy of PROSP RPT CARLETON LK GOLD PROJ, please? No need to respond tonite, anytime tmorrow, or whenever convenient is fine. Thanks!
Great job on getting our exact location pinned down. I think grab samples are next, or drilling results, so Edwin can show us more!
Good luck in your CNEX information searches! You are certainly helping all of us CNEXers a lot lot! Thank you a million!
Congratulations on your good job as well!
I too am thinking CNEX will reward us longs, in time. We might (dare I hope) even see a repeat of 1975-1980 years, when gold price spiked, and penny (under a dollar) mining stocks actually went to $100 to $400 a share, many of them, within those 5 years.
Thanks for the Congrats! I think you have already beaten Edwin to several punchlines! : )
You are doing so much to help out CNEX, and the shareholders here, we owe you a lot!!
Trapper Jim--
Thank you for all of your DD on exactly where the property is located, and exactly what we have (a diamond, just waiting to be uncovered)! I am so glad we could both buy more today, at a reasonable price, too.
I had some more good news today---I got a job offer for a Clinical Lab Scientist at a hospital here in Saint Louis, and I am in the process of accepting it! I am so happy. Gary, my husband, is very happy too.
Yes, we are all in CNEX together. You are right about SFMI taking it hard today. But, if CNEX has all we think it has in the ground, they could be poised for a buyout even! We will make everything back, very soon IMO.
Thanks, Trapper!
Good job! I just got 328,912 sh at 0.0008, at 12:41 pm! Go CNEX!!
I am glad you are loading too. A good PR about grab samples, maybe one simiar to our neighbor's high gold sample results, will be great!! Go CNEX!!
Thank you for your kindness! YES, CNEX could be next.....I just bought more today!
Thank you for your most kind words. I too, really appreciate you, Carnac, Trapper, Banker, and others, and all of your / their due diligence. It will indeed help to attract other investors.
Go CNEX!!
Ursa-- You are most welcome. It is great fun to be here in CNEX, and on this terriffic board, which keeps climbing in the rankings and on the Buzz Cloud! Probably all the fun will also turn into some serious $$$ gains, in the not too distant future, IMO.
Thanks for the message about the other people coming in potential, and the other potential! I will keep my ears open.
Carnac-- Thanks for the heads up about Monday!
I'd take 1/10 of that for CNEX too!!
Carnac-- Yes, I agree inflation will definitely play a role in this. My 15 free posts ran out last nite, or I would have replied sooner. I plan on selling my 1 non-mining stock to buy more CNEX Monday!!
ursa--- I am glad you were up on Goldcorp. My 15 free posts ran out last night, or I would have replied sooner.
I agree,in 2-3 years, CNEX could have enormous gains. I looked at a 5 year chart of SFMI, for example, at Charles Schwab's site, and it is actually up + 0.26, for a 5 yr. gain of 259,900%! So, I know it can hapen for real!
Doubloon-- Thank you for your comments. I am glad you think we could have a good run on copper over the next 2 years, plus the factors of supply / demand by the Chinese especially, and the fact dollars are worth less. Thank you too, for commenting on your own investments' location. I appreciate that.
My pleasure. I'm glad you enjoyed it.
That's neat about the Pelham Prospect, with a high number of Oz/ton, and only 50 miles away from CNEX. I too, am anxious for CNEX drilling to start and get results back...maybe by Dec.?
Maybe not in only one year, but over 5-8 years, perhaps, IMO....
I too, believe gold will go much higher, and you and I are not alone in that belief. Mining stocks will also benefit greatly, IMO.
Carnac--
I kind of hope all the markets don't turn to crap, but if they do soon, at least we here are all poised in gold and silver mining and in gold stocks, to take advantage of this unique time in history. You are so right, that the political situation will also determine gold's valuation.
Glad you liked them! It is kind of awe inspiring, and it could potentially repeat again, if the stars and planets align right!
It is a great time to be in mining stocks, in general. Wishing you many happy returns, literaly!
Trapper--
Please see my post to ursa, starting with the words "Goldchaser posted", around 5 pm Sat. posted by BSNB. You will be amazed!
'Goldchaser' posted this post earlier, from the SFMI board, documenting mining stocks that rose incredibly between 1975 and 1980:
******************************************************************
goldchaser Share Saturday, September 11, 2010 9:50:33 AM
Re: sphindog post# 19947 Post # of 20577
For those that don't understand the potenial of what we could be seeing in share prices over the next few years............
There were a few articles about gold from 1972 to 1975 but the real big stories didn’t really get published until around 1978-79 and especially in January of 1980 the final blow off top in both gold and silver. What I really wanted to uncover from the old financial papers were old stock tables so I could see how high most gold and silver stocks got to in January of 1980 and from what level a few years earlier.
What I found was absolutely shocking. In 1975 most or all of the gold and silver stocks were trading under $2 most were penny stocks under
.50.
Even with gold up 400% from the 1972 low of $60 to the 1975 top of $200 most gold and silver shares did little to make anyone notice especially the mass public who had no idea what was going on. It was not until gold bottomed out in late 1976 at $100 and into1977 that gold and silver stocks started there historic bull market that would end where some of the prices for gold and silver stocks were unthinkable only a few years earlier. I printed out stock tables from 1975 up until the January 1980 top and was totally stunned at what I found.
Let me give all you fellow gold and silver investors and people reading this essay who are thinking about buying some gold and silver shares a few of the many examples of the kind of gains that were made in the last gold and silver bull market a generation ago(before cell phones, the internet, and p4 computers) so you can have an example of the kind of gains we may see in the new gold and silver bull in the 21st century.
Lion Mines – 1975 price $.07 / 1980 price $380 YES that’s right it’s not a misprint you could of bought 1000 shares of lion mines in 1975 for around $50 dollars at 7 cents per share and held on for 5 years riding the wild gold and silver bull until 1980 where you then sold those same shares for $380 each for a total profit of around $380,000. Not bad hey!!!!! This is only one of many more examples.
Bankeno
1975 price $1.25 / 1980 price $430
Wharf Resources
1975 price $.40 / 1980 price $560
Steep Rock
1975 price $.93 / 1980 price $440
Mineral Resources
1975 price $.60 / 1980 price $415
Azure Resources
1975 price $.05 / 1980 price $109
These are only a handful of gold and silver stocks that participated in what I consider one of the biggest financial opportunities in the history of human civilization. I don’t know of any other time except maybe the .com bubble where in only a 5 year time span you could have tuned so little into so much wealth.
Imagine buying in 1975 a handful of gold and silver stocks for under a dollar and selling them in 5 years for $100, $200,or even $500 per share as gold fever ripped through Wall Street.
This is a great example of the kind of investing philosophy that Dr. Marc Faber talks about where to be a great investor you only need to make a few good investment decisions in your whole life to be successful.
This one decision in 1975 to buy just a handful of gold and silver stocks and sell them near the all time high’s of hundreds of dollars per share could have set you up financially for the rest of you life!!!!.
Yes, I read in a documented post (I think on the SFMI board) that between 1975 and 1980, gold mining stocks in general did very well, gold fever swept Wall Street, and several (many) mining stocks went from 0.5 to 400 dollars a share. They gave individual examples, several. If I can find the post again, I'll reprint it here.
Yes, I'll be happy for more modest gains, and by Dec. would be great!
Doubloon--
I wanted to get your take on this article I found, please. It basically says NOW is the time to be in gold mining stocks, as the overall mining stocks are due to catch up with the meteoric rise in gold itself, very soon. What do you think? Could we have another amazing stock run, like we had between 1975 and 1980, when many mining stocks hit $100, even $400 a share? Would the same reasoning below, apply to copper stocks as well?
-BSNB
A case for Gold Mining Stocks, an interview with Chen Lin:
******************************************************************
Gold Mining have lagged the metal's price too long, says this successful investor...
A DOCTORAL CANDIDATE in aeronautical engineering at Princeton, Chen Lin found his personal investment strategies were so profitable, he put his PhD on the back burner, says the Gold Report.
Between Dec. 2002 and May 2010, Chen Lin turned his wife's Roth IRA retirement savings from $5,411 into $869,846 – without adding a dime in new funds. Today, after working in the internet and I.T. area, and employing a value-oriented approach plus exceptional technical analysis, Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling? for Taylor Hard Money Advisors, Inc.
Here he tells The Gold Report why he thinks Gold Mining stocks are set to follow the metal's price sharply higher very soon...
The Gold Report: In 2002, you turned a little more than $5,000 into a portfolio worth close to $1 million in 2010. I am sure many people ask how you did that. Do you think you could repeat that success again in the current market conditions?
Chen Lin: It's one of the many accounts I am managing; in general, the accounts I manage have had similar performances; some more, some less. The results of my wife's IRA are published on miningstocks.com. There you can see it's pretty much consistent – about 100% a year average in the past seven or eight years. There are down years, like 2008; I was down by 5%; but in 2009, I was up 500%, so it was a very big year. The average is still at about 100%, maybe a little more.
TGR: You were down only 5% in 2008? That's pretty good for that year.
Chen Lin: Yeah, you can see the exact figure on the site. I lost about $50 of every $1,000 invested.
TGR: Do you think you could do it again in the current market?
Chen Lin: There's always a bull market somewhere; I am hoping this can continue.
TGR: What would it take to do that? How would you go about it?
Chen Lin: I don't focus on only one stock; I buy stocks in the sector that I really like. I compare all the sectors, their fundamentals and the stock valuations and the company's earning power, then I decide where to put my money.
TGR: And what did you decide?
Chen Lin: There was a period when I was in energy a lot and another when I was in base metals. Earlier this year, I was in energy and paper pulp. Those were actually a pretty big success. Right now, we have the Greece problem spreading all over Europe; and because of that gold will do very well.
In May, I started to advocate that people take money off the table. In early May, I was very rapidly selling. And then, when we had cash, I started buying gold stocks; I started recommending those in late May and in June.
Why was that? Because there was a very big market correction, and a lot of people were scared. People seemed to think there would be a repeat of 2008. However, I believe gold has much stronger fundamentals. And then people were selling in May and going away, just like many people on CNBC were saying. That created a very good opportunity to buy gold stocks in late May and June. When they finished selling, we went in and bought cheap stocks.
TGR: Another thing you mention in your newsletter is that after the Great Depression, gold stocks started their climb after the second market correction.
Chen Lin: Exactly, yes. That's another thing that really makes me feel confident gold stocks will likely soon take off.
TGR: When do you see that second correction happening?
Chen Lin: Oh, the second correction has already happened in the general stock market. You can see that the market's been very, very volatile since the Greece crisis, and spreading to the PIIGS (Portugal, Italy, Ireland, Greece, Spain). I believe the second correction is starting and, in the Great Depression, the major gold stocks took off just after the second phase. I hope that will repeat, maybe even be better; because before the Great Depression, we had gold-backed currency. This time, they're fiat currencies – paper currencies. And once people start to lose faith in paper currencies, gold actually is the only place for them to go. And during the Great Depression, gold had a fixed price; this time, the Gold Price can go much higher.
TGR: Your portfolio is heavily weighted in precious metals; what are some other sectors you like?
Chen Lin: One particular sector I really l like is pulp and paper. It's a unique sector with not a lot of people paying much attention. But there's a couple of trends that are very favorable for pulp; since the crisis in 2008, all the new pulp and paper projects were cancelled or delayed indefinitely, so there's no new pulp projects coming until 2012. In the meantime, the largest pulp and paper consumer is China. It's growing about 10% a year. You can see it's a surprising amount. Without much supply coming into place, the pulp producers can make a lot of money in the next three years.
TGR: Alright, your portfolio has gone up something like 16,000% since 2002. You've identified precious metals as a sector that you want to be in. You see the second market correction as happening now, much like what happened in the 1930s after the big crash in 1929. But anyone can invest in gold stocks and not have your kind of success. What do you looking for in companies that makes you trigger on those stocks?
Chen Lin: Actually, you raise a very good point. Individual gold stocks didn't go as high as gold. The gold stocks are lagging gold, which is a very interesting phenomenon. You know, we've traded commodities for a pretty long time, and usually commodity stocks go up exponentially to the commodity price, because each time the commodity price goes up, the profit margin just goes up exponentially.
For example, Gold Mining producers' average cost right now is probably around $500. Back a few years ago, in 2007 the Gold Price was $600; you make a little bit of money. Then in 2008 you have $800, and you make a little bit more. Now it's at $1200 an ounce. Every Gold Mining producer is making an incredible amount of money, and the market doesn't appreciate that much. That's a very interesting phenomenon.
One thing will happen – either gold has to come down significantly or gold shares will go up significantly. I believe it's the latter; so, we could have a phenomenal gold run. I don't know when, but it could happen this year; it could happen next year. People will look at it and say, "Wow, that's a great run on Gold Mining stocks." It hasn't happened yet; we have actually seen gold stocks come down from the beginning of the year. As I was telling my subscribers, "Okay, just buy these bargains, buy these gold stocks." Traditionally, gold stocks are weak in June, July and August. In these three months, I want to load up as much as I can on gold stocks and I'm looking for a breakout after.
TGR: But are you looking at cash flow, earnings per share, ounces in the ground, management, jurisdiction, metallurgy – what are you looking at?
Chen Lin: That's a very good question; it's changing from time to time. Of course, jurisdiction is always very important because if someone comes to confiscate your mine, you're finished. Right now, we are in a bear market; cash is king, so I want to look at cash flow more heavily. If you have a significant cash flow – especially free cash flow – after all capital expenditures are paid, that's real money. That is very important to a company.
However, if market conditions improve and we have a blowout gold market, then you may want to look at how many ounces are in the ground – those will weigh more and more heavily (in an investment decision). But right now, we're in a defensive mode; so we're putting more weight on cash flow.
TGR: Another advantage you have over other newsletter writers is that you know people on the ground in China. We're told all kinds of things about China here, some of which are true, some are partially true. What's really going on there?
Chen Lin: The Chinese government has tried to put on the brakes, to slow down the red-hot economy. At some point this year, they're going to let their foot off the brake; they don't want the economy to really go down. They just want to slow it down. They're trying to crack down on the real estate speculation; the housing prices are coming down, which is a good thing. They probably want it to correct 20-30%. It's creating some interesting opportunities for traders.
TGR: You said it was creating some interesting investment opportunities. What are some of those?
Chen Lin: Well, Wall Street and CNBC always exaggerate – they see a small correction, and they say it's a crisis. Part of it is the news media always wanting to catch your ear. But if you know what really goes on, you can buy when everybody thinks something is finished. Then you sell when sales start turning up, and then everybody in the news media says, "Oh, the correction is over!," and you can take profits. So, that's how we create a lot of trading opportunities.
TGR: You go against the popular sentiment? Is that what you do?
Chen Lin: It's not exactly against; I go with my own sentiments. When I see it is overvalued, I sell and, when I see it as undervalued, I start to buy. The more undervalued, more I buy. But sometimes when it goes down, you don't know where the bottom is.
TGR: What are some companies that are benefiting from the current economic conditions in China?
Chen Lin: Pulp and paper stocks will benefit. And the energy stocks – I owned some, and I want more focus on land-based drilling after the BP disaster. Actually, I sold all of my ocean drillers when news of the BP disaster first came out. When they first said the oil leak was 1,000 barrels, I started selling everything because I know it is impossible to leak only 1,000 barrels per day (bpd) in that gusher. I'm a pretty cautious person and, when I see that something goes wrong, I try to get out as soon as I can. That's my own money.
TGR: Any thoughts before you leave us today?
Chen Lin: We could have an incredible run for Gold Mining stocks; it will happen at some point. It could be this year or it could be next year, but I see it coming.
ursa---
I'm glad you like the article, and the last line, in particular.
I like it too, and I am wondering if we could ever/will ever have another amazing run like mining stocks had between 1975 and 1980, where several mining stocks went from 0.50 or 0.80 to $100 a share, and some went to $400 a share, in 5 years! This data about 1975-1980, documented, was posted on another board.
I watch the ice road truckers, and it gives you white knuckles sometimes, just to see them take those steep grades, on ice. They even have some women drivers doing this, too.
Carnac---
I wanted to get your take on this article I found, please. It basically says NOW is the time to be in gold mining stocks, as the overall mining stocks are due to catch up with the meteoric rise in gold itself, very soon. What do you think? Could we have another amazing stock run, like we had between 1975 and 1980, when many mining stocks hit $100, even $400 a share.
-BSNB
A case for Gold Mining Stocks, an interview with Chen Lin:
******************************************************************
Gold Mining have lagged the metal's price too long, says this successful investor...
A DOCTORAL CANDIDATE in aeronautical engineering at Princeton, Chen Lin found his personal investment strategies were so profitable, he put his PhD on the back burner, says the Gold Report.
Between Dec. 2002 and May 2010, Chen Lin turned his wife's Roth IRA retirement savings from $5,411 into $869,846 – without adding a dime in new funds. Today, after working in the internet and I.T. area, and employing a value-oriented approach plus exceptional technical analysis, Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling? for Taylor Hard Money Advisors, Inc.
Here he tells The Gold Report why he thinks Gold Mining stocks are set to follow the metal's price sharply higher very soon...
The Gold Report: In 2002, you turned a little more than $5,000 into a portfolio worth close to $1 million in 2010. I am sure many people ask how you did that. Do you think you could repeat that success again in the current market conditions?
Chen Lin: It's one of the many accounts I am managing; in general, the accounts I manage have had similar performances; some more, some less. The results of my wife's IRA are published on miningstocks.com. There you can see it's pretty much consistent – about 100% a year average in the past seven or eight years. There are down years, like 2008; I was down by 5%; but in 2009, I was up 500%, so it was a very big year. The average is still at about 100%, maybe a little more.
TGR: You were down only 5% in 2008? That's pretty good for that year.
Chen Lin: Yeah, you can see the exact figure on the site. I lost about $50 of every $1,000 invested.
TGR: Do you think you could do it again in the current market?
Chen Lin: There's always a bull market somewhere; I am hoping this can continue.
TGR: What would it take to do that? How would you go about it?
Chen Lin: I don't focus on only one stock; I buy stocks in the sector that I really like. I compare all the sectors, their fundamentals and the stock valuations and the company's earning power, then I decide where to put my money.
TGR: And what did you decide?
Chen Lin: There was a period when I was in energy a lot and another when I was in base metals. Earlier this year, I was in energy and paper pulp. Those were actually a pretty big success. Right now, we have the Greece problem spreading all over Europe; and because of that gold will do very well.
In May, I started to advocate that people take money off the table. In early May, I was very rapidly selling. And then, when we had cash, I started buying gold stocks; I started recommending those in late May and in June.
Why was that? Because there was a very big market correction, and a lot of people were scared. People seemed to think there would be a repeat of 2008. However, I believe gold has much stronger fundamentals. And then people were selling in May and going away, just like many people on CNBC were saying. That created a very good opportunity to buy gold stocks in late May and June. When they finished selling, we went in and bought cheap stocks.
TGR: Another thing you mention in your newsletter is that after the Great Depression, gold stocks started their climb after the second market correction.
Chen Lin: Exactly, yes. That's another thing that really makes me feel confident gold stocks will likely soon take off.
TGR: When do you see that second correction happening?
Chen Lin: Oh, the second correction has already happened in the general stock market. You can see that the market's been very, very volatile since the Greece crisis, and spreading to the PIIGS (Portugal, Italy, Ireland, Greece, Spain). I believe the second correction is starting and, in the Great Depression, the major gold stocks took off just after the second phase. I hope that will repeat, maybe even be better; because before the Great Depression, we had gold-backed currency. This time, they're fiat currencies – paper currencies. And once people start to lose faith in paper currencies, gold actually is the only place for them to go. And during the Great Depression, gold had a fixed price; this time, the Gold Price can go much higher.
TGR: Your portfolio is heavily weighted in precious metals; what are some other sectors you like?
Chen Lin: One particular sector I really l like is pulp and paper. It's a unique sector with not a lot of people paying much attention. But there's a couple of trends that are very favorable for pulp; since the crisis in 2008, all the new pulp and paper projects were cancelled or delayed indefinitely, so there's no new pulp projects coming until 2012. In the meantime, the largest pulp and paper consumer is China. It's growing about 10% a year. You can see it's a surprising amount. Without much supply coming into place, the pulp producers can make a lot of money in the next three years.
TGR: Alright, your portfolio has gone up something like 16,000% since 2002. You've identified precious metals as a sector that you want to be in. You see the second market correction as happening now, much like what happened in the 1930s after the big crash in 1929. But anyone can invest in gold stocks and not have your kind of success. What do you looking for in companies that makes you trigger on those stocks?
Chen Lin: Actually, you raise a very good point. Individual gold stocks didn't go as high as gold. The gold stocks are lagging gold, which is a very interesting phenomenon. You know, we've traded commodities for a pretty long time, and usually commodity stocks go up exponentially to the commodity price, because each time the commodity price goes up, the profit margin just goes up exponentially.
For example, Gold Mining producers' average cost right now is probably around $500. Back a few years ago, in 2007 the Gold Price was $600; you make a little bit of money. Then in 2008 you have $800, and you make a little bit more. Now it's at $1200 an ounce. Every Gold Mining producer is making an incredible amount of money, and the market doesn't appreciate that much. That's a very interesting phenomenon.
One thing will happen – either gold has to come down significantly or gold shares will go up significantly. I believe it's the latter; so, we could have a phenomenal gold run. I don't know when, but it could happen this year; it could happen next year. People will look at it and say, "Wow, that's a great run on Gold Mining stocks." It hasn't happened yet; we have actually seen gold stocks come down from the beginning of the year. As I was telling my subscribers, "Okay, just buy these bargains, buy these gold stocks." Traditionally, gold stocks are weak in June, July and August. In these three months, I want to load up as much as I can on gold stocks and I'm looking for a breakout after.
TGR: But are you looking at cash flow, earnings per share, ounces in the ground, management, jurisdiction, metallurgy – what are you looking at?
Chen Lin: That's a very good question; it's changing from time to time. Of course, jurisdiction is always very important because if someone comes to confiscate your mine, you're finished. Right now, we are in a bear market; cash is king, so I want to look at cash flow more heavily. If you have a significant cash flow – especially free cash flow – after all capital expenditures are paid, that's real money. That is very important to a company.
However, if market conditions improve and we have a blowout gold market, then you may want to look at how many ounces are in the ground – those will weigh more and more heavily (in an investment decision). But right now, we're in a defensive mode; so we're putting more weight on cash flow.
TGR: Another advantage you have over other newsletter writers is that you know people on the ground in China. We're told all kinds of things about China here, some of which are true, some are partially true. What's really going on there?
Chen Lin: The Chinese government has tried to put on the brakes, to slow down the red-hot economy. At some point this year, they're going to let their foot off the brake; they don't want the economy to really go down. They just want to slow it down. They're trying to crack down on the real estate speculation; the housing prices are coming down, which is a good thing. They probably want it to correct 20-30%. It's creating some interesting opportunities for traders.
TGR: You said it was creating some interesting investment opportunities. What are some of those?
Chen Lin: Well, Wall Street and CNBC always exaggerate – they see a small correction, and they say it's a crisis. Part of it is the news media always wanting to catch your ear. But if you know what really goes on, you can buy when everybody thinks something is finished. Then you sell when sales start turning up, and then everybody in the news media says, "Oh, the correction is over!," and you can take profits. So, that's how we create a lot of trading opportunities.
TGR: You go against the popular sentiment? Is that what you do?
Chen Lin: It's not exactly against; I go with my own sentiments. When I see it is overvalued, I sell and, when I see it as undervalued, I start to buy. The more undervalued, more I buy. But sometimes when it goes down, you don't know where the bottom is.
TGR: What are some companies that are benefiting from the current economic conditions in China?
Chen Lin: Pulp and paper stocks will benefit. And the energy stocks – I owned some, and I want more focus on land-based drilling after the BP disaster. Actually, I sold all of my ocean drillers when news of the BP disaster first came out. When they first said the oil leak was 1,000 barrels, I started selling everything because I know it is impossible to leak only 1,000 barrels per day (bpd) in that gusher. I'm a pretty cautious person and, when I see that something goes wrong, I try to get out as soon as I can. That's my own money.
TGR: Any thoughts before you leave us today?
Chen Lin: We could have an incredible run for Gold Mining stocks; it will happen at some point. It could be this year or it could be next year, but I see it coming.
Trapper---Thanks for your reply. I am glad you liked the article/interview on mining stocks and why "the time to own them is now", by Chen Lin. I am shooting for a similar final figure as you are, but it may come from a combination of all 4 stocks I own. I think we can do it, given a litle time, compounding/doubling as you said, persistence, and patient holding!
A case for Gold Mining Stocks, an interview with Chen Lin:
******************************************************************
Gold Mining have lagged the metal's price too long, says this successful investor...
A DOCTORAL CANDIDATE in aeronautical engineering at Princeton, Chen Lin found his personal investment strategies were so profitable, he put his PhD on the back burner, says the Gold Report.
Between Dec. 2002 and May 2010, Chen Lin turned his wife's Roth IRA retirement savings from $5,411 into $869,846 – without adding a dime in new funds. Today, after working in the internet and I.T. area, and employing a value-oriented approach plus exceptional technical analysis, Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling? for Taylor Hard Money Advisors, Inc.
Here he tells The Gold Report why he thinks Gold Mining stocks are set to follow the metal's price sharply higher very soon...
The Gold Report: In 2002, you turned a little more than $5,000 into a portfolio worth close to $1 million in 2010. I am sure many people ask how you did that. Do you think you could repeat that success again in the current market conditions?
Chen Lin: It's one of the many accounts I am managing; in general, the accounts I manage have had similar performances; some more, some less. The results of my wife's IRA are published on miningstocks.com. There you can see it's pretty much consistent – about 100% a year average in the past seven or eight years. There are down years, like 2008; I was down by 5%; but in 2009, I was up 500%, so it was a very big year. The average is still at about 100%, maybe a little more.
TGR: You were down only 5% in 2008? That's pretty good for that year.
Chen Lin: Yeah, you can see the exact figure on the site. I lost about $50 of every $1,000 invested.
TGR: Do you think you could do it again in the current market?
Chen Lin: There's always a bull market somewhere; I am hoping this can continue.
TGR: What would it take to do that? How would you go about it?
Chen Lin: I don't focus on only one stock; I buy stocks in the sector that I really like. I compare all the sectors, their fundamentals and the stock valuations and the company's earning power, then I decide where to put my money.
TGR: And what did you decide?
Chen Lin: There was a period when I was in energy a lot and another when I was in base metals. Earlier this year, I was in energy and paper pulp. Those were actually a pretty big success. Right now, we have the Greece problem spreading all over Europe; and because of that gold will do very well.
In May, I started to advocate that people take money off the table. In early May, I was very rapidly selling. And then, when we had cash, I started buying gold stocks; I started recommending those in late May and in June.
Why was that? Because there was a very big market correction, and a lot of people were scared. People seemed to think there would be a repeat of 2008. However, I believe gold has much stronger fundamentals. And then people were selling in May and going away, just like many people on CNBC were saying. That created a very good opportunity to buy gold stocks in late May and June. When they finished selling, we went in and bought cheap stocks.
TGR: Another thing you mention in your newsletter is that after the Great Depression, gold stocks started their climb after the second market correction.
Chen Lin: Exactly, yes. That's another thing that really makes me feel confident gold stocks will likely soon take off.
TGR: When do you see that second correction happening?
Chen Lin: Oh, the second correction has already happened in the general stock market. You can see that the market's been very, very volatile since the Greece crisis, and spreading to the PIIGS (Portugal, Italy, Ireland, Greece, Spain). I believe the second correction is starting and, in the Great Depression, the major gold stocks took off just after the second phase. I hope that will repeat, maybe even be better; because before the Great Depression, we had gold-backed currency. This time, they're fiat currencies – paper currencies. And once people start to lose faith in paper currencies, gold actually is the only place for them to go. And during the Great Depression, gold had a fixed price; this time, the Gold Price can go much higher.
TGR: Your portfolio is heavily weighted in precious metals; what are some other sectors you like?
Chen Lin: One particular sector I really l like is pulp and paper. It's a unique sector with not a lot of people paying much attention. But there's a couple of trends that are very favorable for pulp; since the crisis in 2008, all the new pulp and paper projects were cancelled or delayed indefinitely, so there's no new pulp projects coming until 2012. In the meantime, the largest pulp and paper consumer is China. It's growing about 10% a year. You can see it's a surprising amount. Without much supply coming into place, the pulp producers can make a lot of money in the next three years.
TGR: Alright, your portfolio has gone up something like 16,000% since 2002. You've identified precious metals as a sector that you want to be in. You see the second market correction as happening now, much like what happened in the 1930s after the big crash in 1929. But anyone can invest in gold stocks and not have your kind of success. What do you looking for in companies that makes you trigger on those stocks?
Chen Lin: Actually, you raise a very good point. Individual gold stocks didn't go as high as gold. The gold stocks are lagging gold, which is a very interesting phenomenon. You know, we've traded commodities for a pretty long time, and usually commodity stocks go up exponentially to the commodity price, because each time the commodity price goes up, the profit margin just goes up exponentially.
For example, Gold Mining producers' average cost right now is probably around $500. Back a few years ago, in 2007 the Gold Price was $600; you make a little bit of money. Then in 2008 you have $800, and you make a little bit more. Now it's at $1200 an ounce. Every Gold Mining producer is making an incredible amount of money, and the market doesn't appreciate that much. That's a very interesting phenomenon.
One thing will happen – either gold has to come down significantly or gold shares will go up significantly. I believe it's the latter; so, we could have a phenomenal gold run. I don't know when, but it could happen this year; it could happen next year. People will look at it and say, "Wow, that's a great run on Gold Mining stocks." It hasn't happened yet; we have actually seen gold stocks come down from the beginning of the year. As I was telling my subscribers, "Okay, just buy these bargains, buy these gold stocks." Traditionally, gold stocks are weak in June, July and August. In these three months, I want to load up as much as I can on gold stocks and I'm looking for a breakout after.
TGR: But are you looking at cash flow, earnings per share, ounces in the ground, management, jurisdiction, metallurgy – what are you looking at?
Chen Lin: That's a very good question; it's changing from time to time. Of course, jurisdiction is always very important because if someone comes to confiscate your mine, you're finished. Right now, we are in a bear market; cash is king, so I want to look at cash flow more heavily. If you have a significant cash flow – especially free cash flow – after all capital expenditures are paid, that's real money. That is very important to a company.
However, if market conditions improve and we have a blowout gold market, then you may want to look at how many ounces are in the ground – those will weigh more and more heavily (in an investment decision). But right now, we're in a defensive mode; so we're putting more weight on cash flow.
TGR: Another advantage you have over other newsletter writers is that you know people on the ground in China. We're told all kinds of things about China here, some of which are true, some are partially true. What's really going on there?
Chen Lin: The Chinese government has tried to put on the brakes, to slow down the red-hot economy. At some point this year, they're going to let their foot off the brake; they don't want the economy to really go down. They just want to slow it down. They're trying to crack down on the real estate speculation; the housing prices are coming down, which is a good thing. They probably want it to correct 20-30%. It's creating some interesting opportunities for traders.
TGR: You said it was creating some interesting investment opportunities. What are some of those?
Chen Lin: Well, Wall Street and CNBC always exaggerate – they see a small correction, and they say it's a crisis. Part of it is the news media always wanting to catch your ear. But if you know what really goes on, you can buy when everybody thinks something is finished. Then you sell when sales start turning up, and then everybody in the news media says, "Oh, the correction is over!," and you can take profits. So, that's how we create a lot of trading opportunities.
TGR: You go against the popular sentiment? Is that what you do?
Chen Lin: It's not exactly against; I go with my own sentiments. When I see it is overvalued, I sell and, when I see it as undervalued, I start to buy. The more undervalued, more I buy. But sometimes when it goes down, you don't know where the bottom is.
TGR: What are some companies that are benefiting from the current economic conditions in China?
Chen Lin: Pulp and paper stocks will benefit. And the energy stocks – I owned some, and I want more focus on land-based drilling after the BP disaster. Actually, I sold all of my ocean drillers when news of the BP disaster first came out. When they first said the oil leak was 1,000 barrels, I started selling everything because I know it is impossible to leak only 1,000 barrels per day (bpd) in that gusher. I'm a pretty cautious person and, when I see that something goes wrong, I try to get out as soon as I can. That's my own money.
TGR: Any thoughts before you leave us today?
Chen Lin: We could have an incredible run for Gold Mining stocks; it will happen at some point. It could be this year or it could be next year, but I see it coming.
Trapper-- I think I misspoke about SFMI. The whole of War Eagle Mountain is worth about 3 bilion dollars in gold. SFMI has a large part of that mountain, not all of it.
SFMI, they say, is sitting on 3 billion dollars' worth of gold total, on War Eagle Mountain. They also appear to be first mining low grade tailings right now, and will proceed with higher grade tailings, next. They have yet to announce amts. of oz/tonne they are producing, however, which is keeping sp down. I don't know which could eventually go higher, CNEX or SFMI...
Yes, they will all go way up, sooner or later, so true. I'm also in WOLV, SFMI, and IMJX (a non mining one).
Heck, yeah! I am so glad I kept the faith and didn't get nervous and panicked. That's the surest way to lose money, I have found out from personal experience.
We are siting on the Mother Load, and now patience is all we need! Happy days are here! Thank you for all of your GREAT posts and DD!