December 3, 2017
December 3, 2017


Kuppy, what do think of Trafigura dumping their position in AAG?
certainly does not seem positive to me, though the stock has been oddly up the last week.

If I didn’t know better (and I don’t), I’d think the stock were in play….. It’s rare for someone to dump a position like that in a single block, unless the other side really wants to be a big owner.

wondering the fate of egd. has been lingering for some time. anything seriously wrong? apprciate a responce on this stock

All seems fine as far as I’m concerned. I bought a few recently and intend to buy more if it keeps dropping.

Apex has been relatively quiet since the rights offering, then in June they gave an update which seemed positive on tons mined, but not so great on contained gold? Another announcement in June re: selling the Wiluna Calcine stockpile, but that announcement came from the buyer, Intermin, and is not on the Apex site… Apologies for asking as I know you are not focused on mining these days and have lowered expectations for Apex, but curious if you have any updated thoughts on them? Is their management team credible? Clearly they have been low on cash, but with Gold price strength even in AUD, can the mine generate sustainable cash flow now?

One would certainly think (hope) that the mine could make a go of it. I have actually bought back my whole position for roughly half (.09c) of what I sold it for. There’s less than a penny left to lose here, I’ll take my chances I guess… Deep underground mining sure is an awful business though.

Hello Harris,
First, thank you for your great blogs and insight. I’ve been following MERC for about a year now, always waiting for an entry point just to see it double. That’s OK *cough*.
What concerns me is their direct or indirect ties to China. As I’m pretty sure China will start to implode within a year or two and some industries will feel it sooner, what would be the impact on MERC, considering their industry?

I think that fears of China collapsing in the near term are grossly overstated. I just don’t feel there is a high risk of this happening. Put it this way, even if China stumbles badly, do you think people will stop wiping their asses? I would think that would be one of the last things they’d stop spending money on….

I just read ur recent put option related post. u wrote it well and i have been doing this for 2 years or so now. i have learnt some lessons too. ur right the higher the premium the more dangerous it is.) I liked your idea of the core position. last year i missed out on 4 baggers that never were put to me and i did not have a position. so i just got the 24% IRR. Can i please ask you to post more on options. also do you use covered calls as well ?

how do you use them and any things u can share from your vast experience

That will probably be the first and last piece on options for a while. They’re useful at times, but they aren’t the focus of what I do. I have used covered calls as well, but I use them much less often as I hate to cut off my upside.

Any opinion on Silikat or their IPO? Their IPO (35% of company, 16.2M shares, 225 MNT/share ($3M USD total IPO)) values the company at roughly $8.5M USD. Their inputs into the Mongolian construction industry (lime & light concrete blocks) seem like a natural fit with your plan to play the overall Mongolian economy. I’m looking over the prospectus now, but I’m a little leery of the quality of information from the Wild Wild West (Mongolia). Any local color on this company & its future prospects?

I don’t have much to add. I’ve been to the facility but they need a whole lot of capital to get it back into Soviet era production levels. Caveat Emptor I guess. Sorry I can’t help more. I’m sure the guys at BDSec can give you more details.

Hi Kuppy,
could you please give me your opinion on prophecy coal.
If you are looking for an undervalued stock look at interactive brokers, they trippled AuM in last 3 years and trade at 12 earnings, because everybody only looks at their trading revenue, not brokerage.

I have no opinion on Prophecy except to say that the Mongolian listed equivalents are quite a bit cheaper. I’ve met the mgmt team and was impressed however. I don’t know enough info about their transport situation to really have an opinion though.

IB is very much undervalued. At some point, it will be a very good investment.

Dear Kuppy,

I am following your advice for a while now. Keep up to good work, it often makes sense to me and serves as a source of inspiration.

I was wondering what you would think of the following: If you would be European, what are sensible strategies in these hazardous times. Lately I feel that things may turn out to be pretty problematic. A split of the Euro seems realistisc and who knows what that will give. How much will my stocks, bonds and savings account (denominated in Euro) be worth? Not much I fear. I was hoping to build a solid foundation for my family but this all seems to be in flux. I have nearly no Euro denominated stocks any more, but a large part of my investments rests at my bank for the long-term (and in Euro).

I can’t give personal advice. I have no exposure to the Euro and I still feel overexposed…. LOL

Gold exists for situations like this. Fortunately I have a very sizable position…. you’re right, it’s going to be a hazardous time for anyone with assets that aren’t in gold or a few select countries that will ride out the crisis just fine.

With the recent comments from Bernanke, and actions from the EMU, are you more inclinded to increase your gold-related investments for the short-term?
It is real difficult time for me as the markets are dicey. I feel these central banks really work against me. When you believe that there will be an imminent sell-off, central banks front-run any sell-off with ideas to stimulate, building a stronger “PUT” supporting the market.
I have a core gold-related postion. Currently, I have a cash position for opportunities and risk management. It is difficult to maintain a full gold investment with the possibility of a sell-off in the markets. Any potential collateral damage to gold-related investments that I can see with the market.
It is also difficult to sit in a cash position as central bankers work overtime to wipe-out any savings.
I am more likely to buy in and just sit-out any correction as I look years forward and the headed damage from Central Bankers is enormous.

I have quite a bit of gold exposure. I was waiting for a spot to add more and may have missed the moment in time…. I’m not sure what I’m going to do now. Guess I’ve been too focused on Mongolia lately and may have missed the inflection point for buying more metal.

Ben speaks today and says “Implying a NEED for additional policy support” Bill Fleck says “Ben needed to say so RIGHT NOW.” My take he can,t wait till Jackson Hole this year.
Have been selective buying off the bottom since end of June. But now am going to Back the truck up and LOAD UP
So am asking, What,s your take on Ben,s HELO. Is it time
Or Steady, Hold, Hold, Hold until he actually makes the QE3 Speech???

Same question as above–I think I may have missed the spot to load up. I’m not sure what I will do now. Fortuantely, I always keep some pretty big exposure.

In your opinion, how safe is Mongolian banks? 12% interest is very appealing and I was considering depositing a reasonably large amount, but fear safety. Given the economic growth in Mongolia, wouldn’t it seem that interest rates should stay high for some time? Thanks in advance for your answers.

I think that interest rates will begin to drop over time as the economy becomes more closely linked to the rest of the world with zero interest rates. Banks here seem safe, but you need to do your own DD. There are more than a dozen banks. Choose well….

did you participate in the EGD convert? will they be listed for retail to buy? Thought they looked interesting. What about GEO? it looks compelling

I did not participate in the convert. No idea if it will be listed. I know nothing about GEO. Sorry

First, thanks for the site. As one of Fleck’s charter subscribers, I thought that he was a screaming deal until I found your site. VBG.

One thing that you might add to your options commentary: Someone might put the shares to you at any time prior to expiration as well. I was following a strategy similar to the one you described (happy to get the shares six months out, and happy to receive the premium if not) when the shares were put to me about one month in. While I had the cash on hand to make the purchase, it was disruptive to my well-laid return plans. Or perhaps this is a rare enough occurrence not to warrant mention.

It happens quite frequently to me. All fine and good b/c I get my shares earlier than expected and still get my premium…

I wondered if you could advise me of an online broker that would enable me to trade some of the stocks you have mentioned (Mercer, Apex and others) and also trade options if I chose. I am in Asia but can access for example interactive brokers if it was useful for international shares.

I use interactive brokers.