08/25/2012
December 3, 2017
07/26/2012
December 3, 2017

08/17/2012

If you think gold will go higher, will the miners go higher also (at least this one time)?

Probably not. lol Miners seem to have no correlation to the price of gold unfortunately….


I was wondering if you have updated your detailed analysis of energold recently. With acquisitions, deals, and change in environment (short-term?), have you reduced your bullishness and price target potential on this stock, or are you as bullish as ever? It seems as though they are building a higher quality, more stable company, but earnings have been pushed out further because of investments in the business, and they may warrant a lower multiple on slower albeit more stable business and growth. Thanks.

I look at investing with 5-year time frames. I have to think that with juniors unable to raise capital, the next quarter or two will be somewhat weak. Longer term, nothing has changed in the thesis. They are growing a solid company with a diversified book of business. I’m very content to own mine.


Do you use technical analysis?

High volume break of recent support, bollinger bands expanding. looks like $3.30 – $3.20 next area of support.

Makes me wonder if the second clause in the last quarter’s report – “In spite of muted demand from “Juniors” due to recent uncertainties in the market, Energold drilled 134,500 metres in the first quarter of 2012, an increase of 6.9% from the 125,800 metres in the comparable period in 2011.” – is meters drilled decreased…

Investor funding in Junior miners is not in a bull market this year, so no increase in drilling activity for the industry seems likely.
What do you think about drilling activity this year? up year over year for the industry?

This is not to say EGD can’t be increase its market share. So all of this speculation.

I own too many shares to really care about technical analysis. Will EGD go to $3.20? I have no real opinion on the short term moves in the shares. I think that drilling will be flat to slightly down over last year for the industry and EGD will likely continue to gain market share. What will that do to drill rates? I don’t really know.


EGD/MERC

I hold both stocks am puzzled by their behavior. I think I understand that the negative performance of EGD is the result of a failed “bought deal” and following these stocks from a technical perspective it would seem that EGD may be putting in a bottom. Do you agree?

I am puzzled by the performance of MERC. It has been trending strongly down since March and I’m interested to know what you think is causing this trend and when or if you think this trend will change and finally whether you are still maintaining your positions.

I think these are economically sensitive companies and investors are giving up on an economic recovery. In the case of MERC, it hasn’t been helped by a decline in NBSK prices. That said, an insider just bought about 20,000 shares of MERC. I think both are fine longer term.


Hi Kuppy,

I’m trying to understand the effect of inflation better. I know mostly about how it affects the currency itself (ie. value of one dollar) and commodities (gold, oil, etc), but I’m less clear on how it affects various other industries.

I’m mostly curious about what kind of businesses do well and badly in inflationary periods, what are the common characteristics and how to think about the shares of businesses thatI own in that context.

I figure financials with lots of currency denominated assets probably wouldn’t do well (insurance cos, banks), but how about a business like mercer? How about an asset light business doing software services?

Thanks.

The businesses that will do well in inflation are ones that either have hard assets and long term debt at fixed rates, or companies that can rapidly change the pricing of their products but their costs are fixed. I think that software would fit the latter. I also think that MERC would also fit as a huge piece of the cost structure of NBSK is the cost of the facility and at current pulp prices, it makes no sense to build a new facility when you can buy MERC at a fraction of replacement cost.


Kuppy,

Favorite biotech play?

Think you have the wrong website….lol