10/28/2010
December 3, 2017
10/21/2010
December 3, 2017

10/25/2010

I am still in Mongolia. Tomorrow I leave for Cambodia. They are planning on opening a stock exchange, and I want to investigate. I’m doing all I can just to respond to emails. I will publish full pieces when I settle down a bit.


Thanks for the article on trends. I moved a large portion of my assets into precious metals in 1998 and still hold them. I have yet to see a strong trend for me sinse. If I do see one I will send it to you. Best of luck in Mongolia.

Please do tell me of any viable trends you find. I created this website to meet like-minded people and learn about investments that my own ‘research network’ has missed. I’m always interested to learn more.


Any opinion on the AAG dilution…Im sure you will receive 100 questions like this in the next few days though.

People like to conflate an increase in share count with dilution. I have never said that the share count would stay static. The issue is always if you get something in exchange for issuing shares. It’s not dilutive if you get more than you give away. In this case, I think it’s quite brilliant really. I hope that they get the full overallotment filled. A year ago, the shares were at $0.25 and the company had few options besides bank debt to fund the project without having to issue 250 million shares. Today, the company just paid for a third of the project by increasing the sharecount by less than a quarter. They have now materially de-risked the project. This money will be used to complete the infill drilling program that will better define the mine-plan along with upgrade the reserves. It will likely increase the mine-life, which has always been seen as a risk. Finally, it will pay for the roads to be built and for cash deposits to be posted on the long lead items. These were two cost based concerns the banks have always had. If the company locks those in, the rest is relatively low risk on the cap-ex side. Most importantly as far as I’m concerned, the company has the ability to now do a metals sale with a royalty company or a convert to finish the project if the banks continue to drag on with more paperwork. From what I understand, the plan is still to have the banks fund this.

Sure, there’s more shares outstanding, but remember what I’ve always said about fair value of the project, it doesn’t matter if there’s 25 million more shares or whatever the number is. If they build this thing, and it operates roughly in line with the mine-plan, it’s worth a lot more than the dollar where it’s trading. I want to make sure they can build it and that the banks don’t hold this up because they have had trouble with their TPS reports. I don’t need Andean to thread the needle, do it all with bank debt and have this be worth $20 a share. A low risk move to $5 is fine by me.


Hi Harris, This week I freed up some money in a tax deferred retirement account and trying to decide on buying GLD vs PHYS for a long term position, and of course when to buy 🙂 GLD gross and net expense ratio is 0.4% and current premium is 0.4%. PHYS gross and net expense ratio is between 0.35 and 0.65% and current premium is 4.25%. GLD looks the winner but I like the physical option with PHYS.

I can’t help you decide. I think it’s really just a different version of the same thing. If you are worried about a few basis points of expense, you’re missing the bigger picture. I hate to pay a 4.25% premium to NAV, but if you want the confidence that you own physical, maybe it’s worth it. Why not just buy the real thing and store it in your sock drawer? I honestly think all the talk about GLD not owning the gold is nonsense–but that’s just me.


Do you day trade at all?

Have you been reading this site long?? When would I have time to day trade? I’m in a different country practially every week. When I’m home, I sometimes trade stocks, but there’s far more money to be made buying a small company and watching it go up ten-fold for you. Daytrading is time consuming and the returns are difficult when you’re moving a lot of capital around. There’s plenty of billionaire investors. How many billionaire day traders are there?


Sir: I’m writing in somewhat desperation (pathetic I know) in reference to my investment in the VXX. I mistakenly bought this as a pure play against the movement of the market & I’m about to lose my entire life’s work in this “hard to explain” death spiral the VXX is in. I’ve tried hard to find an exit point to get out but every single day it underperforms in correlation to market movement & I’m now convinced I will lose all my investment from this ill conceived & treacherous product that Barclay’s has knowingly put out in contempt. As I write today the DOW is down 20 pts. with the VXX down .47% of a point. I intend to hire an atty. while I still have resources & see if I have recourse against what I view as a virtual trap with this failed product. The evidence is undeniable & the charts bear out it’s intent. I would appreciate any further information you have or if you know a respectable atty. who I could contact to confront Barclay’s on my behalf. Please let me know.

A few obvious thoughts. To start with, Caveat Emptor. The prospectus for VXX pretty clearly says that the product is designed to fail. Beyond that, you should never put your ‘entire life’s work’ into any security. Position limits exist for a reason. I’m sure you didn’t want to hear that, but it’s the truth.

Now to the practical points. Whenever I have an investment that I realize I’m wrong on, I decide if I can be patient and get a better price, or sell it now and stop the pain. 99% of the time, I just stop the pain, even if it’s very oversold and I think a bounce is imminent. Once I stop the losses, I can collect my thoughts, learn from my mistakes and move on to the next investment. Otherwise, I get bogged down in a losing idea and it consumes my thinking. You have to decide what’s best for you as I cannot give personal investment advice. Just remember that the current monthly decay curve is in the double digit % range.

As for suing, Barclays is pretty clear in the prospectus that this isn’t a product that anyone should actually own. Why did they create it? It’s wall street. Lots of stupid products are created. If a broker put you into it, you may have some recourse, but I am not a lawyer. You should probably contact a professional if you want to proceed from here. I have never sued anyone, so don’t know any good lawyers. Sorry. If it’s any consolation, try to learn from your mistake. Always do your own research before investing in a product. If you cannot understand a confusing product, focus on something else.