Augusta Gold (G.TO)

He is completely out of gold and has been for some time. There is a place for gold in the marketplace, but this isn’t the time. It hasn’t tested for low. We have come close to breaking down in the last little while. If it breaks down through $1000, it could continue. The times when gold has really flourished is when there is relatively high inflation. This is probably the best of the bunch.

Always has a small position of about 3%-5% and this is his primary holding. He likes this company. Have had very good results out of Penasquito and Cerro Negro. They reduced their dividend, which will save them $300 million annually. He sees their production profile increasing over the next few years. Free cash flow will be paying down a significant amount of debt going forward. Management is vigilant where they can cut production costs and keep them in line. This would be his 1^st choice in a gold mine.

A solitary position is gutsy, but not stupid. Debt troubles in the world are catching up with us. It could well turn out to be an extraordinarily intelligent move. The fundamental value of money is going down. He thinks long term this is going to be a winner.

Should caller take profits from Goldcorp, which he bought as a seasonal trade, or is there more movement? There has been a major downtrend in this stock. Thinks there will be a rally. Look for $21-$22. Then the stock will probably come back and run out of steam. He feels if you are a trader this may be a time to take some profit.

Just slashed its dividend by 60%. Management, quite prudently, decided to keep $300 million of cash. When you are investing in commodity companies, bad times come, but the good times are unbelievable. Has increased its credit line by $1 billion and sold a mine for $1 billion, so suddenly they have $2 billion of liquidity. Also, had numbers that were quite good from an operating perspective. They now have a Tier 1 triple B balance sheet that they are intending to maintain, and have the ability to pick up other companies that are falling on hard times. Dividend yield of 4.43%.

This is his blue-chip, steadfast company. The problem with this company and all the big boys is that the only way they survive is by cutting back operations. The good thing though is that some of his companies have been buying those operations that they are selling. He buys it for older clients that want a blue-chip name, but he would rather be in other companies that are actually acquiring at this point.

Gold is fascinating. It has this major technical support that it has been bouncing off numerous times lately. It just will not break down through $1150. Gold stocks aren’t 100% related to that, but there is correlation. If gold can hold, you are coming into the seasonal part and you want to buy some gold and play it out until October. He would want to see support on gold hold at around $1150 or so.

This company is not paying down debt. Their cost of production is relatively low at about $600 an ounce. As far as an operational business goes, it is pretty good; it’s just in the wrong sector. You had a secular bull market in commodities from 2000 through 2012 on the back of a strengthening China. China rolled over in 2012 and at around that time inflation started coming down.

Assets around the world. He is concerned about where gold is headed. If he was looking to invest in gold, this would be a name he would go into.

25% below Book Value right now and just made a $1 billion sale. RSI is below 30 in the last trading days. Is this a good opportunity? This has been the bellwether in gold for a long time, and the natural place for people to gravitate to when making initial investments. He is looking for free cash flow from wealth creation, and this doesn’t really fit. Their free cash flow is pretty minimal at the moment, but it looks like they are going to turn the corner and generate free cash flow towards the end of the year. However, that will probably just pay for their dividend. It is questionable what the Book Value is, based on the acquisitions they have made. Has always been a low risk company because of production in low risk jurisdictions, but he sees better opportunities elsewhere. Yield of 3.7% which is probably double what you would expect to get in a senior gold producer, so there is some expectation that they may cut that.

He had a negative transit last week on this company. That is a Sell signal for him. He wouldn’t touch any gold company right here right now. It looks like they are going to go lower.

He likes it. A good quality balance sheet. Like all of the gold stocks. The upside potential is quite indifferent because of the low price of gold. He is quite bullish on the price of gold over the next couple of years, however. Gold stocks should do well then. Don’t hold more than 10% in a portfolio.

Thinks investors have just lost so much money investing in gold stocks for such a lengthy period of time that there is just not a lot of interest. This one is the best in class, so if you want to hold a gold stock, this is one to own.

Doesn’t see himself getting interested in gold stocks, until he sees some significant return to an inflationary environment. Right now we are still working our way through a big drop in energy prices, so he sees inflation as being very subdued, perhaps for the next 6-9 months.

He doesn’t and hasn’t owned gold companies. Doesn’t understand the gold market well enough. Among the different companies, he has a lot of respect for this one.