Yamana Gold Inc. (YRI.TO)

The trend is down. There are some signs of basing. It is trying to consolidate. It has not proven to him that it is done. Wait until It breaks the old high.

Owns a little, but the only reason he holds it is that he is hoping Agnico-Eagle (AEM-T) takes it out. Prefers others. His company has a $5 target on this.

This gold company has been showing up more and more on his screens. Within the group it looks quite inexpensive. They expect to see some production improvements in a couple of their mines in the 2^nd half. Hedged 60% of their copper production at $3. He could see this company having production growth going forward.

For a 2-5 year Hold? The cost of gold production right now is near where the price of gold is. This is not a bad producer and they have some decent mines. Smaller companies will move when the gold price moves, but there is a little bit more stability in bigger names. A smaller name, but good quality. (See Top Picks.)

They still seem to have the cash flow to cover their dividend. People are questioning what is going to happen to the reserves at Cerro Morro. The Malartic mines seem to be doing well. This is not really a low cost producer. If he were to see gold go under $1000 an ounce, a lot of these companies would be beat up even more, and we are not that far away from there.

(A Top Pick Aug 8/14. Down 71.7%.) Has good property in good locations with cost of production at around $1200. They are getting there in terms of the limit. At some point this project will be acquired.

Gold stocks have a problem because gold is not in an uptrend. Also, their costs don’t change much as the price goes down. Unless they are hedging out their commodity, it can be an uglier story for the producers. Chart shows it has been in a pretty long downtrend from late 2012 and is having trouble finding support. There is nothing below its current price that would act as a support.

This is a case of a company that was well loved and was recommended by a lot of professionals. The chart shows an advance from 2010 up to the end of 2012, followed by a break down. Bullion made a low in mid-2013 and mid-2014, and this company took out the lows of the broader indices and gold, so it is a poor relative performer. He would ignore the story and move on to other gold stocks. If you’re going to go for gold, buy a basket suchs as the iUnits XEG-T, BMO ZJG-T or iUnits XGD-T.

An intermediate gold producer. Have 3 pretty interesting, high-quality assets, Chapada, Artic mine and El Penon. However, when he looks at the rest of the portfolio, it is a little bit stretched and they are smaller, scrappier assets. While the 3 core assets could probably trade at a premium, the rest of the portfolio drags down that target multiple you expect to see it trade at. NAV is about where it is trading at. Have taken on a lot of debt, and management is a big question mark in the eyes of investors.

This is hitting new lows. He suspects they will be writing off a lot of stuff from their balance sheet, probably in the next few quarters.

Gold miners tend to do well from July through to September, which is a time when there is a pickup in volatility. There has already been a bit of a basing pattern in gold itself. The miners are not reacting as of yet, but this one could be setting up. There is support at about $4. You could take a position to play the volatility to the end of the summer. It’s not showing the uptick as yet, but you do have a crossing point which could be your Stop level.

There is an issue with the CEO’s compensation. This stock is on his radar screen and he has his finger over the Buy button because he likes that it is a low cost operator and shedding off their 3 troubled Brazilian mines in the 3^rd quarter. That should help refocus the company on its core assets which are not giving them as many problems. Given the seasonal aspect of July-September, this is not a bad entry point.

His valuation chart of the company shows it is trading at 50% of the BV, which is as low as it has traded in all the years that he has a history on it. One of the big problems is that earnings forecasts continue to go into the ditch. Finally the FMV has fallen so far that it has caught up with the price. Thinks the outlook for gold bullion is good when he sees what the Central Banks globally are doing.

On his watch list. It still has too many problems for him at this time, but has a lot of characteristics of a contrarian company.

He owns a little of, but it is not his top preference. His company has this with a $6.50 US target, and as a sector outperform.