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rolfoto on Jan 13, 2006 8:35pm
van Eeden on Market call Jan 13 2006
van Eeden on Market call Jan 13 2006
Nightcap is next. We'll talk more about gold and gold stocks with paul van eeden of cranberry capital. We'll be right back.
>> Howard: As we told you earlier gold continued to shimmer today make for a third straight weekly gain solidifying the fact that bullion is in bull territory. In new york gold closed up to $557 U.S. Up 1.4%. Deutsche bank is saying the rally will continue to 2007 with the price perhaps averaging $660 an ounce next year. Joining us on nightcap to talk about all of this paul van eeden of cranberry capital. Good to have you back. So one thing i want to ask you about are these mid-cap gold companies here in canada like the womenas always at the top of the most active -- the bemas always at the top of the most active list. How many speculation is going on in these things right now? >> A lot. Mining companies are purely a speculation on prices. Thee they are trading at premiums which means that the only stock value as a speculation that the commodity price will go up. As the commodity price goes up, as gold is doing right now, more and more people come into the market to speculate on these stocks, volume increases, volatility increases and actually the price premium increases as well.
>> Howard: So is there value?
>> In these right now. I don't think there's value in them. I think there's merit in the speculation because I do believe that gold can go higher. But i couldn't call it value. >> Howard: So what areas are you liking the most right now smallcap, mid-, what?
>> Paul van eeden: I've always been a speculator in the very, very small cap nano cap exploration stocks. And that's where i spend most of my time working. But for people who are more serious investors and don't want to take that kind of risk i would you tell say you know look at gold bullion, look at gld in new york which is street tracks it's a proxy on the gold price. Look at the large caps and mix cap and get a diversified portfolio. You don't have to do what other people do. You have to do what's good for you. >> Howard: So how much is a diversified portfolio. How much different securities, just about 20 seconds here?
>> That's again a personal question. I might own 50 stocks at any one time. But i would think that you could actually get adequate diversification with maybe 10 stocks. So it really comes down to personal question that's different for everybody.
>> Howard: Talk more about that on "market call tonight". That's paul van eeden of cranberry capital that's "the business news" for this evening and this week. Stay tuned for "market call tonight". Paul van eeden will be here to take your calls and e-mails on canadian gold mining stocks. Meanwhile you can catch "the business news" every night at 7:00 P.M. And 11:00 P.M. Eastern time. I'm howard greening. Thanks for watching. Have a great weekend. See you back here on "the business news" at 7:00 P.M. Eastern monday night. Stay tuned for "market call tonight". >> Howard: Welcome to "market call tonight" I'm howard green. Our guest this evening is paul van eeden from cranberry capital. Here's to take your questions on canadian gold mining stocks. Call us about those kinds of issues tonight. If you want your questions answered give us a holler tollfree: Welcome back to "market call tonight", sir.
>> Paul van eeden: Thank you.
>> Howard: One last question we talked about gold a couple times this evening on "the business news". I wanted to ask you about central bank buying. How significant an issue is that for the gold market right now, should people pay attention it to? >> Paul van eeden: Absolutely. If you've noticed that the gold price has had a significant rally since about june, july last year. This rally outperforms any kind of correlation that you can put between the gold price and say the U.S. Dollar exchange rate. That indicates something else entirely is going on in the market right now. My belief is that this rally in the gold price is absolutely telling us that there is uncertainty. Gold performs as well during periods of uncertainty. Question is what is that uncertainty. And that sometimes easier in hindsight than with foresight. But a big hart of that uncertainty in my opinion revolvers around central bank foreign reserve allocations. We've seen our argentina come into the market and buy gompd i read somewhere recently that south africa has come into the market to buy gold. We've heard russia publicly state that it's going to double the gold in its foreign exchange reserves. >> Howard: Why this after the trend has been to sell gold?
>> Paul van eeden: Because the trend has been to sell gold and invest in U.S. Dollars. That's what they did, right? And now i think we're coming into an gnvironment where people are saying well, the U.S. Dollar has been falling for four years. Maybe this is going to continue or resume. And so what we're seeing is uncertainty in a large scale uncertainty revolving around the U.S. Dollar and central banks rethinking their strategy of selling gold and replacing it with U.S. Debt instruments and saying you know what, maybe we should diversify out of our U.S. Dollar instruments, especially the large asian central banks. Japan, china, south korea. Of those two, china and japan, of course are the 600 pound gorillas. >> Howard: Let's go to the phones see what folks want to know about specifically tonight. Aaron you were first, hi, eric.
>> Hi, paul. Paul can you give us your outlook for full metal minerals. Fmm on the vancouver exchange. Their lucky shot on property in alaska certainly sounds interesting.
>> Hi, eric thanks for the call.Ñi full metal minerals is an interesting little company. It's run by a very dynamic young management team that's done a stellar job thus far with the business. They adhered to what i like to call the joint venture business model which is they use their expertise to acquire projects and then joint venture them out. The exception to this was a project that they called lucky shot and they drilled a couple of holes and they got lucky at lucky shot. They hit some multiounce intercepts. They are right now saying they can see multihundred thnd ounce potential at lucky shot. They believe there's the potential to move that up perhaps into the greater than somewhere between 500 and a million ounces. And the average historical grade has been 1.50 ounces per ton.
>> Howard: Is this a buy or very speculative buy?
>> Paul van eeden: All of the stuff i do is very speculative. This is a very speculative buy. Lucky shot at the kind of grade it has will become a mine if there's any size to it. Full metal minerals management believes there's size potential it to. There's infrastructure near both both road and power and the grade is good it's also in alaska which means it's in the united states. So any devaluation of the U.S. Dollar would give you an incremental benefit on the lucky shot project. >> Howard: Piece of this one?
>> Paul van eeden: I own a piece of this. I participated in subsequent financeings so yes i own it I'm biased.
>> Howard: Let's go to chris in london now. Hi, chris.
>> Good evening. My question is about bravo ventures group. The last couple weeks this stock has gone up over 200%. I'm wondering is it going to correct a bit or is it going to keep going. Where you do you see this going in maybe s months thank you.
>> Paul van eeden: Hi, chris good question and good observation. Bravo has recently doubled and then doubled again. That has occurred essentially without any good news. They released some initial drill results out of nevada they were interesting but not great. They did announce that placer dome is back right now recommencing the drill program and exploration at their south mountain project. Now a couple things about bravo. First of all, the south lone mountain project is a very scpijt very interesting project. What happened there is that brafa reanalyzed some drill cuttings from an old oil well and they found gold minerallization in the correct geological formation that you want to find gold in in the southern battle mountain eureka trend much that's very significant. And in doing that they attracted placer dome in as a joint venture partner. Placer dome immediately commenced an enormous land acquisition activity around this project and signed up a as joint venture partner. As i said placer dome is now back drilling. But that's not what drove up the price of bravo. In the last few months we've seen a tremendous resurgence in interest in nevada exploration. And what happened in bravo is that there's been some interest which i believe is coming out of germany or out of europe, at least. >> Howard: So what should somebody do if they're holding it route now?
>> Paul van eeden: This german interest is double the price of bravo in about a evening with i sold some. If the market gives you a double for no good reason it's incumbent upon to you supply the market with some liquidity. So --
>> Howard: You sold some but not all?
>> Paul van eeden: I sold some but not all. I doesn't mean it's going to go higher or lower. When you see this activity in a speculative small stock with no news to account for it take some money off the table. >> Howard: We'll take this break. When we come back we'll have paul van eeden's first pick of the evening. Please stay with us.
>> Howard: Okay, we're back with paul van eeden of cranberry capital talking gold stocks tonight little gold stocks. We have miranda gold as the top pick. You've picked that before back in august it's a venture exchange stock. Again another very speculative one?
>> Paul van eeden: Yes, absolutely. Stock is very, it is, it is speculative. It's a junior exploration stock like full metal like most of the things i like to invest in they follow the joint venture model. They're active in nevada. >> Howard: Why is it up 35% today?
>> Paul van eeden: Funny you should ask. Again, we're seeing interest out of europe. Presumably out of germany coming into the stock. Why we seeing this all of a sudden seeing this interest in nevada stocks i can't entirely explain to you. But we definitely are seeing it. Miranda went up as you mention 34% today. I saw that on my computer screen today and as i said, it's an opportunity to take some money off the table.
>> Howard: Did you?
>> Paul van eeden: I did. I have i have to give you these stock picks well in advance so i didn't know. This in all honest, when you see a stock go up 30% in one day for no reason, other than that there's some speculation in it, take money off the table. Miranda is a long-term holding of mine. I think it's a superb company, well managed with excellent projects. But to see this stock rally from $1.50 to $1.60 to over $2 in one day means that we're going to see a retracement. >> Howard: But you still have a piece of it?
>> Paul van eeden: I have a large position in it.
>> Howard: What price did you pay for it?
>> Paul van eeden: I've been in this stock for probably two years or more. My initial investments were in the 20 cents range. I've been buying it up i paid a lot more for subsequent purchases. Initially 20.
>> Howard: Let's go to amir in edmonton.
>> Hi. Good evening, gentlemen. Paul, what's your take on silver and silver market? Are we going to see $50? >> Paul van eeden: Amir interesting question. You know, a lot of people are bullish on silver and there are many people who would like to see the silver price do what the gold price does. But silver and gold are not the same right now. In the old days there was a period in which both were used as coinage and both were money. In today's world we're seeing silver being priced an industrial commodity and gold as a monetary aspect. It does not mean if the gold price runs the silver price won't run it probably will. But the silver market is very different to the gold market today. One thing that i do expect to happen is that the silver market is a very ill licht market in a global scale. If we see the gold price rally and investor demand come into the silver market it's entirely possible that that investor demand will cause the silver price to outperform the gold price on a percentage basis. >> Howard: What happens in the other direction a squeeze?
>> Paul van eeden: Exactly. As much as i think that the silver price can outperform gold on the upside i believe its volatility is going to be much more severe than gold. So if you see the silver price run, as with these illiquid junior mining stocks, take money off the table. You have to be invested in these things before they run. When they run, is not the time to get greedy. When they run is the time to take money away. >> Howard: Let's go to an e-mail paul, from dwayne on B.C. Metals. Ticker symbol C. What kind of volatility will B.C. Metals trade with in the near term? He wants to know.
>> Paul van eeden: Impossible to predict. I have no way to tell you what kind of volatility we'll will. What I can tell you about B.C. Nettals they have a fairly substantial copper project in northwestern and british columbia. This copper project could go into production if there was power to it but there's no power. There's a proposal to the B.C. Government to put a power line up into the northwestern part of the province which would be able to supply power to projects such as their red crest deposit. >> Howard: That hasÑi been going on for a long time hasn't it?
>> Paul van eeden: Exactly. The speculation with B.C. Metals is should the power line go in then this deposit is worth multiples. If the power line doesn't go in the project is probably worth a fraction of what B.C. Metals is trading for.
>> Howard: So would you buy it?
>> Paul van eeden: I own it. I'm on the speculator side that says there's a reasonable enough chance that the power line will ultimately go in that somebody will pay attention to this thing and take it out. >> Howard: But lots of risk?
>> Paul van eeden: Lots of risk.
>> Howard: Another break when we come come back top pick number two from paul van eeden.
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>> Howard: We're back talking gold stocks with paul van eeden of cranberry call. Top pick number two one you picked couple times in the past going back to last april at least. Altius minerals. Again another venture stock and another little risky one. >> Paul van eeden: Yes, definitely on the speculative side. Less risky than perhaps many of the other things I do. What makes it less risky is the management of the company has evolved to incorporate a lot of merchant banking-type of deals as an example, they purchased 10% of the outstanding net smelter royalty on the boises bay deposit. Their purchase price for that was probably in the order of $10 million. One could argue that that is worth three to five times what they paid for it right now. They acquired by staking a project in labrador that they turned into a joint venture with frontier minerals. I believe altius's cost was a few hundred thousand dollars maybe $500,000. One could argue on a market comparable basis if you look at public companies that project's value today would be somewhere between $100 and $200 million. >> Howard: That's had quite a run since april when you recommended it first. Have you peeled off some of that position?
>> Paul van eeden:. No that's a position that I don't think I'll ever make a sell decision on. I think that's a stock that I'll hold until somebody else pries it from me.
>> Howard: Really. To use your word earlier, is that prudent? When you made money like that?
>> Paul van eeden: My belief is that if you find people such as the people who runçó altius, if you find a management team like this and you have an investment in a company like that, selling it is probably the biggest mistake you'xeÑ going to make. Warren buffett used to say that the best holding term for a stock is forever. If you find the right company you never have to sell it. When you sell it you're going to pay taxes which is not a smart thing to do and you may do something silly with the money afterwards. So why sell a good company. That's, you know, altius is really in a different category than the other speculations i own. I do believe that we're seeing the company maturing more towards merchant banking, more towards deal flow. And i think as that occurs the risk profile of the company is going to change as well. Ahour what's the price you paid on that one?
>> Paul van eeden: I've owned that one since 1999 or 2000. Initial price was probably about 35 to 50.
>> Howard: Would you still buy it now?
>> Paul van eeden: Yes.
>> Howard: What you are?
>> Paul van eeden: I haven't bought it recently but I'm very often tempted. >> Howard: Let's go to tony in san bruno, quebec. Hi, tony?
>> Thank you for taking my call. Paul, radius gold. Have you gotten back in since the pullback and is it just going up with price of gold or is there something there playing. Thanks for microtaking my call.
>> Paul van eeden: My pleasure. Just to refresh mem people's memories radius gold developed a project in nicaragua which they joint ventured to meridian gold who came in the first round of drilling. The drill results were disappointing and the stock fell quite dramatically. Probably from about a $1.50 down to probably the lows in $50, 60 range. That reduction was maybe a little bit overdone but justified by the drill results in that they were disappointing. >> Howard: Did you sell it because you were recommending it back in april?
>> Paul van eeden: I sold a little bit of stock when it started following. When it fell below you know 80 to 90 i stopped selling. I believe that you know at 70 or less it isn't worth me selling this stock I would you tell rather be buying it. My position in radius is large enough that i did not buy anymore because it's a significant nothing my portfolio. So no really i haven't got back and bought anymore but i haven't sold any either. The update on radius is that meridian is coming back in the first half of this year. They're going to commence another aggressive second round of drilling. What could have happened is that the first round was too shallow so they're going to drill deeper. But in subsequent prospecting they've also identified additional gold zones. So they're going to follow up on exploration there. Radius is also generated additional projects in nick are a and they've also been generating projects in mexico. So the company still very active. Good manage many team and a very strong treasury.
>> Howard: All right. We're going to take another break. When we come back top pick number three from paul van eeden of cranberry capital please stay with us.
>> Howard: Okay a few minutes left with paul van eeden of cranberry call. We're talking gold stocks tonight in particular small ones. Let's go to rim fire minerals. Rfm on the venture exchange. Tell us about this one it's a new name. >> Paul van eeden: New name for the show it's an old name for my client subscribers. Rimfire is a stock I've owned since about 2000, 2001. Absolutely superb management team. One of the best in the exploration industry. It's a company that focuses on the joint venture model. They're very, very good at relationship building. To the extent that newmont invited them into nevada to evaluate one of newmont's databases in the walker lane. This is a strategic joint venture between newmont and rimfire it's the first time i ever heard of a major mining company of newmont inviting a junior into their ground. >> Howard: What about the risk profile of this one versus the other ones tonight?
>> Paul van eeden: Similar to other stuff it's high risk. This is pure grassroots exploration very high risk. But the other thing that's interesting about it is that they also have a substantial land position in alaska that they've acquired during the 90s. This was when tech discovered the pogo deposit in alaska. That's a 4.50 million ounce deposit that teck will bring into production this year that will commence production this year. I believe rimfire has strategic ground in alaska. As the exploration excitement builds again in the good district this should be beneficial for rimfire that's why i brought it in as a top pick tonight. I think we're about in the right timing for things to start heating up in that general area again. >> Howard: Price you paid for this one?
>> Paul van eeden: Probably in the 25 initially.
>> Howard: Still buying it?
>> Paul van eeden: Haven't bought it for a while. Actually that's not true. I did buy it not so long ago. Probably in the dollar range.
>> Howard: 1.36 tonight. As we we say every night at this time check with your own financial researcher before making any financial decisions.
>> Hi, howard. Excellent show as always. Paul, given the snare auto of falling U.S. Dollar and rising bullion price i would appreciate your views on queen stake resources and their outlook. Thank you. >> Paul van eeden: Yes, queenstake could possibly be a very, very significant player. We talked briefly about the volatility and liquidity that we're seeing evolving in the mid-tier market. Now queenstake is a company with an operating gold mine in nevada. So if we have a decline in the U.S. Dollar and an increase in the U.S. Gold price then the operating margins for queenstake should go up dramatically. Queenstake has suffered a little bit because they have a very high operating cost they don't have a lot of ounces ahead of the mill. So you know they're having a tough time keeping the mill hungry mill satisfied. And that has impacted the operations and negatively impacted the share price. Now if we see a dramatic increase in the gold price, this should have dramatic increases in queensstake share valuation. But i would really like to see queenstake address the issue of reserves that are lying ahead of the mill. An increase in reserves and resources would do magnificent wonders for the stock.
>> Howard: Does that mean don't buy it until you see that?
>> Paul van eeden: That's my opinion. I haven't bought queenstake i visited the operations. I'm positively predisposed of the stock but i would like to see increases of resources before it pushes me to the point write would buy the stock.
>> Howard: Let's go to john in vancouver now. Hi, john.
>> Hi, thank you for taking my call, howard. Paul I wanted to get your opinion on the outlook for the price of platinum. It closed at about i think just over a thousand maybe a thousand 30 today i just wanted to get your opinion on kind of the market doesn't seem to be paying much attention on it. Thank you, I'll hang up and listen to your response. >> Paul van eeden: Well i think with the price of a thousand dollars an ounce the market is paying a lot of attention to it. You know, platinum is purely an industrial commodity. There's some jewelry component to by the taught mainly industrial. Now if we see a slowdown in economic activity, which is my belief that we're going to see at some point, then we could see a reduction in catalytic demand for platinum that could have negative consequences for the platinum market.
>> Howard: Do you invest in it at all? >> Paul van eeden: I do not forÑi that previce reason -- for that precise reason. There's convertible between platinum and palladium. Palladium is $273. Platinum is a thousand. That means there is an economic pressure on converter manufacturers to switch the ratio of platinum and palladium. It used to be that they used more palladium and palladium was a thousand dollars an ounce and platinum was $200. Then they switched the ratios now it's the opposite.
>> Howard: Too complicated for the average investor? >> Paul van eeden: Not necessarily. Keep in mind it's an industrial commodity. If we see a slowdown the demand for the commodity can go down. Just because gold is running does not mean platinum, palladium all these other metals have to run. They could doesn't mean they have to.
>> Howard: So if you have any positions in these just 20 seconds left?
>> Paul van eeden: I would bail out of the platinum market. It's been too rich for me for a long time so i didn't benefit from it. It may be unfair of me to say i would bail but that's what I would do. >> Howard: Unfortunately, here out of time. Thanks, paul. That's paul van eeden managing partner with cranberry capital that's it for tonight and this week. Monday on "market call tonight", john zechner will be here from J. Zechner associates. He will take your questions on north american large caps. Get a head start by e-mailing us now at marketcall@robtv.Com. Have a great evening and great weekend and see you back here with me monday night.