DENVER – Pizza delivery:Hello? Four Kings Pizza.
Non-English speaker:Please I like-a da-pizza.
Pizza shop: HELL-OH? What KIND?
Non-English speaker: Allora. A Four King Pizza OK?
I have to laugh at thesefour-king metals equities. What a four-king joke.
My beloved garage-loft and pizza-delivery investors are in large part to blame. They are four-king slicing their four-king gold and silver (and other metals) stocks and returning the picked-over pieces to vendor.
“The whole market is retail guys and traders getting bored,” says my friend Mark McGinnis, a Toronto broker for Haywood Securities.
Another broker sent me a depth listing of market makers and placed bids and asks for one of my favourite gold prospector stocks – one that has lost almost half its value since April. It is all bottom-fisher bids for the Colombia (Canada-traded) stock with a sprinkle of sell orders at far higher prices. Nothing happening; bid-ask spreads as wide as the four-king Canucks’ gap on defence on Boston’s away ice.
“History mimics itself,” says Quinton Hennigh, a geologist whose target modeling of drill holes is assisting several companies, including Evolving Gold (TSX: T.EVG, Stock Forum) and EurOmax Resources (TSX: V.EOX, Stock Forum), in prospecting of minerals deposits in Wyoming, Nevada and the Balkans.
Dr. Hennigh, who studied at the Colorado School of Mines, says he doctored up the attached chart. It shows the ratio of gold to the Dow Jones Industrial Average, a subject we discussed last week. (See article via Stockhouse.) His point: that metals equities, primarily gold and silver, show tremendous strength exactly when investment demand for bullion eases.
“People think we should be in a bull market in gold stocks right now. This is not true ... look at history. The bull market has yet to come,” he says. Dr. Q was telling me the same thing in West Africa two weeks ago, and he likely will be telling me again in the Balkans in three weeks on a EurOmax tour.
Dr. Hennigh says relentless stock market gains in exploration companies “FOLLOW the bust in the in the general markets and the PEAK in gold price. Quite contrary to popular opinion.” As the chart here shows, reverse-psychology gains for prospectors’ paper occurred most recently from years 1980 to 2000.
Several strategists are on this theme, that I know of: Fred Hickey for one. Jim Dines another. Anyone old enough and-or bruised enough to savvy behavioral investing and its fakeout-shakeout moves. Dr. Hennigh is not that old, but he is a fanatic fan of history.
Lots of reasons why: 1. Mainstream investors finally wanting a taste of metals-equity action after years of watching commodities make headline highs. 2. Financial analysts becoming more comfortable with lower gold projections in their pricing and earnings models. 3. What four-king ever.
None of my convictions have changed about prospecting and the value of on-site research, namely, my own on behalf of our Stockhouse audience and select clients of Torrey Hills Capital, a firm that pays me for my networking ideas.
Sure, my net worth has declined about 38 percent since early April. But none of it is on margin and most of it is designed for years-long storage. Companies I am personally familiar with, have researched on-site and have been purchasing, albeit at higher prices, these past two weeks include Fortuna Silver (TSX: T.FVI, Stock Forum), Revett Minerals (TSX: T.RVM, Stock Forum), African Gold Group (TSX: V.AGG, Stock Forum), Sandspring Resources (TSX: V.SSP, Stock Forum) and Scorpio Gold (TSX: V.SGN, Stock Forum).
All of them likely will go four-king lower. If I am lucky, I will have some cash around to purchase more. But I do not recommend that anyone else in garage-loft and pizza delivery land do the same. That’s because individual investors these days apparently prefer buying stocks when they are rising, like the yeast in their Four Kings pizza dough.
ACTIONABLE NOTES: I mentioned I met with Amarillo Gold’s (TSX: V.AGC, Stock Forum) Buddy Doyle in Vancouver last week. I said that Mr. Doyle, 55 and an Australia-bred geologist, is the only CEO I have met recently who has dirt under his fingernails. He runs the Brazil prospector with grizzled grit. So I must mention that technically, Dr. Hennigh above, CEO of Evolving Gold, also has dirt on his hands.
I own some of the companies in this article, as noted above. Four of these companies, EuroOmax, African Gold Group, Sandspring and Scorpio Gold, are represented by the investor outreach firm I work with (see below and the entire client list). My current sked includes a trip next week to see Canaco’s holdings in Ethiopia and Tanzania. Andy Smith’s CanacoResources (TSX: V.CAN, Stock Forum) will spin out 100 percent of its 70 percent-owned Ethiopia gold and copper holdings to existing shareholders as of a record date of June 28.
Thom Steps Out: I am adding professional outreach for a select number of natural resources companies to my log. I will continue to write free articles such as this one for Stockhouseand its nearly one million users. Here is the press release about my new gambit: Thom & Torrey Hills Capital. Please do not purchase shares of these or any company based solely on my writing, my speaking or my on-site research
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