TIBURON, California – This is the part where we kill all the brokers.
The promoters. Toronto merchant bankers. CEOs. The analysts, asset managers and newsletter writers, myself included.
Worldwide, more than 10,000 resource companies trade their equities publicly. Few if any are holding their own. Most are getting shellacked.
My No.1 equity gauge for foul weather, Newmont Mining (NYSE: NEM, Stock Forum), is among the best of the losers: just 10 percent shy of its one-year high. Its presence in Nevada and Ghana, nice and stable, is a big Newmont plus.
In contrast, Rio Tinto Plc (NYSE: RIO, Stock Forum), in a Mongolia copper quagmire that deepens daily, is pulverized: off more than 30 percent.
The junior companies, against a landscape of relentless promotion, are the worst of the worst. Especially those in nations or jurisdictions perceived as corrupt, politically volatile, and operationally inept or stained with blood. These include but are not limited to Tanzania, Mongolia, Peru, Bolivia, Guyana and South Africa.
In Mongolia headlines, and after 10 years of committing cash, expertise, heart and exploration soul to Oyu Tolgoi’scopper and gold deposit in the south Gobi steppe lands, Ivanhoe Mines’ (TSX: T.IVN, Stock Forum and (NYSE: IVN, Stock Forum) Robert Friedland still gets zero respect from the mining press.
That’s OK. How does one give face to a shifting & shapeless media that cut and paste every other paragraph and sound bite? One does not.
The intelligentsia’s generalizations about how Mongolia’s working classes perceive Oyu Tolgoi are misguided at best, perverse and contorted at worst. Imagine burning in effigy these cut-and-pasters, lining the streets of Ulan Bator with their smoking mannequins; now that’s a festival worth attending.
No matter. Ivanhoe Mines’ $12 billion market worth, off more than 50 percent from its yearly high, will double and more after Rio Tinto’s standstill pact on equity ownership expires in early January 2012. Just follow the copper, and as Mr. Friedland has been saying for at least 15 years, in my own frayed notebooks anyway: “Go long everything China is short of.”
As for the rest of the landscape, as I said, everyone in the resource biz deserves a throttling.
On the ‘effigy’ list:
-- Those,myself included, who have stood firmly behind prospectors and miners in Mongolia, Tanzania, Mali, my beloved Colombia and elsewhere. I still own ‘em all and at present am going down with this s-h-i-p.
-- Those who insist a company’s equity worth can overcome the speculative malaise puncturing their bloated notions of “fair value” yet go curiously silent at times like this, their usual vaporware vaporized.
-- Those who blame short sellers, NGOs, margin calls and warrant-holders for their favoured companies’ steady descent into red ink.
Especially, those who claim to be veteran stakeholders with years-long time lines, yet dispatch their market shares or four-month-hold equities at the first signs of turbulence. WS wrote all this in “Henry VI.” ‘First thing we do, let’s kill all the (hedge funds).’ At least, spray ‘em with buckshot. (See photo – Thom Calandra)
What is there to say right now? I can point to only a stickled crop of resource developers that have “held their own” as equities. Even those are wavering in these chill-factored winds. (Feel free to list your own in the comments section below.)
My long-favoured Xtra-Gold Resources (TSX: T.XTG, Stock Forum and (OTC: BB: XTGR, Stock Forum), a Ghana gold explorer, is “hanging in there,” albeit in light trading. I own it and purchase more when I work up my nerve. (More on that next week.)
Sunward Resources (TSX: V.SWD, Stock Forum), a Colombia gold-copper explorer, is benefiting from a poker-faced group of 10 major stakeholders who are loath to sell. I do not own those shares.
Scorpio Gold (TSX: V.SGN, Stock Forum), Peter J. Hawley’s brilliant little Nevada gold producer and prospector, is outpacing nearly everything in that benign state of miners. I wish I owned more than my flimsy $8,000 worth. Another Nevada prospector, Gold Standard Ventures (TSX: V.GV, Stock Forum) near Elko, is holding its own amid the promise of its Railroad gold and silver project. I don’t own it, but credit where credit is due, right?
Oh yah, and those tried-and-true silver producers in Mexico and Peru? They’re getting whacked, too. Yes, unfairly. There, I said it. Also: iron ore producers are decimated in share value. Molybdenum companies: macerated. Tungsten. Potash. Cobalt. Amen.
The investment market is so very unfair. We should burn it in effigy.
NOTES: I will be speaking at Brien Lundin’s New Orleans Investment Conferencein late October. You can click on this link to get a sweet discount on the entrance fee. … I am a partner of Torrey Hills Capital, which is in Del Mar, near San Diego, California. That investor outreach firm lists Scorpio Gold, Xtra-Gold Resources and Gold Standard Ventures as clients.
Stockhouse members – the service is free – can see my entire portfolio online. It is under the portfolio function and my user name, which is TCALANDRA. There is nothing in my portfolio suitable for risk-averse investors. I am not a financial adviser.
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