Eric O's Favorite Gold Miners

Thank-you for your comment EO

With Tahoe being in Guatemala pretty much took it off my screen as well.

But when I was researching it in 2010 around the time of IPO I could not help but love the team behind this company.

Kevin McArthur knows the mining industry better then anyone. As well knows the country and the politics 

that this company would be dealing with.

I do understand the risk involved that whats got me up in the air as to add more or cut my position.

Here's some comments on Tho,  Cheeko

Tahoe Resources (TSX: THO; Pink Sheets: THOEF) — Any Guatemala country risk discount has been completely wrung out of Tahoe Resources as it becomes apparent to the entire market that Escobal is a monster world class silver (+base metal and gold) deposit easily capable of producing 20 million ounces of silver at near zero cost (thanks to by-product credits). IR Director Ira Gostin freely shares management’s hope to eventually produce many more millions of ounces per year from southern Guatemala (30 million? 40 million?), which would make the country one of the world’s major silver producers — not to mention give an appreciable boost to its GDP. That in part is likely why the permitting process has gone relatively smoothly, along with the careful community relations conducted by Tahoe. Yet this is still Guatemala, one of the few countries that can give a company like Goldcorp a bad name (at its Marlin mine — the reason why Tahoe got Escobal in the first place). All things considered, we’re inclined to give Tahoe a thumbs up and we’d buy the shares when the time is right.

Thought I'd mention a trading method I've been developing over the past few months. During the SVM shorting fiasco I got into selling puts and then buying some stock and have been following the stock closely.

This month I sold 500 shares at $7.76 and 1000 shares at CAD$7.60 using trailing stops at 2 brokers. I then purchased 300 shares at CAD$7.10. At its most recent $7.55 I'm not buying but I would near a $7.00 price. However I've sold $7 and $8 March puts and expect the $8 puts may be in the money. So I'll let the $8 puts that I sold in November for $1.30 get exercised giving me another 1000 shares at an effective $6.70, plus commissions.

If silver breaks out sometime then trailing stops and selling puts gives downside protection without losing upside profits.

I currently have a small holding in JAG (Jaguar Mining, that has 3 operating mines in Brazil). Its one of my few gold winners having spiked to $8 on take over rumours then moved sideways to around $6.50 recently. Getting slightly P'O from not selling at $8 I sold a covered call on my holding at the end of last month. I got $0.55 for the March $8 call, not much but its gravy unless the stock explodes in 3 weeks. I'm currently thinking of selling both puts and calls for April at $7, if I still hold the stock, since I don't expect much movement but would not object to increasing my holding at below market price.

You don't need to get so complicated. If you want to buy below market sell a put (for those stocks that have options). If its not exercised (and most aren't) at least you'll get beer money.

Thoughts, comments, critiques?

EO, thanks for pointing out the downside. 

I must admit that I have been burned but most of my losses have occurred with long calls. The entire system is slanted toward the seller who benefits from the time decay. I keep track of my total exposure if everything crashes to zero. I'm able to sleep well at night and while still learning find I am making more on options than stocks.

Still making mistakes, of course. I had sold SLW March 34 puts that went badly underwater and so bought back when I had a 50% profit on my sale rather than waiting, as it is obvious now they will expire worthless. I tell myself that its never wrong to take some profit.

Bought a chunk of ATN, averaging 1.45, had to let go of KAM, WDO & GPD,

Though so far, not a bad trade off.

I like the volume in this stock.

Guyana Goldfields continues its slide after publishing the feasibility study on its Aurora project, which was not very well received.

See: http://micro.newswire.ca/release.cgi?rkey=2002247083&view=16273-0&Start=&htm=0

and http://www.miningweekly.com/article/guyana-goldfields-falls-on-feasibility-results-2012-02-25

Apparently the investing community was disappointed by the lengthy pay-back time on investments... which are largely due to an over conservative $1300 /oz for the projected gold price . While at the other hand the budgeted crude cost at $100 seems reasonable or even low.

What's your opinion, Eric. After two consecutive days of double digit losses, is GUY worth the gamble or will we most likely see the downside of $5 before any recovery takes place? 

Three more punishments meted out today to Trelawney and Batero  and Gold Canyon for less than anticipated resource estimates. Batero really took it on the chin.

Doesn't Canada share the official "head of state" with Guyana?