In this issue
Your Days are Numbered - Buy Now !!
As my subscribers know, I listen to the views of
many analysts. At least 2 of those analysts believe that by the end
of June (yes, this June) gold will be shooting back toward $1,000
and that by the end of August (yes, this August) we could be seeing
gold at $1,300 - $1,500.
I totally agree with this view and I am
personally positioned to profit handsomely.
Are you?
We have many new subscribers who are getting
ready for this potential move and we welcome you to join us NOW as
your days are numbered before we blast off. You must ask yourself,
do you want to buy when prices are reasonable, like now, are wait
until we are going higher and higher every day? Your Choice!!
Why Gold Mining Stocks & Warrants Are Up So
Dramatically
This week, Lorimer Wilson, our feature writer
and Marketing Director here at
www.PreciousMetalsWarrants.com
and also www.InsidersInsights.com
wrote a great piece which appeared on many websites. We want to
share this will you in case you missed it as you need to understand
what is happening and why it is happening with
warrants.
Yes, you will see that warrants are up
substantially BUT the big move has not yet started. Perhaps
the markets are waiting for you.
Why Gold Mining
Stocks and Warrants are Up so Dramatically
By: Lorimer Wilson
Every investor has a wide array of asset classes and investment
vehicles to consider – stocks; bonds; commodities; funds; options;
LEAPS; etc. and the relatively unknown and misunderstood category
called ‘warrants’. This article highlights the exceptional
performance of commodity related company stocks (i.e. gold, silver,
uranium and other metal miners and oil and gas operators) and their
associated warrants vis-à-vis the aforementioned categories and
explains why that is the case.
Week after week throughout
most of 2009 the warrants of mining companies in North America have
outperformed all the various stock market indices hands down and
outperformed their associated common stock by even greater margins.
To top it off, the situation is even more unbalanced in favour of
warrants when compared to gold bullion and silver. It begs the
question: What’s going on here? There are three over-riding reasons
as discussed below.
Americans Investing in Canadian
Securities Profiting from Strengthening Canadian Dollar.
The U.S./Canadian dollar exchange rate is undergoing a major
reversal. Since the beginning of the year the U.S. dollar has
weakened 7.2% against the Canadian dollar.
Most commodity
stocks and associated warrants are traded on the Canadian TSX or the
CDNX and, as such, in Canadian dollars. This makes it that much more
profitable for American investors to own such stocks and warrants
than to own U.S. equities, gold and silver which are all priced in
U.S. dollars.
True, currency plays can also go the other way,
but most economists are of the opinion that the U.S. dollar is in a
long-term decline vis-à-vis other currencies and, in particular,
commodity currencies such as the Canadian dollar. Indeed, many
economists foresee the Canadian dollar being at par with the U.S.
dollar by the end of 2009. That would equate to a further 9.6%
appreciation for Americans in the value of their Canadian dollar
denominated holdings i.e. a possible 17.5% in additional profits
over the course of 2009.
There you have it and it is worth
repeating. Americans who used their U.S. dollars to buy Canadian
denominated equities at the beginning of 2009 have received a 7.2%
greater return on their Canadian investments to date than have their
Canadian neighbours to the north. Were the U.S. dollar to continue
its descent as anticipated, they would see a further 9.6% return by
year’s end. That is impressive. It would appear that this is no time
to look a gift horse in the mouth!
Indiscriminate Selling
in 2008 Presenting Extraordinary Buying Opportunities in 2009.
Another reason for the outperformance of commodity stocks and their
associated warrants is that they declined so dramatically last year
from their 2008 highs (i.e. the stocks by 58.2% and the warrants by
80.1%) that they have nowhere to go but up and up they are going at
a rapid clip.
One of the dirty little secrets about warrants
is that they outperform stocks considerably in a bull market and
drastically under perform stocks in a bear market and that is just
what happened in 2008. That might seem rather disturbing on the
surface but it is not actually of that much concern because the
benefits of investing in warrants are realized over a long time
horizon (as much as 8 years in the case of one warrant available on
the market today). Indeed, warrants are a true buy-and-hold
investment vehicle.
Warrants give the holder the right, but
not the obligation, to purchase the common shares of the company at
a specific price within a specific time period after which, if not
exercised, they expire worthless.
With 50 of the 115
warrants associated with natural resource companies having duration
periods of 24 months or more there are a large number of companies
to choose from. Indeed, of the 50 warrants 25 have expiration dates
beyond 36 months and 12 beyond 48 months. As such, there is ample
time for many warrants to work their magic.
Increases in Price of Gold will Increase Mining Company
Profits and Share Prices
A third reason that commodity stocks
and their associated warrants (and particularly those of gold and
silver mining companies) are outperforming all other asset classes
is the expectation by most pundits that the price of gold will
escalate rapidly in price (i.e. to $1,600, $2500, $5,000 or even
more) in the next few years (even by next year, say some). This will
have a significant positive impact on the profitability of gold
mining companies. For example, if gold were priced at $950/oz., and
the cost of production was $400/oz., and two years later gold had
risen to $1600/oz., and the cost of production had escalated by 20%
to $480/oz. then the mining company’s profit margin would have gone
up from $550/oz. to $1120/oz. (i.e. from 57.9% to 70.0%).
With the cash flow of a mining company going up
dramatically, the size of the resource and the value of a company
going up dramatically and the profits of a company going up
dramatically as well, one could reasonably expect a dramatic
increase in the share price of a mining company’s stock. Those
understanding this relationship are now also aggressively buying
warrants from their current still oversold base which is driving
their prices higher.
Investor Advantage Rests with Those who
Know the Secret of Future Warrant Leverage. The above being said, it
should be noted warrants are not to be bought with one’s eyes
closed. There are many factors to take into consideration before
doing so. The three most important considerations, of many, are
one’s estimation of the future prospects of the mining company of
interest and, as such, its projected future stock price; secondly,
the duration (i.e. how many months before the warrant expires) of
the warrant associated with the mining company; and thirdly, the
stated price (referred to as the strike or exercise price) and terms
at which the warrant can be redeemed for the actual stock.
If one is of the considered opinion that the share price of
the mining company being evaluated will increase significantly in
price before the warrant expires and that the exercise price of the
stock is sufficiently low to effect the option to buy the stock then
major excess profits (as much as 10-fold) can be made by investing
in the warrant instead of the stock itself.
Leverage is what
warrant investing is all about. If one believes in the long term
prospects of a company with warrants, if the warrant has a duration
of 24 months or more (and preferably at least 36 months), if the
exercise price is favourable and if the trading volume and frequency
makes the warrant sufficiently liquid, then owning such a warrants
is the best way to maximize one’s returns on the dollars invested.
To better understand which warrants are best positioned to
realize over-and-above (i.e. leveraged) gains vis-à-vis their
associated stock a twenty dollar investment in the extensive
database details and leverage calculations offered by
preciousmetalswarrants.com should be seriously considered.
Commodity Related Stocks and Warrants are Outperforming Gold
by Large Margin YTD
The table below tells it all:
% Appreciation*
Year-to Date**
Warrants 149.0
(24+mo duration)
Stocks
94.0
(with warrants)
CDNX 56.8
HUI 31.6
GDM 30.3
TSX 28.3
Silver 39.2
Gold 10.7
S&P 500 1.8
*all calculations based on U.S dollar
equivalents
** May 29th, 2009
What more is there to say?
Year-to-date, gold and silver mining companies that offer warrants
are up 94.0% and the warrants associated with those stocks are up a
whopping 149.0%. Yes, 149%! Silver is up a very respectable 39.2%.
What about gold? In spite of all the hype recently gold bullion is
only up 10.7%.
In conclusion, those concentrating on the
future prospects for gold need look no further than the present
performance of gold and silver mining companies and their associated
warrants. The mining companies are outperforming gold by 8.8 to 1
and their warrants by almost 14 to 1.
The above analysis begs
the question: Now that you know what others don’t shouldn’t you add
some gold and/or silver mining stocks to your portfolio? Better yet
shouldn’t you own some well chosen long term associated warrants? It
is not too late and the financial rewards could be truly
outstanding.
-------------
Dudley's closing comments,
Again, I believe your timing could not be better
to enter our world of investing. Those who subscribe to my Gold
Subscription also receive access to my new service, Insiders
Insights in which I follow the monies of the corporate insiders.
Outrageous gains are being made in a short period of time.
Regards from the team,
Dudley Baker, Owner/Editor,
Guadalajara/Ajijic, Mexico
Lorimer Wilson, Director of Marketing,
Toronto, Canada
Bruce Ross, Webmaster & Administrative Services,
Mesa, Arizona
www.PreciousMetalsWarrants.com
www.InsidersInsights.com
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
What's this
newest service
all about?
"A Look Over
My Shoulder":
Are you curious
which companies
have warrants
and are
trading?
Are you curious
which company
has a warrant
with an
expiration date
in 2017.
Are you curious
of a
company which
has a warrant
with an
expir date
in 2015.
Are you curious
which warrants I
own?
Are you curious
which common
shares I own?
Are you curious
which warrants
and common
shares are on my
"Hot List" for
your possible consideration to purchase?
Are you curious
which companies
have insiders
buying?
As always, I
encourage our
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support and
consider
subscribing to
those services
which we follow
and which we
quote from time
to time.
_________________________
