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Golden Leverage - Cashout Time Ralph Kettell Archives December 2, 2003 A little over 6 months ago, I penned an article entitled Golden Leverage. In that piece, I presented an opportunity for speculators to buy warrants on Kimber Resources which were then trading around $.06Cdn (six cents Canadian). I suggested that those warrants appeared to be a good speculation up to about 10 cents given the then current value of Kimber Resources stock and the length of time to run till expiration. I also performed a couple of simulations which compared the returns on the warrants versus the returns on the stock for several future values of Kimber stock. Well folks, payday has arrived. Kimber stock has taken off in the past week or so and the warrants have gone up so much that it is now prudent to close the position and take profits. The warrants are trading around $1.10 to $1.15Cdn with the stock at $1.70Cdn. If you had purchased the warrants for $.06Cdn, then you have a 1733% profit excluding commissions. If you had spent as much as $.10Cdn, then your profit would be somewhat less stimulating, but still quite a satisfactory 1000% profit in a little over 6 months. In addition, the Canadian dollar exchange rate was approximately 0.72 on May 13th, but is now about 0.77. This yields an additional 7% profit to the trade, which should cover the commissions and spreads. This article should not in any fashion be considered as a recommendation to sell Kimber stock. Kimber is a great silver and gold play in Mexico that I would certainly recommend for the long term. However, now is the perfect time to protect some hard-won profits in the warrants which will expire in mid-January. We could possibly hold on for a higher price over the next few weeks, but the risk/reward equation argues strongly against doing so. If we assume that the stock could swing up or down $0.50, then the warrants could go up to $1.60Cdn, but they could also fall to $0.60Cdn. I would rather keep my current profits rather than risk half of them in order to maybe make another 45%. Viewed versus the trade entry price, the current gains are 1700%, if the warrant drops to $0.60 then the gain goes to 900%, or if the warrant goes up to $1.60 then the gain is 2500%. I hope that many of you purchased and held onto these warrants and thus made a good deal of money. I know that many people bought them when the article ran, because the warrants ran up in price the next day. There were a few entry points at $0.10Cdn during the couple of weeks after the article was published. When I locate another potential grand slam like this, I will certainly post it here for your speculating pleasure. December 2, 2003 Ralph W Kettell, II Archives email Disclosure: The author is not an investment advisor and this article should not be construed as a recommendation to invest in the discussed securities. The author is merely presenting some possible scenarios and what the potential risks and rewards associated with an investment in these securities could be. The author has not been paid to write this article, either in cash or securities. The author is a share holder of these securities along with about 15 to 20 other mining companies. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to make potential investors aware of the possible rewards of investing in this stock and/or warrants and to elicit interest on their part in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock. _______________ 321gold Inc