Tax Loss Silly Season
I read something a couple of days ago about the Tax Loss season. When investors take a hit, they tend to dump the shares in December to move into something else. They take the loss and write it off. The interesting thing about the Tax Loss season is that for the past 11 years if you bought the gold/silver indexes on Dec 22 and all you did is hold for 90 days you would make a profit. That is if you were smart enough to take profits, many people aren’t.
It seems pretty obvious that we have been in a major bottoming pattern for two months with the resources. They are thoroughly hated and despised by burned out investors still licking their wounds. There will be a lot of selling of stocks this Tax Loss Silly Season. If you are smart enough to duplicate last year, buy the stuff now and hold it for 90 days. I have identified a couple of companies that have been beat and battered in spite of good news.
I’ve written about Arianne Phosphate several times, in September and in October of last year. In October of 2013 the company released their Bankable Feasibility Study showing a NPV of $21 per share. That goes beyond stupid. The shares are selling for $.63 and that’s about 3% of NPV.
Arianne baffles me. The stock is the biggest phosphate project in North America. Management is excellent. We need more food and more efficient food production yet the stock dropped 50% in the last three months. It makes no sense at all. Insiders are buying with both hands yet the stock recently hit a three year low.
The Lac à Paul deposits are the largest greenfield phosphate deposits in the world with over a billion tons in resources. The project will produce a 39% pure product higher than everyone except a few Russian projects. Arianne is aiming at 50 years of production. The Quebec government participated in a financing at $1 in Mid-October.
The project has a completed bankable feasibility study, is in one of the safest jurisdictions in the world, Quebec, yet trades for 3% of Net Present Value.
Another safe jurisdiction project selling for pennies on the dollar is Gold Standard Ventures in Nevada. It’s another resource company where the insiders are gobbling up shares with both hands. It’s a company that is down 84% in 2.5 years but has increased its resource and consolidated an entire gold district in Nevada. It simply makes no sense.
Earlier this year GSV consolidated the Pinion gold project. They immediately began a massive drill program to bring the historic resource into 43-101 standards. By September they had increased the 43-101 resources to 423,000 ounces of gold in the indicated category and 1,022,000 ounces in the inferred. That is both 50% larger and higher grade than Newmont’s Emigrant Mine a few kilometers to the Northeast.
Pinion came with a historic resource of 800,000 ounces of gold. GSV spent $750,000 punching holes in the project and came out with a 43-101 resource of 1.45 million ounces in six months. They added 600,000 ounces of gold for $1.25 an ounce. That’s oxide and at surface just like Emigrant Springs. When Newmont bought Fronteer, Newmont paid about $1000 an ounce but GSV adds economic ounces for $1.25 and the stock goes down. Go figure.
Then a few days ago, the company announced completing the acquisition of two new areas with known historic resources, Dixie Creek and Dark Star. These are oxide deposits with grades similar to that of Pinion and Emigrant Springs. GSV picked them up for less than $1 per historic resource ounce of gold.
I think that we are going to see that’s pretty cheap, especially given that the CME just announced a planned trading halt should gold move over $400 in one trading secession. So the CME seems to think either it’s going to take three days for gold to go to zero or they see an explosion in gold shortly.
I began 321gold in 2001 because I recognized that either we had the greatest opportunity to invest in resources in history or mining was going to go the way of the dodo bird. I was wrong. Today is better. But you have to be willing to ignore the crowd and you have to know how to take a profit when you have one. It doesn’t matter if GSV and DAN double or triple if you won’t take some profit off the table when you have some. The only other alternative is to lose money. That’s what most people want to do.
Arianne is an advertiser and I am biased. I own shares purchased in a private placement at higher prices. Gold Standard Ventures is also an advertiser and I am biased. Do your own due diligence.
Arianne Phosphate Inc.
Gold Standard Ventures