As we move through the back half of the year, here is a golden opportunity.
By Bill Fleckenstein President Of Fleckenstein Capital
July 24 (King World News) – Google was successful at beat-the-number and saw its stock price immediately vault about 4% after hours. And once the market opened today that was good enough to precipitate a rally of 0.75% to 1%, as those results were extrapolated across-the-board. However, about mid-morning the indices began to give back some of their gains…
KWN receives so many emails from its global readers and listeners about which high-quality mining companies they should invest in, and as a result we have added another remarkable company to the list. This is one of the greatest gold opportunities in U.S. history and you can take a look at this remarkable company and listen to the just-released fantastic interview with the man who runs it by CLICKING HERE OR BELOW
Telsa Execs Put the “Ex” In “Exit Strategy”
As the market began to weaken a bit, two bellwethers (at least in my mind), Netflix and Tesla, began taking on extra water. Of course, in Tesla’s case, it turns out its head of sales is joining the procession of other executives leaving the company, so it had a bit of news.
In the afternoon, the Nasdaq led the chart into negative territory and 0.5% lower by mid-afternoon. The true leader was the Nasdaq 100, which gapped up 1% but was only up 0.2% when I had to leave, with an hour to go. The recent budding signs of a change in trend that I have been highlighting are slowly building and one day soon they might just cause some downside acceleration.
Away from stocks, oil was up a percent, fixed income was slightly higher, and green paper was mixed and kind of flat, although the yuan at one point (last night) was quite weak before it managed to turnaround. That weighed on the precious metals, but in New York trading they were able to rally, as they apparently decided to follow the huge move in copper, albeit just barely. The miners were a mixed bag.
On the topic of miners, I would like to note that I think Pretium is one of the cheapest relative to NAV and earnings on next year’s estimate that I have ever researched. The company believes its reserves are about 15 grams per tonne and last quarter (only its third in operation) it achieved something in that neighborhood after the two previous quarters were lower (for understandable reasons). If the company can maintain those production and grade levels (while not a guarantee, but not a stretch either), at today’s gold prices it could make something on the order of $1 per share next year, and higher gold prices would obviously translate into even higher earnings.
The company has a few things it needs to accomplish in the next couple of years in addition to mining. First, it needs to reacquire a gold stream it sold and has the option to buy back. (It is very likely it will be able to, but it’s not a slam dunk.) Second, it needs to extend the maturities of its debt, which should not be a big deal.
On a positive note, Pretium has plenty of drilling underway and could easily wind up with many more years of reserves than it has on the books (which at the moment total about 15 to 20 years, depending on how you want to look at it).
Blast From the Past
The bottom line is that PVG is an incredibly cheap stock that reminds me of the valuations I used to see when I looked at companies in the 1980s — and it’s a miner. Today’s stock price handicaps the average grade of the reserves at about eight grams per tonne rather than the 14 or 15 that are quite likely there.
Thus, we have something of a rarity in the mining sector: a margin of safety and huge upside as well. Obviously, dramatically lower gold prices or the ore body not developing as expected would dent the analysis, but that’s not something I think is a very high probability. For anyone who is bullish on gold, it is a situation that mandates close analysis, as it most likely has more upside than any other miner I own.
***KWN has now released the powerful audio interview with Andrew Maguire and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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ALSO JUST RELEASED: Last Time We Saw This Gold Skyrocketed $300! CLICK HERE TO READ.
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