Gold Production in Mexico
Targeting 2013 annual production of 118,000 ounces of gold
Message: Ivan Lo: What I am Buying
What I am Buying
I continue to add long positions in quality gold and silver stocks.
Last week after my report, "A Cash Flow Machine," I bought shares in Timmins Gold (TSX: TMM) (NYSE MKT: MGD) and I couldn't be happier with their performance.
Last week after my report, "A Cash Flow Machine," I bought shares in Timmins Gold (TSX: TMM) (NYSE MKT: MGD) and I couldn't be happier with their performance.
They're up 11.7%, while their peers are down 1.2% this week.
Take a look:
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| Week Ended August 31, 2012. Courtesy: RBC Capital Markets |
Why the disconnect, you ask?
A simple effect of revaluation.
Funds and institutions know Timmins Gold is significantly undervalued when compared to their peers by almost every metric.
I've done a simple back-of-the-napkin calculation based on a Cash Flow Per Share (CFPS) model and the result shows me why Timmins was up this week, while its peer group was down.
Timmins Gold is trading around a 3.7x 2013 CFPS. If it can get the Mexican peer group average of 7.95x CFPS, it means Timmins' would double in value.
Remember what I said before: if gold goes from $1600 to $2000, Timmins' (Net Present Value) NPV doubles and their profit margins increase by 50%.
Timmins' growth prospects look strong and they're on pace to decrease costs and increase production; yet, it continues to trade far below its peers.
This past week showed me the buy side money is beginning to fuel into Timmins and away from its peers.
This past week showed me the buy side money is beginning to fuel into Timmins and away from its peers.
Conclusions
I find it absurd that journalists and reporters continue to talk about gold as if it didn't mean anything. Most of them have never even bought gold, or anything associated with it.
Heck, the only stock they own is stock of their employers as part of an employee stock option plan.
Gold, along with silver, is about to breakthrough and that means quality gold and silver companies are going to see a major surge. The next surge in gold will prove to everyone that the rise in gold is real and here to stay.
Sentiment amongst dealmakers is getting a lot better and funding is back on the table.
The money will soon flow at an aggressive pace. I won't be standing on the sidelines. Markets are closed tomorrow, so be prepared for Tuesday.
Companies in this report:
Timmins Gold Corp (TSX: TMM) (NYSE MKT: TGD)
Until next week,
Ivan Lo
Equedia Weekly
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