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Gold Master Investing 102: The Minnows role in the Ultimate Niche Business-The Golden Nugget 2 Hotel/Casino-Upside down?

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My analogy of any Gold Metal Producer (Printer):

 The Golden Nugget 2:

I want you to create this picture in your mind. We are in Las Vegas, Nevada, USA; we are there watching them build a 500 million to 1 Billion usd new Hotel/Casino; named ironically “The Golden Nugget 2”. The loan to finance this project; is for 30 years or more depending on any future refinancing; which is common these days in the world!

This project is enormous; takes up 12 city blocks; the hotel is 100 stories high; built on top of a Casino & shopping mall complex underneath it. They expect to make lots of money from room rentals, restaurants, bars, a dance hall, and the shop rentals but mostly from the gambling in the Casino.

The promoters & initial owners formed a public company, floated shares & acquired financing based on a brilliant business plan (the story to acquire money) and future incredible: Earnings per Share (EPS). All the Investor, Backers and Analysts love the project, which prompts the public small Investors to also buy shares in this project for future stock appreciation capital gains. See photos of construction & foundations (Footings):

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Any Gold Metal Producing (Printing) Mine:

Now take the picture above and flip it upside down to represent my analogy of a Gold producing mine; which is like building an upside down mega Hotel/Casino named the “The Golden Nugget 2” down into the ground!

They are very similar in ways and much different in Cash flow & Net Profit creation for the stockholder. See this;

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1.the Gold Mine costs 500 million – 1 Billion usd to build; for the Mine, Mining equipment, Gold processing (treating) plant, and too much more to list here……etc.

The big difference is this; “The new Gold Producing Mine” has a IRR (Internal Rate of Return) of > than 30% and pays all the money back in 3yrs; not 30ys like the: “Golden Nugget 2 Hotel/Casino”

These Gold Producing (Printing) Mines have amazing Cash flow & Net Profit; especially in a rising Gold Bull Market but even so with an ASIC of ($700-$800/oz) in a Gold Market of $1000 – $1200/oz.

 AISC definition:

“All-in sustaining cost” is a measure that captures direct operating costs, corporate and exploration expenditure and capital investment required to sustain the business.

That’s why they are the one of the best niche market businesses in the World to invest in; they pay off huge development Capex costs in 1.5-5 yrs!

No other business can compare except for possibly Cell phone tower companies with huge future revenues once their infrastructures are built; like a Gold Mine.

They do have other differences that are profound, advertising, many new competitors in same markets, clients that are fickle and change providers readily on new promotions to name a few.  

That being said; let’s talk about the Minnows, how they fit into the Gold mine equation & why they are one of the best types of any class of stocks in the world to trade 24/7 from any cell phone, in any country for monthly income;

1.the Minnows; are the foundation, the concrete footings of any gold mine. It is these promoters that explore, find & define, gold deposit ore bodies for their future development; by them to create their own gold mine, Joint Venture % splits, Mergers and out right sale to the big fish;

2.Just like the “Gold Nugget 2 – Hotel/Casino” is built on a massive foundation; all gold mines are built on the gold reserve assets defined and appraised by these Minnows in NI-43-101 technical reports; a TSX reporting requirements to protect the public with accurate data for companies that raise money on the TSX exchange.

How to trade the penny/dollar stock Minnows on the TSX with safety and monthly income profit; some general trading tips and methods I use and reasons why;

1.I trade Minnows with my own very strict criteria; that works for me;

1.1 Companies that have at least one or more advance gold deposit asset with drill holes and technical reports.

This I call the Companies golden safety net; they will never go broke as another big fish will always want their gold asset or they will find the money from their bankable feasibility technical reports to develop & create a gold mine for themselves.

I cannot stress this enough that a huge reserve of cash (gold) is their real Value; this Value play is what the Market never really considers in the early days, they just put an emphasis on EPS after gold production starts; I’m just the opposite in trading the Minnows (who only burn money doing the exploration phase); they spend money; gold producers make money, it’s that simple.

So why would you want to trade the penny/dollar stock Minnows; for what reason? I’ll tell you; to make monthly income and you are NOT INVESTING FOR CAPITAL GAIN SHARE GROWTH FROM THE GOLD PRODUCERS WHO MAKE BUNDLES OF MONEY!

These of course are my highly recommended: Killer Whales, Sharks, Goldfish and Starfish in my “Ocean of Gold Manuals”

Some trading specifics & strategies that surely will bring some criticism from old pro stock traders & arm chair guru’s that I usually disagree with most of the time anyways!

1.2 I trade what I call the “Wave of motion channels in any time period from 5 min, 15min, 30min, and hourly, 4 hrs, daily, weekly or monthly whatever my Minnow picks tell me on the charts. I explain each of these strategies in my monthly newsletter “The Gold Net” with 1 top Minnow pick a month given you the 1st week of each month and additional techniques within that month.

The Wave of Motion is a channel; is a high/low price point in any timeframe. Its intensity or height of the wave, price differential (the price spread) is normally from least to most following the shortest timeframe to greatest timeframe you’re trading. A 15 minute chart may have a spread of 1-3 cents versus a weekly chart that may have a 4-8 cent spread which are all subject to many various factors; some are News (good or bad), a big buy or sell, volumes, central bank currency plays, a buyout offer and many more. And some times the Wave is still water and there is no channel to trade; but I’m giving you plenty of choices as there is always movement in the Minnows somewhere.

And for the end of this post on Gold Master Investing 102; I leave you with this; my very successful strategy for Penny/dollar gold stocks (only them!): (This will raise the eyebrows of a few guru traders!)

1.3 – I never trade with stop loss orders (to limit losses) or sell orders (to capture profit). If I’m not on the screen I will use entry buy orders at my entry price points on several issues at once and let them fill; if I get fortunate on the trade. After I’m in absolutely no Stop loss orders or Sell order to limit profits.

Why I never use Sell orders:

1.31 – Why? I never want to limit Net profit with a sell order because these penny stocks can jump on a big buy, a buy out offer with several competitors to push the stock up exponentially, Good drill hole news, good analyst reviews and many more factors.

Why I never use Stop Loss orders:

1.32 – Why? Because of the golden safety net under the companies I choose with my other strict criteria; I have no worries; in fact I like to see my penny trade stock in a 20 to 30 cents trade channel, I’m in at 24 and it drops to 12 from say a big sale. I buy 10,000 more shares at 12 for an average now of 18 cents for 20000 shares; when it returns to 28 to 30 I sell for a $2,000 to $2,200 net profit, not bad if you can get 4 of these a week or a month!

A GoldMasterAfrica quote (from my mentor in 1982):

 “You have to see what other people don’t see and then quickly act on it; for an idea is worthless without action!”

 

The Gold Master Africa – Gold Master Investing

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