KGC Could Be Bought

I say could be, not should be.

Disclosure: Got in just now at 3.80.

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I tipped KGC at 3.85, just after it came off its intraday low of 3.77. So 3.85 is close to a price someone could have gotten had they scrambled to confirm the soundness of my tip by pulling a price chart and doing a tiny bit of fast, green eye shade work. Had they done so, they’d now be up a dime a share (at 3.95). This might seem like tiny money, but it isn’t. So let me run a riff.

There are 52 weeks in year. But markets close about ten days a year. Therefore, there just 250 days a year that stocks can be bought or sold. If the long-term, average gain offered by owning equities is around 10% per year --and Buffet projects 8% going forward-- that works out to an average gain of just 4 basis points (bps) per market day. The gain of a dime a share on a 3.85 entry is a gain of (roughly) 260 bps. YeowZaah! If our would-be trader had done nothing more than immediately cash out to grab that dime gain, he/she could park that money for the next 65 market days and still be on track to tag the historical gain of 10% per year.

Now come some realities. You bet big. I never do. Therefore, a bet on a single trading opportunity is never more than the advised 2% of AUM. (In my case, bets are often not even one-tenth of one percent of AUM.) But let’s be bold and brave and make each bet to be 5% of AUM, but park half the account in cash-equivalents such as a 26-week T-Bill ladder that’s offering 5%. If our investment goal is 10% per year, the cash half of the account will achieve one quarter of the needed total, and the actively traded half (ten positions max) needs to earn the other 3/4ths of the goal, or an average over the whole year of 7.5% per position. But if 2.% can be grabbed in a single day, then that one trade has done 4 months’ of work (and merits a vacation).

My intention with KGC isn’t a quick trade. The US is in big trouble politically, economically, morally, financially, and the price of gold isn’t yet reflecting that. The miners tend to lag the physical, and they are also over-sold right right. Some of the companies in the sector/industry aren’t worth owning. But KGC seemed to me to be one of the better ones. So I was willing to do a ‘trade’ that could also turn out to be an ‘investment’.

So, here’s my challenge to you. You’re on a screen all day and often see fleeting opportunities. How about posting some of them as they occur? Don’t do a big write up, or even post a chart. Just say, “Take a look at such and such” with the explicit warning that the tips would have to be vetted by anyone wanting to act on them.


In case anyone is following this thread on KGC and thinking to now get in, my advice would be, Don’t. You’re late to the trade. And here’s a 5-minute chart that backs that up with evidence from the tape.

The circled areas are obvious ‘stalls’. Buyers and sellers are treading water, waiting to see what the other is going to do, and so should you. Unless you’re a good enough chartist or tape reader to be able to predict whether prices will break to the upside, the downside, or just continue to go sideways, don’t make your move yet, but do pay attention to the order queue.

Do notice where I got my fill, the tiny green arrow right at the end of the first stall. A grade of ‘A’ for that entry, if I say so myself.


As could have been predicted, that third stall morphed into a decline.