I just don’t understand what is going on with this stock. It has done nothing but gradually fall for years while they discover one new rich deposit after another. I think that there will be mining on their claims for generations, there is so much ore in fat, rich vein clusters, though the veins seem to be often discontinuous as is often the case in the California Mother Lode. There is no resource estimate yet, and drilling is relatively shallow, but there is obviously millions of ounces just at the shallow levels they have drilled so far.
I have an abnormally large investment in NFGC and so I am interested to hear if anyone here knows anything bad about the company that I have missed. It is Eric Sprott’s largest investment, and like me he has put in more money as the stock price kept falling. At a guess I would say that it is worth 1.5 billion but the market cap is about one third of that.
The stock price has often fallen on strong up days for gold.
Is it the young management and the unusual (or innovative) prospecting methods - seismic surveying, surface stripping to expose their most impressive bonanza deposits - they are using? Could it possibly be the Lassonde Curve in operation to an absurd degree?
Well of course it’s unprofitable. It is an explorer/developer and is years from actually mining its orebodies. The value of the company lies in its gold resources in the ground less its exploration expenditures to date. Although there has been no resource estimate yet, there is already a large known body of hugely profitable vein systems which are at a multiple of the size they had years ago when the stock price peaked soon after the initial discovery. While they discovered most of this very-high-grade ore over the last four years, the stock price has only gone down. Is the gold mine market so deeply asleep that no one is watching? It feels a lot like yr. 2,000 to me. I think we are at the start of a significant PM miners’ bull market. No one at all seems to be paying attention to the miners, while their intrinsic value has been climbing for years.
The traffic on this board is another indicator. We were getting a dozen or more posts a day as I remember during the early 2,000s when the last bull was in progress. Big moves always start from lack of interest and low valuations.
I remember making a speech at my NYeve party in 1979. I predicted a big bull market in stocks. My remarks were greeted with catcalls and disbelief. Anyone with stocks had been losing money for years. Due to lack of interest, tomorrow had been cancelled. I believe we are there again with the miners.
Thanks for your question. So let me be explicit rather than merely dismissive.
If a fundie site I trust says that NFGC is “currently unprofitable and not forecast to become profitable over the next three years”, and I have no evidence to say that is not so, then my necessary conclusion is that NFGC doesn’t merit a place in my portfolio, not when other companies in the industry/sector ARE turning a profit.
In several industries, namely mining, biotech and the current darling, AI, there are dozens (hundreds?) of these kinds of tiny companies who have plenty of cash on their books, perhaps from a recent IPO, but whose future prospects are just a speculative bet at present. There are ways to try to turn a profit from betting on them. But they involve doing more work and taking more risks than I’m willing to do.
With respect to NFGC specifically, why not just use GDXJ to make a bet on the juniors? In fact, I own GDXJ, well as a basket of the juniors, every one of which is in the green from my entry points. Up an avg of 20% in less than a year, which is good enough money for the girls I go dancing with. So why would I consider NFGC? Just doesn’t make a lick of sense to me. Why go looking for trouble? But as I said earlier, to each , his own.
To be explicit, I guess you could have said, “I don’t analyse mining companies: I just invest in the sector or on recommendations.”
In any case, to say that NFGC is a dog without any analysis whatsoever is a bit of a stretch. For your information, it owns one of the world’s most spectacular group of discoveries and has spent its time since its initial discoveries in 2021 finding more and more rich deposits all along its claim holdings, which are massive now. All this time the share price has been falling and I can see no reason for it. After 46 years of gold mine investing I have found my niche in the junior explorers/developers, (basically investing in orebodies, as the closed-end junior-miner fund Dundee Precious Metals used to do before they threw all their resources behind their Chelopech operations and closed the fund) and this one is shaping up to be a solid opportunity as far as I can judge. Is their anybody here who knows anything about New Found Gold that is not on their website? I know that a small outfit has been recently shorting and bad-mouthing the company, but they are just flies on the wall as far as I can tell. Their justifications for shorting are not new facts: just old knowledge that has been amply reported by the company itself over the last few years.
As far as investing in ETFs is concerned, I stay away from them because firstly they are just a somewhat-leveraged play on the gold price (Whereas I invest in mines as businesses and make no gold price forecasts) and secondly because I see investing in ETFs as “letting the side down” because I don’t believe that they are fully invested in the mines rather than derivatives, and so the effect of people investing in mining ETFs are not driving up the mine values much at all. This opinion is supported by the anaemic way that ETF fund flows affect the underlying stock prices.
If you look at the Northern Miner’s lists of top ten drill holes the last couple of years, you will find that NFGC is all over that winner’s board. Hardly what I would call a dog.
If you want to make a hobby of digging into the company-specific fundamentals of obscure mining companies, then go for it. But such a project doesn’t interest me. Never has. Never will. Hence, I’ll stick by my rating of NFGC as a ‘dog’ that should be ignored and avoided until --if ever-- it begins to report profits.
As I said over a year ago, “‘l’ll stick by my rating of NFGC as a ‘dog’ that should be ignored and avoided until --if ever-- it begins to report profits.”
Well, that was then and this is now, and Simply Wall Street has revised its rating on NFGC, whose shares I now do own and have a modest 31% gain on. And I say ‘modest’ because my gain from owing the ETF that tracks the juniors, GDXJ, is 2x that, and my gain from owning the EFT that tracks the physical is 5x that. And I’m up 8x on ARMN, which I’m guessing ranks as a major. Thus, my original call was correct in terms of what was likely to perform best for me and where my money would be best allocated.
I hope you made the killing from NFGC you were hoping for. But a chart of what NFGC has done since we exchanged views Sept ‘24 suggests otherwise, because NFGC isn’t much higher now than it was then. Thinking of oneself as an “investor” who owns a fractional share of a business is all well and good, but it doesn’t bank the profits that can come from looking at stocks as simply being exchange traded derivatives that often have a very tangential relationship to their underlying.
If no one is buying, what do the fundamentals matter, no matter how solid they might be? How long should an investor wait for “the market” to value that business properly? Timing matters. In fact, it’s the only thing that matters in the investing/trading game. You gotta be buying when the buying should be done, not before, and not after.
When was the time to have begun accumulating shares in NFGC? When its fundamentals were sound AND “the market” began to reward that fact. Too early doesn’t make money.
I sold two thirds of my shares back when the hedge fund attack occurred, and invested in other miners. I kept some shares because I thought the grade-capping imposed by the engineers in the first resource assessment was incorrect. The nuggety nature of the New Found ore is much like that of the Northern mines on the California Mother Lode. The Alleghany mine was the longest-running California mine until recently. Don’t know if it’s still open, but the point is that they were able to do well enough with that mine, which was known as a “pocket mine” because of its numerous rich pockets and mostly barren veins.
The resource estimate was influenced by the Grade-measurement controversy and was conservative to a ridiculous degree IMO, because of this reasoning. If you have lots of almost-barren vein intersections, and a few bonanza intercepts as at Queensway, you have a choice of approaches in which to determine the overall Tenor of your ore. You can apply grade-capping rules to your best intercepts to be sure that you have at least as much gold as in your report. OR, you can give your bonanza intercepts equal weight to determine the most likely average grade in any one zone, as is done with more uniform deposits. Mining is inherently risky, and grade capping is not appropriate in the case of Queensway with its numerous separate zones with separate characteristics. IMO there should have been no grade-capping at all so as to find out the most likely rather than the most certain average grade in a zone. The occurrence of bonanza intercepts is so frequent in the rich vein zones that the average grade in those zones is obviously higher than revealed by the resource estimate. Mining those zones is the only way to find out how rich they are: You pretty much have to mine them and see. The mine operators and their backers understand this. They know that the Keats Main, Lotto, Iceberg and other zones are immensely rich, with lots of relatively barren stretches in between fabulously rich pockets. As in the Mother Lode, the mine owners will make legendary profits over many years. It just takes a little fortitude and patience to mine such a deposit and put up with the utterly uneven cash flow. Notice they have no trouble raising money on good terms.
Putting all this another way, I believe that If ten percent of drill holes in a zone hit bonanza grade, then it is reasonable to expect ten percent of the ore to be bonanza grade. Evaluating New Found’s worth that way with equal weights to all intercepts, you get a very different story as to average grade.
Putting it yet another way, If mining a certain zone at Queensway is economic according to the resource estimate and the PEA, then it will work out as expected, but you will get a bonus every time you hit a bonanza-grade pocket. And these pockets are so frequent there, that bonuses will show up with vexing irregularity but big enough to make for happy mining experience there over the next few decades and more. While having had better luck so far with other mines, New Found is one of the three miners I still hold, two of which I expect to do well even if the gold price drops considerably.
Kudos to you for your command of the mining fundamentals. Seriously, it’s truly impressive, and I hope that skill and knowledge makes you a ton of money.
Me? I’m just a very late to the game silver and gold bug whose involvement with metals only goes back a couple of years, and then just as a trader who was surprised at how solid the financials of a typical mining company were and how ignored by “the market” those companies were.
The father of an old girl friend used to specialize in mining companies, He’d plan his vacations so he could visit the mines. This was mid-80’s when the gold bugs were mostly scoffed at the Money Shows. These days, they’re still being scoffed, but from fear this time, because the facts are proving them correct. E.g.., if the analysts I follow on silver are even 10% correct, the unraveling of the silver short over the next week or so is going to wreck havoc with global markets and trash the US economy even further, which will be A Good Thing for gold.
I am expecting the Comex and other silver trading exchanges to change the trading rules very soon. If you and I can see dreadful outcomes in sight, the exchanges can see the risks too. When I had my entire net worth on silver in the late seventies just as the Hunt Brothers were building an attempted corner position, as soon as the situation became unstable and silver went into a moonshot like today I sold out early, missed a lot of the profit but avoided the crash when they changed the rules. As I remember, they raised the margin interest rate as well as changing other rules. I am currently out of silver investments and will remain so except for my bullion.. I have learned to be cautious with mining investments and do not invest in things like GDXJ because they require a rising gold price to advance, and forecasting the gold price is well nigh impossible because like oil, the price is strongly affected by government actions which are always capricious and totally unpredictable.
I think you’re being too cautious in being entirely out of paper silver. There’s serious money to be made. The key is to not over-bet one’s hand. (My allocation to metals is barely 1% of AUM.)
OTOH, your owing the physical instead of derivatives should prove the more profitable strategy. My problem is that I don’t want the hassles of trying acquire the physical.
As for forecasting the price of the underlying, be it gold, silver, platinum, copper, uranium, or whatever, that’s not something I try to do. Instead, I let a price chart tell me something is over-sold, and then I check the company’s fundamentals, if it’s a miner, or the macro-economic scuttlebutt, if it’s an ETF, and make a guess. The killer combo for me is finding something that is both ‘over-sold’ and ‘under-valued’.
E.g., I’m up 300% on PAAS. Its price was hugely down when I started buying, but its fundamentals were solid. So I bought shares.
There’s a guy on YouTube who has been posting a flurry of videos that dig into how the metals markets work and how the shorts are scrambling. In fact, he called tonight’s action in the over-night market exactly. Futures for US equity indexes are up, and futures for gold/silver are backing off. Why? The bet has to be that the US Treasuries Plunge Protection Team is stepping in, so the silver shorts can cover at better prices than would prevail if the metals markets weren’t so manipulated.
That same analyst fills in why silver has become such a strategic industrial metal, not just a backup currency.
Way too funny. The Plunge Protection Team’s effort to push down the price of silver is failing. After an initial drop at the open of the overnight session, the price of SLV, as a proxy for the price of the physical, is now higher than Friday’s close.
I’m kicking for myself for not jumping on a screen earlier and trying to lowball.
One of the flaws (IMO) of the financial system is that at a point like this in the silver market for instance, commodity traders all wet their pants at the chance of making a sudden windfall and pile in to profit from the misery of others.. The financial world is constantly patting itself on the back for being the backbone of industry, doing God’s work or something but at times like this it is a financial obstacle to industry. In this case, the coming shortage has been anticipated for years, but instead of investing, bringing the price up so more mines open to fill the gap, many have waited to invest until the price of silver rose rapidly, getting in at the end and causing all sorts of losses and instability. It is time to let the situation sort itself out rather than piling on at this late stage.
I am not that cautious. I have had a 10-25% allocation to gold and silver since before Y2K because of the actions of the federal reserve and still have well over 10% therein. In fact, I calculated the other day that, if I had been in nothing but gold and silver bullion since I started investing in the seventies I would have seen a lot more increase than I got from stocks and fixed income. As long as there is fiat money there will be inflation. Long term it is a no-brainer merely because of the way our “money” is produced and the character of the people in charge.. However at today’s gold valuation I see little upside in the next ten years unless the money printing goes wild (which I expect to happen as we continue to make our way towards the inevitable inflation, depression and currency crisis which has now been essentially locked in by the actions of our Congresses since 1971). In the rest of the developed world the situation is equally unsustainable, which means that wherever you live, it is wise to hold a substantial fraction of your net worth in specie within walking distance of your home. In this world wide fiat inflation debacle, it is perfectly possible for all the major currencies to collapse in a short period. For the first time in world history, most all major nations except Russia are in the same technically-bankrupt position. A currency crisis in Japan or some other place run by madmen will spawn crises all over because the cat will be out of the bag - all will see the fiat regime has no clothes and the enormous, wild fiat scam will be over with, leaving precious metals the only surviving currencies, and possibly the virtual token currencies in places that still have electric power.
Very shrewd overview with which I totally agree. Our present troubles have been a long time coming: FDR’s actions in '33, Nixon’s scam in '71, Easy AL’s bailing out LTCM in '98, whomever it was bailing out the banks in '08, the covid bailouts, etc. Always, the Fed trashes the currency to keep the insitutions alive.
Incidentally, I put on 19 new positions today spread across gold, silver, copper, platinum, and palladium. 16 are ITM and 3 OTM for an avg gain of a very modest 1%. The money doesn’t matter to me, only the confirmations that was entries were correct. I won’t trail stops, because my bet is they’re all going much higher.
