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Eldorado Gold Corp. Message Board

  • rjjones11 rjjones11 Feb 12, 2013 5:49 AM Flag

    RJ is now onboard.

    Fearing a higher 2013 tax rate for gold bullion [which didn’t happen] and fearing the safety of the Kitco Gold pool, I sold the four ounces of gold I had in the Kitco Gold Pool just before December 31.
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    I figured that I would trade my Gold Pool assets, which had doubled, for gold stocks.
    Since the beginning of the year I have been pondering the question, “Which gold stock should I purchase?”
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    I went around in circles about what would offer me the best potential: a gold exploration stock, a silver stock.
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    I came extremely close to speculating on the Rye Patch situation in Nevada, or Bob Quartermain’s Pretium, a new gold mine in British Columbia.
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    My broker cautioned me that these mines may never be built. It has been my experience that many British Columbian and Alaskan hot prospects never became mines. I am actually in a defensive stance. I began to come to the opinion that it is not the time for such speculations.
    I have seen the availability of cash come to a halt after 2008, and if things repeat, then that will likely happen again.
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    Why not a silver stock?
    IMHO, the silver stock companies are of much lessor quality than Eldorado.
    IMHO, the silver stock companies are not bargains. You are not getting the leverage that Eldorado offers.
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    What do I mean by that?
    When I purchased 4 ounces in the Kitco Gold Pool, when the old price went up a $1000, the value of my 4 ounces went up by $4000.
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    Now from this point of view, Eldorado really stands out as a remarkable bargain.
    You get four ounces in the ground for the price of one gold pool ounce.
    This means that instead of 4 ounces of gold, I have 16 ounces of gold in the ground.
    When gold goes up $1000, the value of my assets will increase be $16,000 instead of $4,000.
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    Now, Newmont offers the same unusually good leverage, why not buy Newmont?
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    Once again Eldorado stands out, Newmont is a billion dollars in debt.
    Eldorado has no debit, and this remarkable fact sold me on Eldorado.
    In fact, Eldorado has more than $200 million in free cash.
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    Who is in a better situation to survive whatever may be coming down the road?
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    I put in a ‘stink’ bid to exchange the proceeds from selling my four ounces for 600 shares of Eldorado, without having to add more money.
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    Monday was my lucky day, surprisingly and happily, my bid for 600 shares [$10.94 US] was hit.
    -
    RJ

    Sentiment: Strong Buy

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