A Wild Week at the PDAC

I am back in Acapulco after a wild few days at the Prospector and Developers Association of Canada (PDAC) conference in Toronto.

Before I go much further, however, I want to apologize to our paying subscribers.  Every weekend we send out an "Interim Update" but we completely missed it this weekend in Toronto.  We take our deadlines seriously and this is the first one we missed but, as you will read further below, this was my first time back to the PDAC in nearly a decade and I completely underestimated what I was about to step into.  That, compounded with the fact that Ed Bugos was also at the conference and was also similarly engulfed in literally morning to late-evening meetings is our excuse.

That said we had time to sit down with the management of most of the companies in our portfolio and we will have a large update on many stocks in our portfolio for this weekends Update.

The conference was attended by more than 20,000 people and the scope of the conference was almost beyond belief.  Almost anyone involved in extracting things from the ground was there.  There were hundreds of booths, countless break-out rooms, speeches, meetings, parties and panels.  It really was overwhelming.

From a contrarian's perspective, however, it might not be such a good sign to see so much interest in the sectors in which we are so heavily invested.  And, without question, I'd be much more bullish on our portfolio if you couldn't find 25 people to go to a conference like this.

However, the PDAC has been quite a large show for a number of years.  Whether the attendance is 10,000, 15,000 or 20,000, it is still quite big.  But consider that, like I said above, almost anyone with any interest in anything to do with extracting the materials we need to support the lifestyles of seven billion people were there.

I would hazard a guess, however, that if you held a gold mining investment show anywhere in the world outside of Vancouver and Toronto that you would be very hard pressed to attract much more than 1,000 people.  Which is about what the crowd was estimated at the Phoenix conference I recently attended.

So, while I prefer to see a little less interest in our target area, outside of the regular hot-spots (Toronto/Vancouver), I still am not seeing all that much interest from the general public in investing in the precious metals or mining companies.

The people I spoke to from 2002-2009 when gold was under $1,000 thought I was crazy for even talking about gold.  Then from 2009-today everyone I talk to tells me that, "It's too late now... I missed the boat."  What do I take from that?  No one seems to have owned gold before and now they still own gold because they think it is too late.

Is there some froth in the overall market?  Yes, of course.  The TSX-Venture exchange is a good proxy right now for junior mining companies.  It has only gone in one direction, almost without fail, for six months straight, climbing almost exactly 50% in that time.

Could it pull back?  Of course.

Will it?  Who knows.  (short term trading is a mugs game)

I've made some stock sales this month.  Nothing that we actually own in our TDV Portfolio, as point of fact.  I owned a number of other companies in which I bought Private Placements which have gone up dramatically.  One, called Batero Gold (V.BAT), is up about 500% in the last year after they hit a massive gold intersection in Colombia - nearly a half a kilometer thick.

I bought it in a Private Placement, which means I also received warrants along with the stock.  If you don't understand what private placements are or what warrants are or why you might want to buy them, we'll be doing a special report to subscribers on buying into Private Placements in the next month or so.  To put it briefly, much of the money I have made in investing in the resource sector has come through the extra profits made from investing in private placements and the risk-free warrants attached to them.  So, in the case of Batero, I sold my stock which had gained 500% and now am just holding on to the warrants, risk free, with unlimited upside - now that's a good investment proposition!

I lightened up on a few stocks like that and actually plan to invest more into some of our TDV portfolio stocks.  Two of the stocks (2 out of 14, for the record) in our portfolio have gone down since our initial recommendation - mainly due to unforeseeable delays or problems - and I will be looking to purchase more of them over the coming days.  We met with management from both those companies this week and continue to feel comfortable not only holding them but also purchasing more.

And, if the markets have a significant correction, we always recommend keeping a sizeable portion of your portfolio in cash to take advantage of it.

One day there will be a time to be completely out of the precious metals sector.  That day, however, is not today.  The riskiest thing you could do in today's market is to be completely out of the precious metal sector.

Are there other sectors worth being invested in?  Of course.  We also like the energy sector (particularly uranium) and agriculture.  I am flying to South America, beginning tomorrow, to do some on the ground research on starting up a medium sized cattle operation.  I'll be reporting more on that to our subscribers if I uncover any interesting opportunities.

I'll be in Lima, Peru on Wednesday night, Santa Cruz Bolivia on Thursday night and Asuncion Paraguay on Friday night prior to heading to Argentina, so stay tuned for more on-the-ground reports.

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