Gold Has A Monster Rally and Closes Up For the Week

November 7, 2014    5:10PM, CST Dudley Pierce Baker http://CommonStockWarrants.com http://JuniorMiningNews.com What an incredible week for gold and that is an understatement. With gold crashing earlier in the week and trading in the low $1130s, today, Friday November 7th gold rallied and the rally continued into after hours trading and closed at $1178.50 up a whopping $37.20 for the day and up $7.80 for the week. Gold needed this move in an attempt to minimize the technical damage which has many calling for the end of the long term bull market in gold. Of course the jury is still out but today was a significant move and may get the bull back on track, only time will tell. Below, we show you the closing charts for the day and week using stockcharts.com, but remember gold surged after the cutoff in the charts. ____________________________________________________________________________________________ Advertisement:Join us at CommonStockWarrants.com for the only listing and details on all … Continue reading

Understanding Stock Warrants

By Dudley Pierce Baker
www.CommonStockWarrants.com

csw160If you don’t understand stock warrants, you are not alone. Very few of the professional newsletter writers and analysts understand them, so why should you?

Allow me to give you a brief education on stock warrants in the following paragraphs and tell you exactly why you need this information.

Did you know that warrants have been in existence and trading for many decades but very few investors know about them? Why? Are warrants that difficult to understand? Of course not, it’s just that one needs to take some time to learn and understand this incredible investment vehicle.

To put this discussion in perspective, I would like to offer a quote from the past,

“…Common stock warrants turn in the most spectacular performance of any group of securities….the speculative potentialities of common stock warrants are enormous….
With potential profits and potential losses so great it is a source of wonder that so little understanding of the nature of common stock warrants exists not only among the investing ‘public’, who might be forgiven this sin, but even among the many ‘professionals’ of the business upon whom the ‘public’ depends for information and guidance.”
Sidney Fried, ‘The Speculative Merits of Common Stock Warrants’, 1949.

Did you get that? 1949. As stated in the above opening paragraph, the public and professionals today are, for the most part, not aware of the enormous profit potential of warrants and thus absolutely nothing has changed since Sidney Fried’s comments in 1949.

In the 1960’s and 1970’s Sidney Fried had a service called, ‘The RHM Warrant Survey’ to which many investors subscribed and which was available only in hard copy. To the best of our knowledge, this service stopped in the late ‘70’s or early 80’s and very little information has been available since to investors, until recently.

Currently there are approximately 200 stock warrants trading on the NYSE, OTC, Toronto Exchange and Toronto Venture Exchange. There are stock warrants trading on virtually all industries and sectors, i.e., resource companies, financial services, gaming, autos, banking, biotechnology, restaurants, etc.

Approximately one-third of the stock warrants trading in today’s markets are on the common shares of the natural resource and commodities companies. As we are still in a bull market in this sector (believe it or not), investors are constantly looking for new ways to invest with the potential for great gains. These precious metals companies which have warrants trading give investors exposure to gold, silver, uranium, zinc, copper, cobalt, platinum, oil & gas, etc.

Stock warrants are but one of the many vehicles to consider along with gold bullion, gold coins, ETF’s, mutual funds, options, LEAPS and common shares of the mining companies.

So with this background, let me give you a brief introduction to warrants.

A warrant is a security (similar to a call option) giving the holder the right, but not the obligation, to purchase the underlying stock at a specific price and expiring on a specified date in the future. Sounds very much like a call option or LEAP, doesn’t it?

Stock warrants are issued by a company usually in connection with a private placement or a financing arrangement and many of the warrants issued will remain privately held and will never trade in the open marketplace but those that trade are the focus of our attention.

So, why the interest in warrants? The owner of the warrant receives none of the benefits of ownership of the common stock of a company. He cannot vote, and he does not receive any cash dividends. Therefore, why would an investor want to buy an option (warrant) to buy something instead of buying the thing itself?

The essence of the answer is that the anticipated gain on the warrant must be greater than the anticipated gain on the common stock. Leverage, or at least potential leverage, is the prime reason an investor would be interested in warrants. This more rapid growth in the value of the warrant relative to the common stock is called leverage. Without this possibility of such leverage the investor would buy the common stock. A good rule of thumb is to seek out those stock warrants having the potential to greatly outperform the shares with a desired leverage of 2 to 1 or better.

Currently there are many warrants trading with expiration dates out to the year 2017 (one out to 2030) and though warrants expiring within, say, two years, may possess great upside leverage and potential for gains, they also pose a greater risk. Therefore, we personally suggest that investor’s focus their attention on those warrants that have a remaining life of at least two years before their expiration.

As with any investment each investor must decide how much of one’s portfolio to allocate to different sectors, different shares, ETF’s, mutual funds, gold bullion, etc.

Even though we personally view ‘long-term warrants’ as investments (as opposed to speculation), an allocation of 10% to 15% maximum of your portfolio would be a reasonable allocation of your total dollars to this investment vehicle.

To summarize, an investor may wish to purchase a stock warrant that is the option (the right) to purchase the common stock of a company. Investor’s may prefer to purchase the warrant instead of the common stock because the warrant offers more potential gain, that is, the warrant offers the investor leverage. Using a portfolio allocation of 10% – 15% and buying long-term warrants on some of your favorite shares, you are now in the position to capture some incredible potential gains as this bull market in the natural resource and commodity sectors reasserts itself over the next two to three years.

For those investors seeking more knowledge on warrants we invite you to sign up for our free emails and visit our Learning Center where we provide you much more information and examples to enhance your learning experience.


Dudley Pierce Baker
Founder – Editor
Guadalajara – Ajijic, Mexico
Website: www.CommonStockWarrants.com
Email: support@CommonStockWarrants.com
Facebook: http://Facebook.com/CommonStockWarrants

Disclosure: Neither Dudley Pierce Baker nor CommonStockWarrants.com is an investment advisor and any reference to specific securities does not constitute a recommendation thereof. CommonStockWarrants.com is an online newsletter providing complete details on all stock warrants trading in the United States and Canada. The information and opinions expressed should not be construed as a solicitation to buy and securities mentioned in this service.

I wish I were smarter: Thoughts from San Francisco

By Dudley Pierce Baker
www.CommonStockWarrants.com

I wish I were smart enough to know when and at what price gold will have bottomed. My comforting thought is that no one has the answer to that question and I have some great company.

Some of the brightest minds in the natural resource sector discussed this timing issue at the recent Metals & Minerals Conference in San Francisco.

One thought was that gold could still plunge to $900 an ounce. Ouch. That would be nasty, but perhaps not out of the question. Others think that gold already bottomed last June at the $1188 an ounce and we are ready for the uptrend to resume. Some analysts believe we will trend lower and sideways for another year or two before an uptrend resumes.

No one knows, and no one will know until well after the bottom is in place and we can look back in our rear view mirror with clarity.

If the so-called experts don’t know what is going on, what is the average investor to do, if anything and when?

My friends in the business, newsletter writers and analysts are pondering this same issue; Rick Rule, Jay Taylor, John Kaiser, Lawrence Roulston, Frank Holmes, Joe Martin, Bud Conrad, Bill Murphy and others were all in San Francisco.

What we do agree on is that we are near a low in gold and resource shares and over the next few years, fortunes will be made by those investors staying the course and remaining committed to this investment sector. As Rick Rule says, “You have stayed for the pain, will you not stay for the gain?”

Many good companies are selling for below or very near their cash value. While this is unthinkable in a bull market, at this particular time it is not difficult to find companies with lots of cash in the bank selling at ridiculously low prices.

Now I may not be the smartest guy on the block but I can recognize opportunities and it is definitely time for investors to be positioning themselves for the next big uptrend, which could begin at anytime.

Should you be nervous? Of course, everyone is nervous, because ‘we’ don’t’ know if there is further downside risk. So perhaps you will want to tip toe into the waters and keep some cash for later, hedge your bets so to speak. While an aggressive investor might say, ‘the hell with it, I am going all-in’.

I guess I could show you some charts, but, you already know how bad it is. This is the worst of times for the resource shares over the last decade or so. Charts would only make you cry to see the destruction of wealth in this sector.

My suggestion is to focus your attention on companies with strong management having significant share positions in the company, good properties, cash in the bank and operating in safe mining environments with little or no geopolitical risk.

The balance of 2013 could be very interesting as tax loss selling season in upon us. Funds will probably also be selling to clear out their weakest positions before year-end as well as to meet redemptions by their shareholders. Thus investors have until the first of the year to complete their due diligence on selected companies.

You don’t need to be a Ph..D. to realize this current oversold situation will correct itself eventually and those investors ‘in the game’ will be rewarded. This is the time to be a contrarian, time to be brave, time to be bold, time to step up to the plate and make some decisions and then wait. Exercise patience and wait for your seeds to grow and grow they will in the coming bull market in the natural resource sector.

While I still wish I were smarter, I am not. However, I will use the approaches above to find new opportunities and alternative investment strategies and to be in the best position possible heading into the first of the year.

You’d be crazy to buy gold stocks now

By Sean Brodrick
Stockhouse

Sean Brodrick

Sean Brodrick

Gold just dropped to a five-week low. The miners are getting flattened. You’d have to be crazy to buy gold miners now, right?

Crazy like a fox, maybe.

Investing in miners would be easier if we knew that gold’s bear run was coming to an end. And I’m optimistic about that. Sure, gold’s getting beaten like a rented mule. But that’s due to short-term selling. It’s mainly fueled by big funds selling gold, which they tend to do at the wrong time.

Regardless, good mining stocks can be found with gold at its current price, and even a little lower.

Continue reading . . .

Special Situations Alert For Savvy Investors

By Dudley Pierce Baker
Editor, www.CommonStockWarrants.com

Investors should always be on the alert for special situations that appear in the markets from time to time.

Our definition of a special situation would be when opportunity and timing come together and present investors with a greater than normal chance for exceptional gains.

We believe the current time in the equity markets is approaching this special situation and suggest that investors be ready to act soon by establishing positions in long/term warrants.

In the United States with the totally dysfunctional government and a pending default on the government debt, the Dow Jones and the S&P 500 are holding up amazingly well.

But, for how long we ask and why have they been so strong of late? The potential for a collapse is clearly upon investors.

With a collapse, in our opinion, would come opportunity and this would present an excellent entry point for some of your favorite stocks.

Many of our readers are investors in gold, silver and the natural resource shares. The resource sector has been our personal focus of attention since the beginning of the bull market in 2001.

This sector has been brutalized over the last two years and there are numerous opportunities but we are of the opinion that a bottom is not yet in place. Yes, we can argue this decision, but we shall continue to remain cautious for now but are looking for positive signs everyday in the technical indicators to assist us.

Some of you may be familiar with warrants. Warren Buffet and Rick Rule, among others, know about warrants and the benefits thereof and would never do a deal without warrants attached to their investments. They would negotiate the longest terms possible, definitely a minimum of two years but more likely three to five years and these warrants would be classified as long-term warrants.

What is a warrant?

Most investors are familiar with stock options, calls and puts so let’s go with this core knowledge. A call option is defined as a derivative giving the holder the right, but not the obligation, to acquire the underlying security at a specific price and expiring on a specific date in the future. A call option may have an expiration of usually no more than 12 months.

The major difference with warrants is that a warrant is actually a security issued by a company usually in connection with a financing and frequently referred to as an ‘equity kicker’, an incentive, if you will, to get the deal done. This is what Warren Buffet and Rick Rule look for, this major ‘equity kicker’, otherwise they would not be assisting with a financing.

Most warrants are issued in connection with private placements. Virtually all companies in the natural resource sector have issued warrants but most will never trade. In the United States, again we see financings every week with warrants attached to a new equity offering but most of these warrants will never trade.

However, the good news is that there are around 200 stock warrants that are trading in the United States and Canada. These warrants are issued symbols, trade like common shares and can have initial expiration dates from two years to ten years. Company management and their financial advisors make all the decisions of details of the warrants including whether the warrants will trade or remain privately held.

What will my broker say?

Hopefully, you are a savvy investor and have an online brokerage account and do not need the assistance of a broker. Chances are if you would call your broker and say you would like to buy the warrants trading on General Motors, he would either laugh or/and would not even know what you are talking about. In fact, he/she should be asking you, which one, as there are currently three warrants trading on General Motors.

Why buy warrants instead of the common shares?

Every investor whether individual or professional, wants to maximize their gain on any transaction but unfortunately, many do not consider long-term warrants for one and only one reason; a total lack of knowledge and understanding.

In summary, it is all about gaining more leverage and in most situations, if an investor is anticipating a gain of 100% in the common shares, then the warrants should produce a gain of 200% and thus, we would say, the warrants produce a 2-to-1 leverage over the common shares.

Basic Requirements:

  • Find a company you like.
  • The company has long term warrants trading — over two years of remaining life.
  • The current market environment is positive; bull versus bear.
  • The timing is right.

Timing your entry point is always extremely important for any investment and this is where we come back to the special situation alert with which we started this article.

The timing is right in front of us to make our investments and a great time to be considering long- term stock warrants and making a list of those opportunities.

Positive Aspects of long term warrants

  • Leverage of 2-to-1 over buying the common shares.
  • Substantial lower price than buying the common shares.

One of the largest financial institutions in the United States has a long-term warrant trading. It does not expire until 2018 and our leverage calculations look very positive. The common shares currently sell for around $41 and the warrant below $14. Thus, an investor can control the same number of shares by buying the warrants at $14 instead of paying $41. One of the big name newsletter writers currently recommends this financial company, but obviously does not know the company has a long term warrant trading on the NYSE. I may tell him at an upcoming investment conference in San Francisco in November, but then, he should already know so why should I have to tell him.

Negative aspects of warrants

Unfortunately there is a negative to warrants and that is if the common shares are trading below the exercise price of the warrant on the expiration date, then the warrants will be totally worthless.

This is exactly the same situation for call options and it the primary reason that investors need to pick companies you like that have long term warrants.


We trust this article has been of value to you and we welcome you to visit our website for additional information on stock warrants at www.CommonStockWarrants.com. Also, don’t forget to signup for our weekly email, The Warrant Report.

Dudley Pierce Baker
Founder – Editor
Guadalajara – Ajijic, Mexico
Website: www.CommonStockWarrants.com
Email: support@CommonStockWarrants.com


Disclosure: Neither Dudley Pierce Baker nor CommonStockWarrants.com is an investment advisor and any reference to specific securities does not constitute a recommendation thereof. CommonStockWarrants.com is an online newsletter providing complete details on all stock warrants trading in the United States and Canada. The information and opinions expressed should not be construed as a solicitation to buy and securities mentioned in this service.

The Secret of Investing With Stock Warrants

By Dudley Pierce Baker
Founder – Editor
CommonStockWarrants.com

We start with the premise that warrants are a secret as so few investors know about the potential benefits via the additional leverage that warrants can offer.

Did you know that virtually every company has some outstanding warrants in their capital structure?

Simply, a warrant is a security giving the holder the right, but not the obligation, to purchase the underlying security at a specific price and expiring on a specific day in the future. Since the 1920s warrants have been issued in connection with initial public offerings and financing arrangements in which investors or the acquiring companies are seeking more leverage and thus warrants are viewed as an ‘equity kicker’ in those transactions.

A call option would be defined very similarly, except an option would be created/written by an investor where as a warrant originates from the company and the options will always have much shorter lives, usually 90 days to one year.

Private Placement Warrants

The warrants of most companies were issued in connection with a private placement and thus will never trade. Yes, a few investors will have the financial ability and legal opportunity to participate in a private placement in the resource sector but those offerings by U.S. companies outside of the resource sector give little opportunity for investment.

Savvy investors like Rick Rule and Warren Buffett would never participate in a private placement without receiving warrants with at least two years before expiration and many times substantially longer.

Trading Stock Warrants

Few investors are aware of the fact that today there are 183 stock warrants which are trading on the Toronto Exchange, Venture Exchange as well as on the NYSE and Nasdaq.

These trading stock warrants are bought and sold just like buying or selling common shares and is done through your regular brokerage firm.

From our view, the standard was set by Sidney Fried in his 1950s thru 1970s service,
“The RHM Warrant Survey” and his many books written on the subject, all of which we own and have studied for many years.

Rules for Successful Warrant Investing

1. Find a company that you like.

This is perhaps the most important factor because if the company does not perform and execute on its business plan the common shares will not rise.

Investors now have many opportunities with stock warrants in the resource sector as well as in other sectors, for example, gaming, banking and financial services, autos, oil & gas, biotech, pipelines and more.

2. Positive market environment.

Of equal importance is the current market environment, that is, a bull market or a bear market. Currently in the United States the equity markets are on fire with the Dow and the S&P 500 near all time highs. In the resource sector the shares have been beaten down badly and offer great upside opportunity, in our opinion.

Ultimately, you as the investor must make the decision as to which company and when to buy.

3. Does the company have a long term warrant trading?

The longer the remaining life of a warrant the better giving the company more time to execute on their business plan and more time in the event of a market downturn. Your minimum time horizon should be no less than two years of remaining life when you purchase the warrants. Many of the warrants have over three years remaining and one of the most recently issued warrants does not expire until 2030.

4. The warrant should be priced to deliver an upside leverage of at least 2-to-1.

Remember, investors are buying stock warrants for their additional leverage over the common shares, thus you should be looking for a minimum of a 2-to-1 return, meaning if the common shares increase 100%, the warrants should increase 200%.

Risk is always a factor in investing and one should remember that while warrants can offer exceptional upside leverage over the common shares, the warrants can expire worthless. If the common shares are selling below the exercise price on the date of expiration, the warrants are worthless. If the company’s common shares and are not performing well, one would be advised to sell the stock warrants just as you would sell the common shares well in advance of the expiration date. It always makes sense to minimize your losses with any investment and stock warrants are no different.


Dudley Pierce Baker
Founder – Editor
Website: www.CommonStockWarrants.com
Email: support@CommonStockWarrants.com


Disclosure: Neither Dudley Pierce Baker nor CommonStockWarrants.com is an investment advisor and any reference to specific securities does not constitute a recommendation thereof. CommonStockWarrants is an online newsletter providing complete details on all stock warrants trading in the United States and Canada. The information and opinions expressed should not be construed as a solicitation to buy and securities mentioned in this service.

Mining Management: Is It Time For A Change?

By Dudley Pierce Baker
Founder and Editor, Junior Mining Resources

Frankly, we are tired of watching companies spend money on exploration, sell more stock, spend more money, sell more stock. Well, you get it. Constant dilution of the interest of shareholders. Sure, in some cases there is an increase in reserves but many of the exploration companies seem reluctant to take their companies to the next levels, development and production. Is this not the end game?

We are at a lost for a good explanation of the reasons why managements delay trying to place properties into production to raise some revenues while continuing to explore the property and expand their resources.

We have seen hints of this frustration from others and sense it is time to pressure management for some answers. Perhaps it is time for a change to younger and more aggressive management and professional geologists.

Continue reading

Long Term Bullish in a Bear Market

Be a Contrarian and Buy Now

By Dudley Pierce Baker
Junior Mining Resources

Baker

For those investors in the resource sector it seems all of the news is negative. Gold is hanging on the edge but has not broken major support around $1,535. Resource shares are virtually at their lowest levels in many years and are greatly oversold and long overdue for a recovery rally.

What am I personally doing?

I cannot tell you that gold and the resource shares will not continue lower, but I have been selectively buying and upgrading the quality of my personal portfolio. I am bullish long term for the resource shares and this is the opportune time for investors to get involved or add to their holdings.

Buy quality shares and be patient as our time will come for big gains, monster gains, outrageous gains over the next few years.

Gold and Silver Shares: Nightmare or Opportunity?

By Dudley Pierce Baker
JuniorMiningResources.com

The last four or five years have been a nightmare for many investors, especially those of us investors in the natural resource stocks. Even though gold and silver rallied to new highs in 2011 most shares did not follow and have in fact greatly lagged in performance.

Of course during this time there have been some companies that have performed well and were big winners. But we know, as well as you, that on balance the natural resource sector has been a nightmare for investors of the shares of juniors and exploration companies. Frankly, that’s putting it nicely.

Throughout the darkest hours we never lost the vision of our dream. The reasons for us investing in the natural resource shares over the last few years, particularly the gold and silver shares and our position in gold and silver bullion and coins, has never changed. All of the reasons for investing in this sector are even more compelling today than ever: the massive printing of monies by the Federal Reserve will, we believe, lead to incredible inflation, if not hyperinflation. Now we have Japan starting the printing presses. The entire world is awash in debt with no way out except to print, print and print. This will not end well and ultimately gold and silver will become investor’s safe haven during the coming crisis.

While it would not have been unusual to experience a pullback in the markets, virtually no one, professional or individual investor, expected what has occurred. The Dark Side of the Dream, our dream and perhaps your dream, of becoming rich in the bull market in the commodity stocks is either over or greatly delayed. So which is it?

Continue reading

Junior Mining: Investing with $5,000 to $10,000

By Dudley Pierce Baker
JuniorMiningResources

Not all investors are flush with cash to put into the natural resource sector and frequently we are asked the question, “Dudley, how much do I need to get started”?

Perhaps your $5,000 to $10,000 will not go far in buying the top companies on the NYSE or the Toronto Stock Exchange, but in the junior mining sector, you will be amazed what you can accomplish. You can actually buy thousands and thousands of shares.

We have seen some recent studies that of the shares trading on the TSX and the TSX Venture Exchange approximately 42% are trading at less than $0.10 and another 20% are trading between $0.11 and $0.19 and many of these junior mining companies are very low on cash.

Thus with 62% of the companies on the TSX and the Venture Exchange selling for less than $0.20 investors have an opportunity to get started investing in this sector with a small amount of money.

Yes, these are ‘penny stocks’ and the challenge is to uncover those companies which have the potential to perform well in the coming months. The risk is incredibly high but so is the potential reward.

There are some great junior mining opportunities buried in those 2,000 companies which have some cash, great properties and good management but of course the ultimate challenge is discovering the special opportunities which have the potential to make you a lot of money, possible, 500%, 1,000% or more. This can definitely be accomplished with some research, attending conferences or following some of the top newsletters in this sector.

There are also many interesting opportunities selling in the $0.30 to $0.50 range meeting our high standards which can be added to one’s portfolio.

We could write volumes on how to find these opportunities but for now we would like to tell you how to invest in these shares once you have found them and will as little as $5,000 to $10,000.

First, we would spread these monies over a minimum of 4 to 6 companies. With $5,000 we would look to buy 4 positions in the junior mining sector and with $10,000 we would spread the money over 6 positions thus giving investors more opportunities as well as diversifying the risk. With the $10,000 dollars we would also include two additional companies selling at higher prices and perhaps with current production.

For example with $5,000:

  • A silver selling at $0.05   – buy 25,000 shares     $1,250
  • B silver selling at $0.50   – buy 2,000 shares       $1,000
  • C gold selling at $0.06    – buy 25,000 shares      $1,500
  • D gold selling at $0.30    – buy 4,000 shares        $1,200
  • Total                                                                    $4,950

For example with $10,000:

  • A silver selling at $0.05   – buy 30,000 shares       $1,500
  • B silver selling at $0.50   – buy 3,000 shares         $1,500
  • C gold selling at $0.06    – buy 30,000 shares       $1,800
  • D gold selling at $0.30    – buy 5,000 shares         $1,500
  • E silver selling at $1.00   – buy 2,000 shares         $2,000
  • F gold selling at $0.75    – buy 2,000 shares          $1,500
  • Total                                                                     $9,800

As you can see we suggest you accumulate a basket of shares each of which has the potential to make you substantial gains but with the full awareness that not all of these position may work out. If only a few shares perform well you can still make a significant amount of money on these investments.

The timing is perfect for all investors to get started in the resource sector. Most of the shares are trading at historic lows and most newsletters and analysts are expecting a banner 2013 for gold, silver and the shares. It’s time for you to get in the game.

Disclaimer/Disclosure Statement:

Neither Dudley Pierce Baker, JuniorMiningResources.com, JuniorMiningNews.com, or CommonStockWarrants.com are investment advisors and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Pierce Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or warrants.