Goodye, My Love. You Are Beautiful, But Got Too Expensive for Me.

All good things must come to an end, and my affair with Northern Freegold is no exception.  I post now to mark the sale of the last of my Northern Freegold shares.

I mentioned Northern Freegold on August 21, 2015 when it was selling for C$0.06.

Northern Freegold has since changed its name to “Triumph Gold” and sells today for C$0.45:

triumphgoldpricerise

 

This 650% price rise in under two years is off the charts even for me, but is not the outlier cherry picked selectively from a blindly random felling of a field of weeds.

Put less poetically, I DIDN’T MENTION IN THIS BLOG A MILLION STOCKS THEN POINT OUT THE ONE THAT ACTUALLY DID WELL.

In this blog, I have mentioned only three stocks: McEwen Mining, Manitou Gold, and Northern Freegold. All three have done well. Now that Northern Freegold has gotten pricey enough for me to sell it, maybe you better pay more attention to McEwen Mining and Manitou Gold:

muxpricerise

mtupricerise

Janitor Amassed an $8M Fortune

CNBC in 2015 reported “how a janitor amassed an $8M fortune . . .”

His name was “Ronald Read, a Vermont gas station attendant and janitor, invested in recognizable names when he amassed an $8 million fortune . . .”

robertread150219a

 

CNBC went on to explain that “to reach Read’s $8 million fortune, . . . investors would have to invest about $300 a month at an 8 percent interest rate over 65 years. ”

robertread150219b

 

All this shows that Robert Read was very smart and systematic with money, especially for a janitor.  He was also lucky enough to live to the age of 92 and watch his investments grow for 65 years.

But could Robert Read have done better?

As followers of this blog know, a certain trash dump worker achieved 25.56% yearly returns in the ten years through 2016.  Since 2016, his investments have stagnated and his yearly returns have gone down to only 21.4% in the eleven years through 2017.

How well could Robert Read have done had he followed this blog?  This spreadsheet does confirm that $300 per month saved over 65 years and compounding at 8.39% per year would have resulted in a balance of $8,026,461.20.  But if Robert Read had been as wise as the trash dump worker, his $300 per month saved over 65 years and compounding at 21.4% per year would have resulted in a balance of $5 billion.

My point is that the yearly return you get on your investments matters a lot. Robert Read “invested in recognizable names” that paid dividends.  I think investing in recognizable names was Read’s biggest mistake.  Names that people recognize are the first names that people buy and bid up in price, so recognized names are impossible to buy cheaply.  In order to get the highest returns, investors need to buy UNRECOGNIZED names with zero debt, high inside ownership, and market capitalizations low relative to tangible net asset value.  Appreciation in the share prices comes IN THE PROCESS of the market recognizing the name.

And buying into companies that pay dividends is not such a bad idea, but it is if the company gets the money for dividends not from operating profit, but from borrowing.

 

 

Trash Dump Worker Invests Better than Harvard, Yale, and Columbia

From ZeroHedge: “Harvard’s returns have trailed rivals’ in recent years – the endowment’s annualized gains of 5.7% over the 10 years ended June 30, 2016 are second- lowest in the Ivy League and below the comparable 8.1% returns of Yale University and Columbia University, . . .

zerohedge170125

The elite schools of the USA have achieved annual gains of at most 8.1% in the ten years through 2016. I wonder why they don’t hire this guy who achieved annualized gains of 25.56% in the ten years through 2016 :

threeyeardouble160725

Not bad for a trash dump worker:

Manitou Gold Rose 90% Just Yesterday

I introduced Manitou Gold on February 19, 2015 as a joint venture between Goldcorp and Rob McEwen.  Manitou Gold shares then were available for only two cents each:

stockhouse

 

Manitou Gold yesterday (June 3, 2016) went up 90% to 9.5 cents per share in just one day:

stockhouse160603partial.jpg

Manitou Gold has risen 375% from 2.0 cents to 9.5 cents since I introduced it sixteen months ago on February 19, 2015.

Could yesterday’s 90% rise in share price be the first shot in a bidding war between Goldcorp and Rob McEwen for Manitou Gold?

 

U.S. National Debt Up by $674 billion In Just One Month

From the name of this blog, perhaps you have ascertained that I believe measuring ROI by a finite resource like gold is better than measuring ROI by the perpetually proliferating U.S. dollar.

In other words, because the U.S. dollar perpetually proliferates, the gold price will perpetually reach record highs despite pullbacks that sometimes last years or even decades.

If you have reviewed the basics of our fractional reserve banking system, then you understand that anyone who borrows a single dollar ultimately spews multiple dollars into the cesspool of dollars through which we slosh and struggle our centrally planned economic lives.

Simply put: more debt means more dollars, and more dollars means more maniacally high gold prices someday.

So with great alarm (and some glee), I spectate the American sport of borrowing dollars.  And nobody borrows more dollars than the U.S. government.

Headlines frequently appear in the news that announce the magnitude of the U.S. government budget deficit and debt.  But I am a bit baffled that recent figures regarding November, 2015 have hit neither any mainstream media nor any alternative media.

The U.S. national debt rose by $674 billion in just November, 2015:
nationaldebt201511all

 
Even if we exclude the $339 billion of debt incurred on November 2, 2015 to cover Jack Lew’s “extaordinary measures” of the previous eight months, the U.S. government incurred $335 billion of debt in November, 2015 alone.

I can only guess why finances of the U.S. government deteriorated so badly this past month.  Did it lose capital gains tax revenue over the past six months as the S&P 500 failed to beat its record high from May, 2015?  Did Obama ramp up military maneuvers in the Middle East?

Anyway, like everyone else who appreciates the ability of gold to retain value over multiple millenia, I keep hoping the gold price has finally bottommed out.  The recent U.S. government diahrreal bout of dollar debt cheers me.

So on a cheerful note, I would like to show that the gold price can snap back and rise very quickly.  It rose more than 50% in just ten weeks in 1982:

goldpricerise1982

Northern Freegold $357 Million Asset on Sale for $1.6 Million

Northern Freegold (symbol NFR, NFRGF for Americans) is a Canadian company.  Its main asset is the Freegold Mountain Project in the Yukon territory (click to enlarge):

nfrhomepage

At a gold price of C$1,484.69; the after-tax Net Present Value of its main asset is C$357.8 million:

nfrpea

The gold price in Canadian dollars right now is C$1,509.27:

goldprice150821

Northern Freegold is now on sale at a market capitalization of only C$1.6 million:

nfrmarketcap

Why would the market sell a C$357.8 million asset for C$1.6 million?  Did the insiders screw up Northern Freegold?  Probably not.  Of the 45.768 million shares, all eight directors on a single day (January 30, 2015) bought into 19.3% of Northern Freegold.

Here is the share count of 45.768 million:

nfrsharecount1502

Here are the names of all eight directors:

nfrinsiders140218

The shares and warrants that all eight directors bought on a single day total 8,860,800, 19.3% of the 45.768 million shares fully diluted:

nfrinsiderbuys150130

Manitou Gold Directors All Think Share Price Will Triple in Two Years

From the June 25, 2015 news release: “The Company also announces that it has granted options to acquire a total of 4,000,000 common shares of the Company to consultants, officers and directors of the Company at the exercise price of $0.10 per share for a period of two years.”

optionsgrant20150624

The current ask price for Manitou Gold is 3.5 cents: mtuprice150626

New CEO Bought 2.71% of Shares Since May 1, 2015

I explained three months ago why I liked Manitou Gold.

But Manitou Gold has since enjoyed some developments.

Manitou Gold as of May 14, 2015 has 56,022,411 shares outstanding (see page 4):

manitoupresentation2015may

Manitou Gold on May 1, 2015 got a new CEO:

newceo

The Canadian government System for Electronic Disclosure by Insiders, SEDI, shows that Richard Murphy bought 1,520,000 shares (2.71% of the 56,022,411 shares fully diluted) since he became CEO:

murphybuys150527

You can see for yourself that CEO Murphy has more than doubled his shares in the past week.

I Like Manitou Gold More Now

I explained three months ago why I liked Manitou Gold.

But Manitou Gold has since enjoyed some developments.

Manitou Gold as of May 14, 2015 has 56,022,411 shares outstanding (see page 4):

manitoupresentation2015may

Manitou Gold on May 1, 2015 got a new CEOnewceo

The Canadian government System for Electronic Disclosure by Insiders, SEDI, shows that Richard Murphy bought 738,000 shares (1.31% of the 56,022,411 shares outstanding) in the three weeks since he became CEO:

murphysharebuys