EnWave Corp, Gold, and Preparing for 2010

by JDH on December 19, 2009

There were many examples this week that proved the point I discussed last week that things are not as they appear.

Last week I talked in detail about the fall of Tiger Woods. (And yes, I know I promised not to talk about him again, but I just can’t help myself. Please indulge me for three paragraphs, and then I’ll talk about important stuff like gold, the markets, and a new stock recommendation). He appeared to have it all: a great career, a beautiful wife, two cute kids. In fact, he has nothing. I will take credit for this remarkably prescient paragraph from last week’s things are not as they appear commentary:

Tiger has long told us that the most important influence in his life was his now deceased father. Was his father a philanderer? Is that where Tiger learned this behavior? During their years on the road together, Tiger as the young golf phenom, his father by his side, his mother at home, is that where Tiger learned from his father to play the field? Or did all of Tiger’s problems start when his father died, and Tiger had no-one to turn to for advice? Either way, this is a very sad story. Either Tiger’s father was a horrible father, teaching his son by example some very bad behavior, or Tiger never did grow up, and so without his father he couldn’t cope.

It turns out that, based on the revelations of his high school girlfriend, that my suspicion was correct; Tiger’s father wasn’t exactly faithful. You would need to be a psychologist to analyze why someone crushed by his beloved father’s infidelity would then repeat that horribly destructive behavior. But then again, that’s how we humans work.

Have you ever watched a stock go up, and then right at the top you finally buy it, only to watch it fall, so you panic and sell it at the bottom? That’s exactly the destructive behavior we have all engaged in, so perhaps we humans aren’t so smart after all.

Speaking of destructive behavior, can anyone think of a more destructive exercise than the Copenhagen Global Warming Summit? Obviously God has a sense of humor, since it’s freezing cold in Denmark, and the President will return home to snow and a blizzard in Washington. It’s so cold they don’t even call it global warming any more; it’s now climate change. I guess if it stays this cold we won’t have to worry about the icebergs melting. The climate change lobby has one goal: more government interference in our lives. More taxes, more government. No wonder I’m so positive on gold.


Speaking of gold, let’s review my comments from last week:

I believe we are close to an intermediate bottom for gold, so this week I started buying. I bought the usual blue chip golds, like AEM.TO – Agnico-Eagle Mines Ltd., K.TO – Kinross Gold Corp. and G.TO – Goldcorp Inc., and I put in some stink bids to increase my holdings of PAA.TO – Pan American Silver Corp., SLW.TO – Silver Wheaton Corp. and SSO.TO – Silver Standard Resources, Inc.

Now, for the chart:


I was right about Tiger Wood’s father, and I’m right about gold. This chart sure looks like an intermediate term bottom to me. Gold is now down to just below it’s 50 day moving average, which either means it’s going to crash, or it is now at support. I prefer to believe we are at support levels, because given all that’s going on in the world, I can’t see a crash for gold anytime soon. So, this week, I continued buying (see list above).

In addition to the blue chips, I also bought some ADM.TO – Andina Minerals Inc., and CEF.A.TO – Central Fund of Canada, a Canadian gold ETF. I may also buy GLD – streetTracks Gold Trust Shares, the U.S. gold ETF, but I continue to worry about currency risk.

As a result of my buying I am now only 62% in cash, my lowest cash level in many months. I am assuming that gold will continue it’s bull run, so I want to be positioned for the January advance. So why am I not 100% invested? Because a further general stock market correction is possible, and probably likely. As we saw last year with the uranium market, in a general market correction everything goes down, and the strong stocks get liquidated so that traders can cover their margin losses on their weaker stocks. So I will build positions on weakness, and with stink bids, but I’m not jumping in with both feet just yet.

Private Placements

One topic I have not discussed in these pages are private placements, where a copy raises money by issuing stock directly to investors. The placements are done at favorable terms, generally at or below market prices, and often with a warrant that allows for future upside. I have purchased many private placements over the last two years, and while many of them have lost money, a few of them have been spectacularly successful. So successful, in fact, that my profits on the winners have far outweighed the losses on the losers.

One of my winners this year was ENW.V – EnWave Corp., which is not a gold or mining stock. They make food dehydration equipment. They are a small company, with great technology, and a now short history of success, with big things to come. You can read more on the EnWave web site.

The good news is they have just announced another private placement at 90 cents per share, with a half warrant at $1.15 per share good for a one year period. EnWave is trading at around $1, so the private placement is well priced, and the warrants should be in the money at some point next year.

It’s a small company, and to the best of my knowledge it is not currently recommended as a buy by any newsletter writer, so if you are waiting for Dines or Casey to start pumping the stock, you won’t be happy. However, I see no problem in investing in a good company with good technology, so I’m buying. I also like the diversification, since obviously my portfolio is heavily weighted towards gold and silver stocks, and this is something completely different.

I own a few shares now, and I’ve contacted my broker to participate in the private placement. I also sold some shares early at a profit. If you can’t get in on the private placement, putting stink bids on the open market is also a good strategy.

NOTE: Do your own due diligence; you are not paying me for investment advice, so you get what you pay for. I am not associated with the company in any way.

2010 Predictions

You will recall that last year at this time I asked you to put your money where your mouth is and put your predictions for 2009 in writing, on the record. Some of you did, and two weeks from now I’ll report on how you did. At least one of you did a remarkably good job; me, not so much. So, let’s give it another try. Download the 2010 Predictions Blank Word Document fill it in and e-mail it back to me at the Buy High Sell Higher 2010 Predictions Mailbox no later than December 31, 2009. More on that next week.

Those are my thoughts for this week; I have some other ideas for 2010, and I’ll report on them next week.

Thanks for reading, and have a Merry Christmas.

{ 2 comments… read them below or add one }

davidslane December 19, 2009 at 8:36 am


Just for the record, global warming causes more extreme weather, not specifically it getting warmer everywhere.

While the whole globe and oceans get on average warmer, changes in weather patterns, specifically over Europe, as the Gulf Stream weakens, would cause much Colder temperatures in Europe.

I would have to say that the weather the past decade feels like it is much more extreme than I remember. Less huricanes, but much more powerful ones. More freak storms, more tornados, more blizzards, etc.

Now, one could argue whether the warming is man made or not.

Although people may argue about global warming, I trust the US military. They are very right wing and very Christian religious. But it has been reported that they have been building military plans to deal with the upcoming climate change. What do they know? They believe.

JDH December 20, 2009 at 6:01 am

I don’t see global warming or climate change as a religious issue. Obviously the weather changes. Obviously cities have much higher air pollution due to man’s activities than does the countryside, so obviously man has an impact on our environment.

How much has man impacted weather patterns? I have no idea. Greenland used to be a tropical climate; now it’s covered in snow; man can’t be blamed for changes that happened 10,000 years ago. Again, that’s not the issue.

The issue is this: if there even is a problem, can government fix it? My answer is “no”. Government can’t fix problems. All government can do is tax and spend. Government has not fixed poverty. Government has not ended war. And I don’t believe that a bunch of politicians flying across the world in private jets will solve anything.

The entire climate change debate is another way for government to increase regulation and taxes. “Cap and trade” is another phrase meaning “taxes”. It’s as simple as that.

I prefer to change my behavior on my own. I prefer to decide to drive a smaller car, and walk, and not have the air conditioner running at full blast all summer long. Those are decisions that I can make, and those decisions can be made without the government taxing me to force me to change my behavior.

But that’s just me.