Wednesday, January 30, 2008

Bookkeeping: Starting New Position in Kinross Gold (KGC)

I began a new position in Kinross Gold (KGC) here around $22. I plan to treat this as a hedge that I increase and decrease relatively often, much like the Ultrashort positions. I am only beginning with 600 shares today or roughly $13.2K or a 1.2% position. I'd like to add more lower if the stock falters to $21 (or better $20). But with another round of Fed cuts and more "liquidity" coming from Europe in the coming months/quarters, I expect gold to continue its trek to $1000+. So I want to get some skin in the game here. My belief is the UK will buckle first (cuts cuts cuts), and then eventually the EU (begrudgingly). Today's 0.6% Q4 GDP in the US even shocks me... Q3 was near 5%, so that is a heck of a drop off in just 3 months. Scary bad.

I wrote my full reasoning here for choosing Kinross [Jan 28 - Stalking Kinross Gold]. The stock has dipped a bit since I wrote that piece earlier this week, about 2%. These stocks trade in a relatively narrow range so every bit helps. My other potential choice of gold miners was Barrick Gold (ABX), but as you can see below these 2 trade in near lockstep so I don't see a reason to go with a basket approach of buying both. (again the risk with buying just 1 miner is a mine closure, flood, emergency etc - along with political risk in the countries the company mines in).

Long Kinross Gold in fund; no personal position

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