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ASA : Want cheap "gold exposure"?

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ASA : Want cheap "gold exposure"?

Buy Calls on ASA - near 10% discount to NAV

===========================================

 

ASA Corp : Chart as of 12 July / update : weekly

ASAjul.gif.jpg

 

Historical comparison with GDX and GDXJ ... update : Note how close it tracks GDX

19222198.gif

 

ASA Price vs. NAV

(chart)

 

NAV : as of 05/20/2011 ... update

Date===== =Price =NAV= Premium/ Discount

Current=== $29.22 $32.34 - 9.65%

52 Wk Avg. $30.25 $32.68 - 7.10%

52 Wk High $35.81 $36.56 - 1.77%

52 Wk Low- $25.00 $28.03 -10.58%

 

A discount approaching 10%, is really quite large in relation to the historical average discount of 7.10%. Now you are getting an "extra" 3.5% which is worth about $1.00 per share, and "pays for" the Time Value on a Call option, such as:

 

ASA Nov. $25 calls : bid/offer : 5.20-5.70 / Mid: $5.45

Where ASA is priced at $29.45, with IV: $4.45, and TV: $1.00

 

(I already own these calls, having paid $5.31 a few days ago.)

 

 

ASA versus GDX: ASA-chart : ASA-10yr : ASAvsGDX : ASAvsGDX-1yr : ASA-5d

AsaGdx.GIF.jpg

 

I like tracking this RATIO (ASA-to-Gold) also: ... update

ASA-to-GLD.png.jpg

 

Updated Fact sheet :: http://www.asaltd.co...r=1&strMetaTag=

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Cheap Ratio?

 

ASA-to-Gold : I posted this a few days ago

 

ASAtoGLD.png.jpg

 

Update:

ASA : $29.44 Change: +0.22 / Percent Change: +0.75%

Gold: $1525.10

GLD : 148.58 Change: -0.01 / Percent Change: -0.01%

Ratio 19.81%

 

GDX : $57.08 Change: +0.47 / Percent Change: +0.83%

HUI : $542.24 Change: +4.36 / Percent Change: +0.81%

GFI : $16.10 Change: +0.27 / Percent Change: +1.71%

AU- : $45.01 Change: -0.21 / Percent Change: -0.46%

 

Old Formula:

FORMULA: ASA.nav = GFIx3.72 + AUx1.28 + HUIx0.224 + HUIx0.224

 

As of 5/24/2011. NAV as of 5/20/2011.

5/20 (ASA:xx HUI:xx GFI:xx AU:xx GDX:xx)

 

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Price NAV\\Current $29.22 $32.34 -9.65%

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It's not only gold though. Especially the diamonds part makes me a little uneasy. Difficult to value.

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It's not only gold though. Especially the diamonds part makes me a little uneasy. Difficult to value.

This may set your mind at ease...

 

Look at the historical correlation with GDX : ASA-and-GDX

 

It is very tight, and tighter still if you adjust for the discount to NAV.

 

The even better news is: The times you want to be buying it, are when the discounts are big, and ASA is especially cheap - like Now perhaps.

 

I have a decent size position already, and may be building it, using in-the-money calls, and some straight longs to capture the dividend yield, which I reckon will rise if GFI and AU pay out more

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ASA holdings from the latest SEC filing:

 

Agnico-Eagle

 

Barrick Gold

 

Compania de Minas Buenaventura

 

Eldorado Gold

 

ETFS Palladium

 

ETFS Platinum

 

Goldcorp Inc.

 

Golden Star

 

IAMGOLD Corp

 

Kinross Gold

 

Newmont Mining

 

NovaGold

 

Randgold

 

Royal Gold Inc.

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5/27/2011 prices

============

ASA: $29.94 Change: +0.20 / Percent Change: +0.67%

GDX : $57.92 Change: +0.82 / Percent Change: +1.43%

HUI : $550.40 Change: +8.27 / Percent Change: +1.53%

GFI : $16.03 Change: +0.04 / Percent Change: +0.25%

AU- : $45.50 Change: +0.95 / Percent Change: +2.13%

 

Old Formula:

FORMULA: ASA.nav = GFIx3.72 + AUx1.28 + HUIx0.224 + HUIx0.224 ... Use 25% each:

1/03/2006 : ASA.nav = 1/4* ( GFIx3.72 + AUx1.28 + HUIx0.224 + HUIx0.224 )

1/03/2006 : ASA.nav = 1/4*( (19.72)x3.72 + (52.35)x1.28 + 2*(298.77)x0.224) = ASA-59.34

1/03/2006 : ASA.nav = 1/4*( GFI (73.36)+ AU (67.01) + 2*HUI (66.92) = ASA-59.34 : ASAnav= $69.10 : 14.1% disc?

====

ASA had a 3:1 split...

5/27/2011 : ASA.nav = 1/4 *( GFIx3.72/3 + AUx1.28/3 + 2*HUIx0.224/3)

5/27/2011 : ASA.nav = 1/4 x ((16.03)x3.72/3 + (45.50)x1.28/3 + 2*(550.40)x0.224/3 ) = ASA-29.94

5/27/2011 : ASA.nav = 1/4 x ((16.03)x3.72/3 + (45.50)x1.28/3 + 2*(550.40)x0.224/3 ) = ASA-29.94

5/27/2011 : ASA.nav = 1/4*( GFI (19.88)+ AU (19.41) + 2*HUI (41.10) = ASA-29.94 : ASAnav= $30.37 : 1.4% disc?

 

== == ==

 

That's not too many miles away - ie a 1.4% discount is not too far from an approx. 10% discount.

 

And the latest reported discount is xxx%

 

But the components no longer work well - the GFI and AU components are too low.

And so, it may make sense to devise a new formula using GDX and some of the actual holdings.

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ASA Nov. $25 calls : bid/offer : 5.20-5.70 / Mid: $5.45

Where ASA is priced at $29.45, with IV: $4.45, and TV: $1.00

(I already own these calls, having paid $5.31 a few days ago.)

 

ASA Calls - Working well so far...

 

======== May 24 : May 31 : change

ASA Corp.: $ 29.44 : $ 30.34 : + 0.90 , + 3.06%

Nov $25c : $ 05.45 : $ 06.05 : + 0.60 , +11.01%

GLD etf.. : $148.58 : $149.64: + 1.06 , + 0.71%

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LARGEST POSITIONS - at Feb.2011 Interim

========

ABX : Barrick Gold----- : $68,666k : 10.3% : 1,300k x $xx

XXX : Newcrest Mng---- : 64,328k : 09.6% : 1,665k x $xx

GG- : Goldcorp Inc. ---- : 51,748k : 07.7% : 1,082k x $xx

GOLD : Randgold Res.-- : 48,141k : 07.2% : 0,720k x $xx

XXX : Cia. Buenaventura : 42,423k : 06.3% : 1,284k x $xx

AU- : AngloGold Ashanti : 38,740k : 05.8% : 0,793k x $xx

AEM : Agnico-Eagle Mn. : 36,934k : 05.5% : 0,525k x $xx

NG- : NovaGold Res.--- : 31,592k : 04.7% : 2,308k x $xx

NEM : Newmont Mng.-- : 28,761k : 04.4% : 0,520k x $xx

GFI- : Goldfields Corp.-- : 28,186k : 04.4% : 1,630k x $xx

Top10 Positions--------- : ======= : 65.9%

Other Positions -------- : ======= : 34.1%

 

==

 

The ASA price has slid with GDX - more than Gold, and the discount to NAV remains above 10%

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Today, ASA has fallen closer to support near $28:

 

Last [Tick] $28.6500[-]

Change $-0.9900

% Change -3.34%

Bid $27.9900

Bid Size 1

Ask $30.3000

Ask Size 1

Open $29.6000

Volume 85,527

Day High $29.6500

Day Low $28.56

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I did this trade on Wednesday not long after the opening, when ASA ws below $28.20

 

CREATIVE OPTION TRADE - on Gold stock ASA

 

I did this yesterday, but in a different size.

 

I like ASA, and think is undervalued at below $30.

 

So I :

+ sold August.$30 puts (x10), and used the proceeds to when I:

+ bought Nov.11.$20 calls (x15)

+ In fact, I put in my pocket a small credit for this

 

If I get put the stock at $30, I will be happy. (As it happens I sold a good sized position last year at an average of $33+)

Whatever happens, I will be able to ride the Nov. Calls.

 

The usual seasonal lowpoint is July-August, so I think there's a chance the Puts will be exercised,

and there remains plenty of time for a rally after that.

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(1)

You might want to think about some Gold stocks too, such as ASA and GDX

I got 25x Nov $30calls, for selling 10x Aug $30puts yesterday

I had also done the trade at 10P = 15C and 10P = 20C

 

(2)

Sorry but I really don't have a clue what you re talking about, I don't have a brokerage account and have not even looked at how options work.

(3)

If ASA Corp (my favorite "major" Gold stock) is over $30 on the August expiry date, I get a load of Nov. $30 calls for free.

 

ASA / ASA Gold & Precious Metals Ltd. (NYSE) ... update

ASA-3yrs.gif.jpg

 

If instead, ASA is trading below $30, then the stock gets "put" to me at $30 in August - and I am happy to buy it there.

 

There's a "double discount" :

+ ASA now trades at about a 10% discount to its NAV (portfolio is major gold stocks)

+ Major gold stocks trade at an approx. 10% discount to their "gold value."

 

So this is (a little bit) like buying Gold at $1525 x 80% = $1220

 

...And: I put up NO CASH to get the position. I just use the buying power in my portfolio

 

Let's look at the pricing in another way. Here's a Ratio: ASA-to-GLD

 

ASAtoGLD.png.jpg

 

I am buying at below 0.19 - 19%, less than 1/5 the price of GLD.

And if this ratio returns to "normal", it should bounce to 22% - 24%.

And it may even rise to the recent high of 26.5%, or higher.

 

And, don't forget: this is a RATIO to GLD, so if Gold rises, ASA should rise to.

 

If gold goes to $2,000, then GLD may be at $190. $190 x 24% = $45.60.

That might be a realistic target for ASA, if Gold hits $2,000.

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WHY BOTHER with ASA and other Gold Majors ?

 

I am just putting together a new report and have specifically recommended my readers NOT to bother with majors. I just don't see the point. They outperform gold by about 10 or 20%, and often underperform. Why take on all that extra risk for that tiny outperformance? Own the metal and if you want leverage use GDXJ, which does outperform.

Here's why:

+ You get a double gain, if you get your timing right

+ Gold rises, and the Ratio of Gold stocks-to-Gold rises also

+ In fact, the Ratio itself is a helpful timing tool.

 

You can see this in the following ASA chart ... update

ASA-3yrs-vsGold.jpg

 

And in the Ratio of ASA-to-Gold

ASA-to-GLD.png.jpg

 

If you bought ASA on the Oct.08 low, and sold on the Dec.10 high, you made +247.5%, versus only +103.9% for Gold bought and sold on the same days. You might do even better by switching to Gold when you sell ASA, because it tends to peak later (ie Gold $1563 came in late April 2011, five months after the ASA peak.)

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WHY BOTHER with ASA and other Gold Majors ?

 

 

 

The majors (at least some of them) are at a valuation level that we haven't seen since at least 04 when I got into the sector (except maybe for a brief moment in late 08). Sure their performance has been bad over the past decade. That's largely because a higher gold price was already baked into the valuations. Now we have the curious case where the gold & silver price have done exactly what we expected but the equity prices are sinking. Something will give eventually - either gold/silver prices will fall or equity prices will rise. I'm betting on the latter.

 

Bubb, I'm going straight to the source so I don't get all the baggage that comes with ASA. Hecla and Newmont are two that I think are outstanding buys right now. I wouldn't want to own several of the majors in their portfolio - not worth the 10% NAV discount I think.

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Bubb, I'm going straight to the source so I don't get all the baggage that comes with ASA. Hecla and Newmont are two that I think are outstanding buys right now. I wouldn't want to own several of the majors in their portfolio - not worth the 10% NAV discount I think.

Okay. I will look at those two.

Historically they have not been that great, but maybe their best days are ahead.

 

Meantime, I like the 10% discount, since it often narrows to 3-4% or less in a good market, and the majors move up like a herd of steers.

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FAT DISCOUNT for ASA

 

ASA Gold and Precious Metals

As of 06/20/2011. NAV as of 06/17/2011.

 

======== : Price : $-NAV : Discount

======== : ===== : ===== : =====

Current---- : $27.10 : $30.60 : -11.44%

52 Wk Avg : $30.45 : $32.90 : -7.27%

52 Wk High: $35.81 : $36.56 : -1.77%

52 Wk Low : $25.88 : $28.36 : -12.42%

 

ASAnav.png.jpg

Distribution Rate-- : 1.23%

Distribution Amount : $0.0200

/source : http://www.cefconnect.com/Details/Summary.aspx?ticker=ASA&AspxAutoDetectCookieSupport=1

 

Got bigger yesterday ?

 

ASA : $27.70 +0.60 // Percent Change: +2.21%

GDX : $54.01 +1.76 // Percent Change: +3.37%

Ratio : 51.29%: 34.09% // 65.6%

 

ASA "should" have been up about $0.90 yesterday ($1.76 x 51.29% = $0.903)

ASAgdx.png.jpg

 

ASA Nov. $25 calls : bid/offer : 5.20-5.70 / Mid: $5.45

Where ASA is priced at $29.45, with IV: $4.45, and TV: $1.00

 

Nov. $25 calls : bid/offer : 3.60-4.10 / Mid: $3.85

Where ASA is priced at $27.70, with IV: $2.70, and TV: $1.15

===

06/16/2011 I Bought :

C25 CALL (ASA) ASA LIMITED NOV 19 11 $25 (100 SHS)

Price: $3.50

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The bottom may be in for ASA ... ASA-weekly-chart

 

It needs to hold support at about $28

 

The ASA-Gold ratio, looks much healthier

 

How it looked to me in mid-June

ASAtoGLD.png.jpg

 

Update :

 

(coming)

 

 

ASA : 28.69 + 0.12

Gold: $1550

GLD : $151.26 - $0.33

Ratio 0.1897 = 19.0%

 

Recent low was : 0.178 = 17.8% (coming a little after the above chart was collected)

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Strong close in ASA, with Gold up:

 

ASA Corp : Chart as of 12 July / update : weekly

ASAjul.gif.jpg

 

ASA : $29.20 + $0.62 : + 2.17%

GDX : $57.37 + $1.75 : + 3.15% (ASA at 50.90%)

Gold: $1565

GLD : $152.77 + $1.18 : +0.78%

Ratio 0.1897 = 19.11%

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UP again today, as Gold jumps on Bernanke's testimony.

 

ASA : $30.03 + $0.83 : + 2.84%

GDX : $59.41 + $2.04 : + 3.56% (ASA at 50.55%)

Gold: $1585

GLD : $154.45 + $1.68 : +1.10%

Ratio 0.1897 = 19.44%

== ==

 

SOLD some Nov.$25 calls at $5.60 today, to "hedge" those larger

 

"time-split synthetic longs" (ie: Long: Nov.$30c / Short: Aug.$30p)

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As of Friday, ASA had rallied to key resistance : ASA-Chart

 

ASA : $30.58 / Change: +0.28

Open: 30.31 / High: 30.642 / Low: 30.31

Volume: 27,281 / Percent Change: +0.92%

 

That's a nice 15.4% rally off the $26.50 low - Beating Gold.

Gold's recent low as $1480, and is now near $1610 - that's +8.8%

 

Time to be cautious, and maybe do a little profit-taking

 

ASA OPtions

 

Aug.$30p : $0.55-0.70

Nov.$30c : $1.55-1.80

 

Using mid-prices, by Sell 10 Nov.$30c at $1.62

You could buyback 25.7 Aug.$30p at $0.63

 

At an earlier point, you could have bought 30 or more Nov.$30c for each 10 Aug.$30p you had sold.

 

So, if you had sold 20 Aug.$30p, and bought 60 Nov.$30c,

you could now sell 8 of those calls, and buyback all the Aug. puts you had sold.

 

This would leave you Long 52 Nov.$30c worth $8,910

"for free".

 

(I have done something like this in my own acct.

But my profit-taking is not the same as I have described above.)

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... from the Beating B&H thread ...

 

Thanks for asking -

The way to play ASA is through options. Because I do think it could go either way.

The main argument is that ASA is a cheap way in to a Good portfolio of Gold stocks.

But the technical set-up is mixed, and there could be a big move in either direction.

 

I am very new to this, but I thought I would ask why you like ASA in the interests of trying to learn something.

 

asa-2011-08-16_2.png.jpg

 

There has obviously been a rising trend (blue channel) since November 2009, but this seems to go into decline in December 2010 (red channel). It looks to me like the upper red channel line and the lower blue channel line are forming a symmetrical triangle and may therefore be due a breakout.

At just below $30, I am mostly OUT of most of my ASA $25 Calls (at a profit), or am holding a large number of almost-free Nov.$30 calls.

 

The main way I got involved is:

+ I bought 65 Nov.$30 calls, and

+ I paid for them by selling 35 Aug.$30 puts - for Zero debit

 

My thought was, that the Aug. Puts might expire worthless.

 

Just Monday:

+ I bought-back the 35 Aug.$30 puts

+ I paid for them by selling 18 Sep.$30 puts - for Zero debit

 

So, Now:

+ I have 6,500 shares worth of upside until Nov.2011, and

+ I am exposed to 1,800 shares worth of downside.

This is like being long 1,800 shares, and having 4,700 free Nov.$30 calls.

 

ASA closed Tuesday at: $29.80 -0.10

Open: 29.90 / High: 30.00 / Low: 29.21 // Volume: 50,667

Percent Change: -0.33%

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Thanks for the reply, I am going to need to go and look up this options stuff that you keep mentioning. I am not good enough to understand a lot of your posts. I do however understand that you seem to be hedging your risk through options, so I did get something out of it - more work :lol:

The simplest way is to buy some Calls on ASA. But you might want to await a dip before doing that.

The thing to do is to start following the price of an individual option, like the:

 

ASA. Nov.$30 call : $1.95 - $2.20, call it $2.07

Versus: ASA stock : $29.80

The ASA Call has:

+ Intrinsic Value : $ 0.00, since ASA is now below the $30 strike price

+ Time Value ---- : $ 2.07, this value is only realised if the price rises over time.

 

My way of financing Calls by selling Puts is more sophisticated and involves more monitoring, and more trades

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Bubb,

are you looking at ASA calls?

I still hold some Nov.$30 ASA calls, which I got for free

 

And when gold/GLD touches the 144d MA, and if it holds that, it may be time to trade in again.

 

ASA Corp... update: last 2years

ASA-10yr.gif.jpg

 

At the moment I am targeting the 200wk MA (which is below $26) as a possible Buy target

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ASA chart looks particularly interesting here

 

 

ASA : $13.90 +0.14 / O: 14.00, H: 14.10, L: 13.81

Low for year : $13.50 / 5/17 weekend: $13.57 / NAV: $14.54 / Discount : (6.65%)

See website : http://www.asaltd.co...ist.asp?reset=1

 

ASA Corp chart ... update : A : B : 10d-ASAvsGDX

 

asay.gif

 

Presentation : http://www.companysp...ious-Metals-Ltd

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