There's gold in them thar hills

There’s no doubt the market is turning. Cash outflows have reduced as we’ve seen in the asset managers, and takeovers are still occurring.

Here’s an excerpt from this article.

Yesterday was Keyword Studios (KWS) with a bid of more than 70% premium.

Today it’s XP Power (XPP) with a 68% premium.

But look closer..

If you’ve followed this company you’ll probably see it.

There were two approaches not mentioned.

One on 24 October 2023, and another one the next month on 5 November.

Why does this matter? Well, the company did a fundraise a day later on 6 November. But they announced it on 6 November, which means that the deal will have almost have been in progress 5 November.

And look who subscribed for the deal.. six directors!

A big well done to these directors who loaded up in the 1,150p placing a day after rejecting a 1,850p offer from Advanced Energy.. that they didn’t tell anyone about.

If only I’d known about that bid when I was offered the placing.. I’m sure I would’ve taken it too!

But recently I’ve been looking at the commodities space.

As I said in my YouTube video, commodities will be a big driver of this new bull market.

The fact is, we need more and more of metals and minerals that aren’t hugely available. Therefore, prices rise. You don’t need to be Warren Buffett to know that. Which is good, because I’m certainly not.

And if you’ve been following any financial news you’ll know that gold has broken out and now rallying into new all-time highs.

This is significant.

Why?

Because gold broke out of a near five-year high.

When price breaks through a significant level, it’s telling you that there may be a significant move to come.

Which is why I love sideways consolidation and significant resistance breakouts.

I don’t trade commodities myself, but that is one nice cup and handle.

But higher gold prices mean higher profits for gold miners.

There are two ways to play here..

You buy the gold miners with the highest costs, because if they’re making small profits and the gold price risers, then profit margins can materially increase.

Or you can buy the gold miners with the lowest fixed costs because they’re already nicely profitable and additional price rises in gold drop to the bottom line (though this may not be a huge percentage increase).

My view is that it depends what’s in the price.

And personally I prefer companies that generate cash - and plenty of it.

I’ve had this company on my radar for two years and finally I believe there is a catalyst for a move.