Sale of OGC

When I last wrote about OGC recently I referred to them increasing production and diversifying their production profile away from the Philippines as a positive. The market reaction this week has shown why that could have been the case.

The new president of the Philippines is a “colourful” character to say the least and could not be said to be investor friendly for gold producers from offshore! The threat of suspending mines has hit the OGC share price enough to trade below my stop level. I am still bullish on the gold price but my approach is to never make highly concentrated bets on specific stocks in this sector. Seeing the destruction in share prices after the boom into 2011 has made me have some protective measures to paper gains I have had this year in RMS, EVN, NST, GDXJ:US, which I have held since last year or early this year. And of course OGC which I bought in January at 2.89.

OGC has become more of a binary outcome from here with its dependence on significant profits, particularly over the next couple of years from its Didipio mine in the Philippines. My gut feel is this is noise and politics that OGC can work through. I would have thought OGC could be “helpful” to the right people in the right places in the Philippines to continue their work there. Having said that I sold today at 3.88. There is no point me placing investment rules and discipline with stops occasionally if I override them. In a situation like this I have to accept there is a fair chance today’s keen sellers know more than my “gut feel” about the situation.

So still a very good trade in OGC this year but I depart the stock on a sour note. I still hold RMS, NST, AGS, CEF:US & GDXJ:US & GOLD.AX within the sector. RMS & NST for over a year now from much lower levels.

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