Letters of the Week

Shale gas exploration

I watched with interest the video between Alan Kohler and James Kirby on shale gas players (see: Investing in the shale boom). Could you provide more information as to the investment opportunities in the local market, apart from the major players like Santos and BHP Billiton?

Name withheld

Editor’s response: Tim Treadgold mentioned some of the smaller shale players back in January (see: Capturing the commodities comeback), while he took a detailed look at some of the local explorers last year (see: Minefield: six shale stars).

Clime Growth portfolio

Until July 27, 2012 Mineral Resources was listed in the growth portfolio as having been purchased at $11.77. On July 27 and thereafter it is listed as purchased at $8.75. Could you explain this?

Carol Green

John’s response: Clime purchased 850 shares of Mineral Resources on April 19 2012 at $11.77. This ‘purchase price’ was recast on June 30 2012 to reflect the portfolio as at that date. The price as at June 30 2012 was $8.95. The intention is to provide financial year returns going forward.

In the reviews we have an inception return and a financial year-to-date return. There is also reinvestment of dividends at December 31 to consider.

Is gold really worth it?

Tim Treadgold's latest article on gold (See: Sleep easier on gold’s currency cushion) suggests there is still more to be squeezed out of physical gold, particularly as an inflation and currency hedge. But just to purchase and resell a nominal 2.5 ounce bar results in costs totalling 6.8% of the purchase price (including freight and insurance costs and the buy/sell differential). Ignoring the hedging benefits, making a nominal profit of 5% per annum presupposes a nearly 12% rise in the relative price of gold. Does Eureka Report still think gold is worth a punt?

ML

Editor’s response: Brendon Lau has just written a timely article on three small cap gold miners, published today, that you may find of interest (see: Three small gold stocks ready to shine).

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