STERLING RESOURCES
(V-SLG)
John Clarke was an award winning Oil & Gas analyst a
couple of years ago and we are still thankful for some of
the picks he gave us way back then.
After a couple of
stressful years at Candax Energy, where little joy was ex-
perienced, he is now moving into a story that we figure a
year from today is going to be very, very interesting.
Today CGX Energy Inc. announced an update they’ve
just committed to the Guyanese Government about their
work plans, and meanwhile Clarke is getting used to his
new surroundings as Vice President of Business Develop-
ment for CGX Energy. So it is only natural for us to ask the
obvious question … John, if you could only buy one stock
today what would it be? He answers Sterling Resources,
which is currently the same name being given by Kevin
Shaw.
Sterling has a bunch of drilling starting over the next
several months in the North Sea, and with oil prices where
they are now, the North Sea suddenly makes a lot of sense.
There may be some tough, high upfront costs in the North
Sea, but the British Govt. at least let’s you keep some
money, unlike Libya, Alberta and many other places.
So what gives, we wonder—as yesterday, gold soared
$30-some dollars, but by the end of the day the majority of
gold stocks were actually down.
A favorite oil stock we follow, which is so close to impor-
tant events happening in its history just sits there (mind
you, it has had a good year this year so far)...what is going
on?
Canaccord gold guy Nicholas Campbell who picked big
winners like Ventana Gold and some of the best performing
gold stocks and Kevin Shaw, the analyst at Wellington West
who has also picked some pretty good stories in the oil sec-
tor such as Bankers Petroleum and Painted Pony, both have
the same suggestions why some stories might have stalled.
They point out that the big folks who run the big mutual
funds, the pension funds and other private funds are look-
ing at their performance over the last while and the stock
market has been rather generous.
So why not lock in some profits so you can get those
bonuses you do when you do have an excellent quarter.
Once again, obviously they are into the profit-taking
mode and that could be one excuse for what happened
in the gold sector yesterday. The incentive is there for
the big money managers to lock in that profit.
Campbell suggests that while some of the good gold
stocks are now trading at the lower range of their statis-
tical relationships, it could stay that way for a while.
Campbell suggests that there will undoubtedly be a little
tax-loss selling affecting some of the stocks as we get
closer to Christmas and year end and he also suggests
that when we get to the New Year, and all the managers
start fresh for the quarter, they will be thinking “okay, so
what should I buy?” which he believes will give some
stories a nice bump in early January.
Meanwhile, Kevin Shaw, the oil guy suggests the
same as the fund managers will look around to start tak-
ing positions in their favorite new stories in early Janu-
ary.
Campbell does warn though that a lot of gold compa-
nies have recently done financings and lots of paper will
come trading in February and one should be very aware
of whether ones gold company did or did not participate
in those financings.
For those looking for leverage in the gold sector,
there are way too many gold stocks that have way too
many shares outstanding. So no wonder, so many have
done so little while gold has done so well. That is usu-
ally the case for juniors, but one can see the same thing
for seniors.
Kinross can barely make any money it seems at this
high level of gold price and yet it has 700 million shares
outstanding. Barrick Gold has close to 1 billion shares
outstanding. Both stocks have done little while gold has
sold off.
When we ask one analyst why anyone would own a
Kinross or a Barrick, he suggests the simple answer is
liquidity.
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