(B)(N) CG Centerra Gold Incorporated

Drama. From its tony offices in Toronto, Canada, the relatively tiny Centerra Gold Incorporated oversees the production of a “mountain of gold” at 12,000 feet in Kumtor, Kyrgyzstan (Reuters, April 3, 2013, A fight over gold at the top of the world). It’s production contracts are also in play to nationalistic turmoil and greed (ibid, Reuters), and the company has long since lost the one virtue that we demand in any investment, no matter how exotic and promising – 100% Capital Safety and a hopeful return above the rate of inflation. How hard is that?

Exhibit 1: (B)(N) CG Centerra Gold Incorporated – Risk Price Chart

Centerra Gold Incorporated is a gold mining and exploration company, engaged in the production of gold and related activities including exploration, development, mining and processing in the Kyrgyz Republic, Mongolia, Turkey, China and the Russian Federation.

(Please Click on the Chart to make it larger if required.)

The company entered the Perpetual Bond™ in 2009 at$5 (please see Exhibit 1 above) and we sold the last of our interest at $18, more than a year ago, in the last quarter of 2011 (Red Line Stock Price (SP) above the Black Line Risk Price (SF)) and it’s currently trading at $6, having lost nearly 2/3rds of its market value in the last year. The “acquisition price”, however, remains at the Risk Price (SF) of $18 ($4 billion) and reflects what might have been under a better management, which, alas, appears to be hard to find.

The Risk Price (SF) is a calculation based on the demonstrated and generally available balance sheets of a company. It is our best estimate of the “price of risk” which is the stock price at which a Nash Equilibrium is obtained between “risk seeking” and “risk averse” investors. Please see our Posts, The Price of Risk, August 2012 and The Nash Equilibrium & Its Stock Price, October 2012, for more information on the theory.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

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Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.