Thursday, September 29, 2011

Traders are teriffied!

Listen carefully to this guy and you will see where the volatility is getting its fuel.  I do not think there are enough retail investors left in the market to do the kind of damage we are seeing.

Listen between the lines...

Monday, September 26, 2011

Faber: Gold Quite Oversold...Consider Buying Gold Over The Next Two Days

Anyone who's been watching our market follies over the past 4 years knows who Marc Faber is. One of the world's leading bears, he is calling gold "quite oversold". Gold bugs and recent converts should pay attention that the correction in gold prices makes buying it a great opportunity right now. But act soon it may be one of the last we will see.

repost from Zero Hedge
Marc Faber: "Gold Is Quite Oversold. I Will Consider Buying Gold Over The Next Two Days"

Anyone trading gold and silver most likely had a heart attack this morning. Of that subset, anyone who survived and traded with conviction made a killing, following an impressive surge in both metals, which saw silver soar from $26 all the way back to $30, after it was made clear that there was no behind the scenes liquidation of the metal but merely more piggybacked margin hikes this time out of China as was first reported by Zero Hedge. Another factor that helped was Marc Faber's appearance on CNBC earlier, who said that gold is now "quite oversold" and that he would be adding to the yellow metal in the "next two days." In retrospect, he should have been adding today to his existing holdings. However, since he already has 25% in gold, he is forgiven. Mutual funds which, however, have about 1% in gold, are not.

Read more and view video interview links here

Friday, September 23, 2011

Has the moment for a brazen gold revaluation arrived?

This is a repost from titled: "Don Coxe's Fascinating Take On Why The Time For The US To "LBO" The Gold Market Has Arrived"

With fiat currencies searching anxiously for something solid to base their utility on—even their very existence—perhaps our long walk on the wild side with paper that only has 'confidence' as it's core strength is coming to an end.  The idea that gold can again become the agreed basis for portable and transferable value so necessary in the business of our planet.

Zerohedge does a wonderful job of extending and placing Don Coxe's pint of view deeper into the American economic context.

The article:

A few short weeks ago we described the transition of America from a government "on behalf of the people" to one "in control of the people" catalyzed, as Bill Buckler, put it simply, by one simple event: the confiscation of America's gold, and the ushering in of the welfare (or "promise") state, the same welfare state that now is supported by a system that no matter how hard one denies, is nothing but a ponzi scheme. Today, we follow up that article, with a very thought-provoking observations by BMO's Don Coxe, in which he describes that just like in the time of FDR, for whom the creation of a "mild" inflation was a prime prerogative to offset the depressionary deflation gripping the land, the moment for a brazen gold revaluation by none other than the US government has arrived. Unfortunately, it likely also means that any scheme in which the government opens a buy/sell gold window at a substantially higher price point, will mean that very soon, either by guile or by force, the US government will once again be the prime and sole owner of all the gold. As Coxe says, "The gold bugs have long proclaimed their own version of the Golden Rule: “He who has the gold makes the rules." By that standard, Barack Obama could become the leader of the world overnight." And while it is described in much more succinct detail below, in summary, Coxe's point is that the time for a government "LBO" of the gold market, one in which every last ounce is extracted from the skittish public, in exchange for pseudo-equivalent assets such as gold-backed bonds, has arrived. The only question is what the acquisition price of the risk-free alternative to fiat would be, and hence how much higher will investors push the price in anticipation of the inevitable 25% take out premium. Once the public realizes that this is the endgame, and that the buyer of only resort will be none other than Uncle Sam... then look out above.

As for the context of Executive Order 6102.2, Coxe notes: "When nearly all OECD economies are running huge deficits at a time of near-zero interest rates, and nearly all governments are looking for ways to raise revenues without imposing economy-unfriendly taxes, why don't the big holders revalue their gold to, say, $2,200 an ounce and declare themselves willing sellers at that price—in bars or in bonds backed by gold—and willing buyers at, say, $2,000? Roosevelt revalued gold from $20.67 an ounce to $35 and declared that the US was a buyer and seller at that price. He also made it illegal for US citizens to own gold. By the end of the Depression, most of the world's visible gold reserves were in Fort Knox."

Most importantly, Coxe observes that "now is a good time to lock in the gold bull market by monetizing the  nation's holdings through various strategies and vehicles forty years after Nixon uncapped gold and 78 years after Roosevelt boosted it 70%. Why don't the governments bring out their gold and use it to back their bonds? Obama should, in our view, try to find one non-Keynesian economist who understands gold to advise him. We’re sure he could get an old-fashioned scholar from the University of Chicago to help him out if he made a few calls."

Must read.

Governments, Central Banks, and Gold

Perhaps the most enduring paradox in all finance is the way major governments and central banks treat their gold holdings: they ignore them.

When nearly all OECD economies are running huge deficits at a time of near-zero interest rates, and nearly all governments are looking for ways to raise revenues without imposing economy-unfriendly taxes, why don't the big holders revalue their gold to, say, $2,200 an ounce and declare themselves willing sellers at that price—in bars or in bonds backed by gold—and willing buyers at, say, $2,000?

Roosevelt revalued gold from $20.67 an ounce to $35 and declared that the US was a buyer and seller at that price. He also made it illegal for US citizens to own gold.

By the end of the Depression, most of the world's visible gold reserves were in Fort Knox.
Apart from all the jobs created in Nevada and other gold-mining states, this attempt to introduce controlled inflation at a time of surging deflation was at least mildly salutary. Having most of the world's gold also proved extremely useful in helping to finance the recoveries in war-torn Western Europe.

Gold's roaring run to $1800 must be a huge embarrassment to the central bankers. Why should investors be rushing out of government bonds into bullion? Don't they believe us when we tell them that printing all this money isn't going to debauch the currency?
The best way to take gold out of its newfound role as moral arbiter of governments' fiscal and monetary policies may be to cap it.

Yes, captious critics would say that this is the equivalent of buying a bathroom scale whose highest reading is three pounds above the buyer's current weight.

But desperate times call for desperate measures.

The gold bugs have long proclaimed their own version of the Golden Rule:
“He who has the gold makes the rules."

Thursday, September 22, 2011

Gold Companies to Watch from the Yukon to Colombia

Looking for good long term investments in gold there are some very good very knowledgeable, experienced and insightful analyst out there and Dale Mah is one of them.  Any investor in gold would do well to include this in their potential investment inquiries.


Repost from The Gold report

From the Yukon to Colombia, with stops in Nevada and Mexico, Dale Mah, an equity research analyst with Mackie Research, covers the map looking for exciting exploration plays. Mah, a trained geologist with 14 years of experience, shares his calculations and insights into how early-stage exploration plays can be safe and satisfying in this exclusive Gold Report interview.

Companies Mentioned: Agnico-Eagle Mines Ltd. - Amarillo Gold Corp. - AngloGold Ashanti Ltd. - Atacama Pacific Gold Corp. - Eco Oro Minerals Corp. - GMV Minerals Inc. - Goldcorp Inc. - Guyana Goldfields Inc. - ICN Resources Limited - Kootenay Gold, Inc. - Lupaka Gold Corp. - Magellan Minerals Ltd. - Newstrike Capital Inc. - Sandspring Resources Ltd. - Smash Minerals Corp. - Southern Arc Minerals Inc. - Sunward Resources Ltd. - Torex Gold Resources Inc.
The Gold Report: Your recent description of Atacama Pacific Gold Corp. (ATM:TSX.V) paints a picture of what every major producer is seeking: a large oxide resource with simple metallurgy in a mining-friendly jurisdiction with other operating mines. Are brokerages taking a pass on covering vein-hosted gold deposits in favor of lower-grade bulk-tonnage gold projects?

Dale Mah: Analysts have their own criteria for what's worthy of coverage and there are many variables for evaluating a project. The major difference between bulk-tonnage, low-grade versus low-tonnage, high-grade projects is that the former are generally cheaper to exploit, easier to build a resource and, in some cases, easier to market.

Atacama Pacific has a 3.6 million ounce (Moz.) resource. In our model, a 44,000-tons-per-day (tpd) operation could produce more than 200,000 oz. of gold for 14 years. Those numbers make it easier to finance or to find a partner, because you know it has long-term potential.

TGR: Are the large-tonnage bulk operations easier to market on the sell-side?

DM: In my experience, yes. A project with 5-10 Moz. and a 10-to-20-year mine life is a long-term investment. You know what is going to happen in the next 10 to 20 years. You can build your mine plan from a textbook, whereas underground, you have to follow the structure and work off a mine plan that needs to be updated on a regular basis and hope it doesn’t disappear or get faulted off.

TGR: High-grade underground veins are rare. There are many more average-grade veins—say in the 4–6 grams per ton (g/t) range. Are those projects being developed less often, given the lack of financing?

DM: The terminology of high-grade and low-grade is all relative. What used to be high-grade can be considered very high-grade nowadays, conversely, what used to be low-grade can now be high-grade. For example, 1 g/t is low-grade for a decent open pit. Underground, anything high-grade is 4–5 g/t. Double digits, like 9–10 g/t overall, is very high-grade.

As far as operating costs go, you can't beat an open-pit mine for processing thousands of tons per day. We are seeing a shift toward feasibility projects looking at bulk tonnage underground situations. You have a tonnage that doesn't quite support a massive open pit or the grades aren't high enough to support conventional underground mining. So, a lot are considering alternative underground methods such as block caving or sublevel caving to mine bulk tonnage underground.

Brien Lundin's Long-Term Resource Investing Tips


In the present and continuing economic distress and market volatility it should be becoming clear to investors that when looking for the long potential in stocks precious metals have moved to the top of the list.  This is the time to take a 5 year view for returns—if you still have any money left that is!

Brien gives an informed view for investors and, in my pinion, is a must-read.

Invest well and prosper.


repost from The Gold Report

The Gold Report: Brien, cited the escalating European and U.S. debt crises as triggers for the August 22 spike in gold prices, when it briefly eclipsed the $1,900/ounce (oz.) mark. Since then, the French bank Société Générale has been downgraded and austerity measures are forcing the Greek economy further into recession. Despite these significant catalysts, the gold price remains range-bound between $1,750 and $1,850/oz. Why isn't gold reacting?

Brien Lundin: If the European debt crisis and the S&P downgrade of U.S. sovereign debt had happened separately, say a couple of months apart, I think gold would have risen just as far, but the rise wouldn't have been as steep and the market wouldn't have overheated. But they happened to occur right on top of each other, so the market got ahead of itself and went nearly parabolic. Speculators who were merely trend-following traders came into gold, but the end of the rally sent them all packing at once. That dealt a sharp psychological and emotional blow to the market that we are still recovering from. Since then, we have seen a lot of very fluid, hot money coming in and out of the market.

More recent news from Europe hasn't had quite the same effect. We have seen some itchier trigger fingers, people playing the news of the day and getting right back out. We have also seen physical gold buyers from Asia come in on the price dips.

The result has been rallies tempered on the upside by the speculators abandoning trades more quickly. We have also seen drops tempered by bargain-hunting, physical gold buyers coming in on the downside. In short, gold is in a consolidation phase, awaiting the next trend, which I think will continue to be headed upward.

TGR: You mentioned Asian physical buying. Recent rumors suggested China could be buying Italian debt to help Italy out of its problems. Is that bolstering the euro and keeping investors out of gold?

BL: I think that China helping out Italy hurts the gold price in an indirect way. It's a sign of China knowing which side its bread is buttered on and knowing that it needs a stable Europe to support its economy.

We saw that need for stability when the European Central Bank and other central banks announced a coordinated U.S. dollar liquidity program and Germany and France said that Greece would definitely stay in the euro. All of this is part and parcel of trying to calm the markets down in the interim and to show that the gold price is essentially capped or that the rise is being dampened by official intervention.

TGR: Are you implying that the euro is doomed?

BL: I believe the euro is doomed as it currently exists. I think there is very little chance Greece will remain in the European Monetary Union. The rest of the PIIGS (Portugal, Ireland, Italy, Spain) remain to be seen. After all, what's the use of a club if you can't kick anyone out?

Obviously, the risks here are the implications of such an event, the dominos that would fall in the European banking system. The fact that Germany and France are so reluctant to kick Greece out of the euro zone shows that the problems could be very deep and widespread. I think they are just prolonging the situation. Ultimately, the euro of the future will not be the euro we see today.

TGR: What effect has the news out of Europe had on the gold price?

BL: There may have been some official manipulation in the gold price recently to bolster the idea that things are calming down. When the Swiss announced its cap on the franc, the news was incredibly bullish for gold; gold in effect became the last safe-haven investment standing. But shortly after that news broke, the metal sold off about $50/oz. overseas in just a few seconds. Investors wondered who could have known that news was coming, who could have reacted that quickly and sold so dramatically. The evidence points toward official management of the gold price.

TGR: In the September issue of Gold Newsletter you wrote that "long-term factors still favor a continued uptrend" in the gold price. Can you give us more detail?

BL: When we look at the S&P downgrade of U.S. sovereign debt, the problems in Greece and the potentially cascading effects across the banking system in Europe, what we see is the result of far too much debt being created on both the governmental and private level. Too much money has already been created and will have to be created in the future to inflate away all that debt. It is mathematically and politically impossible for austerity programs to be severe enough to overcome these debt loads. There is no way, especially under the weight of those austerity programs, that growth can be robust enough to overcome these debt burdens. At some point and to some degree, inflation will have to depreciate those debts away. That is the very reason why investors with a long-term view are buying gold. They aren't concerned about gold having come so far over the past 10 years. They are looking down the road and seeing the amount of currency that will have to be created to get out of our tremendous fiscal problems.

Wednesday, September 21, 2011

Gold and Silver Mining Stocks in 2011—Wondering Why They are Underperforming?

Record gold and silver prices have outpaced by a wide margin the share performance of the producers of them.  The constraints on precious metal pricing according to this article focuses on costs of building and operating a mine.  What is important in the following article is the recognition that we (the market) are in a transitional phase from stage 2 to stage 3 - so now it's all about earnings.  I wonder what will happen to those just on the cusp of going into production - hmmmm....

'Seeking Alpha' Article by David Urban (edited for key points):

Miners' Many Hurdles Keep A Lid On Gold And Silver Stocks

Investors in gold and silver mining stocks in 2011 have been left wondering why they are underperforming, despite record gold prices and margins.

There are a number of factors which have helped to constrain stock prices this year.

Building a mine is a time-intensive and expensive process that takes years to complete. One has to deal with drill results, 43-101 estimates, pre-feasibility studies, feasibility studies, and the permitting processes, which include environmental surveys and community discussions over issues such as waste water management, power acquisition, and the use of hazardous chemicals. All of this takes years before the first equipment is ordered and the construction process begins.

Once construction starts, a whole new set of issues pops up, from obtaining building materials and mining equipment to getting it on site on time and on budget. The pressure then builds to deliver the mine on budget and on time. This is no easy feat when the location may not be accessible 12 months of the year because of weather or poor regional infrastructure.

Finally, when the mine is built and operational, there are issues with equipment that can range anywhere from obtaining tires for mine trucks to problems with the mill or lower than expected recovery of ore grades.


Mining is a difficult and time-intensive job, and execution is the key. So far this year problems at mines are causing solid management teams consternation as they miss estimates. Investors wondering why their mining stocks are lagging may want to check to see how management is executing on their 2011 forecasts. We are coming close to the end of the third quarter, and people will be wondering if forecasts will be revised come the end of the second quarter.

This is not to say that the management of mining companies is not of high quality, as many issues are out of their hands and specific to the locations in which they operate.

We are in a period where we are transitioning from stage two to stage three of this bull market for gold. In this transitional phase, the market is looking for the companies to deliver on guidance, and those that deliver on said guidance will be rewarded with higher stock prices.

What should a small investor be looking for in a mining stock? Managements that are delivering in these uncertain times, effectively managing risks and successfully hedging their cost structure while delivering on production and cost guidelines.

Invest in Gold and Silver?

This is a somewhat 'lite' article but it is the kind of thing getting passed around these days a s gold and silver provide potential security is a fiat-sick world.


...Right now, precious metals are the investment choice of most people. More specifically, this refers to gold and silver which have been incredibly visible even in the old years. Both metals are not only utilized for jewelries but also have very strong ties in different industries.

Why Invest in Gold and Silver?

What most people don’t know is that precious metals are capable of protecting individuals during inflation. This means that even as the purchasing power of money lessens, the value of these two metals remain rock solid. This isn’t really surprising considering their history. Gold was once used as a medium of exchange and is still highly valued current trade. In fact, countries today release their currencies depending on the number of gold reserves they have in the vault. Simply put, paper currency is an efficient representation of gold the country has. Make sure your assets are safe from economic collapse by setting up a silver 401k .

On the other hand, there are many industries that utilize silver and deem it important. In fact, there might be more uses for silver today compared to gold. For one thing, silver has antibacterial properties that make it invaluable in the hospital room. In order to keep them sterile, medical equipments are actually being coated with silver. The fact that they are also conductive means that wires today have small traces of silver in them to make them more productive.

Of course, their industrial use are not the only reasons why they make good protectors against inflation. Imagine having $10,000 today, putting it in the safe and using it 10 years after. The value of $10,000 right now would hardly be equal to the value of $10,000 ten years into the future. In fact, it might decrease drastically, causing a person to purchase lesser products with their $10,000 in the future. However, this isn’t the case with both gold and silver. Since the value of currencies depend on them and not vice versa, they are rarely affected by changing purchasing powers. A kilo of gold today would still be a kilo of gold ten years into the future. Even after a long time, precious metals have the capacity of maintaining their value and resisting devaluation. Even better, gold is globally recognized and is therefore not that hard to convert.


The Real Goldbggr