Another Mining Analyst Asks: Is It Time to Get into Gold Junior Mining Plays?

Looks like there is a lot of talk building around this sector.

In this article by Philip Ker he points to the opportunities to: "identify lower-risk opportunities in projects that are backed by strong management, and ones that can provide value growth in the future"

It all bodes well for little companies like New Carolin Gold Corp. (LAD.V) over the coming year in my opinion.

...and yes i do hold shares of LAD.V

=)

Here are some excerpts from the article ·see link at bottom to read full article.

Is It Time to Get into Gold Junior Mining Plays?

Philip Ker, a mining analyst for Canada-based Union Securities Ltd., says while current market conditions are affecting the junior mining space, they are also helping investors to identify low-risk opportunities and projects that may provide future value growth. In this exclusive interview for The Gold Report, Ker discusses how the industry will need to continue to see positive news, especially from senior and midtier producers, which should trickle down to the juniors.

he Gold Report: Philip, welcome. In a recent Union Securities research report, you wrote, "Despite global market volatility and foreign debt issues, we believe market valuations for mining companies, particularly in the precious metals sector, appear to be at incredibly low prices, on level with values seen prior to Q310's commodity bull run. This is regardless of gold and silver being approximately 30% and 50% higher, respectively." I agree that current share prices in the junior precious metals space are comparative to that timeframe, but we have been in a risk-off sector investing environment since last July, and you are operating in a high-risk sector. Share prices are low but without investors bidding up prices, how are we going to see a rebound in junior precious metals equities?

Philip Ker: We are seeing current market conditions affect the junior mining space, but also educating investors and helping them identify lower-risk opportunities in projects that are backed by strong management, and ones that can provide value growth in the future. We will need to see continuous positive news, particularly from the senior and midtier producers, at which point it should give more traction toward junior equities. I also expect mergers and acquisitions (M&A) activity to be a key factor for the juniors as a result of the strong balance sheets senior producers continue to build; as they look to replenish diminishing production portfolios they will target junior developers coming online.

TGR: Are you saying to stay on the sidelines at your peril?

PK: Not necessarily. It is more or less identifying the correct opportunity and the projects that are most targeted for growth that would be a good fit for a senior producer in its portfolio. ...
TGR: One thing, though, with regard to M&A activity, we recently watched Kinross Gold Corp.'s (K:TSX; KGC:NYSE) shares fall about 20% after it announced there were problems with its Tasiast gold mine in Mauritania, which it acquired through the takeover of Red Back Mining Inc. (RBI:TSX) early last year or the year before. Do you think something like that might make the majors think twice about dipping into the sector with some juniors with prospects that look promising?

PK: What was skeptical about that original takeover was that Kinross was stepping outside of the gold space and more into a copper play. Getting that project into development has been a task for Kinross and, as seen recently with the write-down along with the higher-than-anticipated costs, affected them considerably.

TGR: Will that have any trickle-down effect on the sector at large in terms of potential takeovers?

PK: No. There is always going to be M&A. The seniors need to do their due diligence in order to identify the best-fit projects and ones that they can develop or take over at a stage where they can restructure or integrate the management and more efficiently operate the new project.

Read full article here.

This is The Year for Gold and Silver Juniors to Shine

You gotta love this year so far in the markets: Stock markets are performing like there's no problem. This could mean that the 'owners' of our world have their servants working the crowd seeking 'buyers' for the coming reality-check which may be delivered via a nasty short attack across all markets as the 'sleepeze' wears off and Europe finds more challenges again. Or it could mean that, because money will stay cheap, what we are seeing is actually a form of inflation—'throwing money from a helicopter' (to quote Bernanke). Or, of course that the world is doing wonderfully well thank you very much and there is no real problem LOL.

One thing which is for sure, in my opinion, is that regardless of the reasons gold will not fall and last year's under-performing gold stocks will start performing and price appreciation is almost inevitable.

In this interview from The Gold Report with Matthew Zyistra there reason for optimism:
"There is definitely a good selection of underpriced junior gold and silver stocks available before the rest of the herd finally wakes up and smells the gold."

Junior gold, silver and pgm stocks to perform in 2012

After a tough year in 2011, there is definitely a good selection of underpriced junior resource stocks available for astute investors to focus on before the rest of the herd finally wakes up and smells the gold. In this exclusive interview with The Gold Report, Matthew Zylstra, mining analyst at Northern Securities, reviews the gold, silver and PGM markets and tells us why he believes that better times are ahead for junior miners in 2012 and which ones he particularly likes at current price levels. - Zig Lambo of The Gold Report (1/30/12)

Excerpts from the Interview:

The Gold Report: When you last spoke with The Gold Report in early March of last year, gold was trading around $1,420/ounce (oz) and silver was around $36/oz. Silver peaked about $49/oz in late April and then gold hit around $1,900/oz in September. Now we're back up above $1,700/oz on gold and about $33/oz on silver. Where do you see these prices going this year, after it appears that they have likely bottomed out?

Matthew Zylstra: We're long-term bulls on both metals. Gold has been correcting since September and it looks like it bottomed out around $1,500/oz. We believe the recent decline is a normal pullback in a longer-term uptrend where nothing has really changed to the outlook. We see a perfect environment for the metal-concerns over our currency debasement, negative real interest rates, geopolitical friction, etc. I expect gold will reclaim the 2011 highs and could reach $2,000/oz.

For silver, the picture is less clear. Silver is, in part, an industrial metal accounting for around 50% of demand and less of a currency. Silver peaked at almost $50/oz in April 2011 and the price has been very volatile. We think the move is a correction, again, in a longer uptrend going back to 2003. I expect silver will trade around the mid-$30/oz range this year.

We actually feel platinum has a lot of potential. South Africa, Zimbabwe and Russia account for about 90% of platinum production and there's a scarcity of good platinum metals group (PMG) projects outside those countries. We expect increased investment demand and believe that supply disruptions, as well as resource nationalization concerns, will drive the price higher. We note that Sprott Asset Management has formed a physical platinum and palladium trust, which could boost investment demand. ...

TGR: So, what do you think is going to be some sort of catalyst to get people more excited faster? Or is this just going to have to be a gradual progression and we are going to have to wait for $2,000/oz gold and $50/oz silver for people to really get into this market?

MZ: The disconnect between gold/silver prices and mining company equities has grown considerably. The sector is cheap by historical standards when you consider the price of gold miners' shares relative to the price of gold. The Philadelphia Gold and Silver Index (XAU), which is an index of 16 precious metals and mining companies, is close to the lowest level it has been since the 2008 crisis relative to gold. We expect this ratio to gradually work its way back to the average. If we see gold mining stocks move up to even the low end of their historical range versus gold, it will mean a significant gain for many of these companies.

Increased merger and acquisition (M&A) activity in the sector will get people interested in a lot of these companies. As the price of gold and silver continues to rise, the economics become very compelling, especially for large- and mid-cap companies to acquire smaller players.

More interest in precious metals will help too. With what I see as a developing currency war-a race to devalue-I think more investors are going to turn to precious metals and related equities.

TGR: It certainly seems like there are a lot of smaller companies out there with some interesting looking projects that may be sitting ducks for being taken over. If they have to keep going back to the market to raise more money and create more dilution, that could be a problem. What's your thinking on that?

MZ: Small exploration companies are going to continue to need funds to advance their projects, and costs have been increasing. That's a major problem. The need to raise capital isn't going to change but we are seeing alternative ways of financing such as gold and silver streams, alternative debt arrangements and joint ventures, which mean less dilution. ...

Read full article here.

This Year and the BS from Last Year

Well, Happy New Year (the one somewhere between the Christian and the Chinese one)...
Time to get back at it!

My points to start this year:

Gold bubble? Utter nonsense—is the financial crisis over? Not by a long shot!

Last year was a year of downside surprises—this year will be a year of upside surprises.

Will Europe disintegrate? Not a Chance in heaven or hell.

1. The whole world has a vested interest in healing this problem
2. The Germans, always complaining in the press. HA HA HA. In reality that's just entertainment for the fools who still watch the politician-pet-dogs of the owners of our world. Just know this: If there was no Euro what would the value of the Deutschmark be? The point being the Germans for all their bellyaching would find that their wonderful top-of-class products would be far too expensive for the rest of the world. Would that be a good thing?
3. Greece is full of Germans.

The manipulation of silver and gold is becoming increasingly dangerous for the deep-pocketed ones and as retail investors storm back into the markets this year the owners-of-our-world are already very much invested in gold and silver (metals) and continue to accumulate. Why do you think they were really manipulating silver and gold?

The wolrd is actually a simple place. Just turn down the noise from the financial commentators and you will hear the music. Turn away from the disinformation and distraction of the dust from the financial sector's spinning wheels and simplify your investing approach. Time to be like Jesse Livermore!

I've included several articles of interest below.

2012 Gold Market Outlook

Gold Investing News: Michelle Smith

...While there is a substantial amount of optimism about gold’s performance in 2012, there are also an abundant number of warnings that price declines—drastic ones by some accounts— are also likely, especially in the beginning of the year.

A Deutsche Bank report notes that since the onset of the financial crisis over four years ago commodity markets have to contend with increasingly frequent longer lasting episodes of heightened asset market volatility, and that risk aversion is likely to continue through 2012.

Last year undoubtedly taught a lot of investors a lesson about risk and volatility. Many had turned to gold because of its reputation as a safe haven and the fanfare surrounding that status. Those who were in the game for safety and wealth preservation were prepared to sit back for a breather and watch prices climb. Then, to their surprise, gold revealed it also has a risk personality.

Other investors prioritizing margins, such as fund managers, contributed to the shock when they liquidated positions to obtain cash and limit losses. Those sell-offs helped shake investor confidence and perpetuate concerns of a gold bubble. That shaken investor confidence may continue to weigh on the metal for sometime.

Read full article here.

A 12th Straight Year of Gold Price Gains?

BullionVault

December's losses were "just noise"...

GOLD ANALYST Joe Foster has been in the mining and investment businesses for over 25 years. He is the lead investment team member for several of Van Eck's Gold ETFs, including the company's Market Vectors ETF Trust – Gold Miners ETF (GDX) and Junior Gold Miners ETF (GDXJ).

Joe Foster is frequently quoted in the Wall Street Journal and Barron's. He's also a frequent guest on CNBC and Bloomberg TV. Hard Assets Investor Managing Editor Drew Voros spoke recently with Foster on the gold market in general as well as the Gold Mining sector.

Hard Assets Investor: Do you think the Gold Price will see its twelfth straight year of positive gains in 2012?

Joe Foster: I continue to think that we're somewhere in the middle of the bull market. We're nowhere near the end. And having that outlook, I think we'll trend higher in 2012.

HAI: Do you anticipate that central banks will continue to be net buyers of gold in 2012?

Joe Foster: In 2011, central banks bought almost 500 tonnes of gold − at least that's what the estimates are saying − which is a tremendous amount of gold. And central banks are Buying Gold for the same reason that we are, for the same reason we're investing in gold-mining stocks. They see a tremendous amount of uncertainty.

They see countries that debase their currencies. They see the debt problems we've been reading about in the papers. Central banks are looking for something that's going to hold its value. The motivation for Buying Gold will continue to be there into the foreseeable future, so we expect another heavy year of central bank buying.

HAI: Why is gold suddenly so tied to the hip of the Euro?

Joe Foster: The trading pattern for gold over the past several months has been a little bit unusual compared to what we've seen in earlier phases of the cycle.

Despite all the turmoil in Europe, gold has had a high correlation with the Euro. It's not acting as a safe haven as it had earlier in 2011. It's had a split personality lately. Some days it will trade as a safe haven; some days it will trade as a risk asset. The market can't quite make up its mind how it wants to trade gold at the moment. I think that's just sort of a phase that it seems to be going through.

Read full interview here.

Junior Gold Carnage

AheadOfTheHerd: Scott Wright

...Since its low of $256 in 2001, gold has soared 640% to its high earlier this year. And with only a couple days remaining, gold is looking to close out 2011 with a 9%+ gain despite its recent selloff.

But while gold was one of the top-performing assets in all the markets this year, the same can’t be said for the stocks of the companies that bring it to market. You’d think that gold stocks would have been a sector that worked for investors in 2011 considering gold’s strength, but they had a dismal year. And this is alarming considering the nature of their business.

Exploring for and mining gold is a risky business. Mining companies are faced with geological, operational, and geopolitical risks among the many. On top of this they are slave to market risk, with the price of their product at the mercy of traders. If these companies are to be successful they need to discover economically-feasible gold deposits, and then produce the metal at low-enough costs to deliver profits for investors. And many quality miners are doing just that.

But in order to entice investors to take on the risks of owning these companies, their stocks simply must outperform gold. If they don’t materially outperform gold, then it makes no sense to own gold stocks. Investors would be better off just owning the metal.

For the most part over the course of gold’s bull gold stocks have indeed outperformed the metal. Investors have seen legendary gains in some of the elite explorers and producers, outperforming the metal by many multiples....

Read full article here.

Even As Schiff Sells Gold, Mining Stocks Hold Their Own

Forbes: Addison Wiggin

...“In this environment, to make the big money,” says our old friend Rick Rule, “you need to enter [gold] stocks that aren’t institutional momentum favorites. Those stocks aren’t going to work.”

Instead, you need to look for “the kinds of stocks that are going to be sold to the Rio Tintos and the BHPs and the Newmonts and the Barricks of the world. The buyer this year is going to be the industry.”

Thus, “the impetus for the market in exploration stocks this year will be takeovers. The companies that have done a good job, although they may not find traction among institutional or retail investors, will be taken over by larger mining companies.

“These larger companies have both the need to replace production and the financial strength to complete the takeovers and to build out the discoveries that have been made by the juniors.”

As a result, Rick sees the majors paying substantial premiums for the juniors — more than you’d normally see.

“If the industry sees $2 billion in discounted free cash flows and they see a market cap of $600 or $700 million, they are willing to pay $1.3 billion to secure net-present value. So it’s possible that you will see 70%, 80% or even 100% premiums in bad markets, for good assets, in select names.”

Options traders are already sniffing this out...

Read full article here.

They don't want you to have gold.

Funny but true video and the attitudes about the utility of gold. Gold is not for spending, it's for not losing value at one's total personal wealth level. Cash it ain't. Gold is all about wanting to be able to keep your head when all about others are losing theirs.

G

"I love gold"

YouTube video cartoon.

Gartman calls gold bull dead—BUT is it really?

Apologies to the Great Dennis Gartman

- Market trading technicals have been severely tested across all financial instruments

-Marauding trader groups (hedge funds, investment banks, deep pockets of the world's ruling-owner elite) are pushing for capitulation in every corner seeking to unhinge and unseat what remains of independent and weaker investors and traders.

-Short attacks are common place with the dark pools doing much of the 'painting' and Miss&Dis-information distribution masters manipulating the markets and media. IMO
BUT after all is said and done today what has actually changed fundamentally with the picture:

1. The world's finances are an utter disaster
2. Fiat currency valuations are purely fear driven
3. Banks have been adding gold at fast rate

To underscore the point—here is the three year weekly chart for gold... notice anything?



I see no trend breakage do you? Maybe Gartman is a trader so his short hairs might be in the grasp of today's great market painters— =\

So IMO Dennis wrong period. Unless you want to trade this market. This is big mistake IMO. What do you think?

G


Death of Gold Bull Market Seen by Gartman

By Nicholas Larkin

Excerpts:

“Since the early autumn here in the Northern Hemisphere gold has failed to make a new high. . . . Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.”

believing that "...wholesale liquidation, and perhaps forced liquidation, shall be the outcome.”

Read the full article here

Why Does Jay Taylor see DEFLATION as GOOD for GOLD?

Interesting view from Jay as always.
There are a number of intellectual gems in this article that warrant a little due diligence by us all, All the chatter about what will happen around money and gold has all centered on inflation as the loss of value.
Jay, in saying deflation will increase gold's value, adds to our understanding of what's going on. There is no real conflict with the prevailing view of gold being a protection against inflation.
The real view, implicit in gold's aura is that the problem is money itself—and its governance, hence trustworthiness, of the whole 'class of bankers' and there relation to their actual utility and true place in our emerging world.
Gold is EVERYONE'S Standard
G

'Deflation in US to create boom in junior gold stocks'—Jay Taylor

Jay Taylor believes the biggest challenge facing the U.S.—deflation—could mean a better year, or even decade, for junior Gold stocks. Taylor, editor of Jay Taylor's Gold, Energy & Tech Stocks, has ridden some equities to the bottom of this punishing market and is ready to pile more cash into small gold companies. In this exclusive interview he explains why market sentiment hasn't shaken his faith.

Companies Mentioned: American Bonanza Gold Corp. - Aurvista Gold Corp. - Calico Resources Corp. - Crocodile Gold Corp. - Great Panther Silver Ltd. - IAMGOLD Corporation - Meadow Bay Gold Corp. - Merrex Gold Inc. - Metanor Resources Inc. - Nautilus Minerals Inc. - Pretium Resources Inc. - Prodigy Gold Inc. - Rye Patch Gold Corp. - Sandstorm Gold Ltd. - Silver Wheaton Corp.

The Gold Report: In the Nov. 4 edition of Hotline, you note that America's ratio of debt to gross domestic product (GDP) is north of 350%. Our total debt as a society is somewhere around $57 trillion (T). That's worse than Greece. Is deflation America's biggest economic threat?

Jay Taylor: I believe it is, however, most of my goldbug friends wouldn't agree. It is important to realize that the U.S. is not a third-world country. It still has the world's reserve currency. The central bank, the Federal Reserve, doesn't put money into the hands of the masses. It puts money in banks. It's all about credit extension. That is very difficult to do now. With the debt-to-GDP ratio as it is, it's unsustainable. The markets are telling us that—not only in the U.S., but clearly in Europe as well. We are undergoing one of the largest debt-deleveraging periods in a long time, which may be much larger than what we went through in the 1930s.

TGR: You believe there should be no more bailouts, let this debt wrench itself out of the system and let bankruptcies occur.

JT: Absolutely. Most people don't understand the reason we're in trouble is because the good times that we had were false. They weren't based on savings and investment. They were based on money creation through credit extension. The nice homes, the big office buildings, fancy cars, everything—it wasn't earned, it was based on debt. Now that the debt cannot be repaid, the expansion goes into a contraction. That process has a long way to go.

Read more here

Extracted: Jay's list of junior gold stocks.

Gold Mining Stocks Looking Set to Rally

Another article underlining the potential for gold stocks to catch-up to this year's rise in the price of gold. Long term this is quite true and virtually inevitable in my opinion. When it will happen is the only question. This not to say that gold will not continue to correct. Indeed the continuing divergence in gold equities may indicate further selling.

As an investor it is clear we are seeing continuing opportunity to accumulate gold stocks. Gaining the greatest leverage for the return of the uptrend in gold equities is, for me, to be found in junior gold stocks with assets—especially those ones still in the penny to two dollar range. See my recent picks in the 'Gold' tab above.

G

From Seeking Alpha

Expect Gold Mining Stocks To Rally

By Robert Hallberg

The gold mining business has been a tough industry for investors over the last couple of years, despite skyrocketing gold prices. Gold has outperformed most other asset classes but the mining shares have not kept up with gold’s performance.

There are many theories why the shares are lagging behind, some say that frightened investors prefer the safety of gold bullion, and others say that newly launched gold derivatives and ETFs has been competing with the shares for capital.

Until recently, many gold equities had been in a multiyear trading range with flat stock performance despite increasing revenues and substantially higher profits. The gold bugs index (HUI) is a good benchmark to see whether gold stocks in general are outperforming or underperforming gold. It is composed of the 16 largest and most widely held public gold production companies.

The chart below compares gold’s (GLD) performance against the HUI. Both gold and the HUI were neck-to-neck until the financial crisis of 2008, when gold pulled away. Until this day gold has been a far better investment than most gold stocks.

click to enlarge

Although the shares have been lagging behind, there are a number of developments that suggest that the mining companies might be ready to catch up and outperform physical gold and silver. First, margins between the gold price and cash costs of production per ounce have been growing steadily. This has led to vastly increased profitability. The increase in margins has been a result of higher gold prices as production cost has been increasing at a much lower rate. This chart below shows the average industry margins between the gold price and cash costs of production per ounce.

The next chart compares the price of gold and the operating costs of production. The price of gold has been increasing at a much higher rate than the production cost and as long as gold remains at present levels the gold mining companies will remain highly profitable.

Read full article here