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XMFSinchiruna (26.61)

Aurcana Re-opens Shafter Silver Mine After 70 Year Hiatus



June 02, 2012 – Comments (7)

I had the great fortune to attend a ceremony and celebration to mark the re-opening of the historical Presidio silver mine as Aurcana's new Shafter mine. I found the experience thoroughly fascinating, and I look forward to telling you all about it on Monday.

Aurcana completed the mine construction on-time and under budget, which is a very rare achievement given the acute capital cost escalation that has dogged so many construction projects throught the industry.

It's a terrific growth story with some exciting new developments. Please stay tuned for my report.

I trust gold and silver investors breathed a sigh of relief as gold surged powerfully Friday and the stocks finally made an overdue show of strength. We haven't seen anything yet, but it's gratifying to witness what may potentially mark a major reversal for the sector. On the flip side, of course, the catalysts behind the move are sobering reminders of how serious a threat we face of unimagineable financial turmoil.

Jim Sinclair has been right all along. There is no limit to the interventions that will be undertaken to forestall the deleveraging process, rendering "QE to infinity" an apt characterization of the dilemma we face.  

7 Comments – Post Your Own

#1) On June 04, 2012 at 7:04 AM, skypilot2005 (< 20) wrote:

Sinchi wrote:

“We haven't seen anything yet, but it's gratifying to witness what may potentially mark a major reversal for the sector.”

Gold bushwhacks bears, again


This week Arensberg’s comment on the HUI chart is bold: “A monumental reversal may, repeat may, be underway. … This is beginning to feel like a real deal post-capitulation rush higher…”


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#2) On June 04, 2012 at 7:18 AM, skypilot2005 (< 20) wrote:

Aurcana Intersects High Grades in Shafter Surface Drilling


 Aurcana Reports: Record 1st Quarter Results



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#3) On June 04, 2012 at 11:18 AM, EGTalbot (< 20) wrote:

Although I remain long gold and silver and some miners (and will continue to do so), the recent acitivity doesn't feel anything like a breakout to me.  It still feels like we're in a range, and it could go either lower or higher once it breaks out. That's my gut but of course, true moves upward really are only visible in hindsight, and obviously moves upward have to include moves like we saw on friday. 

The one thing i thinks is really hard to predict is what impact the Euro's imminent collapse will have on it. One obvious scenario is gold spiking. But I could easily see a combination of commodity deflation and flight to the dollar (which we've already started seeing) staving off a rise in gold for a decent period of time, and possibly even triggering another leg down.

This is all short term.  Long term - 3,5,10,20 years -  there's no way to unwind all this liquidity gracefully. There will be some pretty serious turmoil, and there's no reason to think gold won't continue to serve the role its served for millenia as a store of value. I just think that the rest of 2012 and some of the likely events such as Greece (or Germany) leaving the Euro may not be bullish for metals the way some think.

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#4) On June 04, 2012 at 4:33 PM, XMFSinchiruna (26.61) wrote:

Aurcana's Silver Triumph and Golden Surprise

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#5) On June 04, 2012 at 9:58 PM, skypilot2005 (< 20) wrote:



Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for Bankers Trust. He has a Master of Business Administration from the University of Chicago, with a concentration in accounting and finance. Currently he co-manages Golden Returns Capital, a precious metals and mining stock investment fund based in Denver.

The Gold Report: You started your career, Dave, in the fixed income securities division of Goldman Sachs. And you worked as a junk bond trader before founding Golden Returns Capital. What prompted you to move into precious metals?

Dave Kranzler: “After working as a bond trader on Wall Street, I was day trading. A friend suggested that I look at gold and silver. I initially poo-pooed that idea, as I was more interested in shorting technology stocks during the Internet bubble. I thought the tech valuations were based on nothing more than hopes and dreams, not on real wealth. The enormous growth in paper investments was driven by the incredible amount of money supply thrown into the system by Alan Greenspan's Federal Reserve.

But in late 2001, my friend finally convinced me to get serious about mining stocks. So I investigated the reasons why there had been a 20-year bear market in precious metals and why a long-term bull market was in the offing.”


TGR: What metrics do you use to assess the value of junior mining stocks?

DK: We look at a range of firms: from companies poking holes in mineral lease claims to companies that have proved resources and are on the verge of becoming producers. I define a junior as a mining exploration company that's not producing and is depending upon the market for financing. I do not invest in evergreen companies. I look for a company that has a track record of drilling results. And, I want those results to come from areas that are proven producing areas, such as the Carlin trend in Nevada or the Durango silver belt in Mexico. Ideally, I like to see an NI 43-101–compliant mineralization report showing some Proved or, at least, Measured resources. I want a company to have on hand at least a year's worth of cash under normal operating and capital expenditure scenarios. Ideally, I want to see a large mining company as a sponsor. I want management to hold 5–10% of the equity. And the company must be operating in areas of relatively low political risk.

TGR: Are there are any junior firms that you like in particular?

DR: One of Golden Return Capital's largest positions is Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX). Management owns roughly 8% of the company. Kinross Gold Corp. (K:TSX; KGC:NYSE) owns about 15% of the equity. It has a little over 3 Moz in NI 43-101–compliant resources proved up. It is poking holes in the ground in a trend in Nevada that could potentially become the next Carlin trend. It has a $55–60 million (M) market cap. It trades around $0.60/share, and I see it as, at least, a $3/share stock down the road. It has about a year's worth of cash. The managers are experienced geologists, with a history of success in developing mining companies. Rye Patch is the perfect junior mining company model.”

TGR: Why should we invest in gold instead of, say, Facebook?

DK: People like Warren Buffett, Charlie Munger and Bill Gates characterize gold as an investment. It's really not. It's a monetary metal. Gold represents the embodiment of real wealth. By contrast, Facebook has a sustainable business model based on revenues derived from advertising. But there's an extreme differentiation between what Facebook might be worth on the basis of long-term historical market capitalization measures versus what the market was willing to pay at its IPO. It quickly dropped in value, and it has a lot further to fall. Gold is more real.

DK: The steady climb of gold over the last 11 years reflects this accumulation by very wealthy interests in Europe and Asia. China has been voraciously accumulating gold. The International Monetary Fund sold 400 tons of gold a couple of years ago. But a lot of these central banks, instead of selling gold, are leasing it out. They rent their bullion to banks like J.P. Morgan and Deutsche Bank that turn around and sell it into the marketplace. That gold is going somewhere. It is going to these quiet accumulators of physical bullion. At some point and, again, it's impossible to measure when, the central banks and investors that have been buying physical gold will have to get more aggressive with what they are willing to pay. That will be the next stage in the bull market.

TGR: When you talk about leasing, these companies that lease the gold aren't actually taking physical possession of it?

DK: They're borrowing it. Then they go onto the London Bullion Market Association and sell it. It's a legal transaction, but it's a paper transaction.

TGR: Is it a form of derivative?

DK: That's correct. Say that you are J.P. Morgan and you've sold me some gold that you leased from a central bank. If I ask for delivery of the metal, you will have to find it and deliver it. That's where the problems are going to start.

TGR: You have described yourself as an investment contrarian. What is your parting advice on mining stocks?

DK: Mining stocks are at an extraordinarily cheap level vis-à-vis their historical valuations, especially when you measure them versus the price of gold. Large and small companies are basically trading at the same valuation levels in relationship to gold that they were when gold was at $400/oz back in 2003–2004. To me, it's the ultimate contrarian and value play to hold your breath and invest in these companies now. I think if you do it now, you're going to be rewarded with a lot of money down the road, especially if the fundamentals for supporting gold and silver only get stronger.”

Sky Pilot

Contrarian AND Official Web Link Assistant to Sinchi

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#6) On June 05, 2012 at 9:36 PM, skypilot2005 (< 20) wrote:

June 04, 2012
Canada Lithium Announces Receipt of Québec Lithium Project Mining Licence

Toronto, June 4, 2012 - Canada Lithium Corp. (TSX: CLQ) (OTCQX: CLQMF) announced today that it has received the mining licence from Québec's Ministère Des Ressources Naturelles et de la Faune (MNRF) for its Québec Lithium Project near Val d'Or.


Harness the Power to Store Power

By Christopher Barker
March 20, 2012

"The common denominator here is lithium, which remains at the leading edge of high-tech battery solutions for everything from your laptop computer to your future energy grid. Now that Canada Lithium (OTC: CLQMF) has raised the capital needed to complete construction of the Quebec Lithium Mine near the Canadian province's city of Val d'Or -- with first production expected in early-2013 -- I encourage Fools to look at this small company with big looming capacity to plug into the market for the storage of power."


Official footnote assistant to Sinchi 

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#7) On June 06, 2012 at 6:31 AM, XMFSinchiruna (26.61) wrote:

Nice catch, Sky! I bought a tiny stake on the news.

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