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XMFSinchiruna (27.47)

CEO Rene Marion Discusses the Future of Gammon Gold

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May 31, 2011 – Comments (6) | RELATED TICKERS: AUQ , GG , AUY

Please follow this link to the article resulting from my recent interview with Gammon Gold CEO Rene Marion. If you enjoy the content, I thank you in advance for reccing the article at the source.

I found his outlook for gold and silver prices particularly interesting. For my part, I am unwilling to attach specific timeframes to my price forecasts, but I nonetheless take notice when dialed-in industry participants like Mr. Marion do. $2,000 gold by the end of 2011 would surpass my own expectations, but there are scenarios I can envision that could support such a move, but as a long-term investor I join Jim Rogers in hoping for a somewhat more gradual and orderly increase in gold and silver prices. 

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My apologies for the delay in my microcap series. Please rest assured I have not abandoned the project, and another installment will come shortly.

Broadly speaking, I was looking to raise some cash this morning after essentially going all-in over the past couple of weeks. The apparent increase in the risk of a broad-based market sell-off continues to threaten a potential impact upon commodity-related equities in the near-term, while the well-publicized lack of attractiveness of U.S. long bonds as a safe haven portends a far swifter reversal from any weakness than we saw in the panic selling of 2008. No matter how bullish one is on the outlook for gold and silver prices, I simply believe that the present market environment implores investors to consider maintaining some significant cash in reserves. I had raised a 20% cash position on the way up to $50 silver, and I subsequently redeployed that capital into the recent lows. My target now is to rebuild a 20% cash position as quickly and as painlessly as I can. Is anyone else employing a similar strategy?

6 Comments – Post Your Own

#1) On May 31, 2011 at 11:56 AM, dcgatlanta (43.53) wrote:

I've raised my cash position to 10% (high for me) and have a 5% short position.  I sold some large caps that ran up 40% over the last year to build the cash.  Definitely like having the dry powder in the event of a market downturn.  In the past I've been 100% long.

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#2) On May 31, 2011 at 12:15 PM, FleaBagger (29.02) wrote:

100% long is just no fun when a downturn happens.

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#3) On May 31, 2011 at 2:16 PM, reinman60 (< 20) wrote:

About 15% cash right now.

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#4) On June 01, 2011 at 11:16 AM, rfaramir (29.31) wrote:

I've been wanting to end a few positions and get cash to take advantage of coming lows, but finding it hard to disagree with hardly any of my current investments.

I do suspect that with the end of QE2, we will find a strengthening dollar (temporarily), resulting in a pullback of stocks and commodities both. This pullback will end with the first hint of a resuming of QE, including a raising of the debt limit (the reason for QE), unless it is a very small rise.

So I want cash. But I don't want to miss the coming re-rise in commodities. I've timed the market once correctly, once badly, and missed many, many opportunities to time it (where I was right but didn't act). I don't in general trust the idea. If I get out now, will I get back in in time?

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#5) On June 01, 2011 at 11:48 AM, silverminer (30.69) wrote:

rfaramir

I completely empathize with your dilemma! It can be excruciating to trim down positions in which one is utterly convinced of the powerful long-term upside potential. I have forced myself to trim a little even from some of my very favorite holdings in recent days, as I still find my cash position too low for my own comfort level.

I agree that timing is always uncertain, and one can already detect the whisperings of QE3 drowning out the recently self-assured proclamations that QE3 would never happen. Expectations of QE3 may be growing back toward a more realistic assessment of the macro picture, but given the diminishing returns I believe the Fed may see fit to wait it out a bit, and let the markets correct, before launching another round of easing.

It is, of course, conceivable that gold and silver might not correct. Regardless of relative USD strength, the poor outlook for Treasuries could easily prompt a swift move into gold and silver. My gut tells me that will more likely occur after a bit of a correction in the early-going, but it remains conceivable that such a pullback may never strike gold and silver (particularly given that these physical markets are dominated by India and China, and the paper markets remains stressed under increased concern for physical supply).

Long story short; this could play out in any number of ways over the next few months, but despite my unfettered long-term bullishness on gold and silver, I require more allocation to cash in order to feel better prepared for multiple scenarios. These are bound to be messy times ahead, and cash is still king.

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#6) On June 02, 2011 at 5:42 PM, skypilot2005 (< 20) wrote:

Sinch wrote:

“I had raised a 20% cash position on the way up to $50 silver, and I subsequently redeployed that capital into the recent lows. My target now is to rebuild a 20% cash position as quickly and as painlessly as I can. Is anyone else employing a similar strategy?”

Yes.  I am at nearly 10%, now.  Heading for 15% - 20%. 

I have a good amount coming into one of my 401Ks (self directed) each month that I am going to let pile up in a money market fund for future deployment. 

Overall, I like where my allocation is primarily in PMs.  I’ve learned the hard way not to try to “time” the market. 

I let my winners run, get my initial cost back and let them continue to run.  I took money off the table in Sept of 07’.   I wasn’t comfortable with the DOW 13 – 14,000 levels.  Sold every stock I had.  Started buying again in Dec of 08’.  It’s been a nice “run”.  I don’t feel comfortable with the current 12,000 Dow but I feel comfortable with the individual stocks I have, today.  

One of my ex-Father In Laws was a stockbroker.  He once told me something that has been beneficial for me over the last 30 years.  “You don’t actually lose any money until, you sell.”

Sinch wrote:

“These are bound to be messy times ahead, and cash is still king.”

I agree:

http://finance.yahoo.com/news/Moodys-warns-US-govt-on-apf-2110375752.html?x=0&sec=topStories&pos=2&asset=&ccode=

Moody's warns US gov't on possible debt downgrade

Moody's warns US government on possible downgrade if no progress is made on debt ceiling

"The heightened polarization over the debt limit has increased the odds of a short-lived default" by the government, the rating agency said. "If this situation remains unchanged in coming weeks, Moody's will place the rating under review."

In April, Standard & Poor's for the first time lowered its long-term outlook for the government's fiscal health from "stable" to "negative." And it warned that it could strip the government of its top credit rating over the next two years if lawmakers failed to reach a deal to control the massive federal deficit.

Ouzo, anyone?

Ouranos Navigate

Official Web Link Assistant to Sinch

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