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XMFSinchiruna (27.09)

Let the Gold Surge of 2011 Begin

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53

April 07, 2011 – Comments (19) | RELATED TICKERS: EXK , GG , GPL

Here is my write-up on gold's latest breakout, and the fascinating role that silver is presently playing in gold's price dynamics.

http://www.fool.com/investing/general/2011/04/07/let-the-gold-surge-of-2011-begin.aspx

Excerpt: "With the tension that was building in the slingshot tether, either gold's failure to break higher would increasingly pull downward against silver's impressive momentum, or silver would retain the lead and pull gold into a more convincing breakout. The latter occurred, of course, and I believe that the immense fundamental strength supporting silver's price advance has handed silver the leash in terms of which metal is leading the other. I expect that to continue, with possible pauses along the way, until silver reasserts its long-term historical price relationship to gold ... just as it did in 1980 at 16:1."

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In other news, please keep an eye on my last blog post highlighting Alexandria Minerals. I have extended an invitation to the company for someone to come in and interact with the community directly, just as we did for Caza Gold in the second post of the series. But to make it happen on such short notice, they may need to see whether or not the community is sufficiently interested.

So please, if you're interested in having someone from, Alexandria Minerals join our collective discussion of the company here, please make that interest known either here, or in the original Alexandria Minerals post. I will indicate in a comment here if someone does make an appearance.

No promises, as I've only just sprung this on them today. I certainly don't want them to feel pressured into participating. What I do want is for them to see just how eagerly our community wishes to gain further insight into this compelling microcap gold explorer. So make some noise, Fools. :)

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I also wanted to acknowledge and thank Endeavour Silver's VP for Corporate Communications, Hugh Clark, for registering as a Fool and posting a comment to my blog post here. He was also kind enough to follow up on a question posed by JBay76 regarding what happens to cyanide used in mining operations. Here is his response:

Hi Christopher – With some help from the guys at the process plant in Durango, here’s the answer to the very good question from your reader.

To answer your direct questions, we use about 3 kilos of cyanide per metric tonne of ore, or 6.6 pounds of cyanide per 2,205 pounds of ore. We recover and re-use about 70% of the chemical and the remaining 30% ends up in the tailings dam. Once exposed to sunlight at the tailings dam, the cyanide soon degrades into a benign, harmless material.

We are upgrading our tailings facility to what is called “Dry Stack” for a number of reasons. One of the reasons will be the recovery of the cyanide will jump from 70% to 90%. This is significant to us, not only for environmental reasons, but will provide us additional cost reductions. The upgrade is scheduled to be completed in Q3 2011.

I trust this helps.

Yours sincerely,

Hugh Clarke, VP Corporate Communications
Endeavour Silver Corp.

 

 

19 Comments – Post Your Own

#1) On April 07, 2011 at 12:21 PM, Jbay76 (< 20) wrote:

Sinch,

Thats really good news to read about the processing/treating of cyanide in the mining process.

I htink it would be great if someone from Alexandria Minerals coudl comment, and on that note, if someone from every company you highlight could participate.  I realize that might be askign too much but I think it safe to say PM investors are a growing lot in fooldom and any sort of insight from those in the company of interest would help to reduce the volatility (or fear thereof) that is embued in this sector..IMHO.

My wife added the link to Endeavors mining videos, part 1 and 2,  to her work youtube address and they have received 100's of hits.  This type of information is highly sought after.  Once she sends me the link, I'll post it here.  They're actually going to have a webinar with Newmont Mining in the near future.

Many thanks for providing your portfoilio.  I've gone through them and wittled it down to a more reasonable number of companies that  to follow, do DD, and invest in and I was wondering if any of the following tickers could be disccused in this series.

AUNFF, CGR, CDY, ECUXF, TKRFF, ISVLF, FVITF, and EXLLF.

For the record, I do plan on doing my own DD, but your insight is worth its weight in gold.  Tinka Resources was recently brought up by a Fool, can'tremember who so I am sorry for not giving proper recognition, and after a quick look-see, I was very impressed.

Anyways,  thanks for all the great work your doing!

J

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#2) On April 07, 2011 at 12:33 PM, XMFSinchiruna (27.09) wrote:

Yes! We will indeed be getting a visit from Alexandria Minerals today. Please do keep an eye on the post to take part in the discussion, and be sure to let them know how much we appreciate these companies taking time out to connect with us directly.

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#3) On April 07, 2011 at 12:48 PM, XMFSinchiruna (27.09) wrote:

Jbay76

Tread carefully with ECUXF and EXLLF; and keep in mind that some of the holdings I've listed might be very very small portions of my overall portfolio. ISVLF will be discussed early in the series, being one a few exceptions that are over $100m mcap that I still want to include in the series. 

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#4) On April 07, 2011 at 1:03 PM, Gonzhouse (24.07) wrote:

Would really appreciate a dialogue with Alexandria Minerals.

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#5) On April 07, 2011 at 1:12 PM, XMFSinchiruna (27.09) wrote:

Coming very shortly to the original post linked here. Please keep checking in over the next few hours to participate. Thanks, Gonzhouse, and to all who take part.

Sinch

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#6) On April 07, 2011 at 1:47 PM, t0bes (< 20) wrote:

This is an excellent program you've started here Chris. Very educational. Thanks

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#7) On April 07, 2011 at 1:56 PM, Jbay76 (< 20) wrote:

Thanks for the heads up Sinch on ECUXF and EXLLF!  They are on my radar for more DD.  The companies I really like, but want more DD done are CDY, AUNFF, CGR, TKRFF, CZGDF and ALXDF, but thanks to the last two series entries, the DD I still need to do for Caza and Alexandria is not as great.

 

Headed over to the Alexandria post now!

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#8) On April 07, 2011 at 2:06 PM, whereaminow (< 20) wrote:

TMFSinch,

I know you have been following the NotHaus case, so I want to pass along this read.  Dr. Murphy does a nice job of exposing just how ludicrous the Fed's case against NotHaus was:

http://blog.mises.org/16399/the-crime-of-private-money/

I keep adding to my gold and silver holdings. I've started diversifying my mining holdings a little more as well.  I really appreciate how much you have helped me think these things all the way through. 

All the best!

David in Qatar

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#9) On April 07, 2011 at 3:47 PM, XMFSinchiruna (27.09) wrote:

Hi Fools,

I just spoke with Mary at Alexandria Minerals, and she asked whether we could set something up for tomorrow morning instead. As a reward for your patience, she will arrange to have CEO Eric Owens join us as well at the same time. :) 

I think the easiest thing to do will be for me to create a new blog post tomorrow morning that's dedicated to our conversation with Eric and Mary. I intend to post at 9:30, in advance of them logging on at 10:00am EST.They will have to leave for an 11am meeting, but in the better part of an hour I think we'll enjoy a great opportunity to interact with them.

Thank you all for your patience with me as I arrange these direct interactions, and for adjusting your morning tomorrow so that you can participate in our discussion beginning at 10am EST.

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#10) On April 07, 2011 at 4:08 PM, motleyanimal (48.86) wrote:

Any opinion on CROCF.PK?

http://www.crocgold.com/

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#11) On April 07, 2011 at 4:16 PM, ajm101 (32.96) wrote:

I have disagreed with you on your view of gold before, but this is just about the most exceptional series of blog posts I've read anywhere, and you are a great analyst of mining junior fundamentals.  Thank you for sharing these.

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#12) On April 07, 2011 at 4:30 PM, awallejr (75.45) wrote:

Good job Sinch.  Sadly I will miss the chat but look forward to reading the thread.

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#13) On April 07, 2011 at 5:15 PM, rfaramir (29.33) wrote:

Awesome Mises quote (for David in Qatar's article link):

"The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard. (The Theory of Money and Credit, p. 461)."

So, hopefully, it won't be too hard to re-establish use of metallic money, if we can just get government to refrain from doing evil.

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#14) On April 07, 2011 at 5:17 PM, rfaramir (29.33) wrote:

Chris,

Yes, please! In response to the request for feedback on the company interview idea.

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#15) On April 07, 2011 at 5:18 PM, rfaramir (29.33) wrote:

Christopher Barker writes:“a gold-to-silver ratio of about 16-to-1, which happens also to approximate the estimated relative geological scarcity of the two metals within the entirety of the Earth's crust.”
I’ve been hearing this a lot, so I decided to look into it (without actually doing original research).
http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth's_crust
2007 figures from 3 different sources:Ag 0.070 ppm - 0.080 ppm (23,000 tons/year)Au 0.0011 ppm - 0.004 ppm (2,800 tons/year)
ratio of occurrence: 63:1 - 20:1 (silver to gold)ratio of production: 8.2:1 (silver to gold)
another page, http://en.wikipedia.org/wiki/Abundances_of_the_elements_(data_page)puts the ratio of occurrence between these limits:20:1 - 25:1 (silver to gold)
But we must understand that relative occurrence is a secondary determinant of relative price. It really only matters when the two are good substitutes for each other. For example, if we were talking corn and wheat, or better, white marble and black marble. For feeding animals and building structures they are substitutes, for human needs, less so.
Gold and silver are interchangeable for monetary uses (with gold always being more valuable due to higher density and higher resistance to corrosion), but NOT for many other uses. Jewelry is a case where they sometimes are substituted under duress, but not by preference. But in electronics or medical applications, they definitely are not substitutable.
*IF* they were highly substitutable, then the relative frequency of occurrence would directly affect their relative value. The more frequent, the less valuable. Like dollars, the more you print, the less each is worth. But unlike the near-perfect substitutability of paper currency, gold and silver have a very imperfect relation. So on the whole, I think the argument from occurrence ratio to value ratio is not worth bringing up. Interesting to look into, but not very valuable to rely on. The production ratio makes a case for the rise of silver (only an 8.2:1 ratio?), as does the fact that much silver is actually lost when ‘used’ industrially, while much gold is still recoverable (from jewelry, at least, sometimes from other industry). Love your article, overall.

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#16) On April 07, 2011 at 5:55 PM, Alexandria2011 (< 20) wrote:

Hi Fools looking forward to connecting with you tomorrow.

Mary Vorvis, Director Corporate Development, Alexandria Minerals

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#17) On April 07, 2011 at 9:54 PM, Option1307 (30.17) wrote:

Sinch,

I can't say that I'm necessarily interseted in PM stocks anymore as I've sold out of all my positions in the first few months of this year. However, I have to say that this is truly fabulous work that you are doing with this series, especially having company representatives interact with the community. A great resource of information and Fools should definitely take advantage of it.

Maybe this could be the start of something bigger for the Fool in general, more direct interaction with companies etc. Who knows!

Great work Chris, +1!

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#18) On April 08, 2011 at 12:53 AM, mhy729 (30.47) wrote:

Mary, we are all looking forward to having you and Dr. Owens with us here at the Fool CAPS blogs this morning.

Thanks to Chris for setting this up!...truly great stuff.

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#19) On April 08, 2011 at 12:40 PM, ChrisGraley (29.71) wrote:

I am definately looking forward to this.

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