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XMFSinchiruna (28.54)

Thursday's Precious Metals Watch

Recs

74

May 05, 2011 – Comments (81) | RELATED TICKERS: CEF , GPL , EXK

These are memorable moments unfolding within the precious metals market in recent weeks, with the past couple of days in particular bringing the action to a whole new level of fascination for longtime observers like myself.

For those who may have been lulled into complacency by the entended duration of the prior rally and taken on leverage as a result, no doubt by this stage the reasoning behind my unyielding admonition against leveraging one's exposure to pms resonates more clearly now. Please learn from this experience and move forward without leverage.

On the other hand, for Fools who have accrued a diverse basket of quality equity vehicles for gold and silver, the damage has been impressively slight. No doubt this can be attributed in part to the significant refusal of mining equities to follow silver higher from about the $40-level onward. But it also speaks to the increased strength behind the long side of this market as compared with the dynamics observed during prior corrections. Toward the end of the day yesterday many equities showed resolve by striking higher amid a deep down day for silver. Today the battle line is inching back a bit, but the resolve remains visible in the refusal of long-term bulls to abandon these equities in the face of new-found weakness. Remember, structurally speaking, a correction within a secular bull market is about shaking out the weaker, shorter-term, and more speculative segments of a market and returning control near-term control to the hands of long-term stakeholders.

CME Group has shown it is out for blood by raising margin requirements for the fourth time in two weeks, for an 84% increase from $11,745 to $21,600 per contract. Yesterday's follow-on announcement is music to the ears of silver shorts, who will no doubt seek to pounce upon the demoralized sentiment of the speculative longs. Silver is making a momentary stand at $36 as I write, which was the next level beneath $40 that I had pegged as likely support, but I am certainly not ruling out further damage ... particularly if the USDX advances further and gold remains beneath $1,500.

In a matter of days, the gold:silver ratio has been restored to its modern historical range above 40 from recent lows in the low-30s that fankly came as a surprise to me (too far, too soon). This is an invitation for gold to retake the reins from silver, so it will be fascinating to see which metal ultimate leads the way out of this correction. My money is on gold, and I think gold is now entirely likely to take out much higher levels before silver can dream of hitting $50 again. If I had to guess, and that's all this is, I would now expect $50 silver at anywhere between $1,700 and $2,000 gold.

Now for something really bizarre: CEF is trading at a substantial discount to its Net Asset Value. This is one of the most illogical market dislocations I have ever seen, and I expect to correct itself very abruptly (especially as prompted by today's headline reminding the market that the fund just closed a $360 million non-dilutive offering priced at $22.30 (an even which already serves under normal market conditions to bring premiums above NAV back down to Earth). Since I began holding in CEF in 2005, I have never seen a negative NAV, and I intend to confirm whether it may be utterly unprecedented as I suspect it is. Fascinating! I can only guess at a possible explanation, which would be that some of the long-side speculators caught by the raised margin and forced to flee may have also hald large stakes in CEF and been forced to liquidate to cover margin. Again, that is purely a guess.

More in a bit, but I at least wanted to get the discussion going. What do you make of these fascinating market dynamics? 

81 Comments – Post Your Own

#1) On May 05, 2011 at 12:36 PM, XMFSinchiruna (28.54) wrote:

Understand when Dan says "top", he's speaking near-term as a technician. Within that context, his commentary is spot on. Investors looking to "break" JPMorgan or other silver shorts are probably fighting a losing battle. COMEX may have been moving close to some form of failure there had the physical supply been truly tested, but there is just to much free digital supply for those powerful enetities to permit such an occurance.

In any event, I will much prefer a more orderly advance for silver than that which was beginning to form. For long-term investors, this is the better way forward. 

http://jsmineset.com/2011/05/04/dan-norcini-silver-plummets-what-to-look-for-now/

Dan Norcini warned over the weekend on the KWN Weekly Metals Wrap that there was, “Potential for a top”, “Negative divergences”, “A great deal of distribution”, “Very dangerous market for people to trade”, “Undercapitalized speculators, they are going to learn they can be separated very quickly from their money.”  Those were just a few of the red flag warnings for traders and investors from Dan Norcini over the weekend regarding the silver market that proved to be deadly accurate.

When asked what he is looking at right now in silver Norcini replied, “I want to address the silver backwardation issue.  Many investors and traders feel that silver should not be dropping in price because of the backwardation structure.  They point to this fact as proof that silver is in short supply and demand is phenomenal. 

That may be entirely true, I don’t know, but the fact is that when we are dealing with the Comex silver market we are dealing with a paper market.  Keep in mind that hedge funds that trade the paper markets do not care about fundamentals.  They are pure technicians who rely solely on their computer trading algorithms to make trading decisions.  These algorithms are utterly indifferent to the realities in the physical market.

The bottom line is once these algorithms move into a sell mode, the hedge funds will unload until they’ve exhausted their selling, regardless of the physical market structure.  Meaning the paper market does not care about the physical market.”

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#2) On May 05, 2011 at 12:37 PM, XMFSinchiruna (28.54) wrote:

http://www.bloomberg.com/news/2011-05-05/silver-investors-dump-futures-as-comex-boosts-speculator-trading-costs-84-.html

Silver prices may drop as low as $31 by the end of the week, said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “Silver is a freight train,” McGhee said. “The market doesn’t change, doesn’t give up. It’s relentless, and you’re just going to get rolled over.”

 

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#3) On May 05, 2011 at 12:39 PM, XMFSinchiruna (28.54) wrote:

http://www.centralfund.com/Nav%20Form.htm

CEF closed yesterday at a 3.7% DISCOUNT to NAV!!

Incredible.

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#4) On May 05, 2011 at 12:42 PM, XMFSinchiruna (28.54) wrote:

Jim Sinclair’s Commentary

The technical dollar rally has no legs.

Asian trio to study dollar alternative: report
May 4, 2011, 7:59 a.m. EDT
By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — Officials from China, Japan and South Korea agreed on Wednesday to study a proposal to use their own currencies for regional trade settlement instead of the U.S. dollar, according to a Dow Jones Newswires report.

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#5) On May 05, 2011 at 12:44 PM, XMFSinchiruna (28.54) wrote:

Mexican central bank buys 100 tonnes of gold
By Jack Farchy in London
Published: May 4 2011 11:35 | Last updated: May 4 2011 20:37

Mexico has quietly purchased nearly 100 tonnes of gold bullion, as central banks embark on their biggest bullion buying spree in 40 years.

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#6) On May 05, 2011 at 12:46 PM, XMFSinchiruna (28.54) wrote:

China "Aims To Have More Gold Than America"
05/03/2011 10:30 PM HKT

THE CENTRAL BANKS of developing countries will Buy Gold at an increasing rate in coming years, with China being a leading player, according to a major industry figure.

Rob McEwen, founder and former head of Goldcorp, now the world’s fifth largest Gold Mining company, believes central bank purchases could help push the price of gold to $2000 an ounce by the end of the year.

"China is out to have more gold than America, and Russia is aspiring to the same,"said McEwen, who is now chairman and CEO of junior miner US Gold. "When you have debt, you don’t have a lot of flexibility. China wants to show its currency has more backing than the US."

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#7) On May 05, 2011 at 12:50 PM, XMFSinchiruna (28.54) wrote:

http://jsmineset.com/2011/05/04/silver-being-silver/

From Jim Sinclair, reminding us that silver is just being silver:

Margins will continue to rise on the COMEX until it reaches the cash price of silver. This works for the shorts as their hammer on the silver market reduced the equity of low cost positions. The efficacy is short term and made no difference whatsoever in 1980 as the silver market made its highs. What broke silver in 1980 was a unilateral change (novation) of the silver contract which went to "sellers only." Under contract law that is simply not permitted. They got away with a violation in 1980, but the corporate changes in structure at the COMEX that have occurred since 1980 makes the COMEX less able to pull that trick off successfully in 2011.

Silver is simply being silver. Silver did help gold therefore the 25% drop in value has to pressure the gold price.

The USDX is simply having a weak rally off a totally oversold on every internal indicator short side trade. The dollar has no future. The supply wishing to diversify is simply too big to allow any rally to have legs.

I have told you silver is a game. That being said, it it is a great game. Certainly as the silver price approached the 1980 high, you might have considered selling 1/3.

The high trade on silver was $54 in 1980. Silver’s round numbers are at $50 and $100. Both will function as such in trading.

Silver is not money. It is simply too bulky to be freely and universally fungible. After this short play, which had to follow the spike intermediary top, silver will rise as fast as it did again.

The Hedgies are having their way with the gold shares, but logically this is coming to an end. When you can buy companies whose resources are three times the company’s present capitalization, the share is getting unreasonably cheap.

The ratio of GDX versus GDXJ is starting to favor the juniors which is a major heads up event.

What you have witnessed is not at all shocking. If you traded 1968 to 1980 you would know this is just silver being silver.

Relax. Put a french curve on silver and you will see the bottom change in trend event.

Respectfully,
Jim

 

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#8) On May 05, 2011 at 12:55 PM, reinman60 (< 20) wrote:

Interesting graph from Casey Research showing the percentage pullback in silver for all major corrections since 2001.  ALthough not predictive, it does lend some perspective to the current action.

 

http://www.caseyresearch.com/cdd/eliminating-need-organ-transplants-coming-soon

 

No, its not the wrong link.  Just scroll down the page a little to "How Far Does Silver Fall"

 

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#9) On May 05, 2011 at 12:59 PM, XMFSinchiruna (28.54) wrote:

Thanks reinman. Here's the image:

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#10) On May 05, 2011 at 1:02 PM, ajm101 (33.71) wrote:

wrt to #6, isn't that impossible via mining?  Is there really that many tons of bullion left in the earth's crust to be leached out?  The US has 8 times more gold reserves than China....

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#11) On May 05, 2011 at 1:07 PM, Valyooo (99.81) wrote:

I have a question, since I have only been in silver since last summer....during all of the other corrections, were people freaking out more, less, or equal to the way they are now?  Not in 08 becayse everythign was freaking out then, but more like in 03-05?

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#12) On May 05, 2011 at 1:09 PM, XMFSinchiruna (28.54) wrote:

As long as we're on the subject of leverage, how's this for a wake-up call?:

From Zero Hedge:

The NYSE has released its monthly margin debt update for March. Not surprisingly, with everyone, and yes EVERYONE, chasing nothing but levered beta, margin debt surged to a fresh 3 year high at $315.7 billion, the highest since February 2008. But far more troubling is that when netting out positive margin balances such as Free Credit Cash Accounts and Credit Balances in Margin Accounts, the investor net worth, or alternatively net leverage, as it is defined, plunged by $18.2 billion to ($75.2) billion. This is the second highest net leverage ever seen on on the NYSE, only lower compared to the $79 billion hit at the absolute peak of the credit bubble in June 2007. We all know what followed after. Ironically, when this kind of mass hysteria happens in commodities the CME can't wait to hike margins to cool those evil, evil speculators. It is only natural that the Globex will hike ES margins in 5....4....3.....

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#13) On May 05, 2011 at 1:13 PM, reinman60 (< 20) wrote:

Just throwing out some numbers here.  We're down about 27% form the high tick in the spot price.  I'm assuming that we get a larger pullback than the 33.7% in 2004 and the 34.9% in 2006, but not as large as the one that occured during the crisis of 2008. If we back off , say 40%, that would bring us to $30 on the spot price.  Just venturing a guess here.

If that were to happen, the way things are going, it could be within several weeks.  Who knows, it could happen in several days!

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#14) On May 05, 2011 at 1:19 PM, reinman60 (< 20) wrote:

Regarding #12.

Tyler nails it in typically sardonic Zero Hedge fashion.  They will never raise ES margins.  Maybe they'll lower them to aid the plunge protection team.

What's interesting is that the manipulation of all markets has become so blatant. The maipulators don't even try to be subtle and  disguise their actions.

It'll work until it doesn't.

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#15) On May 05, 2011 at 1:24 PM, Valyooo (99.81) wrote:

The major question that I ask myself, as I stare at my huge losses on my miners....why are we picking a battle with the big banks?  There are other investment classes out there.  The big boys WANT the stock market higher, and WANT the silver market lower...so why be in silver if the people with power are against us?

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#16) On May 05, 2011 at 1:28 PM, XMFSinchiruna (28.54) wrote:

ajm101

It would be a rough task if it had to come exclusively from mined supply, but above-ground supply also becomes available as prices increase.

Valyooo

I'm not entirely sure.I would venture to guess it varies widely depending upon who you are, when you began, what you've been through, how certain you are of the eventual outcome, how you have positioned yourself accordingly, and whether you heeded the admonitions by precious metal veterans to eschew leverage entirely and eschew market timing from the core of one's exposure.

I know I am personally experiencing zero anxiety with this sell-off. To the contrary, I am having a blast observing the market dynamics with endless fascination. Back in April of 2006, I think it was, it was a different story for this Fool, as I think I've mentioned before that was the last time I was swayed to sell into weakness by a reduction in confidence about my assessment of the longer-term trend.

I bet for the leveraged speculators getting squeezed by the margin hikes, this likely feels like a sort of Armageddon. On the other end of the spectrum, if you've held strong through a far deeper correction as many of us did in 2008-2009 without selling into weakness, then you're even less likely to be shaken today because you know the trend has not yet run its course ... not by a long shot.

I had dinner last night with a guy who has competed in the Iditerod. I asked him what it was like, and he remarked: "it has the effect of making everything else that comes afterward in your life feel easy by comparison".

For a timely read, go back and take a fresh look at my article from May 2008: Gold Delivers a Gut Check. Same $#%!, different day.

:)

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#17) On May 05, 2011 at 1:30 PM, kdakota630 (31.51) wrote:

I'll have to take some time to go through everything, but I did want to point out the blog I reposted, calling attention to the Peter Grandich suggestion to sell silver on April 26th.  I'd say that was damn nice timing on his part.  Now you know why I respect this guy so much as it's not the first time.

Did I sell anything?  No.

"Why, Chachi?" you might ask.

To which I'd reply (after saying that I have no idea why you'd call me "Chachi") that I would've, had my investments been near their peak.  At the time, one of my bigger holdings (Great Panther Silver) had peaked at $4.90 (Canadian market), but was at about $3.30 at the time, down roughly 1/3.

I mentioned to a friend of mine that I was seriously considering selling Great Panther and from that taking a small stake in ZSL.  Had I done that I'd be up about 65% at the moment, but decided against it since I really didn't have the money (or the balls) to make such a call with real money.

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#18) On May 05, 2011 at 1:42 PM, XMFSinchiruna (28.54) wrote:

Valyooo

@comment #15 ... a valid sentiment, to which I would merely reply: that is what the non-pm segment of your equity allocation is for. Invest only that which you are comfortable wagering on the likelihood that the Fed et al. will ultimately not succeed in staving off a major monetary and economic crisis because their liquidity-injecting approach has not addressed any of the root causes of the crisis. To anyone who may think there is a good chance that we are on a path toward sustainable economic recovery and that a dollar crisis can be averted in the process, I might suggest that pms would not be the place for them to invest anything more than a miniscule allocation as a hedge. I think everyone could use some exposure to gold and silver, but I consider matters of allocation highly personal, and inextricably connected to one's own sense of certainty about the most likely macroeconomic scenarios moving forward. For me personally, I feel certain enough about the long-term trajectory of the dollar that I am willing to essentially go all-in, but I would never consider suggesting to any other individual that such a concentrated allocation is advisable. 

 

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#19) On May 05, 2011 at 1:44 PM, catoismymotor (72.81) wrote:

Not having any dry power at this time to purchase more of my now discounted producers is the only thing causing me to be anxious. Its just time to hang in there. I see no fundamental reason to sell at this point.

 

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#20) On May 05, 2011 at 1:47 PM, Valyooo (99.81) wrote:

I am 100% certain the dollar will continue to tank and that our recovery is not sustainable....but don't you think the big boys who have more money and are very smart, should also see the same thing?  Why would they want to pick a fight unless they were sure they could win?

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#21) On May 05, 2011 at 2:00 PM, XMFSinchiruna (28.54) wrote:

reinman60

@ comment # 13:

Yup, I certainly expect this correction to be swift and to the point with respect to its ultimate bottom, even if it takes a fair bit of time (as I hope it does) for silver to approach $50 with a shot at making its way through. In the meantime, I think we'll see the equities really begin to shine (finally).

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#22) On May 05, 2011 at 2:05 PM, reinman60 (< 20) wrote:

@valyooo

 Most of the big boys don't have a view.  It's mostly about having your quants setting up HFT algorithms to chase money flow and momentem.  This really tends to exaggerate moves both to the upside and downside.  

When the momentum reverses, and it will, they'll be the first (within microseconds) to be on the other side of the trade.

There's carnage in hedge fund land to day.  Some of the silver liquidation may be due to the huge losses they're sustaining in FX.  EUR/USD has moved over 400 pips in the last 24 hours, and those guys were all massively short dollars.  Short dollars, long PM's, its all the same trade to them.

These guys are massively leverage, and their panicing- they have to. But we can use it to our advantage.

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#23) On May 05, 2011 at 2:05 PM, XMFSinchiruna (28.54) wrote:

catoismymotor

That was the situation I faced in 2008, and so even though I was never panicked about the outcome, I certainly regretted being unable to purchase SLW at $2.51 when I called a bottom for everyone else.

I swore I would never suffer that fate again, and have strived to keep a 10% cash allocation or higher ever since. If you learn from the experience and enter future rallies with an eye toward raising a cash stake to deploy into a subsequent sell-off, then the experience will have been worthwhile.

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#24) On May 05, 2011 at 2:24 PM, catoismymotor (72.81) wrote:

Sinch,

The main reason I am lacking cash at the present is we are expecting a baby girl in late July or early August. All the spare cash is being put into getting her room together and saving for the time my wife is off work. Otherwise I'd have bought more Impact at $2.40 and this weeks $1.95.

All my miners, except SLW, have been purhased to hold for one to three years. I'm mostly content to let them ride unless a game changing event takes place.

I don't begrudge having to withhold new purchases until autumn because I know this little girl will be far more precious than anything that can be pulled out of a mine.

Cato

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#25) On May 05, 2011 at 2:26 PM, kdakota630 (31.51) wrote:

catoismymotor

Congratulations.  I don't think I knew that until now, and you are correct about the preciousness of your baby girl.  That's exactly how I feel about my two.

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#26) On May 05, 2011 at 2:30 PM, XMFSinchiruna (28.54) wrote:

catoismymotor

Beautifully said, and congratulations!!!!

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#27) On May 05, 2011 at 3:37 PM, goldminingXpert (30.70) wrote:

Remember back to 2008 when the hopelessly unsustainable oil bubble popped. Oil started to crater in early July 2008. By August 2008, the stock market began to tank and by fall, the whole economy's hidden rot was revealed to everyone in a great panic.

In May 2011, the stupid, unbelievable, and completely unjustified commodity bubble popped. If history is any guide, we'll be back to a 3-digit S&P 500 by fall. An economy can't run on fake money and 10% unemployment forever.

Now we shall see that the deflationists were 100% right while the hyperinflationists missed half the story... 

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#28) On May 05, 2011 at 3:58 PM, 100ozRound (30.42) wrote:

We shall see...

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#29) On May 05, 2011 at 4:21 PM, Valyooo (99.81) wrote:

Sinch, I am not going to hang on to your predicition so dont feel pressured to give me an honest answer, because I am not panicking...but when do you think we will be back to $50?

I have been averaging down.

These are my positions:

SLW average price $41.82

GPL average price $3.68

EXK average price $9.30

CEF average price $19.73

AGQ average price $255

SVM average price $11.80

If silver can sustain $50, my positions should see in total hopefully a 125% gain

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#30) On May 05, 2011 at 4:37 PM, goldminingXpert (30.70) wrote:

How long do you want to wait Valyooo? $50 again in 2011? No. In the next decade? Yeah, probably.

Why a dog like GPL and not FVITF? 

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#31) On May 05, 2011 at 4:40 PM, goldminingXpert (30.70) wrote:

I also agree with TMFSinch in that leverage should be avoided. AGQ is a massive time bomb, as the past week has shown. Buying ultra-longs with a longer-term time horizon is exceptionally dangerous and generally not advisable due to the great rates of decay.

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#32) On May 05, 2011 at 4:46 PM, cbwang888 (25.84) wrote:

GMX,

You missed the whole commodity runs and now you call for deflation? Except lower wages and housing price, everything grows.

How do those regions with strong currencies still see inflations and try to raise their interest rates by many attempts?

What happened this week is a commodity margin squeeze. The commodity market is for deep pockets, not average Jane and Joe. The economy has gone bipolar (the rich get richer).

Sounds like US debts are going to be dump into the sea just like Osama Bin Laden's corpse.

 

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#33) On May 05, 2011 at 5:12 PM, goldminingXpert (30.70) wrote:

Except lower wages. 

Awfully hard to run much of an inflation with wages falling, no? I honestly didn't think Obama and Bernanke were capable enough to reinflate the fake money bubble again after 2008, I give them some credit. They pulled it off for awhile. But now it's over. $4 gas, 10% unemployment, and 1,400 SPX make no sense. In the long run, unemployed people aren't going to be buying stocks or gasoline. 

How long can the looters and leaches survive off the rotted economy? One thing is for sure, people won't be able to pay $4/gas or $8/bushel wheat for long. Who is John Galt? 

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#34) On May 05, 2011 at 5:13 PM, reinman60 (< 20) wrote:

@valyooo

 

Don't mean to be presumptuous, as Chris is the real expert here, but referring to the chart in #9, after the sell off of 33.7%  in 2004, it took about 9 months for silver to reach its old highs again.  After the 34.9% drop in 2006, it took 6 months.  It took longer, more like 18 months, to come back from the big sell off in 2008, but I don't know if that's going to happen again.

Its a different world today, with worries about fiat currencies all over the world and worries concerning the stability of the  global financial system, it just could bounce back quicker this time.  The fundamentals that made gold and silver attractive to investors a week ago haven't changed.

To me, the story of this sell of is a market that had gotten ahead of itself, too much leverage, huge margin increases, and high frequency trdaing accelerating the short term trend, aas it did to the upside.  Just a few quick thoughts.

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#35) On May 05, 2011 at 5:36 PM, rofgile (99.10) wrote:

"Precious Metal Watch" sounds a lot like "Suicide Watch".

That's what it looks like to me when I look at SLV over the last week.. 8% losses a day!  This is like a dot com bust!

 -Rof 

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#36) On May 05, 2011 at 5:39 PM, portefeuille (99.78) wrote:

worries about fiat currencies all over the world

at least among the usual suspects, hehe ...

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#37) On May 05, 2011 at 5:56 PM, LiveOakGrey (< 20) wrote:

Sinch,

 You frequently mention good articles from jsmineset, and kdakota is pointing towards a new one for me, grandich.  Have you got a list of sites you think would be profitable to look over regularly to get an idea of larger trends in the markets, and general understandings of politics and HFT mechanics, etc?

 

With the HFT trades that allow the Hedgers to get off the wrong side of a trade and onto the right side of it in a few microseconds, is there any rule of thumb about how long it takes for them to dump even a hugely unprofitable position and convert it into a profitable one?  If it were you or I, it would take months to years of careful effort to recover from a big loss, but I don't have the feeling it works the same way when you can manipulate the markets and have super computers that scan the world's headlines to beat the masses to market.  Any thoughts along any of these lines?

 

The previous corrections in the silver markets listed above seem pretty sizeable, how long in terms of days/weeks did they take to run their course?  Is there a rule of thumb regarding the size of the correction and the swiftness it takes to occur?

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#38) On May 05, 2011 at 6:01 PM, wolverine1987 (< 20) wrote:

GMX,

Well there is only one problem with the whole thesis that the S&P will be in triple digits later this year--profits. They are at historical highs now, and profits, despite the bubbles, technicals, Bernanke and other factors, are ultimately what drives the market. Are you one of those that believe these profits are phantom and unsustainable? Of course, the multiple given to those profits can change, but they are real, tangible profits. Which would limit the downside one thinks. If we do get deflation, then all bets are off, but I would ask you--what sign do you see of deflation?

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#39) On May 05, 2011 at 6:12 PM, silverminer (37.03) wrote:

goldminingXpert

Why a dog like GPL and not FVITF?

Oh man ... thanks for the boisterous laugh! Wow ... that's a classic, even from you! I spent four years amassing my core position in that "dog" beneath $1, and guiding Fools to massive returns on the stock. And now every time the stock advances another buck on its way into double digits, I'll enjoy another chuckle thanks to that ridiculous drive-by, unsubstantiated assessment.

You've had all these years at your disposal to develop the expertise that your username falsely implied all that time ago, so what have you done with your time? You have been wrong about gold, silver, and the companies that mine them at every conceivable turn. And yet you never take an interest in altering your approach. Go back to writing tirades against Rosetta Stone.

I see you making the exact same error in judgement all over again that led to your failure then to see the huge rally in gold and silver coming. You observe the specter of deflation and/or deleveraging on the horizon, but you fail to understand the automated response of limitless liquidity that will be thrown upon that fire until it burns out of control.You miss the central thesis behind gold and silver, even after all these years. It's really quite astounding.

As for whether we will see $50 silver again in 2011, you haven't a clue; and neither do I. There are certainly scenarios by which it would be conceivable, and so your matter-of-fact reply is baseless.

rofgile

I'm still up for the year, and silver is still 30% above its 2011 low. Get a grip.

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#40) On May 05, 2011 at 6:19 PM, silverminer (37.03) wrote:

LiveOakGrey

There is no quick answer to any of your questions above, except to state that I would begin by bookmarking jsmineset.com, kingworldnews for the great interviews with precious metal veterans, and perhaps zerohedge for its attention to developments that are routinely overlooked by mainstream media outlets.

There are no rules of thumb with respect to corrections. Each one is unique. There has been a massive increase in worldwide interest in and understanding of precious metals since 2008, so I do not consider anything of that duration as a likely scenario. At some level, it will all come down to the timing of QEIII.

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#41) On May 05, 2011 at 6:24 PM, FleaBagger (32.74) wrote:

Buying some more .900 U.S. silver at ~27x face value today. Gonna buy about as much again if silver sees the south side of $30/oz. Also, I'm gonna sell some at $48/oz (when, not if, it goes back there) and buy rolls of nickels with the proceeds.

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#42) On May 05, 2011 at 6:26 PM, FleaBagger (32.74) wrote:

I was going to sell some at $48, but my sorry, lazy butt was too slow. For future reference: when Sinchy and kdak are both calling a short-term top in silver, it's probably a good time to take some profits and buy back in on the cheap.

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#43) On May 05, 2011 at 6:35 PM, LiveOakGrey (< 20) wrote:

Sinch,

 

Thanks for the additional sites.  What got you looking into pms at least as far back as April 2006?  Was it something Sinclair said, or did you come to these conclusions from other sources? 

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#44) On May 05, 2011 at 6:49 PM, silverminer (37.03) wrote:

LiveOakGrey

I began investing in gold and silver in 2005 when gold was about $425 and silver was about $7. I had come off some good market gains in prior years, and became more interested in seeking protection from downside risk. I researched bonds, and came into contact with some of the structural issues facing the dollar. It all started with an investigation of the dollar, which made gold an attractive option. Silver came into focus increasingly as I came to understand the structure of that particular market from a supply/demand perspective and study historical movements relative to gold. I don't remember exactly when I fist came across jsmineset, but that did represent a formative experience with respect to my long-term outlook on the sector.

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#45) On May 05, 2011 at 6:55 PM, reinman60 (< 20) wrote:

Just checked the futures settlement prices on the COMEX.  Front month to DEC15 is an amazing $1.38.  If they think physical supply is tight now, let's see what happens if they take the price down another few dollars.

This outsized takedown is not solving their problems, only making them worse.  This is getting more interesting by the day!

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#46) On May 05, 2011 at 7:10 PM, reinman60 (< 20) wrote:

Also, great post by Dan Norcini over at his blog.  He's a real pro, and has a great grasp of both the short term technicals and the long term fundamentals.

He makes a great point in the last paragraph about the Yen.  Look at a chart of the Yen, paying attention to Mrch 15, the day of the coordinated intervention, and you'll see what he's talking about. 

When I was trading FX, taking the opposite side of a central bank intervention was the closest thing to free money there was.   Moral of the story: manipulation works great in the short term, but in the longer term, if it runs contrary to the secular trend its doomed to failure. In currencies, and in the metals.

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#47) On May 05, 2011 at 7:16 PM, goldminingXpert (30.70) wrote:

GPL was a good purchase under a buck, a decent one at two, a questionable one at three and utterly foolhardy over that. I bought FVITF in the low 2s last year and had fun with it ... similar scale run-up as GPL, better company by far. Of course, if silver is going to $100/oz, even the dogs will run to the stars (heck, ECU Silver might go back to its all-time highs from 2006 :D :D :D)

To whoever said US Silver ... much better selection as well.

To the comment about S&P and profits. Sure the profits are real, not denying that. The profits are not sustainable though -- the entire economic recovery was built on a lie, easy money, and when credit vanishes, the profits go too. Corporations are getting loans at absurdly low interest rates (junk bond heaven!) and interest expenses will rise sharply soon.

Rofgile -- remember everyone screaming that oil was a bargain at $110 back in August 2008. It's down 30% off the peak, it's never going back under $100 again, they said. Months later, it goes to $40. Bubbles are fun fun fun until they pop.

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#48) On May 05, 2011 at 7:21 PM, goldminingXpert (30.70) wrote:

P.S. RST has dropped 60% during the greatest bull history of our lifetimes since my "tirades" began. RST was just another inflated bubble. Unlike silver (or tech stocks) RST didn't have many cheerleaders so it went down hard and fast.

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#49) On May 05, 2011 at 7:54 PM, silverminer (37.03) wrote:

goldminingXpert

@ #48: You missed my point entirely.  

@ #47: keep digging deeper, my man. You're on the record calling GPL a "dog". Nothing against Fortuna, which I own a little bit of, but to call GPL a dog is like placing your consistent and time-tested inability to distinguish good stocks from bad in the pm sector up on a Times Square marquee. 

Need I remind you, your CAPS score on metals and mining stocks is (805). That's negative 805 over a four-year period during which gold appreciated by 126% and silver added 186%. It's nothing personal, but until you stop trotting around here getting your jollies on every time gold and silver correct as though you possessed a time-tested understanding of the sector, I will continue to ensure that fellow Fools remain aware of the pertinent context.

You stood tall one day and admitted you were wrong about gold. Channel that humility, it'll do you a world of good.

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#50) On May 05, 2011 at 9:13 PM, workfor (< 20) wrote:

On a lighter note, this video reminds me of the CME beating the silver market over the head trying to stop it in it's tracks :-)

http://www.radiopaniekzaaierwebradio.com/video/when-i-say-whoa-i-mean-whoa-dumb-camel-gets_00:59__hBhlQgvHmQ0.html

 

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#51) On May 05, 2011 at 10:30 PM, nilesgold (20.05) wrote:

Sinch, I just recently started familiarizing myself with PM and PM miners and I have enjoyed reading your blogs.  I've initiated a couple of very small positions in junior gold miners (working towards compiling a basket of several) as well as a small position in AUY.

You've mentioned Silver Wheaton on a number of occassions and as far as I can tell have a very high opinion of it.  Their business model and operational performance are impressive, yet I am more than a little unsure of how to try and ascertain any kind of fair value that the shares are worth.

I did a few rough calculations based on their current and anticipated production, and assumed a $50 per oz price for silver.  What I got was revenue for 2011 around $1.4B and EBITDA somewhere in the neighborhood of $1B.  With assuming a generous $50 per oz price for silver I was expecting share price/EBITDA to be significantly lower than 12.  I am probably doing something wrong or maybe there is a more commonly used metric for valuing a company such as SLW?

 

thanks

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#52) On May 05, 2011 at 10:47 PM, goldminingXpert (30.70) wrote:

Quick glance at your math indicates you are correct, if not a bit generous.

The important thing to realize, though, is that the market is not using fundamentals to value SLW. Any attempt to trade it based on fundamentals will only leave you confused. SLW trades as a high-leverage proxy for the price of silver -- as if it were an ultra vehicle. Nothing more and nothing less.

A large number of SLW supporters no know about the company other than its basic and admittedly interesting business model. Easy money in, easy money out... momo momo just like 1999 all over again. SLW is more of an AMZN (way overvalued, good business, good management, will be a good investment again in the future) rather than a Pets.com though. ;)

---

I'm more than happy to have GPL be a notable call to stake some of my reputation to. I am also happy to remind you all that I have repeatedly spoken negatively of SA, NG, and ECUXF, and I will gloat happily when all four go crashing lower in the coming months. I love watching capital being re-allocated from losers to winners. That's the essence of free markets right there.

---

My CAPS mining score is unduly effected by the fact that a few bogus mining companies I expected to go bankrupt (ANV and GORO in particular) didn't and they have gone up 1,000% or so. Only a couple of bad picks caused my underperformance. As this is CAPS where accuracy is king, rather than real life, where we use stop losses, I unfortunately must continue to wait on those two

(though the ANV trainwreck is starting to become apparent in recent weeks to those with eyes that see. $0.00 cents a share in this quarter's reported earnings. If you can't make money now, you never will. ANV now has a $3.1B market cap and it made $200,000 (YES, THOUSAND) in its last quarter. Complete insanity.)

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#53) On May 05, 2011 at 10:51 PM, MoneyWorksforMe (< 20) wrote:

Peter Grandich is now aggressively buying gold and silver, including the miners after his top call at 49...

 http://www.grandich.com/2011/05/time-to-go-back-in-gold-1481-silver-35-75/

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#54) On May 05, 2011 at 11:36 PM, rofgile (99.10) wrote:

GMX:

 Hold on to your GORO downthumb, because it is looking like the correction should happen still.  They have recently gotten some bad results with their current producing venture (the one that was never really audited.. ahem ahem..) that is now ending production in less than a year since the first started production.  (And they are still paying special dividends with what.. financing??)

 -Rof 

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#55) On May 05, 2011 at 11:37 PM, awallejr (80.13) wrote:

How many times have we been down this road?  Asset x goes up, then corrects, people panic and the correction deepens. 

Trading is hard.  Few people are ever really good at it, and they wind up staring at their computer screens 24/7.

Invest and accumulate.  That wins in the long run.  That is exactly what Buffett did and does and guess where he stands on the wealthiest people in the world list.

If the longterm thesis remains intact, take these corrections as opportunities to accumulate further.  Don't jump in hard, do it a little bit here a little bit there.  And just stop staring at the screen.  Time goes by quick enough.  Don't rush it.  Make your commitment and stick to it and do other things.

Guess what, years from now silver will be at $100 an ounce. You want to try time the ups and downs good luck.  Otherwise learn the concept of WEALTH ACCUMULATION.  Stop listening to those CNBC'ers who just want to churn you for ratings.

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#56) On May 06, 2011 at 12:04 AM, awallejr (80.13) wrote:

 goldminingXpert

When are your going to learn?  You showed humility at one point then you go back to being offensively offensive.  There is nothing wrong with disagreements.  That is what makes the world go round.  It is how you present those disagreements that matter. 

Me?  I don't care.  I don't care how people perceive me.  I tell it like it is.  You listen to my advice or you don't.  But you seem to have an interest in financial blogging/analyzing.  You have an ability to write well, but you are losing that value by being caustic.  Make your argument.  Let that speak for itself.  Stop attacking, leave that to people like me.

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#57) On May 06, 2011 at 12:04 AM, AvianFlu (47.82) wrote:

I took this opportunity to pick up about 8K more CEF. Unless I have overlooked something I don't think our spending and printing binge is behind us so the long term trend remains positive for gold and silver. I almost went for more RJA but was drawn in by the massive declines in PMs.

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#58) On May 06, 2011 at 12:28 AM, reinman60 (< 20) wrote:

@awalleir

"Guess what, years from now silver will be at $100 an ounce"

I don't think it will take that long.

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#59) On May 06, 2011 at 2:37 AM, tdonb (22.52) wrote:

I have been waiting to deploy my reserve cash. Tomorrow may be the day for part of it anyway. CEF, YNGFF, EXK, GRS, and Silvermex all look interesting at this point.

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#60) On May 06, 2011 at 8:06 AM, MoneyWorksforMe (< 20) wrote:

Bought 50 oz. physical last night around 35/oz. Looking to increase position in GPL later today, probably near market open...

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#61) On May 06, 2011 at 8:27 AM, catoismymotor (72.81) wrote:

Sinch & kdakota630,

Thank you. I can't wait to meet her. :)

Cato

 

 

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#62) On May 06, 2011 at 10:00 AM, silverminer (37.03) wrote:

And then GMX has the gaul to suggest that SLW is overvalued and that many investors don't understand the stock.

Here again, for the record, a prior conversation comes to mind that I feel compelled to share with those that might otherwise become unduly swayed by these wholly uninformed and unsubstantiated opinions of his. This time from December 11, 2008. On that date, SLW closed at $4.34, for a quick 73% gain in just over two weeks from the multiyear low reached on the date this article appeared.

I advised Fools to remain focused upon the long-term potential of the stock, stating: "Decide now, while you're feeling great, whether you're in for the long haul or a quick gain. If, like me, you're looking to the long-term picture where a devaluing USD is likely to press gold and silver to new highs, then you won't mind the dips one bit."

Then GMX advised the blogger in question to sell half his position in SLW even though he admitted to having zero understanding of the business model. His exact words were:

sell half, keep the rest if you like it. I've never bothered to try to figure out SLW's opaque financials, but as a corporate offspring of Goldcorp, I have to assume the worst. With no cash and lots of debt, they are highly leveraged to the silver price cycle... if you are a bull on silver here, you probably like this stock. If like me you are neutral on silver, than the debt risk is just too much, take your profits with at least 50% of your shares as this market is so tough, take the profits when you got 'em.

Opaque financials? Wow, GMX, that's a creative way to characterize one of the most beautifully simple income-generating business models in their entire world. He later backtracked from that adjective, but it only gets worse for GMX.

I replied: 

If your goal is locking in profit regardless of long-term earnings potential, then I can't argue with GMX's advice. However, his characterization of SLW's financials as opaque is utterly preposterous. Aside from how insanely cheap the shares were below $3, the other main reason for my wishing to delve into a detailed valuation analysis of SLW is the fact that SLW has THE MOST TRANSPARENT FINANCIALS IN THE INDUSTRY, bar none!

Dealing in only one metal, SLW has none of the discrepancies between total costs and costs after by-product credits that so often obscures the forecasts for most miners. They carry none of the risks associated with potenetial development cost overruns that every other miner has to contend with. Second, SLW has paid up-front for rights to the silver streams at a fixed price, making SLW the only pm 'miner' with measurable, fixed costs over the long haul. The terms of every silver stream deal ever penned are available right on their website, and they offer a treasure trove of data on projected production volumes at every project in their portfolio.

The company carries a very reasonable $351 million in long-term debt relative to its $1.11 billion market cap. Besides, as I pointed out in the article:

"Silver Wheaton has targeted silver production of about 16 million ounces for 2009. With the production cost fixed at $3.90, cash flow from operations in 2009 would be roughly $98 million at $10 per ounce of silver. If silver stages a recovery to an average of $15 for 2009, the company will rake in about $178 million, or more than one-half the company's entire long-term debt of $351 million."

As for former parent Goldcorp, well GMX and I have gone back and forth on that company before. :) [Remember?] While acknowledging some serious shortfalls in the effectiveness of company management in the past, in retrospect no one in their right mind can argue with their move to sell their entire 48% SLW stake back in January for about triple what the stake would be worth today even after the recent rally! With the $1.5 billion in proceeds, GG paid down its entire $1 billion debt to achieve the cleanest balance sheet among all the world's major miners ... of anything let alone gold! With $473 million in cash and no debt, Penasquito coming into full production next year, and with some of the highest quality gold assets in the world, Goldcorp could outperform with the Geico cavemen running the show! This company cannot fail going forward. Would I run out and throw money at the stock in the midst of this rally? - no! But I would most certainly keep GG near the top of my watchlist.The next time these manipulated gold prices get hammered down by the unregulated shorts at the investment banks, I would treat that as an opportunity.

And then he admitted the obvious:

Opaque was the wrong word to use. My apologies. I don't understand how they generate money, some sort of agreement to buy GG's silver and then sell it or something. I've never understood it and haven't tried to. I understand mining, and that's what I follow, if I want a spec silver play, I'll buy CDE (I'm not looking for one though) NXG is my under a buck spec play, and with news like we got yesterday with the Y/D mine, we're in great shape.

So ... I happily explained the business model to him:

It's really not complicated, and SLW is hardly a spec play. SLW pays upfront cash to miners for purchase rights to their silver production at about $3.90 per ounce either for the life of a given mine or for very extended periods of 25 years or more. They acquire these assets -- silver streams -- at very reasonable prices by targeting either A.) companies for whom silver is but a by-product who value predictability of revenue from that by-product, and/or B.) companies who need capital in the near-term to bring an asset closer to production. GG created the entity as a very creative vehicle for creating stable income for silver by-product, and it stands today as one of the most unique business models in the industry. It is, in my opinion, an infallible model selling for an insane valuation.

After reading my explanation of the business model, he either still didn't grasp the model, or didn't believe that I was providing a full picture of it. GMX then asked:

why would someone sell them silver at $3.90 an ounce. If that is really all there is to it, SLW should be making a mint as they are ripping off the entire mining industry.

So I explained further, scolding him for erroneously suggesting that SLW was "ripping off" the industry:

Why admit to having no knowledge of how a company operates and then proceed to make a spurious claim like that?  I explained precisely why companies would want such a deal in my comments above. They're not ripping anyone off... they get a great price, but they give up capital up-front. At least read my article that spawned this thread in the first place.DYODD

Then, after I laid the entire picture out for him on a silver platter, a little light finally seems to go off in his head suggesting that maybe there is greater potential there than he previously realized when he knew absolutely nothing -- zilch -- about the nature of the company or how it generates income.

He closed with: Hmm, I'll have to check these guys out, maybe being the corporate offspring off GG isn't so bad after all.

...............

Fast forward two and a half years, over which time I have maintained a constant vigil on the company with uninterrupted analysis, and discussed in great detail the means by which Fools can ascertain fair value for the stock under disparate silver price scenarios. And yet still GMX has the gaul to suggest the stock is overvalued without offrering a shred of analysis to back his spurious claim, and by extension thereby dismissing in full the opposing assessment of the very person who taught him how the company worked when its stock traded for a small fraction of its current price and he was advising Fools to sell.

....

GMX, I derive no pleasure from taking you task in this way. You continue to bring it upon yourself by: A.) sticking with your original username which has already been shown to be a farce, B.) making inflamatory statements against quality companies and their stocks without offering a shred of evidence or analysis to substantiate your claims, and C.) continuing to employ a misguided conceptual framework for the entire gold and silver bull market with a degree of self assurance that is both unwarranted by your failed track record and inconsistent with your prior admission of wrongmindedness with respect to the sector.

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#63) On May 06, 2011 at 10:02 AM, catoismymotor (72.81) wrote:

I find it intersting that all my producers are up 2% to 3% this morning. It looks like the smart money is picking up that low hanging fruit.

 

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#64) On May 06, 2011 at 10:23 AM, rofgile (99.10) wrote:

Isn't a "gaul" a barbarian that sacked Rome?

I think you are looking for "gall".

 -Rof 

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#65) On May 06, 2011 at 10:42 AM, Valyooo (99.81) wrote:

Opaque financials?  Its the easiest company to understand in the world.  Its like a bank for silver mines.  Few employees, easy to understand metrics and business model, good management, growing like crazy.  To be honest, its the only silver stock I do understand very well.  The rest of my silver positions are a basket.  I believe equities should outperform the metal, but I don't have the time to learn how to value a silver company, so I bought a basket of the ones most highly recommended by Sinch.  Do I wish I had the knowledge about every company, yes, but nothing wrong with a Sinchi ETF.

Anyway, I picked up some PAAS this morning when it was up 2%.  I have a LOT of silver now

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#66) On May 06, 2011 at 11:54 AM, silverminer (37.03) wrote:

I've been responding to this correction precisely as I have to each and every bout of weakness over the past several years: by systematically redeploying cash raised into strength in a manner that accelerates as the sell-off deepens and successive targets for technical suport are broken. As such, yesterday was my biggest buying spree yet, and whether or not current levels hold in the near-term, I remain supremely confident that the purchases I made yesterday will yield a fortune. I retain some cash still in reserves, but if we never dip lower I will be perfectly content with the amount of buying I was able to complete to this point.

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#67) On May 06, 2011 at 12:40 PM, silverminer (37.03) wrote:

A good read from Trader Dan:

http://traderdannorcini.blogspot.com/2011/05/collusion-by-fed-officials-and.html

With respect to the above discussion of key sites for pm investors to bookmark, Trader Dan's blog would be another.

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#68) On May 06, 2011 at 12:51 PM, REITDUDE (87.89) wrote:

Silverminer, Sinch, thanks guys- best chain of comments on a blog ever. 

Ok not ever, but right up there with some of FB & Specbear's old stuff.

Regarding CEF, there are plenty of examples where similar vehicles trade at irrationale premiums/discounts to NAV (TPOU, FFH, GRLE), but none are quite as simple to calculate & know the reasons for as the 1 week swing in CEF (panic). Still a good deal.

 

 

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#69) On May 06, 2011 at 2:03 PM, reinman60 (< 20) wrote:

Another site worth a look is The Golden Truth, written by Dave in Denver, the manager of a PM and mining stock fund.  As a fund manager, he's on the front lines every day, and he has some good, sensible insights into these markets.

 

http://truthingold.blogspot.com/

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#70) On May 06, 2011 at 2:20 PM, silverminer (37.03) wrote:

nilesgold

With respect to valuing SLW, it's the most beautifully simple valuation exercise in the industry. A very conservative reserve-focused valuation would place fair value at about 1.5-times the long-term average prevailing silver price for silver going forward (over at least a 3 to 5-year timeframe). I haven't run a discounted cash flow valuation analysis since the acquisition of the Barrick stream, but that is bound to yield a significantly higher multiple over one's same long-term average silver price projection (likely greater than a 2X multiple). Because of the company's unique cost structure that is essentially fixed, valuation can be condensed to a simple multiple of the prevailing silver price, after which point one need only track new acquisitions and production guidance to tweak the multiple as needed.

Back before the Barrick acquisition and before the Silverstone acquisition, I used the reserve-based valuation multiple of 1.2 that applied at the time to predict SLW's eventual surpassing of the price of silver in nominal terms. After pressing well ahead of spot silver since that time, the stock fell back below silver recently and now stands at about 1:1. Short-term modulations aside, anytime one can purchase shares of SLW for equal to or less than the price of silver, one can rest in complete assurance of the terrific bargain thus obtained.

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#71) On May 06, 2011 at 2:21 PM, silverminer (37.03) wrote:

reinman60

@ #69: No ... that guy is terrible. Terrible!!

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#72) On May 06, 2011 at 2:28 PM, reinman60 (< 20) wrote:

Why so?  I'm not looking to him for specific advice, but for yet another perspective on the markets.

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#73) On May 06, 2011 at 3:20 PM, silverminer (37.03) wrote:

reinman60

re: comment #71: It's nothing personal against the blogger you mention, but his irrational, vitriolic reaction to my article about Hecla Mining revealed what I see as a troubling failure to retain objectivity, presumably as a result of dogmatic bullishness on a stock that I gather might have been one of his core or favorite holdings. He also displayed in that post a tendancy to invest based upon under-researched or unsubstantiated presumptions, which is not a quality one might properly look for in a source for guidance on this sector. I have reviewed several of his rants since that time, and have been rather unimpressed with the content. I don't even see a link from his blog to any sort of site that would corroborate the existence of a fund that he references in his posts.

In any event, his rash and careless assessment of the matter at hand appear to have cost him in the near-term. While he was doubling down on HL on February 28 (around $10) as he avows on the basis of my "hack analysis", I was alerting Fools to what did prove a substantial blow to the stock's momentum. Over the next two months, Hecla drifted lower while its silver rivals gained 15-40% during silver's push towards $50. [And yes, it was the development itself, and not my coverage of it, that produced the loss of momentum in the shares!]. I then proceeded to sound the all-clear for HL near $9, followed by more vocal buy signals as HL approached $8.

Anyway, if dismissing carefully researched analysis as garbage after a mere 5-minute review (by his own admission) of a complicated filing, and then doubling down on a stock based upon a failed presumption that said analysis is A.) baseless, and B.) responsible for that day's sell-off in the shares represents his version of the "Golden Truth", he can keep it as far as I'm concerned. 

The last thing Fools need when seeking commentary on this market is someone who may be unable to view the market objectively. I see his dogma being inserted throughout his rants, and I just don't see the difference between it any of the thousands of other spots on the web where one can find predictable confirmation of bullish expectations ... if that is all that they seek. I personally think Fools would do best to steer clear.

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#74) On May 06, 2011 at 3:23 PM, silverminer (37.03) wrote:

The latest from Jim Sinclair:

Dear Friends,

Today’s action totally eliminates all and any concern for the price of gold. Today’s action lights up the $1764 Angel in gold.

Technical damage always requires technical repair. That type of price action is a perfect set up for a major launch of the gold price in June.

Relax and enjoy your protection and insurance positions.

Regards,
Jim

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#75) On May 06, 2011 at 3:28 PM, kdakota630 (31.51) wrote:

silverminer

LOL!  That blogger's response was hilarious.  Since he was so far off, maybe he's onto something regarding Ellen Degeneres, and I might use her for some NFL gambling tips.

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#76) On May 06, 2011 at 3:42 PM, silverminer (37.03) wrote:

kdakota630

:P My wife tells me that Ellen's Mom is the real authority on football.

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#77) On May 06, 2011 at 5:16 PM, silverminer (37.03) wrote:

http://www.nysun.com/national/amid-a-collapsing-dollar-two-debates-on-gold/87333/

Mr. Kaplan likened America’s fiscal policy since 1971 to the actions of Wile E. Coyote in the “Road Runner” cartoons, who runs over the cliff so fast it takes him a moment to realize there’s nothing beneath his feet. America's previously robust economy and the position of the dollar as the world's reserve currency has delayed, Mr. Kaplan suggested, but will not prevent its downward plunge. “We’ve passed the tipping point,” he later warned.

“We are going back to the re-monetarization of gold by investers who no longer trust the central banks . . . .,” concluded Mr. Hathaway, “The one thing I do know is it is not a bubble . . . . It is not over valued.”

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#78) On May 06, 2011 at 5:20 PM, silverminer (37.03) wrote:

Another interesting chart from zerohedge:

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#79) On May 07, 2011 at 11:31 AM, skypilot2005 (< 20) wrote:

I’ve received some good information from Sinch’s blog, as well.  In the spirit of returning the favor, I had a positive surprise on one of my miners this week I’d like to share.

I reduced my Commodities exposure by selling some of my Gold, Silver and Copper miners earlier in the week.  (pure luck)  I don’t believe in Market timing.  Held pat on my Potash and Uranium producers.  

While reviewing my remaining Commodities’ positions today, I have found something  interesting.  It is a position I have in Pele Mountain Resources that I didn’t sell this week.  OTC: (GOLDF.PK)  TSX: GEM 

http://www.pelemountain.com/

 

On April 29, I found some change under the driver’s seat while cleaning the interior of my vehicle and purchased a few K shares @ .2589.

It is the only remaining miner commodities firm that was up for the week for me.  +7.36%.

52 week: .09 - .69. 

They mine Gold, Uranium, Nickel, Diamond and Rare Earths.  I took a position because I find the diversification appealing.  Uranium Nuclear Energy – Global Warming, Falling USD, Rare earths demand in any scenario, etc.  I believe all of the properties are in Canada. 

Pele Mountain Resources is focused on the sustainable development of its 100-percent owned Eco Ridge Mine Rare Earths and Uranium Project. Eco Ridge is one of very few North American deposits with NI 43-101 compliant REO resources and is located in Elliot Lake, the only Canadian mining camp to have ever achieved commercial REO production. An updated Preliminary Assessment is on schedule for expected delivery during the second quarter of 2011, incorporating design enhancements achieved since the initial positive Scoping Study in 2007 and, for the first time, providing a detailed economic model based on revenues from both REO and U3O8.

With well-understood geology, excellent regional infrastructure, and strong local support, Eco Ridge is an ideal location for a safe, secure, and reliable long-term supply of REO and U3O8. Pele also holds interests in a portfolio of Northern Ontario gold properties at Highland and Ardeen.

Here’s the latest Gold piece of the pie information for them.

http://www.pelemountain.com/news/030711_PeleMountainProvidesGoldProjectsUpdate.pdf

Here are the latest financials:

12/31/2010:

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=49041

Not making money and share dilution may be concerns.

Comment on the year ended Sept 30, 2010

http://ca.hotstocked.com/article/4080/pele-mountain-resources-inc-cve-gem.html

Technical Report Eco Ridge – Elliot Lake Area - Ontario

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=49044

Fool On,

Sky Pilot

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#80) On May 07, 2011 at 11:51 AM, skypilot2005 (< 20) wrote:

Almost forgot:

Full disclosure:

I bought some more YNGFF @ .523 and initiated a position in HMNC @ $2.45 this week.  I am up on those purchases for the week.

 

Sky Pilot

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#81) On May 11, 2011 at 4:02 AM, silvermind (< 20) wrote:

http://caps.fool.com/player/skypilot2005.aspx

 

Thanks for the look at Pele Mountain Resources.  They already have 43-101 on $3B of U, if I'm not mistaken, and over $1B in REO ($5 a pound).  Does that sound anywhere close to accurate Sky Pilot.  

 Thanks for the contributions you make to the blog.  BTW - this isn't the first time you mentioned finding $ under your car seat.  Better insure that car!

 

 

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