HUH? The DOW closed at its lowest level since 1997.
A few of The Muppets on CNBC have been pointed to the copper and oil charts as potential indicators that the economy might be about to show some life and that the market may be ready for a rally … from extremely oversold conditions. In particular, they are referring to their rounding bottom formations, which were followed today by breakouts, especially copper…
Then, this morning the DOW, S&P and the DOG were all called a fair amount higher on this news…
Perhaps coming Chinese economic stimulation is MORE than necessary as the true state of Chinese and Asian economic activity is not properly understood. The latest from my friend since 1980, Frank Veneroso…
***Neither commentary is mutually exclusive. If the Chinese go all out here because they are in such a mess, they will need a lot of oil and copper, etc. Better their people have shovels than guns.
This is a roundabout way to get into covering my field, gold and silver. Gold was bombed for 7 days in a row … from top to bottom $100+. Two weeks ago the world was falling apart and it was THE safe haven play. By yesterday the price drop had many of its advocates stumbling and the press was quickly ready to pan it as a GO TO investment.
This really is silly people stuff. Twenty to Thirty years from today people won’t believe the garbage reasons offered for gold doing what it does … emanating from the press and The Muppets. In a bigger picture sense it is equivalent to those who thought the world was flat some 500 years ago.
Gold is more a safe haven play than ever and the price is going to the moon, along with silver. The only reason we have seen and endured a stunning 10% drop in the price of gold in 7 days is because the US Government/Gold Cartel ordered the price down. Once they set the fall in motion, it led to normal technical selling by funds, as most follow money management/stop loss principles. The Gold Cartel has been feeding on these folks and the likes of momentum trader Dennis Gartman for the 10½ years The Café has been open.
Gold is now in its 9th year of making new highs; and still, many pundits and Muppets are questioning it as an investment because it has no yield. Another huh? Yep, and it has no counterparty risk either, nor has it lost 50% of its value like the DOW over the past 12 years.
There are so many dingbats out there who relate back to the 1980 gold high and say it has gone nowhere, or little to nowhere, which is more silly people stuff. Tell that to those who bought the DOW over the past 12 years, who are at best even, with most EVERYONE losing money, while gold has soared.
Silly, silly, silly.
On that note, veteran Café members will remember Neal Ryan (had not heard from him in 6 months or more) who spearheaded the Blanchard & Co. lawsuit against Barrick and JP Morgan. He just checked in with CP and me this morning. Forget the mental midget, Muppet gold commentary. This is the real deal and the main reason for gold’s $100+ price drop…
Gents,
hope all is well on your end. I must profess that I haven’t kept track of things in the metals markets much recently, but did some quick work for a friend who was looking to invest and asked about bank selling. Just an FYI since I was trying to explain to him why when central bank activity ramps up it’s the time to buy….Euro CB’s have dumped over 220 tonnes of gold on the market in the last 3 weeks…ie. they’ve met nearly half their yearly selling quota in 3 weeks. Hadn’t seen anybody mentioned anything like that in any news lately, though hadn’t been looking either. It’s always the interesting stuff that no one in the mainstream media seems to notice.
keep up the good fight!
Neal
Neal, who is so well connected and really knows his stuff, what? … the press getting to the gold truth? Explaining it to the bewildered public?
Oh well what fun!!! From MIDAS yesterday (referring to JB’s ECB selling numbers)…
“But the key point of the note is that this 38 tonnes of selling is dwarfed over a two month period by the 249 tonnes GLD has supposedly bought over the same period of time (see Adrian below). Hmmm.”
Which if Neal’s info is correct, means The Gold Cartel dumped 211 tonnes SURREPTITIOUSLY as part of their gold price suppression scheme and was THE real reason gold fell like it did. It all fits.
Oh, so many of the mainstream gold world folks is a bunch of shallow nincompoops!
CNBC’s Jim Cramer was jumping up and down about silver last night. It was quite a lengthy segment on silver. However, as bullish as he was, he said that gold and silver were going DOWN first, so buyers should scale in at intervals on the downside. Silver popped early to $13.17 but gradually fell apart, while gold was smothered for no apparent reason again, except for The Gold Cartel’s reasons. Gold roared early up to $922.30, then was nailed by the bums to $905 before stabilizing. We have witnessed this pattern (the cabal slams gold after an early burst) over and during the past (now) 8 days of successive losses. Perhaps we have a double bottom above $900. With so many buyers lurking out there between $880 and $900, that would not be a surprise. Then again, there is a horrendous US jobs report coming on Friday and gold is always nailed around that report. Perhaps that was part of what this takedown was all about and the major damage has been done already.
Silver was aided in the morning by the VERY firm copper and oil prices. The hoopla over the Chinese stimulus comments didn’t hurt either.
The gold open interest only fell 2,071 contracts to 365,271 (not much liquidation there), while the silver OI went up a slight 15 contracts to 93,051.
The yield on the 10 yr T note is 3%. The dollar fell .73 to 88.57. The dollar/gold relationship has taken on an entirely new dimension for the time being.The CRB came back from the dead, gaining 7.78 to 211.45.
AM gold goodies from John Brimelow…
Indian ex-duty premiums: AM (S15.63) PM ($8.79) with world gold at $913.58 and $911.80. Basis Delhi – well below legal import point. After a soft start, the rupee managed a rally at last, closing at $1 = R51.35 (Tuesday R51.95). This had a notable effect on the PM premium situation. The stock market also managed an up day. Closing 0.23% above Tuesday.
A rally in the rupee could have an important influence on world gold at this point.
In a somewhat confusing development, The Gartman Letter today speaks of cutting another unit of gold from its model portfolio, by my reckoning eliminating its position. But the portfolio summary reflects neither today’s nor yesterday’s action.
Nevertheless, the attitude towards gold now held by this well-informed and influential commentary is clearly unenthusiastic.
Of interest is that MarketVane’s Bullish Consensus for the S&P, which is normally very sticky, slipped a point last night to 32%.. In the past couple of years it has been lower only 3 days, October 8-10 last year, when it bottomed at 29% (and then saw a 10 point rally. On some reckonings (Hays), that remains the “internal low” of the market.
Since very recently selling in gold appears to have been linked to stock market weakness, this could be important to gold’s friends.
***
MIDAS note: there will be JB evening input (more gold goodies) between 5 and 7 Eastern Standard Time unless otherwise notified.
And here it is…Tuesday’s deep $34 intraday Comex sell-off and down $26.40 loss (2.8%) saw only a minor fall in open interest. Only 2,071 lots were shed (0.6%). In the first instance this implies there continues to be a substantial short interest in the market, and that the widely reported long-liquidation is exaggerated, at least as far as Comex is concerned.
Today a promising early Comex rally was reversed on heavy volume – by 10am 62% of the day’s estimated volume had traded and gold was $10 off its high. Gold then drifted down to a floor close loss of $6.90. Only 99,266 lots were estimated to have traded – switch effect 8,734.
A great deal of attention is now being paid to the slack Asian demand/scrap reflux situation with wider discounts on kilo bar being reported, especially in the Far East (50c HK, 75c Tokyo). See
http://in.reuters.com/article/businessNews/idINIndia-38330720090304?pageNumber=2&virtualBrandChannel=0
On the other hand, a survey of US coin and bullion dealer sites this afternoon suggests that US premiums have widened slightly, and remain very high.
MarketVane’s Bullish Consensus for gold slipped a point to 74%.
The GLD ETF achieved a fifth day running with reported gold holdings static at 1,029.29 tonnes.
While this is the 8th down day in a row for Comex gold, the bears cannot be said to have really pressed their advantage, with volume fading away once the early rally attempt was blocked. Neither the HUI (down 0.94%) nor the XAU (up 0 02%) lost their curious gains of yesterday. Some will see the apparent exit of The Gartman Letter as a positive sign.
The market remains interesting.
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Now we know Gold has come roaring back but I couldn’t agree more “Very Interesting”!-Jschulmansr
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Gold: Entering an Accelerated Trend Channel – Seeking Alpha
By: Olivier Tischendorf
Gold has history on its side. It is a proven way to preserve one’s wealth over time. It acts like an insurance and it is highly unlikely mankind’s behavior during the last 6,000 years is going to change anytime soon. Some things never change. Two of those things are human nature and gold’s capacity to preserve one’s purchasing power.
That said gold has recently reached new highs in various foreign currencies. The chart of gold in Euro terms tells the story of what is to come. Don’t take this lightly. This is an important event as new highs typically attract more buying. If the Europeans start allocating more funds to physical bullion demand will increase drastically and gobble up supply. It is reasonable to expect additional upward pressure for the price of gold. Physical accumulation is accelerating on a worldwide basis. Keep in mind gold is a very tiny market compared to the equities market. A change in asset allocation resulting in a small increase to bullion exposure could easily double worldwide demand for gold bullion investment purposes.
A story hitting the wires recently is that: Greenlight Capital’s founder, David Einhorn, is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending. Einhorn fund’s recent decision to invest in physical gold bullion is testament to increased awareness of gold’s bullish long term trend and it looks like this is only the beginning to added buying pressure for gold bullion.’ For full coverage of the story click here.
It looks like the price of gold in US Dollar terms is merely lagging other currencies as the US Dollar has been very strong lately. It is still early to draw conclusions as the US Dollar could stay stronger than most people expect but the new accelerating trend channel looks to be a valid one.
So what it all comes down to is that worldwide accumulation of physical gold is accelerating. Hence the odds the gold price is going to accelerate as well are rather high.
If you haven’t built a physical bullion position yet now is a good time to think about doing so. I typically recommend holding at least 5% of one’s liquid net worth in gold bullion held in your own possession. Increasing that percentage up to 20% isn’t that bad an idea either. Although the markets look like they might want to stage some kind of rally right now taking a longer term perspective indicates the gold trend is going to make you more money than buying the S&P500 via the SPY.
Gold should reach new highs in US Dollar terms soon following the lead of foreign currencies like the Euro, the Canadian Dollar, the Australian Dollar, the Swiss Franc and the British Pound Sterling to name a few. As long as the lower trend line of the new dotted trend channel is not breached ‘the trend is your friend’ and you should hold on to your gold bullion position. You could use that level to protect your position with a stop loss.
If you want to be more aggressive you should consider buying silver bullion. The silver market is much smaller than the gold market so the market is considered to be a riskier one. But once the public is going to stress silver’s monetary significance as opposed to viewing it simply as another commodity silver prices will increase significantly and should ultimately outperform gold. I recommend closely watching the gold – silver ratio for clues. Historically the ratio has showed to be lower than the actual one. Watch for the ratio to go back to the 55 level and overshooting to the downside as soon as silver garners more interest.
You can easily keep track of the three charts and how they evolve over time by visiting my public list.
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My Note: Remember even with the $100 oz drop Gold came nowhere close to breaking out of even it’s upward accelerated channel! Patience my friends!
! Catch the New Bull! – Buy Gold Online – Get 1 gram free just for opening account– just click here and then again on the Gold Bar!, no minimums – Buy Safely, quickly, and at low prices, guaranteed! – Bullion Vault.com
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Greg McCoach: Gold $2000/oz by Year’s End? – The Gold Report
Source: The Gold Report
Successful entrepreneur turned bullion dealer Greg McCoach brings more than 20 years of business experience, a vast network of mining contacts and his unique precious metals industry insights to the mining investment newsletter he launched in 2001, The Mining Speculator. In this exclusive interview with The Gold Report, Greg outlines the ‘new’ criteria for junior miners, explains why he favors the juniors over more senior producers and advises a combination of both physical metal and stocks for investors to protect themselves in today’s market.
The Gold Report (TGR): In your January newsletter, there’s a table that shows how the HUI Gold BUGS Index over 10 years was the top asset class. Can you talk about gold as the top asset class compared to these others?
Greg McCoach (GM): We see by the statistics that the HUI Index, which is a measure of gold and silver precious metal stocks, has performed better than any other asset class in the past 10 years. Now what’s interesting is that we’re still in the process of watching this gold bull unfold. In terms of the four stages of a bull market, we are probably past the midway point and heading into the latter stages. This is where the parabolic moves in the precious metals will start to happen. And with all that is unfolding in the world economic scene, it’s not difficult to see why gold will soon be soaring.
TGR: So you definitely think this bodes well for the next phase of the gold bull market; there will be a parabolic move?
GM: Yes. This is where you’re going to see gold really go to levels that people can’t even comprehend. Up to this point, gold has been a surprise to many in the mainstream media. What investors need to understand about the bull market in gold thus far is that the numbers that we’re dealing with, $960 an ounce gold right now, is nowhere near the 1980 high in gold of $875 an ounce.
You have to inflation-adjust those 1980 numbers for 28 years of true inflation. If you did that, the $875 high in gold would have to be $6,500 an ounce in inflation-adjusted terms. For silver, it’d be $400 dollars an ounce. So when you see silver at its current rate of $14 an ounce and gold at $960 an ounce, in real inflation-adjusted terms, those prices are still dirt cheap, relatively speaking, compared to where they’re going to be going.
As we see the world financial system continue to unravel, the dollar along with all fiat currencies will just implode leaving gold as the currency of last resort. Gold, and silver will go into the stratosphere as this happens. People need to remember that what took gold and silver to their all-time highs in 1980 pales in comparison to what we are dealing with now. The world has never witnessed the likes of the financial destruction that is now underway. It is truly frightening.
TGR: You say in your “Greg’s Crystal Ball” section that you think the mania phase is going to start happening sometime next year, in 2010.
GM: I think by the end of this year things are going to be so bad worldwide that gold is going to become headline news and that will become the driving force towards the parabolic moves. What’s happening right now is that the big money is still playing the paper game of musical chairs. “Paper musical chairs,” I call it. When the music stops, people run from one chair to the other chair looking for safety. They run from bonds to dollars to Euros, etc., trying to find the safest place. But they’re not finding it. Why? Because the paper system as we’ve known it is unraveling. So people are trying to chase safety. Well, they can’t find it because it doesn’t exist. They go into dollars, and they feel comfortable there for a little while; then suddenly the dollar tanks again, and then they run out of the dollar to another paper currency.
Ultimately, when the music stops, they’re not going to run to a chair; they’re going to run for the exits. When that happens, they’re going to discover the asset class known as gold. That’s when these parabolic moves are going to happen. As that happens of course, the select precious metal mining stocks will move up accordingly. The leverage investors can get will be phenomenal during such a scenario.
TGR: You say the key is to own the physical metal, as well as the stocks. What do you recommend as far as percentages in a portfolio?
GM: Right now my personal portfolio is 25% cash, 25% physical metals. I take physical delivery of gold and silver. I have 35% in select precious mining stocks, junior mining stocks mostly, and then the balance is in Canadian oil and gas trusts that pay a monthly dividend check.
TGR: You favor the juniors over the more senior producers simply because of the growth potential?
GM: Yes. The leverage is better. For me, personally, I’m willing to take the extra risk with the juniors because I feel like I know what I’m doing and I’m confident about it, so I feel comfortable in being able to identify the juniors that are going to perform very well. The seniors will do well, but they won’t do as well on a percentage basis. In other words, there’s not as much leverage with the seniors as there is with the quality juniors. But the big problem for the average investor is trying to understand what a quality junior is. There’s so many of these companies out there, 80% of which are nothing but moose pasture, and it’s very difficult to sort through all the promotions and scams to find the real jewels. That’s my job as a newsletter writer; that’s what I do. I travel the world trying to sort through all the garbage to find the real opportunities that can deliver the big returns.
TGR: What do you see right now with the juniors? Some of them definitely are climbing back up.
GM: I think it’s nice to see them recover a little bit. This is a very good learning situation for investors of mining stocks. Look at the companies that are rebounding. If we have another implosion, which companies do you want to buy? The ones that rebounded the quickest and the most in the past several weeks, months.
Since the bottom in late November, early December, we’ve had companies that have doubled, tripled, and even quadrupled if you had enough courage, or any cash, to buy back then. But there are other companies that haven’t moved at all, and they’re just stuck in the mud. So, obviously, you have been given a great opportunity to see the companies that are more quality oriented, that have the value, that have what the market is looking for, and those companies are the ones you want to really pay attention to.
Since a lot of the stocks on our list bottomed out, the top 10 list, in particular, has had some of the stocks do quite well. Some of them have doubled, tripled, and have bounced back quite nicely from the bottom. Unfortunately, most of us probably bought at a higher level and so we’re not even up to the point where we’re at break-even again. Obviously, we’re still waiting for higher levels.
Now what I’ve been saying is that, unfortunately, with the severity of the world economic events, up to this point our mining shares have been sucked down the drain, so to speak, when world stock markets sell off. Every day that the world stock markets have had a bad day, the mining stocks have had a bad day as well. What we’re looking for is the precious metal prices to help us disconnect from that activity. It hasn’t happened yet. I’m still worried that the next downturn in the world markets could affect our junior mining stocks again. I’ve been looking for this key disconnect moment, where the precious metal prices take us into another realm and help protect and insulate our select junior mining stocks. You have to use ‘select’ because so many of the juniors are going nowhere. It’s only the select companies that are going to be protected or insulated from other market activity that’s going in the wrong direction. So I’m looking for that moment our quality junior stocks start to move on their own accord.
TGR: Can you give us an overview of what you consider a select company? What is the criteria?
GM: The criteria is this. They have to exceptional management. In other words, out of all the management teams that exist out there, there’s probably only a small handful that really have the quality background and experience to do what they say they’re going to do. Most of these other people are just managers or lawyers who don’t have experience or are hoping to get involved with a hot sector. They’re highly promotional, and most often are only looking out for themselves.
So you look for the people that have the right resumes, the ones who have worked for the majors for 10, 15, 20 years or more and have the experience (paid their dues so to speak), learned the business, understand what they’re doing and what they are trying to accomplish. Do they have experience in doing this specific task such as find gold? Did they mine gold or silver before? If they were mining for uranium their whole career and they jump into gold, well, that doesn’t sound too good to me.
So you have to have the experience and the knowledge base. That’s key. The way we’ve been playing this market the last eight years is no longer as valid as it once was. We need to adjust to the new rules on how to play this game and win.
What the market is looking for is very specific. If you make a good gold discovery, it has to be in an existing mining camp. It has to be in an area where the development costs aren’t very large. If you make a big gold discovery, and it’s in an area that’s out in the middle of nowhere, the development costs are going to be too high. No one’s going to fund it; no one’s going to finance a project like this with the new market environment. It doesn’t matter how good the results are.
So you have to find these discoveries in good jurisdictions that have short permitting times that have existing infrastructure. If it doesn’t have those things, forget about it. There are plenty of great discoveries that I know of. They’re just in the wrong area. Some examples would be Romios Gold Resources Inc. (TSX.V:RG), Copper Fox Metals Inc. (TSX:CUU), who have tremendous discoveries but are unfortunately in the wrong area. It takes too much money to develop such a desolate area as we have seen with NovaGold Resources Inc. (TSX:NG) (AMEX:NG) in their effort to get the Galore Creek deposit in production. The cost overruns were so enormous, they had to shut the whole thing down. Well, the market’s not interested in those kind of projects anymore. I choose to invest in areas that have what the market wants.
Look in the areas that have plenty of existing mines and infrastructure. This is where plenty of experienced mining people already live and juniors who can make a discovery will most likely be bought out by a major who is in the area.
Now certain jurisdictions are better than others. The political risk now is more intense than it was. Political risk is always a big factor, but the political risk now is just amazing, so you have to be very careful where you’re willing to invest your money. For me, I’m getting to the point where there are only a few jurisdictions that I’m willing to look at. Certain parts of Canada where there’s existing mining camps, certain parts in the United States, and Mexico which still looks very good. That’s about it. Everything else is no longer as attractive as it once used to be.
We’re also looking for higher-grade resources vs. lower grade. We’re looking for low-cost development situations vs. high-cost development situations. We’re looking for economic deposits that can be financed.
Here’s another situation—within mining, the different kinds of discoveries. A large copper-gold porphyry system is known to house large amounts of gold and silver,; but, unfortunately, it’s also known to have very high development costs. Who’s going to finance that? I’m not as interested in those kinds of stories as I once was. You’re better off looking for the higher grade— “epithermal”—smaller vein, higher grade, near-surface deposits that will have an easier time of actually going the whole distance and getting into production.
TGR: Let’s talk about some of the companies on your top 10 list. Pediment Exploration Ltd. (PEZ:TSX) (PEZGF:OTCBB) (P5E:FSE) is at the top; can you give us an update?
GM: Since they bottomed, Pediment has more than doubled. They’re hanging around the dollar trading range, which some people have been disappointed with. But what I say is, look, Gary Freeman, the CEO, is just weighing his options right now. He’s not making much in the way of news. That’s okay. He’s lying low, he’s looking at his options right now, and this is a company that is about to release a new 43-101 that will have more than 2 million ounces of gold in the ground. This is a verified situation. That’s a significant number because once a company, a junior, crosses the 2 million ounce gold mark, it gets on the radar screens of the majors.
Gary has a lot of things he’s weighing out. After the market meltdown, he decided to reduce costs, get things trimmed down, and get the burn rate really low to conserve cash. So, in the last few months there has not been much in the way of news. The company is lying low for now, but I think you’re going to see that change as PEZ announces their new 43-101 resource calculation. At that point I think you’re going to see Pediment start to have a lot of news flow, which should be very good for the share price.
He’s got the Baja property we just talked about that’s going to have the new 43-101. I don’t see how it’s not at least 2 million ounces based on my back-of-the-envelope calculations, but you never know with these things until they actually come out. I would guess it’s going to be over 2 million and there’s plenty more to be discovered there In my opinion, this deposit could be greater than 3 million ounces before all is said and done. Well, that’s a major discovery. It’s in the right jurisdiction, with very low development costs and it’s in an existing mining area, so it should do very well.
Now, Pediment also has a project called La Colorada that could be a near-term producer. It’s the old open pit that El Dorado Gold Corporation (ELD.TO) (AMEX:EGO) produced from, which really made El Dorado Gold what they are today—what launched them—that discovery and putting it into production. Pediment now controls it and other people are interested in it. Should Gary vend it out to somebody else, take the cash and run, or should he develop it himself? He has lots of options. He has lots of cash. He has lots of great properties. Gary has many different things he can consider at this point, so I think he wisely just stepped back, started to look through everything that he has and what options are available. We’ll see what happens but the prospects for the company look very good..
I’m sure there’s been interest by majors already on the Baja Project. He’s probably gotten plenty of calls, where the majors are already saying, “hey, look, what if we just take you out at this price?” Is it high enough? Is it worth taking the money now and running, letting somebody else deal with it? Or is it better for the company to go down the road a little bit further, develop it themselves in the hopes of getting a much higher price later on? These are things we all have to weigh out. Is it better for us as shareholders to take the money and run right now, even though we might get a lower price for it? Or should we wait a little bit longer, and get a higher price when they develop it? These are things we have to look at. So, with that being said, in my opinion, as we see these higher gold prices and with the news that’s about to come out, I think Pediment’s a two dollar stock in the next six to eight weeks.
TGR: Capital Gold Corp. (TSX:CGC) is also on your list, correct?
GM: Yes, and as Capital Gold runs up to the 90 cent level—it was recently in the 80 cent range—as it gets close to 90 cents Canadian, I’m telling people to start selling, start taking some profit. What’s going to happen is the company is going to do a reverse stock split, which is going to be a minimum 4:1 stock split. These stock splits are always negative for current shareholders. Let’s just say they decide to do the reverse split at a dollar. They’ll reduce their outstanding shares by 75% and the stock would be at four dollars at that point, which would get them their AMEX listing (which is a good thing), and that’s why they want to do it. But, typically, what happens, after they do a reverse split, the stock gets hammered. The four dollar share price gets leveled and it usually retracts to a level that is very damaging to current shareholders. So this is why I’m saying take some profit as Capital Gold gets over 90 cents, hold the cash.
I think Capital Gold is worth holding in the portfolio, but wait ‘til after the reverse split and the detrimental effects that reverse splits typically have on share prices. Wait for the share price to retract, and then buy in again because I think Capital Gold will be a good company to hold. I just think you should take some profits at this point.
TGR: What about SilverCrest Mines Inc. (TSX.V:SVL)?
GM: Silvercrest is a great story. Their production scenario at Santa Elena in Mexico is a high-grade silver-gold kind of scenario. They just came out with their resource update. The resource is growing and the project should be in production by the end of 2009. Things are looking very good so I’m going to keep the company in my portfolio. This resource should grow with time. It’s got all the things that the market’s looking for—precious metals-oriented in Mexico, near-term production and the company should have cash flow.
TGR: Riverside Resources Inc. (TSX:RRI) just joined your top 10 list, right?
GM: Yes, they made their entry into the top 10 because they have shown me that they know how to manage the prospect generator model with success. The CEO, whom I like very much, really watches and guards the treasury and watches out for shareholders. He’s managing his properties very well, and I think he’s got not just one but possibly multiple discoveries. And this is what you want with a junior exploration stock. Some people say, “Greg, don’t you want to have people who have a production cash flow?” Yes. We’re going to have some of those in the portfolio, but the exploration companies—the good ones that can make the discoveries—is where you get the biggest leverage of all. And I think Riverside is in that category. So they are now number nine on our top 10. I like them very much and I think it’s a good play.
TGR: Can you talk about another from your top 10 list— Allied Nevada Gold Corp. (TSX:ANV) (ANV)?
GM: Allied Nevada is a good story because they’re getting the Hycroft mine back into production. It’s going very, very well. The stock price has rebounded very nicely, and I think it’s probably poised to make a new high. Now we saw some selling pressure, some people were taking profits in January and early February as the stock was recovering; but now I think that selling pressure is gone and the stock is back up over the $6 level again. With higher gold and silver prices, I think you’re going to see Allied make a new all-time high and I wouldn’t be surprised to see the stock at $7 or $8. So there could be a profit opportunity on that one coming up here.
TGR: Now Vista Gold Corp. (TSX:VGZ) (AMEX:VGZ) is not on your top 10 list, but you cover them, correct?
GM: Yes, I like Vista Gold. Allied Nevada and Vista used to be one company before they did the split. The better properties I thought went with Allied Nevada, but Vista Gold still has plenty of good situations. Their model of acquiring cheap gold ounces in the ground, increasing the value of them in a market where gold prices are going higher, is a very valid market. They have a good share structure, they have cash in the bank, and they’re a very well-managed company with top management talent. So, with higher gold prices, that model should do very, very well.
They’ve got multiple projects with big gold deposits in Australia at the Mt. Todd deposit, which is a 6 million ounce gold resource. They’ve got the Awak Mas property in Indonesia that is a very large holding of gold. And higher gold prices make these kinds of projects worth more and more. They’ve also got some great projects in Mexico next to Pediment’s project on the Baja. They have the Paredones Amarillos Project, which is kind of waiting on a permit situation that they thought was already done years ago that seems to have had a little glitch there, but that’ll get worked out. And they’ve got some other good projects in Idaho and one other one (I can’t think of it off the top of my head), but it’s a good scenario and that model should work well. If you believe in higher gold prices, Vista Gold should do very well.
TGR: Greg, this has been great. We appreciate your time.
Greg McCoach is an entrepreneur who has successfully started and run several businesses the past 22 years. For the last eight of these years he has been involved with the precious metals industry as a bullion dealer, investor, and newsletter writer (Mining Speculator). Greg is also the President of AmeriGold, a gold bullion dealer.
Greg’s years of business experience and extensive personal contacts in the mining industry provide unique insights that have generated an impressive track record for The Mining Speculator since its inception in 2001. He also writes a weekly column for Gold World.
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As you can see, from mid-1971 to December 1974, gold rose 471%. It
then fell 50%, from December ’74 to August ’76. After that, it began
its next leg up, exploding 750% higher from August ’76 to January
1980. Now, in its current bull market (2001 to March 2008), gold
rose over 300% from $250 to a little over $1,000. And just like in
the mid-70s, it began showing signs of weakness after its first big
rally up to $1,014 in March ’08. At one point, it even fell to $700, a 30% retraction.
Granted, it wasn’t a full 50% retraction like the one that occurred
from 1974-76. But we are experiencing a financial crisis. And gold
is the most common catastrophe insurance.
If we were to go by the historic pattern of the gold market in the
‘70s, gold should experience upwards resistance for 19 months after
its first peak today. Gold’s recent peak was $1,014 in March ’08
(roughly 17 months ago). If this bull market parallels the last one,
then gold should renew its upward momentum in a very serious way
starting in October 2009. And this next leg up should be a major
one (the biggest gains came during the second rally in gold’s bull
market in the ‘70s).
The chart certainly forecasts a major move.
As you can see, gold has formed a long-term inverse head and
shoulders formation (two smaller collapses book-ending a major
collapse). Typically a head and shoulders predicts a massive
collapse. However, when the head and shoulders is inverse, as is
the case for gold today, this typically predicts a MAJOR leg up.
Indeed, any move above the “neckline” of 1,000 would forecast a
MAJOR move up to $1,300 or so. Going by history, this is precisely
the move we should expect: remember based on historical trends
(the gold bull market of the ‘70s) gold should begin its second
and largest leg up in September or October 2009.
Watch the gold chart closely over the next month or so. If gold
makes a move above $980 perhaps add to your current positions.
If it clears $1,000, hold on tight, cause the next leg up in this
secular bull market has begun.
Good Investing!
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My Note: After watching stocks (DJI) this afternoon and the strange
price behavior before the close, I felt I would add this article too!
-jschulmansr
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Anytime stocks explode higher on next to no volume and crap
fundamentals you run the risk of a real collapse. I am officially
going on record now and stating that IF the S&P 500 hits 1,000, we
will see a full-blown Crash like last year.
3) This Latest Market Rally is a Short-Squeeze and Nothing More
To date, the stock market is up 48% since its March lows. This is
truly incredible when you consider the underlying economic picture:
normally when the market rallies 40%+ from a bear market low, the
economy is already nine months into recovery mode. Indeed, assuming
the market is trading based on earnings, the S&P 500 is currently
discounting earnings growth of 40-50% for 2010. The odds of that
happening are about one in one million.
A closer examination of this rally reveals the degree to which
“junk” has triumphed over value. Since July 10th:
Apparently the gold market and currency markets have heard the news (the chart to the right will be updated as needed over the next hour or so – update #1 from $925 to $932 already complete).
“As we saw the gold price attack the $1,000 level for the second time, but with far more force, institutional investment demand continued to drive the gold price, forcing the closure of ‘short’ positions [selling when the seller doesn’t have the gold] on COMEX and stunting both jewelry and Indian demand, where higher prices have at least temporarily sidelined these buyers.
“
