Saturday, 26 May 2012

Debt and Deleveraging

See also previous posting on Ray Dalio's views which emphasise the same themes.

Merryn Somerset Web at UK Moneyweek points to a review by McKinsey of 32 previous episodes of deleveraging after financial crises.

Canadian Venture Market Review

Possible reversal,though not as pronounced as GDX/GDXJ.
Accumulation has remained strong during the price lows.
We need to climb above the October low.

from for $CDNX

Visit to see more great charts.

The Big Print is Coming

A well argued case that very significant easing will come. At LibertyBlitzkrieg Blog.
The key quote below - have we seen the precious metals bottom before everything else does?

Wednesday, 23 May 2012

New York Hard Assets Conference - Company Reviews

Metal Augmentor discuss the geologic potential and business plans of a number of companies. I liked their written PDAC reviews, I have yet to listen through the Audio reports this time .

Link - Here

One Nation Under Germany - Niall Ferguson

Historian Niall Ferguson in the UK Sunday Times suggests that the Euro is overwhelmingly in Germany's interests and they will lead deeper integration. John Maudlin's free email "Notes from the Frontline" has picked up on this for a wider audience.

I have seen others argue quite convincingly that Germany exits to a hard money zone. The "rump" of the Eurozone then devalues the core Euro, and their debts, quite an elegant re-balancing.

Bulletin Board Capitulation

TF Metals was a board which became popular during last years silver "mania". Poster "Bag of Gold" led boards discussing junior miners there and at Kitco.

This was the last comment suggesting revulsion in the sector.

When will this change?...Who knows!...Either sell what you have at the highest price you can get...or you may have to hold onto what you have for a long time!...I won't be posting anymore until things change!...Do what is best for your situation!...
I am so sorry folks!...Take care!!!...

Biiwii Fully Stocked on Gold Miners - Dumb money sold in May

Gary Tanashian is a voice to listen to for sensible contrarian views, following the bond "continuum".

At the end of this article, which sees a turn to inflationary bias to come, he lets slip that he is fully stocked with gold miners exposure. He called the bottom in 2008 very well.

Monday, 21 May 2012

A Beautiful Deleveraging - Ray Dalio

Ray Dalio manages $120bn at Bridgewater, so may have a perspective on things..!

Interview in Barron's Here

Points to 15 year deleveraging cycles, through a combination of austerity, default and money printing.

Suggests 10% gold allocations, gold as a currency to protect against devaluation by indebted US, European and Japanese governments. Much more worth reading full 2 page article. Views and perspectives on Europe and risks of European gold liquidity sales.

What's Wrong with Junior Golds

An overview from Peter Hodson - Here
To quote
What will it take to turn this sector around? Generally, when things are so bad investors get sick to their stomachs, a bottom is usually close at hand. Talking to investors recently, we have to believe we are near — or even past — that point already.

Spotting Gold's Turnaround

Some excellent technical overviews from Geoff Goetz at Cara Community

Bob Hoye - Outstanding Rallies in the Gold Miners

Bob Hoye puts the Gold Miners in historical perspective.....
"in a hundred years of data....only one selloff to a monthly RSI worse than now.......lows were all followed by outstanding rallies - virtually immediate to the reading." ...... more below.....

Friday, 18 May 2012

Gold - Dead Cat Bouncing - Or Last Chance to Buy Before QE3

This article from just about sums it up ...... the battle between the Bulls and Bears continues.

They point out that by the time QE1 was officially announced Gold was well off 2008 lows.

The fact that gold and the miners moved counter to the general stock market and moved up alongside the US Dollar might have some significance here.

Either Gold begins to act as a safe haven and moves up with the dollar, or gold anticipates easing to come from the Fed recognising a weaker US Dollar, or gold anticipates easing by all central banks in a race to the bottom for fiat money which aims to devalue the debt.

Extremes in Commodities / US$ - Bottom in Gold & Miners?

An excellent overview from Short side of Long .

Extreme positions reached in gold lows and US$ highs.

The question is whether there will now be a significant "turn" as predicted by various timing windows, or merely a corrective bounce.

Bill Cara has called a cycle bottom for the goldminers

True Contrarian sees dollar down gold miners / GDXJ up to come

Bob Moriarty has made some good timing calls. Sees a bottom

Trendsman Jordan Roy Byrne suggests a bottom this week

Wednesday, 16 May 2012

Gold/Bonds Trade of the Decade - Japanese Pension Fund Buying Gold

There are a number who see an opportunity to exit bonds (government paper debt) at the current extreme high values. Some who look to gold at the end of the bond bull market.
Ultimately I believe bonds and interest rates are incredibly political they are being "acted upon", price discovery will come but perhaps not quickly.

Geoff at Cara Community of the Trade of the Decade - Short Bonds - Long Gold (part way down from top of daily blog page)

Zerohedge on Pension Fund Gold buying
Small percentages of Institutionally managed pension funds would see enormous capital flows.

Monday, 14 May 2012

Thursday, 10 May 2012

Willem Buiter at Citigroup Recommends Helicopter Money Drops

Time for the radical playbook according to Former Bank of England figure Willem Buiter.
Details below......

Potential Reversal for Gold Miners / Venture Thoughts

An interesting technical take on GDX linked by Jim Sinclair

A Review of Venture exchange history and prospects

Stephen Leeb Interview

Interview in full at KWN

Key quote

The junior gold stocks, the ones with honest to goodness reserves which have not been developed, they will see one of the greatest, if not the greatest bull market of all-time.  

Rick Rule Interview

A long interview with Rick Rule including transcript.

Rule sees "reasonable valuation" in the gold miners.

What can turn the market

  1. Black Swan - fear - Gold bull driven by both greed and fear.
  2. Early stages of acquisition cycle
  3. Early in discovery cycle.- A big discovery is like a takeover on steroids.

Unlikely that we won't have a major discovery, too much money being spent.
Knows a lot of good geologists doing good work.
Funding increasingly good people in the juniors. Thinks we will be surprised by discovery.
Has done extremely well in early stage exploration, because the only one in it, has patience.
Seeing the broadest difference between scoping / DFS NPV against market value.
Diverted some early exploration funds to companies with established resources and values.
Sees 12-20 takeovers at 35-60% premiums.
Employing significant capital, opportunities to do that don't come very often.

Tuesday, 8 May 2012

Gold Sentiment

Mark Hulbert Reports 16% net short positions recommended by Gold Timers are at historically negative levels.
On a contrarian view Hulbert sees this as constructive for gold prices, particularly on a 3 month view.

Gold as Good Collateral / Dark Inventory in Commodities

FT Alphaville has continued a series of interesting articles by Izabella Kaminsky.

For some time now the team have considered systemic financial perspectives on the falling availability of "Good Collateral" as bonds - debt paper - fail to hold value, for example in Spain, Italy etc.

Here considering a "De Facto Return to the Gold Standard" as presented by Professor Lew Spellman. The most significant part of this story I consider to be the decision making to come from the Bank of International Settlements (BIS) through the Basel Committee for Banking Supervision to determine whether Gold can be held as a Tier 1 banking asset.
Such assets can be held as core capital with little or no margin. This would put gold very clearly back into of the monetary system. Volatility, especially downwards, would then impact core banking capital. The BIS is little discussed but appears remarkably powerful.

A more recent article considers the reducing volatility of commodity prices, the apparent tight availability of oil and copper against a background of high inventories.
The suggestion is that commodities are being used as collateral in financing deals. The official inventories are therefore "encumbered" and not available for sale creating a squeeze on prices. The suggestions also followed up in the comments section are that this concentrates one way risk away from public markets. I would relate this to the first article in that markets, especially the Chinese market are holding large inventories and using them as "money".
I would add that useful day to day commodities are not supposed to be used as money.
These effects are having real economic impacts.
Much better to use monetary metals for such collateral ?

Sunday, 6 May 2012

Sell in May - Short Side of Long

HT - "My Own Market Narrative" Blog (see blogroll) for recommending "The Short Side of Long" blog.

Interesting contrarian views.

In particular the chart of stock market performances in Election years.
There is a regular thump of "Sell in May" currently, given the wisdom of doing so in 2010 and 2011. The chart indicates a strong summer in election years.

Also seeing the dollar as weak in what should be a supportive environment.

Positive commodities in a "late cycle" rally

This article summarises much of this together with a positive China, commodities outlook and looking to an end in the bond bull market.

Precious Metals and Mining Stocks Approaching a Major Bottom

Robert McHugh's wave counts suggest a major bottom and move to wave 5 to begin within a few weeks targetting $3000 gold, $60-70 silver and 800-1000 in the HUI

Saturday, 5 May 2012

Generational Buying Opportunity in the Juniors

HT to the Fundamental View for linking this article from Union Securities.

Win or lose, value buy point, or end of gold bull market.

Miner Ratings and Earnings Estimates

Published weekly at Kitco by Bill Matlack of Scarsdale Equities.

Coverage of a good range of senior and junior miners with forward earnings estimates.

Kitco - see "Contributed Commentaries"

May 2nd Reports

There are many companies with foward 2013 P/E ratios below 10x earnings, plenty near 5x based on $1715 gold and $35 silver prices.

If gold and silver run over the next year there is extraordinary value in the miners.

The consensus metal prices used for 2014 / 2015 are lower.

My view is that we will see extremes in gold prices.

Either everything is "fixed" and gold is due to collapse, or there are serious problems to come. With easing the practical response, gold will respond aggressively to the upside.

With gold entering timing bands for a cycle change is this the end of the bull or the start of a move to Nichol's or Field's numbers (see right bar of blog)

Mickey Fulp's Gold Miners Suck

Mickey Fulp is a geologist writer I respect, linked on this blog at the Mercenary Geologist.

Brent Cook is another, well respected economic geologist, also linked from this blog at Exploration Insights.

Both have written and spoken recently of the weakness in the juniors, caused especially by a surfeit of poor companies and surplus paper in the market.
Both prompt careful slow accumulation in the sector and expect little to come during the traditional "summer doldrums" after "sell in May".

Here is Mickey Fulp's article
And smart trader Robert Sinn's contrarian take on it.

Summary of Brent Cook's recent Stock Picks on BNN
Link to BNN Interview - A good listen
Brent Cook is a smart Geologist but also associates with some smart investors like Rick Rule. However he also admits to some bad trading calls in 2011 for example getting lured back into the market and being well down in 2011.

OT - Bank Holiday Bowie

So many, hard to choose. In the world of the I-phone / I-pod / You-tube a trip back to the album is called for, songs which follow each other, belong together, where the sum is so much greater than the parts.
Keep meaning to read the biography which tracks along with the music...... Favourites....

Friday, 4 May 2012

Lawrence Roulston on Junior Mining Mergers and Acquistions

A long article covering likely M&A activity from Lawrence Roulston of Resource Opportunities.

Linked in full Here

To Quote
So, back to the important question: Is this the right time to invest in mining?
Absolutely, yes. The downside risk from the current price levels in minimal. The upside is huge. Just remember that there is enormous diversity in the quality of companies in this sector.
Investors must be selective. The objective should be to own companies with high quality projects that will become takeover targets. Management is critically important. Companies that have cash are in a much stronger position than companies that will have to raise cash in a bad market.
Areas with low perceived risk will be more popular in the near term: Canada, parts of US, parts of Latin America. For example, the recent coup and pending civil war in Mali has further impacted the value of companies throughout Africa.
There are good projects in risky areas: you just have to weigh the risks against the potential rewards.
Importantly, you should diversify and you should get some professional input in evaluating companies. There is still further downside risk. In the meantime, high quality companies are adding value and the takeover binge continues. Another of the companies that we follow received a takeover bid last week, again at a substantial premium to the market price. There will be many more such offers, regardless of whether investors come back to mining.
By Lawrence Roulston

Tuesday, 1 May 2012

Bullish Gold Miners

A number of writers I like suggesting something positive in the wind for gold stocks

The Cara Team - identified this period for some time now.
Bob Hoye
Jeff Kern - Ski Indicators
Stewart Thomson
Gold Scents

A number suggest the possibility of a final puke first .....

Jim Sinclair Quotes Alf Field's Elliot Wave analysis of the gold price
Gold has Bottomed, Alf Fields
Elliott Wave Gold Update: In the article “What Happened to Gold” dated 1 March 2012, the “other possibilities” mentioned in the event of gold dropping below $1650 related firstly to the 61.8% retracement of the prior rise. The prior rise was from $1523 to $1792, so the 61.8% retracement was $1626. There was a further possibility of the retracement being 2/3 of the prior rise, also a Fibonacci relationship. That produced a figure of $1612. The first number $1626 did provide some support to the market but the absolute low was $1612.8 on 4 April 2012. This low came at the culmination of a double zig-zag correction, which adds to the validity of that low. The odds now suggest that the gold correction bottomed at $1612.8 on 4 April 2012 and that the gold market is in the early stages of a sharp upward move.
Apr 28, 2012
Alf Field

Junior Gold Valuation Tables

Some interesting gold junior valuation tables being kept up to date by the editorial team at Stockhouse.
Always remember some are cheap for a reason....others are bargains.
More due diligence to decide which.

Click Here for discussion article
Here for Lowest EV per oz Table
Here for lowest net debt - i.e. highest cash when negative
Here By highest Gold Resource ounces
Here Alphabetically by Name