Select Page
Gold and Silver: Your Stomach Is Probably Wrenching Right Now

Gold and Silver: Your Stomach Is Probably Wrenching Right Now

By The Gold Report

Source: Lior Gantz for Streetwise Reports   07/11/2017

Wall Street’s largest firm, Goldman Sachs, is throwing in the towel on commodities, which reminds Lior Gantz, Wealth Research Group’s founder, of 1998, when Merrill Lynch closed its commodities desk very close to the end of a cyclical bottom.

Bear v. Bull

Gold is up for the year, but silver just made a 52-week-low.

Gold price

This is a highly unique situation—it rarely happens.

Silver ended 2016 priced at $15.91, and it is now priced at $15.61. Gold, on the other hand, ended 2016 priced at $1,151.94 and is now priced at $1,212.46.

This puts the gold/silver ratio at 77.65, which is unusually high, but it might reach 84 before reverting back to the 65:1 range.

Historically, when silver outperforms gold, the mining shares rally, and when the latter is true, the miners are weak. We are close to an extreme right now.

What’s even more unique is that for only the third time since 2000, when the commodities supercycle began, we have a brief timespan I call “The Millionaire Window,” and you’ll see what this is all about is our weekend article.

It’s part of why I’ve been considering taking profits on my favorite cryptocurrencies.

Realize this: Goldman Sachs, the world’s No. 1 commodities trader, is doing a nuts and bolts review of the trading desk!

Remember that CEO of Goldman, Lloyd Blankfein, started his career in the commodities business, but he is drawing closer to the industry’s prevailing consensus. Morgan Stanley, JPMorgan Chase & Co., Barclays Plc, and Deutsche Bank AG have cut back or exited commodities trading in recent years.

In 1998, Jim Rogers, arguably the best commodities trader in history, noticed that Merrill Lynch was giving up on commodities and called the bottom. As a group, commodities rose 20% per year for five consecutive years after.

Commodities

The pain doesn’t end yet—the sector is down 5% this year, as well.

It’s not the time to call the bottom on commodities, but we are itching closer by the day, and here’s why:

1. The market is severely underpricing risk right now:

Most investors, since they don’t take the time to educate themselves like we are, suffer from “rearview mirror” syndrome. This means that for the majority, what happened in the past three months is likely to occur again in the following three months. This syndrome is what makes people pile in as prices rise.

Economic Policy Uncertainty and VIX

Now look at this must-see chart. In blue is the EPU, which is the Economic Policy Uncertainty Index. It’s basically measuring the amount of key terms regarding challenges with the economy that everyday investors are exposed to.

In black is the VIX, which measures the fear investors feel towards downturns—it’s the volatility index.

The correlation is clear, apart from a number of key periods. Examine 1998–2000 closely, when euphoria persisted and the major newspapers, like the L.A. Times, Boston Globe, USA Today, and others didn’t report much on coming calamity and the markets roared.

Then check out 2011, when the “fiscal cliff” and the Greek default were all anybody was talking about, and gold peaked at $1,925 per ounce. That was a “fear bubble.”

But since that time, we have undergone a “fear anti-bubble.” Look at the complete disparity between the EPU and the VIX. The mainstream media has confused investors and they are now indifferent to risks.

Russia’s cyber wars, a possible nuclear war with North Korea, problems in the EU and Brexit—nothing changes the point of view of investors. Risk is being tolerated, and that’s why precious metals, especially silver, which is mostly industrial and only bought for investment demand when fear is excessive, are falling.

2. Central banks’ lack of “success”:

Since the Federal Reserve is supposed to be the all-knowing entity that gets things right at all times, when they raised rates for the first time in close to a decade back in December of 2015, the market became convinced that inflation is returning and the Fed is keeping a leash on it so it won’t spiral out of control.

Bear v. Bull

What this chart portrays, in the bottom line, is that speculators are again exiting the gold sector.

When Trump took office, investors were screaming “Trumpflation” and everyone was bullish on inflation and thinking the market would collapse.

Since no one believed Trump would win up until the votes were tallied up, the cost of puts (bearish bets) was low, and it spiked right after the results were announced. Today, Trump is in office, but the scare is gone. Being bearish doesn’t cost much, and inflation is weak.

Central banks are folding up tents because they’ve “failed” at meeting their inflation targets, and the Fed minutes show they are more divided than ever.

Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world by far, says that the Fed is very likely to begin committing mistakes, and that’s why he sees gold as a strategic investment right now.

The research I zoned in on these past two weeks has led me to finding “The Millionaire Window,” which has only happened three times thus far, and each time was proceeded by a spectacular move higher.

I’m putting the finishing touches on the research and we’ll publish it this weekend. I can tell you that I sent it to three major gold-focused private wealth funds for the elite, based in the Caribbean Islands, and they were stunned—I’ll leave it at that.

Lior Gantz, the founder of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosures:
1) Statements and opinions expressed are the opinions of Lior Gantz and not of Streetwise Reports or its officers. Lior Gantz is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Lior Gantz was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts provided by Wealth Research Group

{“@context”: “http://schema.org/”, “@type”: “NewsArticle”, “headline”: “Gold and Silver: Your Stomach Is Probably Wrenching Right Now”,”datePublished”: “2017-07-11″,”description”: “Wall Street’s largest firm, Goldman Sachs, is throwing in the towel on commodities, which reminds Lior Gantz, Wealth Research Group’s founder, of 1998, when Merrill Lynch closed its commodities desk very close to the end of a cyclical bottom.”,”mainEntityOfPage”: “http://streetwisereports.com/pub/na/gold-and-silver-your-stomach-is-probably-wrenching-right-now”,”author”: {“@type”: “Person”,”name”: “Lior Gantz for Streetwise Reports”},”publisher”: {“@type”: “Organization”,”logo”: {“@type”: “ImageObject”,”url”: “https://www.streetwisereports.com/images/flex_headers/SWR_horizontal_1000.png”},”name”: “Streetwise Reports”},”articleBody”: “Gold is up for the year, but silver just made a 52-week-low.

This is a highly unique situation—it rarely happens.

Silver ended 2016 priced at $15.91, and it is now priced at $15.61. Gold, on the other hand, ended 2016 priced at $1,151.94 and is now priced at $1,212.46.

This puts the gold/silver ratio at 77.65, which is unusually high, but it might reach 84 before reverting back to the 65:1 range.

Historically, when silver outperforms gold, the mining shares rally, and when the latter is true, the miners are weak. We are close to an extreme right now.

What’s even more unique is that for only the third time since 2000, when the commodities supercycle began, we have a brief timespan I call The Millionaire Window, and you’ll see what this is all about is our weekend article.

It’s part of why I’ve been considering taking profits on my favorite cryptocurrencies.

Realize this: Goldman Sachs, the world’s No. 1 commodities trader, is doing a nuts and bolts review of the trading desk!

Remember that CEO of Goldman, Lloyd Blankfein, started his career in the commodities business, but he is drawing closer to the industry’s prevailing consensus. Morgan Stanley, JPMorgan Chase & Co., Barclays Plc, and Deutsche Bank AG have cut back or exited commodities trading in recent years.

In 1998, Jim Rogers, arguably the best commodities trader in history, noticed that Merrill Lynch was giving up on commodities and called the bottom. As a group, commodities rose 20% per year for five consecutive years after.

The pain doesn’t end yet—the sector is down 5% this year, as well.

It’s not the time to call the bottom on commodities, but we are itching closer by the day, and here’s why:

1. The market is severely underpricing risk right now:

Most investors, since they don’t take the time to educate themselves like we are, suffer from rearview mirror syndrome. This means that for the majority, what happened in the past three months is likely to occur again in the following three months. This syndrome is what makes people pile in as prices rise.

Now look at this must-see chart. In blue is the EPU, which is the Economic Policy Uncertainty Index. It’s basically measuring the amount of key terms regarding challenges with the economy that everyday investors are exposed to.

In black is the VIX, which measures the fear investors feel towards downturns—it’s the volatility index.

The correlation is clear, apart from a number of key periods. Examine 1998–2000 closely, when euphoria persisted and the major newspapers, like the L.A. Times, Boston Globe, USA Today, and others didn’t report much on coming calamity and the markets roared.

Then check out 2011, when the fiscal cliff and the Greek default were all anybody was talking about, and gold peaked at $1,925 per ounce. That was a fear bubble.

But since that time, we have undergone a fear anti-bubble. Look at the complete disparity between the EPU and the VIX. The mainstream media has confused investors and they are now indifferent to risks.

Russia’s cyber wars, a possible nuclear war with North Korea, problems in the EU and Brexit—nothing changes the point of view of investors. Risk is being tolerated, and that’s why precious metals, especially silver, which is mostly industrial and only bought for investment demand when fear is excessive, are falling.

2. Central banks’ lack of success:

Since the Federal Reserve is supposed to be the all-knowing entity that gets things right at all times, when they raised rates for the first time in close to a decade back in December of 2015, the market became convinced that inflation is returning and the Fed is keeping a leash on it so it won’t spiral out of control.

What this chart portrays, in the bottom line, is that speculators are again exiting the gold sector.

When Trump took office, investors were screaming Trumpflation and everyone was bullish on inflation and thinking the market would collapse.

Since no one believed Trump would win up until the votes were tallied up, the cost of puts (bearish bets) was low, and it spiked right after the results were announced. Today, Trump is in office, but the scare is gone. Being bearish doesn’t cost much, and inflation is weak.

Central banks are folding up tents because they’ve failed at meeting their inflation targets, and the Fed minutes show they are more divided than ever.

Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world by far, says that the Fed is very likely to begin committing mistakes, and that’s why he sees gold as a strategic investment right now.

The research I zoned in on these past two weeks has led me to finding The Millionaire Window, which has only happened three times thus far, and each time was proceeded by a spectacular move higher.

I’m putting the finishing touches on the research and we’ll publish it this weekend. I can tell you that I sent it to three major gold-focused private wealth funds for the elite, based in the Caribbean Islands, and they were stunned—I’ll leave it at that.

Lior Gantz, the founder of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosures:
1) Statements and opinions expressed are the opinions of Lior Gantz and not of Streetwise Reports or its officers. Lior Gantz is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Lior Gantz was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts provided by Wealth Research Group”}

Updated Resource Estimate for Nevada Gold Project Increases Overall Ounces by 162%

Updated Resource Estimate for Nevada Gold Project Increases Overall Ounces by 162%

By The Gold Report

Source: Streetwise Reports   07/11/2017

An NI-43-101-compliant resource estimate for the Dark Star gold deposit, part of this company’s 100%-owned Railroad-Pinion Project, beat one analyst’s expectations and was called a “good start” by another.

darkstarcover

Source: Gold Standard Ventures

In a June 29 press release, Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE) reported “an Indicated Mineral Resource of 15.38 million tonnes grading 0.54 grams per tonne (g/t) gold (Au), totaling 265,100 ounces of gold, and an Inferred Resource of 17.05 million tonnes grading 1.31 g/t Au, totaling 715,800 ounces of gold, using a cut-off grade of 0.20 g Au/t.”

Brian Szeto, an analyst with PI Financial, provided this assessment of the company’s news in a June 29 research report. “Total resources at Dark Star [have] increased from 375Koz (at 0.51 g/t gold) to 981Koz (at 0.94 g/t gold) which represents an 85% increase in grades and 162% increase in overall ounces. . .we highlight that this resource update includes an initial resource from the high grade North Dark Star zone which hosts a resource of 716Koz (at 1.31 g/t gold) which came in better than our expectations of 500Koz (at ~1.5 g/t gold).”

Macquarie Securities Group’s Michael Gray summed it up this way in a June 29 Morning Notes brief: “Good start/initial resource for the New Dark Star oxide complex. . .the resource does not include any sulphides, was estimated at a $1250 gold price with a 0.20g/t cut off. We have modelled 1.35moz at 1g/t and expect infill/expansion drilling to grow the resource. GSV plans +12km drilling in 2017 and has just received drill permits.”

Szeto also noted that “mineralization still remains open in a number of directions.” The Railroad-Pinion project lies on Nevada’s productive Carlin Trend.

“Overall, we view this resource update positively given the substantial increase in resources where the initial resource from North Dark Star also came in substantially better than expected,” Szeto stated. “In addition, since North Dark Star will likely be the high grade starter pit, this will also have positive implications to the overall economics of the project. . .Looking forward, with the gold inventory of the project now achieving 500 critical mass, we believe Gold Standard will now begin the process of completing a PEA in Q317.”

“Our discovery of North Dark Star in 2015 has made an important tonnage contribution to this resource estimate at a very desirable grade,” Jonathan Awde, CEO and director of Gold Standard, stated in the company’s press release. “We are very confident that this estimate will grow with this year’s aggressive drill program.”

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Gold Standard Ventures Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

{“@context”: “http://schema.org/”, “@type”: “NewsArticle”, “headline”: “Updated Resource Estimate for Nevada Gold Project Increases Overall Ounces by 162%”,”datePublished”: “2017-07-11″,”description”: “An NI-43-101-compliant resource estimate for the Dark Star gold deposit, part of this company’s 100%-owned Railroad-Pinion Project, beat one analyst’s expectations and was called a good start by another.”,”mainEntityOfPage”: “http://streetwisereports.com/pub/na/updated-resource-estimate-for-nevada-gold-project-increases-overall-ounces-by-162″,”author”: {“@type”: “Person”,”name”: “Streetwise Reports”},”publisher”: {“@type”: “Organization”,”logo”: {“@type”: “ImageObject”,”url”: “https://www.streetwisereports.com/images/flex_headers/SWR_horizontal_1000.png”},”name”: “Streetwise Reports”},”articleBody”: “In a June 29 press release, Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE) reported an Indicated Mineral Resource of 15.38 million tonnes grading 0.54 grams per tonne (g/t) gold (Au), totaling 265,100 ounces of gold, and an Inferred Resource of 17.05 million tonnes grading 1.31 g/t Au, totaling 715,800 ounces of gold, using a cut-off grade of 0.20 g Au/t.

Brian Szeto, an analyst with PI Financial, provided this assessment of the company’s news in a June 29 research report. Total resources at Dark Star [have] increased from 375Koz (at 0.51 g/t gold) to 981Koz (at 0.94 g/t gold) which represents an 85% increase in grades and 162% increase in overall ounces. . .we highlight that this resource update includes an initial resource from the high grade North Dark Star zone which hosts a resource of 716Koz (at 1.31 g/t gold) which came in better than our expectations of 500Koz (at ~1.5 g/t gold).

Macquarie Securities Group’s Michael Gray summed it up this way in a June 29 Morning Notes brief: Good start/initial resource for the New Dark Star oxide complex. . .the resource does not include any sulphides, was estimated at a $1250 gold price with a 0.20g/t cut off. We have modelled 1.35moz at 1g/t and expect infill/expansion drilling to grow the resource. GSV plans +12km drilling in 2017 and has just received drill permits.

Szeto also noted that mineralization still remains open in a number of directions. The Railroad-Pinion project lies on Nevada’s productive Carlin Trend.

Overall, we view this resource update positively given the substantial increase in resources where the initial resource from North Dark Star also came in substantially better than expected, Szeto stated. In addition, since North Dark Star will likely be the high grade starter pit, this will also have positive implications to the overall economics of the project. . .Looking forward, with the gold inventory of the project now achieving 500 critical mass, we believe Gold Standard will now begin the process of completing a PEA in Q317.

Our discovery of North Dark Star in 2015 has made an important tonnage contribution to this resource estimate at a very desirable grade, Jonathan Awde, CEO and director of Gold Standard, stated in the company’s press release. We are very confident that this estimate will grow with this year’s aggressive drill program.

Read what other experts are saying about:

Gold Standard Ventures Corp.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Gold Standard Ventures Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.”}

Additional Disclosures for this Content

Disclosures from PI Financial, Gold Standard Ventures Corp., Corporate Update, June 29, 2017

Analyst Certification: I, Brian Szeto, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.

Research Disclosures:

1) PI Financial Corp. and its affiliates’ holdings in the subject company’s securities, in aggregate exceeds 1% of each company’s issued and outstanding securities. No

2) The analyst(s) responsible for the report or recommendation on the subject company, a member of the research analyst’s household, and associate of the research analyst, or any individual directly involved in the preparation of this report, have a financial interest in, or exercises investment discretion or control over, securities issued by the following companies. No

3) PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period. Yes

4) PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company. Yes

5) PI Financial Corp. and/or its affiliates have managed or co-managed a public offering of securities for the subject company in the past 12 months. No

6) The following director(s), officer(s) or employee(s) of PI Financial Corp. is a director of the subject company in which PI provides research coverage. No

7) A member of the research analyst’s household serves as an officer, director or advisory board member of the subject company. No

8) PI Financial Corp. and/or its affiliates make a market in the securities of the subject company. No

9)Company has partially funded previous analyst visits to its projects. Yes

10) Additional disclosure: No

 

Disclosures from Macquarie Morning Note, June 29, 2017

Disclosures available here.

Macquarie Capital (USA) Inc. or one of its affiliates, expects to receive or intends to seek compensation for investment banking services from Gold Standard Ventures Corp in the next three months.

MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates has provided Gold Standard Ventures Corp with investment advisory services in the past 24 months, for which it received compensation.

MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates managed or co-managed a public offering of securities of Gold Standard Ventures Corp in the past 12 months, for which it received compensation.

MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates has provided Gold Standard Ventures Corp with investment advisory services in the past 24 months, for which it received compensation.

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,sans-serif;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:”Times New Roman”;
mso-bidi-theme-font:minor-bidi;}

Target Price Risk: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures.

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,sans-serif;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:”Times New Roman”;
mso-bidi-theme-font:minor-bidi;}

Blockchain the End of Gold Price Suppression

Blockchain the End of Gold Price Suppression

By The Gold Report

With so many rumors and complaints over the years about flash crashes, overleveraging, taking advantage of clients and overcharging, blockchain could signal the end of big banks having their way on the Comex and paper metals markets, says Tom Beck, founder of Portfolio Wealth Global.

I bought my first gold and silver coins in 2003. I was 21, and well on my way to becoming a proponent of free markets and commodity-based money.

CPI Formula Shows Gold Is Near All-Time Lows

John Williams, of Shadowstats.com, and the brilliant analyst Jeff Clark, of GoldSilver.com, have published this important chart that, if you understand it correctly, would mean to never sell one ounce of your gold.

Today, the metal only covers 6% of the global currency supply, and that is a century low. Not since the Federal Reserve was created has that much of our global payment system been based on credit, without any tangible commodity backing it.

I’m personally not of the opinion that the gold standard is coming back soon, but Portfolio Wealth Global does see gold covering more than 15% of the currency supply, which translates to $3,000 per ounce using today’s prices.

Since I bought my coins, I’ve been hearing about manipulation by big banks, to which I always reply that all markets are rigged in some way or another, but what JP Morgan and Barclays have done with the silver market is shameful, and there’s now a way to truly stop it.

Inflation Adjusted Silver Price

Silver might be the world’s cheapest commodity of all time. Its price is less than 1% of what it was just 37 years ago using the same inflation metrics.

This wouldn’t be possible if complete transparency existed. The fact is the COMEX in London and New York is leveraged to about 247:1. For every 247 paper ounces, there’s only 1 physical ounce. This allows leveraged swings and smash-downs to occur, almost without repercussions.

The blockchain technology that drives the Bitcoin network has one great advantage: it is immutable, which means that past data can never be changed.

It is a point of reference that can be trusted, and it has meaningful impacts for gold. Using blockchain, state-of-the-art communications enable gold to be redistributed across the globe with the snap of a finger, without ever leaving vaults.

China’s gold market is now the largest in the world, and it is increasingly moving online. The Precious Metals Department of leading Chinese bank ICBC explains is leveraging the Internet to drive gold investments among savers, from the young millennials to professional and seasoned investors.

Chinese Gold Imports

The dream of a decentralized precious metals market is ever closer.

Though millennials have no clue what the historical roles of gold and silver are, their purchasing power is insignificant compared with the rapidly growing middle classes of China and India.

Gold is becoming part of financial technology—it’s turning more modern and becoming easier to store and own.

Over the summer, I’ll show great ways to own it.

When the market becomes more sophisticated and price discovery occurs, the price of silver could easily be $64 per ounce.

Remember, most Asians don’t see a huge difference between silver and gold with regards to their role as a store of value, therefore they’ll buy what’s cheaper, and silver is literally dirt cheap.

Tom Beck is the founder of Portfolio Wealth Global. Known as one of the first millennial millionaires in the United States, Beck is a relentless idea machine. After retiring two years ago at age 33, he’s officially come out of retirement to head up Portfolio Wealth Global. He brings a vision of setting a new record for millionaires with his seven-year plan to accelerate any subscribers’ net worth who will commit to the income lifestyle. Beck delivers new ideas on the marketplace that were once only available to the rich. Traveling the world, he’s invested in over a dozen countries, including real estate.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosures:
1) Statements and opinions expressed are the opinions of Tom Beck and not of Streetwise Reports or its officers. Tom Beck is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Tom Beck was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts provided by Portfolio Wealth Global

 

 

Undervalued Companies for the Precious Metal Portfolio

Undervalued Companies for the Precious Metal Portfolio

By The Gold Report

Source: Streetwise Reports   07/11/2017

The rebalancing of the GDXJ and other factors offer buying opportunities in the precious metals space, says Ralph Aldis, portfolio manager at U.S. Global Investors, who discusses a number of companies he believes offer good value in today’s marketplace.

Dollar with hardhat

The Gold Report: Ralph, thank you for joining us today. Let’s talk about royalty and streaming companies. What factors are making them attractive investment vehicles right now?

Ralph Aldis: There are several aspects. We look at factors like return on invested capital. It doesn’t necessarily have to be extremely high; we just want to see that there’s low volatility in those returns. The royalty companies do that very well.

The royalty companies are highly diversified, and thus, the geologic risk of any particular deposit really has been diversified away.

Additionally, royalty companies essentially get paid off the revenue line of other mining companies. They’re getting paid first, and those cash flows have a high certainty to them because they’re coming off the topline versus coming off the bottom line.

TGR: What royalty and streaming companies are at the top of your list?

RA: The three biggest and most successful ones have been Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), what’s now called Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) and used to be Silver Wheaton, and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX).

The last three to five years, Franco has outperformed the other two companies by a pretty good margin. That’s because the other two names have had some minor issues. But the issues are solvable, and actually some of them are being solved right now.

Wheaton Precious Metals Corp. is one of the three biggest and most successful royalty and streaming companies.

When we had that downturn in the metal prices in 2015 and 2016, Silver Wheaton and Franco both did very large royalties with some of the major miners that were producing gold as a byproduct. Those streams were in production and paying right then and there, so they immediately started getting returns on that.

Wheaton Precious Metals has an issue with the Canadian Revenue Authority (CRA), which is trying to assess taxes on some of its offshore earnings. So, the company has somewhat been under a cloud.

Looking at three-year numbers, Franco-Nevada is up 55%. Wheaton Precious Metals is actually negative, -20%. And Royal Gold is up 28%. That’s reflected in what’s going on. Franco hasn’t had any issues. Silver Wheaton has been challenged by the CRA. It has been in negotiation, and discovery, I believe, is finished now. But if the matter can get resolved favorably, and case law points to it might, Wheaton Precious Metals could have a very significant pop. I could see 20% in any single day if it gets this thing put to bed.

The last big royalty stream that Royal Gold did was on Mount Milligan. The operator did have some problems. Mount Milligan has since been taken over by Centerra Gold Inc. (CG:TSX; CADGF:OTCPK). Centerra has a lot of cash in the bank, so it has the deeper pockets to make sure that Mount Milligan continues to work. I think that’s why Royal Gold has lagged somewhat relative to Franco.

TGR: The GDXJ (VanEck Vectors Junior Gold Miners ETF) rebalancing occurred in June, and it created some buying opportunities. Can you give us a quick overview of what happened at the GDXJ and why?

RA: Between the GDXJ for juniors and the GDX (VanEck Vectors Gold Miners ETF) for seniors, the combined ownership was hitting up against owning 20% of shares outstanding for some companies and actually went over 20% for some. There’s a Toronto Stock Exchange rule where once you own over 20%, you’re obliged to make a compulsory takeover offer. And obviously, that’s not the goal of the ETF. Part of those flows going into it were driven by some of the leveraged products—DUST (Direxion Daily Gold Miners Bear 3X ETF), JNUG (Direxion Daily Junior Gold Miners Bull 3X ETF) and NUGT (Direxion Daily Gold Miners Bull 3X ETF). These funds actually buy the GDX and GDXJ and leverage it up. That’s why they grew so fast, because a lot of people wanted that 3X product earlier in the year.

With the amount of assets coming into the fund, the GDXJ could no longer be in those smaller companies where it could go over 20%. The GDXJ had more than $5 billion in assets at the time when it announced that it was going to liquidate or downweight half of those names in the fund and shift that money into larger-capitalization names, which are really in the midtier spectrum. It announced this with an eight-week window.

Over those ensuing eight weeks, everybody started frontrunning those names, selling the ones that were going to be kicked out and adding to the names that were going to be bought, even though there was nothing fundamentally wrong with any of those names. It was just that the GDXJ had showed its cards, and people will game that to try to make money.

That knocked down the share prices of some companies where there’s no fundamental reason why they should have been knocked down 20 to 30%, depending on the name.

TGR: Let’s talk about a couple of those names that have been affected and might offer buying opportunities.

RA: Some of the names are tightly held, such as Wesdome Gold Mines Ltd. (WDO:TSX); Resolute Funds Ltd. owns just under 20% of the stock. There are three or four other players, including us. We own a substantial amount of that stock.

TGR: Wesdome recently released drill results from the Kiena mine complex and gave details on the ramp at Kiena Deep that’s going to take about nine months or so to build.

RA: Yes, it is going to take about nine months or so to get that ramp fully put in. But the company said by September/October it’ll be down in the ramp, not complete, but it will have some new drilling stations. In the press release recently, it alluded it had run out of the ability to drill that deep discovery that has the market so excited about Wesdome. The news flow could be a little slow, but by September/October we should start to see more drilling taking place. Wesdome did put out a few holes with this last press release, and there were some impressive results, like 12.8 grams over 8 meters. But again, we’re probably not going to see any results for another two or three months as it ramps down.

But I think it’s positive; Wesdome will get a new mine into production that’s been on care and maintenance for a couple of years. This provides a good growth profile.

TGR: What’s another company affected by the GDXJ rebalance?

RA: Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT), which is another name where three or four big players own a substantial amount of the stock. We are one of those names, too. What also happened with Klondex is because the majority of its shareholder base are U.S. residents, it had to change from International Funds Control Reporting System accounting to U.S. Generally Accepted Accounting Principles (GAAP).

That made Klondex look as if it had reported a miss on the quarter because U.S. GAAP requires you to write off everything once you have one ounce of gold production coming out of the mill. And that’s what it had at True North, which was an acquisition it had done the prior year. It was running some of the tailings through the mill just for testing it, and it produced some gold. But it was really more of a situation where it was pre-commercial production, which U.S. GAAP does not recognize. So Klondex had to report the cost at True North at something around $1,600/ounce gold. But it was just an accounting change. And if you looked at the earnings based on the previous way it was reporting it, it actually was an earnings beat.

But the algorithms out there don’t care. They just scan and look for earnings misses and start shorting that stock. Plus, they also see that this name is being downweighted in the index, so maybe that’s a reason to short it also.

Another name that got knocked down about 22% is Golden Star Resources Ltd. (GSS:NYSE; GSC:TSX). On that one, it was the number of days of trading volume that spooked people. Golden Star has actually had a pretty good turnaround. Its CEO has done a great job with the company. Royal Gold actually gave it a royalty to help get the development done that it needed.

TGR: Are there other companies that investors should be looking at?

RA: One of them is still in the exploration stage, TriStar Gold Inc. (TSG:TSX.V). The company recently did a small raise, $5.1 million. It has a gold alluvial conglomerate deposit in Brazil that outcrops at surface. It’s very much like Tarkwa in Ghana, where Gold Fields Ltd. (GFI:NYSE) has been mining for a number of years or like Yamana Gold Inc.’s (YRI:TSX; AUY:NYSE; YAU:LSE) deposit in Brazil, Gualcamayo.

Now that TriStar has raised money, it’s going to be doing some infill and stepout drilling. It has about 16 kilometers (16 km) of trace of this outcrop, and the current resource is only on about 2–3 km kilometers of it. So, we should see some resource updates that grow the resource, and I think the market will be pleased to see that.

TGR: Are there other companies you want to talk about?

RA: Sandstorm Metals & Energy Ltd. (SND:TSX.V) has been punished recently by being downweighted in the GDXJ. It also did a transaction where it bought a piece of Mariana Resources Ltd. (MARL:TSX.V; MARL:AIM) to get partial ownership over the Hot Maden deposit.

Sandstorm eventually wants to create a royalty out of that, but is willing to take the risk of equity ownership and then see if it can transition it into a royalty because the royalty space has become fairly competitive. This is one way where it thinks it can get an advantage to getting a royalty that has a little better economics to it.

One other company is AuRico Metals Inc. (AMI:TSX); the company has royalties on the Fosterville deposit, which Kirkland Lake Gold Inc. (KL:TSX; KLGDF:OTCQX) owns in Australia. Fosterville has just been knocking it out of the park with some great resource additions at higher grades. AuRico is benefitting from that. But it also has the Kemess development project, which was the original Northgate Minerals Corp. (NGX:TSX, NGX:NYSE.MKT) Kemess mine. All the infrastructure is there; it’s been on care and maintenance. It may be now that that deposit is going to become economic again at the metal prices that we’re seeing today. AuRico has an opportunity to redevelop it. It’s been adding to its team. AuRico may end up being a royalty company. It may end up being a development company. It may end up having a partner come in. There’s more than one way that it can make some money and create some wealth with its asset base. I’m very positive on AuRico Metals, too.

TGR: Any other parting thoughts?

RA: Investors need to keep their wits. Sometimes, you get hot markets and you want to invest as much as you can. But you have to remember to keep a diversified portfolio, with 5 to 10% of your assets in the precious metals space. The rest should be in another type of asset that is uncorrelated, just as the gold space is largely uncorrelated with the broader market. That gives you diversification and helps you weather the highs and lows in the respective markets as they oscillate. Stay diversified, and rebalance once a year at minimum.

TGR: Thanks for your insights.

Ralph Aldis, CFA, portfolio manager of U.S. Global Investors, is responsible for analyzing gold and precious metals stocks for the World Precious Minerals Fund (UNWPX) and the Gold and Precious Metals Fund (USERX). In addition, Aldis serves as co-portfolio manager for the Global Resources Fund (PSPFX), Holmes Macro Trends Fund (MEGAX), All American Equity Fund (GBTFX), Emerging Europe Fund (EUROX), Near-Term Tax Free Fund (NEARX), U.S. Government Securities Ultra-Short Bond Fund (UGSDX), the China Region Fund (USCOX), and the U.S. Global Jets ETF (JETS). In 2011, and again in 2015, Aldis was named a U.S. Metals and Mining “TopGun” by Brendan Wood International. In 2016, he and Frank Holmes were named Best Americas-Based Fund Manager by the Mining Journal. Aldis received a master’s degree in energy and mineral resources from the University of Texas at Austin in 1988 and a Bachelor of Science in Geology, cum laude, in 1981, from Stephen F. Austin University. Aldis is a member of the CFA Society of San Antonio.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new interviews and articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Wheaton Precious Metals Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Ralph Aldis: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. Funds controlled by U.S. Global Investors hold shares of the following companies mentioned in this article, as of 03/31/2017: Franco-Nevada Corp, Wheaton Precious Metals, Royal Gold Inc., Centerra Gold Inc., VanEck Vectors Gold Miners ETF, VanEck Vectors Junior Gold Miners ETF, Direxion Daily Gold Miners, Direxion Daily Junior Gold Miners, Wesdome Gold Mines, Klondex Mines Ltd, Golden Star Resources Ltd, TriStar Gold Inc., Gold Fields Ltd, AuRico Metals Inc., Kirkland Lake Gold. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals Corp., a company mentioned in this article.

{“@context”: “http://schema.org/”, “@type”: “NewsArticle”, “headline”: “Undervalued Companies for the Precious Metal Portfolio”,”datePublished”: “2017-07-11″,”description”: “The rebalancing of the GDXJ and other factors offer buying opportunities in the precious metals space, says Ralph Aldis, portfolio manager at U.S. Global Investors, who discusses a number of companies he believes offer good value in today’s marketplace.”,”mainEntityOfPage”: “http://streetwisereports.com/pub/na/undervalued-companies-for-the-precious-metal-portfolio”,”author”: {“@type”: “Person”,”name”: “Streetwise Reports”},”publisher”: {“@type”: “Organization”,”logo”: {“@type”: “ImageObject”,”url”: “https://www.streetwisereports.com/images/flex_headers/SWR_horizontal_1000.png”},”name”: “Streetwise Reports”},”articleBody”: “The Gold Report: Ralph, thank you for joining us today. Let’s talk about royalty and streaming companies. What factors are making them attractive investment vehicles right now?

Ralph Aldis: There are several aspects. We look at factors like return on invested capital. It doesn’t necessarily have to be extremely high; we just want to see that there’s low volatility in those returns. The royalty companies do that very well.

The royalty companies are highly diversified, and thus, the geologic risk of any particular deposit really has been diversified away.

Additionally, royalty companies essentially get paid off the revenue line of other mining companies. They’re getting paid first, and those cash flows have a high certainty to them because they’re coming off the topline versus coming off the bottom line.

TGR: What royalty and streaming companies are at the top of your list?

RA: The three biggest and most successful ones have been Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), what’s now called Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) and used to be Silver Wheaton, and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX).

The last three to five years, Franco has outperformed the other two companies by a pretty good margin. That’s because the other two names have had some minor issues. But the issues are solvable, and actually some of them are being solved right now.

Wheaton Precious Metals Corp. is one of the three biggest and most successful royalty and streaming companies.

When we had that downturn in the metal prices in 2015 and 2016, Silver Wheaton and Franco both did very large royalties with some of the major miners that were producing gold as a byproduct. Those streams were in production and paying right then and there, so they immediately started getting returns on that.

Wheaton Precious Metals has an issue with the Canadian Revenue Authority (CRA), which is trying to assess taxes on some of its offshore earnings. So, the company has somewhat been under a cloud.

Looking at three-year numbers, Franco-Nevada is up 55%. Wheaton Precious Metals is actually negative, -20%. And Royal Gold is up 28%. That’s reflected in what’s going on. Franco hasn’t had any issues. Silver Wheaton has been challenged by the CRA. It has been in negotiation, and discovery, I believe, is finished now. But if the matter can get resolved favorably, and case law points to it might, Wheaton Precious Metals could have a very significant pop. I could see 20% in any single day if it gets this thing put to bed.

The last big royalty stream that Royal Gold did was on Mount Milligan. The operator did have some problems. Mount Milligan has since been taken over by Centerra Gold Inc. (CG:TSX; CADGF:OTCPK). Centerra has a lot of cash in the bank, so it has the deeper pockets to make sure that Mount Milligan continues to work. I think that’s why Royal Gold has lagged somewhat relative to Franco.

TGR: The GDXJ (VanEck Vectors Junior Gold Miners ETF) rebalancing occurred in June, and it created some buying opportunities. Can you give us a quick overview of what happened at the GDXJ and why?

RA: Between the GDXJ for juniors and the GDX (VanEck Vectors Gold Miners ETF) for seniors, the combined ownership was hitting up against owning 20% of shares outstanding for some companies and actually went over 20% for some. There’s a Toronto Stock Exchange rule where once you own over 20%, you’re obliged to make a compulsory takeover offer. And obviously, that’s not the goal of the ETF. Part of those flows going into it were driven by some of the leveraged products—DUST (Direxion Daily Gold Miners Bear 3X ETF), JNUG (Direxion Daily Junior Gold Miners Bull 3X ETF) and NUGT (Direxion Daily Gold Miners Bull 3X ETF). These funds actually buy the GDX and GDXJ and leverage it up. That’s why they grew so fast, because a lot of people wanted that 3X product earlier in the year.

With the amount of assets coming into the fund, the GDXJ could no longer be in those smaller companies where it could go over 20%. The GDXJ had more than $5 billion in assets at the time when it announced that it was going to liquidate or downweight half of those names in the fund and shift that money into larger-capitalization names, which are really in the midtier spectrum. It announced this with an eight-week window.

Over those ensuing eight weeks, everybody started frontrunning those names, selling the ones that were going to be kicked out and adding to the names that were going to be bought, even though there was nothing fundamentally wrong with any of those names. It was just that the GDXJ had showed its cards, and people will game that to try to make money.

That knocked down the share prices of some companies where there’s no fundamental reason why they should have been knocked down 20 to 30%, depending on the name.

TGR: Let’s talk about a couple of those names that have been affected and might offer buying opportunities.

RA: Some of the names are tightly held, such as Wesdome Gold Mines Ltd. (WDO:TSX); Resolute Funds Ltd. owns just under 20% of the stock. There are three or four other players, including us. We own a substantial amount of that stock.

TGR: Wesdome recently released drill results from the Kiena mine complex and gave details on the ramp at Kiena Deep that’s going to take about nine months or so to build.

RA: Yes, it is going to take about nine months or so to get that ramp fully put in. But the company said by September/October it’ll be down in the ramp, not complete, but it will have some new drilling stations. In the press release recently, it alluded it had run out of the ability to drill that deep discovery that has the market so excited about Wesdome. The news flow could be a little slow, but by September/October we should start to see more drilling taking place. Wesdome did put out a few holes with this last press release, and there were some impressive results, like 12.8 grams over 8 meters. But again, we’re probably not going to see any results for another two or three months as it ramps down.

But I think it’s positive; Wesdome will get a new mine into production that’s been on care and maintenance for a couple of years. This provides a good growth profile.

TGR: What’s another company affected by the GDXJ rebalance?

RA: Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT), which is another name where three or four big players own a substantial amount of the stock. We are one of those names, too. What also happened with Klondex is because the majority of its shareholder base are U.S. residents, it had to change from International Funds Control Reporting System accounting to U.S. Generally Accepted Accounting Principles (GAAP).

That made Klondex look as if it had reported a miss on the quarter because U.S. GAAP requires you to write off everything once you have one ounce of gold production coming out of the mill. And that’s what it had at True North, which was an acquisition it had done the prior year. It was running some of the tailings through the mill just for testing it, and it produced some gold. But it was really more of a situation where it was pre-commercial production, which U.S. GAAP does not recognize. So Klondex had to report the cost at True North at something around $1,600/ounce gold. But it was just an accounting change. And if you looked at the earnings based on the previous way it was reporting it, it actually was an earnings beat.

But the algorithms out there don’t care. They just scan and look for earnings misses and start shorting that stock. Plus, they also see that this name is being downweighted in the index, so maybe that’s a reason to short it also.

Another name that got knocked down about 22% is Golden Star Resources Ltd. (GSS:NYSE; GSC:TSX). On that one, it was the number of days of trading volume that spooked people. Golden Star has actually had a pretty good turnaround. Its CEO has done a great job with the company. Royal Gold actually gave it a royalty to help get the development done that it needed.

TGR: Are there other companies that investors should be looking at?

RA: One of them is still in the exploration stage, TriStar Gold Inc. (TSG:TSX.V). The company recently did a small raise, $5.1 million. It has a gold alluvial conglomerate deposit in Brazil that outcrops at surface. It’s very much like Tarkwa in Ghana, where Gold Fields Ltd. (GFI:NYSE) has been mining for a number of years or like Yamana Gold Inc.’s (YRI:TSX; AUY:NYSE; YAU:LSE) deposit in Brazil, Gualcamayo.

Now that TriStar has raised money, it’s going to be doing some infill and stepout drilling. It has about 16 kilometers (16 km) of trace of this outcrop, and the current resource is only on about 2–3 km kilometers of it. So, we should see some resource updates that grow the resource, and I think the market will be pleased to see that.

TGR: Are there other companies you want to talk about?

RA: Sandstorm Metals & Energy Ltd. (SND:TSX.V) has been punished recently by being downweighted in the GDXJ. It also did a transaction where it bought a piece of Mariana Resources Ltd. (MARL:TSX.V; MARL:AIM) to get partial ownership over the Hot Maden deposit.

Sandstorm eventually wants to create a royalty out of that, but is willing to take the risk of equity ownership and then see if it can transition it into a royalty because the royalty space has become fairly competitive. This is one way where it thinks it can get an advantage to getting a royalty that has a little better economics to it.

One other company is AuRico Metals Inc. (AMI:TSX); the company has royalties on the Fosterville deposit, which Kirkland Lake Gold Inc. (KL:TSX; KLGDF:OTCQX) owns in Australia. Fosterville has just been knocking it out of the park with some great resource additions at higher grades. AuRico is benefitting from that. But it also has the Kemess development project, which was the original Northgate Minerals Corp. (NGX:TSX, NGX:NYSE.MKT) Kemess mine. All the infrastructure is there; it’s been on care and maintenance. It may be now that that deposit is going to become economic again at the metal prices that we’re seeing today. AuRico has an opportunity to redevelop it. It’s been adding to its team. AuRico may end up being a royalty company. It may end up being a development company. It may end up having a partner come in. There’s more than one way that it can make some money and create some wealth with its asset base. I’m very positive on AuRico Metals, too.

TGR: Any other parting thoughts?

RA: Investors need to keep their wits. Sometimes, you get hot markets and you want to invest as much as you can. But you have to remember to keep a diversified portfolio, with 5 to 10% of your assets in the precious metals space. The rest should be in another type of asset that is uncorrelated, just as the gold space is largely uncorrelated with the broader market. That gives you diversification and helps you weather the highs and lows in the respective markets as they oscillate. Stay diversified, and rebalance once a year at minimum.

TGR: Thanks for your insights.

Ralph Aldis, CFA, portfolio manager of U.S. Global Investors, is responsible for analyzing gold and precious metals stocks for the World Precious Minerals Fund (UNWPX) and the Gold and Precious Metals Fund (USERX). In addition, Aldis serves as co-portfolio manager for the Global Resources Fund (PSPFX), Holmes Macro Trends Fund (MEGAX), All American Equity Fund (GBTFX), Emerging Europe Fund (EUROX), Near-Term Tax Free Fund (NEARX), U.S. Government Securities Ultra-Short Bond Fund (UGSDX), the China Region Fund (USCOX), and the U.S. Global Jets ETF (JETS). In 2011, and again in 2015, Aldis was named a U.S. Metals and Mining TopGun by Brendan Wood International. In 2016, he and Frank Holmes were named Best Americas-Based Fund Manager by the Mining Journal. Aldis received a master’s degree in energy and mineral resources from the University of Texas at Austin in 1988 and a Bachelor of Science in Geology, cum laude, in 1981, from Stephen F. Austin University. Aldis is a member of the CFA Society of San Antonio.

Read what other experts are saying about:

Wheaton Precious Metals Corp.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new interviews and articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Wheaton Precious Metals Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Ralph Aldis: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. Funds controlled by U.S. Global Investors hold shares of the following companies mentioned in this article, as of 03/31/2017: Franco-Nevada Corp, Wheaton Precious Metals, Royal Gold Inc., Centerra Gold Inc., VanEck Vectors Gold Miners ETF, VanEck Vectors Junior Gold Miners ETF, Direxion Daily Gold Miners, Direxion Daily Junior Gold Miners, Wesdome Gold Mines, Klondex Mines Ltd, Golden Star Resources Ltd, TriStar Gold Inc., Gold Fields Ltd, AuRico Metals Inc., Kirkland Lake Gold. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals Corp., a company mentioned in this article.”}

Silver Expected to Rally

Silver Expected to Rally

By The Gold Report

Source: Clive Maund for Streetwise Reports   07/10/2017

This could be an optimum time to buy silver and high-quality silver stocks, says technical analyst Clive Maund, as he expects a sizeable silver rally to ensue.

8-Year Silver Chart

June is silver’s worst month of the year by far, on a seasonal basis, and its price dropped significantly this June. However, we are now well into July, and July is seasonally silver’s 2nd best month of the year, and as the month got off to a bad start, it is reasonable to expect things to look up, especially as silver put in what looks like a high-volume Reversal Day on Friday, when it broke down below support but then got back above it later in the day.

We can see silver’s dive into what looks like a capitulative high volume Reversal Day on Friday to advantage on its 6-month chart, and the chance of its having hit bottom is increased by the fact that there was a full moon at the weekend.

6-month Silver Chart

The origins of the support underpinning the silver price here can be seen on its 20-month chart. It derives from the December low which formed at support above a trading range that developed from February through April last year. We may be seeing a Double Bottom form with that low.

20-Month Silver chart

Like gold, silver’s long-term 8-year chart appears to show a large Head-and-Shoulders bottom completing, which is downsloping in silver’s case because silver traditionally underperforms gold towards the end of bear markets (and early in bull markets). With the price near to the Right Shoulder low after its recent drop, we could be at an optimum time to buy the sector here from a price / time perspective.

8-Year Silver Chart

Finally, silver’s COTs (Commitment of Traders Report) are looking the best they have since early 2016. The Large Specs have finally given up on silver in recent weeks and their positions have shrunk steadily and rather dramatically. While they could shrink even more to near zero, as they did late in 2015, this is thought to be unlikely because readings in late 2015 marked the final low bear market lows for the sector when sentiment was in the basement, which was followed by a huge rally in PM stocks that looks like the first impulse wave of a new bull market. It is therefore considered unlikely that silver’s COT readings will ease much more, if at all. We are, therefore, thought to be either at or close to an important intermediate bottom here, a time to buy silver and the better silver stocks for the sizeable rally that should follow.

Silver COT Report

Click on chart to pop up a larger, clearer version.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund.

{“@context”: “http://schema.org/”, “@type”: “NewsArticle”, “headline”: “Silver Expected to Rally”,”datePublished”: “2017-07-10″,”description”: “This could be an optimum time to buy silver and high-quality silver stocks, says technical analyst Clive Maund, as he expects a sizeable silver rally to ensue.”,”mainEntityOfPage”: “http://streetwisereports.com/pub/na/silver-expected-to-rally”,”author”: {“@type”: “Person”,”name”: “Clive Maund for Streetwise Reports”},”publisher”: {“@type”: “Organization”,”logo”: {“@type”: “ImageObject”,”url”: “https://www.streetwisereports.com/images/flex_headers/SWR_horizontal_1000.png”},”name”: “Streetwise Reports”},”articleBody”: “June is silver’s worst month of the year by far, on a seasonal basis, and its price dropped significantly this June. However, we are now well into July, and July is seasonally silver’s 2nd best month of the year, and as the month got off to a bad start, it is reasonable to expect things to look up, especially as silver put in what looks like a high-volume Reversal Day on Friday, when it broke down below support but then got back above it later in the day.

We can see silver’s dive into what looks like a capitulative high volume Reversal Day on Friday to advantage on its 6-month chart, and the chance of its having hit bottom is increased by the fact that there was a full moon at the weekend.

The origins of the support underpinning the silver price here can be seen on its 20-month chart. It derives from the December low which formed at support above a trading range that developed from February through April last year. We may be seeing a Double Bottom form with that low.

Like gold, silver’s long-term 8-year chart appears to show a large Head-and-Shoulders bottom completing, which is downsloping in silver’s case because silver traditionally underperforms gold towards the end of bear markets (and early in bull markets). With the price near to the Right Shoulder low after its recent drop, we could be at an optimum time to buy the sector here from a price / time perspective.

Finally, silver’s COTs (Commitment of Traders Report) are looking the best they have since early 2016. The Large Specs have finally given up on silver in recent weeks and their positions have shrunk steadily and rather dramatically. While they could shrink even more to near zero, as they did late in 2015, this is thought to be unlikely because readings in late 2015 marked the final low bear market lows for the sector when sentiment was in the basement, which was followed by a huge rally in PM stocks that looks like the first impulse wave of a new bull market. It is therefore considered unlikely that silver’s COT readings will ease much more, if at all. We are, therefore, thought to be either at or close to an important intermediate bottom here, a time to buy silver and the better silver stocks for the sizeable rally that should follow.

Click on chart to pop up a larger, clearer version.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund.”}

Pin It on Pinterest

%d bloggers like this: