Companies and Macro-economic Issues

November 26, 2011

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In this show Al discusses:

  • Segment 1 – Al opens the show with James Turk, the dean of the gold analysts.
  • Segment 2 – Al chats with Rob Grey about Exeter Resources and Extorre Gold.
  • Segment 3 – Al and Marshall Berol co-portfolio manager of the Encompass Fund discuss the current state of the resource market.
  • Segment 4 – John Kaiser of the Kaiser Bottom Fishing Report discusses the disconnect between commodity prices and the related share prices.
  • Segment 5 – Jeff Pontius Chairman of Corvus Gold, provides an update on the Company.
  • Segment 6 – Larry Reaugh provides an update on American Manganese.
  • Segment 7 – Rick Honsinger discusses why Formation Metals share price had rebounded so strongly.
  • Segment 8 – Big Al and Trader Rog opine on the future of the markets.

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

    Nov 26, 2011 26:01 AM

    Al,,,,great show

      Nov 26, 2011 26:49 AM

      Good Morning Jerry,

      Many thanks for you kind words.

      Big Al

        Feb 22, 2012 22:52 AM

        Terrific work! This is the type of info that sulohd be shared around the net. Shame on the search engines for not positioning this post higher! Come on over and visit my site . Thanks =)

      Nov 26, 2011 26:08 AM

      I concur; out of the ballpark commentaries by you and your guests.
      Go Cougs……………

        Nov 26, 2011 26:44 AM

        HI Dai Uy,

        Go who?

        You gotta admit, gonna be a good one at 4:30 p.m.!

        Big Al

    Nov 26, 2011 26:33 AM

    Good weekend Big Al,
    Since 4 trading days, $Gold had strongly held the crucial support level of 1,681.00-1,682.00 (Hammer from Nov-01).
    If it stays over this level on next monday, then, Rog is right and the “Santa Claus Rally” will be set for the 1,756.00 goal.

    Hello Trader Rog,
    You certainly know the Wikings were outstanding traders. You´ve already demonstrate us in the past with your almost perfect forecasts that your ancestors´s skills are flowing in your veins.
    You are a big Mrs Merkel´s fan. Well, Merkel points out in her speeches several times that she is learning by doing. I don´t have so much confidence in her political moves because she is using too much the delaying tactic. Hopefully she will take the right decisions in the future and she will be not as stupid as Helmut Kohl was in the past.
    If Germany should step out of the euro currency, the overindebted euro zone countries would experience a creeping Weimar type hyperinflation. What a dreadful mess!

    Have both, Al and Rog, a reposeful week-end.

    P.S. Rog, I have lost my “single status” for 32 years and still happy about it! 😉

      Nov 26, 2011 26:48 AM

      Morning Anna,

      Many thanks for your contributions. You are truly an insightful individual and a valuable member of this forum.


      Big Al

        Nov 26, 2011 26:14 AM

        Gold is in a pennant type formation and needs to hold 1680 to avoid breaking down from it. 1760 would be the top line of the pennant and over that would be a potential breakout. So the bullish case has to be a rally from 1680 to 1760 from here. Failure of that would be pretty bearish in my humble singular opinion.
        I also note with interest that gold ended the week for the Thanksgiving long weekend almost exactly $1680 and silver almost exactly $31, real round number pirces, right on the line. check out the Kitco 3-day charts this weekend!Hmmmmmmmmmmmmmmmm.

          Nov 26, 2011 26:17 PM

          Hi dave

          Sometimes I wish I was a technician

          Thanks for the comment

          Big al

    Nov 26, 2011 26:59 AM

    Morning Everyone,

    Here is a comment from a listener that he sent to my e-mail:

    “hey Big Al!

    Don’t know if you read this yet, but this is going to shake things up a bit…and probably not a good thing for the dollar!

    Love the daily shows!”

      Nov 26, 2011 26:17 AM

      If the dollar gets stronger, I would think that PM Harper will attempt to drop the Looney further as we currently import 80% of their exports; it will be interesting to see how the looney trades against the Yuan if China continues to need oil and other natural resources which Canada can supply.

        Nov 26, 2011 26:46 AM

        Morning again Dai Uy,

        Really good points!

        Foreign trade and the implication of currency values are a very interesting wild card in this whole scenario.


        Big Dawg

      Nov 26, 2011 26:59 PM

      Interesting article. Yes, it’s not a good thing for the greenback. But in a race to the bottom, it’s all relative levels of ‘not good’! Although Canada and Aus each have some interesting strengths if China doesn’t go bust too fast or too far, since they export so much right now.

    Nov 26, 2011 26:16 AM

    Italy had to pay record rates to raise €10bn this morning, while France and Germany warn that a blow-out in its giant debt mountain would signal “the end of the euro.”
    Meanwhile, EU Economic and Monetary Affairs Commissioner Olli Rehn has upped the pressure on Italian Prime Minister Mario Monti’s new government, calling for “an ambitious timeline” on economic reforms.
    “Italy is faced with formidable challenges,” Mr Rehn told Italian lawmakers during a visit to Rome.
    “The new government needs to deliver on fiscal consolidation and adopt bold measures to re-launch growth,” he said.
    ”Full and effective implementation will be key,” he said, adding: “It would be essential to give strong signals to citizens and markets with a clear and ambitious roadmap for reform and an ambitious timeline.”
    In its bond auction, Italy was forced to pay a rate of 6.504% on bonds due in six months and 7.814% on bonds due in two years – dangerous levels that analysts say could drive Italy insolvent within months.
    A day after a summit in Strasbourg with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Mr Monti’s press office reported the two leaders had said a debt collapse in Italy would be “the end of the euro.”
    Ms Merkel and Mr Sarkozy “said they were aware that a collapse of Italy would inevitably be the end of the euro, stalling the process of European integration with unpredictable consequences,” it said in a statement.
    Mario Monti promised the two leaders that further fiscal consolidation in Italy “will be implemented rapidly with measures to boost growth.”
    Commissioner Rehn is this afternoon meeting Mr Monti, who was installed on 16 November after market pressures and a parliamentary revolt ousted his predecessor Silvio Berlusconi.
    Italy has been forced to agree to auditing of its books by the European Union and the International Monetary Fund and the European Commission has said more austerity measures may be needed to balance the budget by 2013.
    A first report from the monitoring mission is due on Tuesday, Mr Rehn said.
    Italy, the eurozone’s third-biggest economy after Germany and France, passed two budget austerity packages earlier this year when fears over its giant debt and sluggish economic reforms began rattling the markets.
    Mario Monti has promised rapid action to slash the debt and boost growth and has wide public support but has yet to launch concrete reform plans.
    Italy’s debt emergency has set off alarm bells around the world over concerns that it could break the eurozone.
    Investors are fretting over the apparent failure of proposals to introduce Eurobonds – which would help weaker eurozone economies by spreading the risk – and turn the European Central Bank into a lender of last resort.
    Concerns about Europe’s health were underscored this week when Germany drew bids of only €3.9bn for a €6bn bond auction.

    Nov 26, 2011 26:18 AM

    Above rte news 20:11 fri. 25. What happened to GREECE ???

    Nov 26, 2011 26:35 AM

    So the big panic this week was ITALY, Who is it going to be next week FRANCE !!! WHY DON’T THESE IDIOTS JUST ADMIT , IT’S TOO BROKEN TO FIX. Why don’t they just write a letter to SANTA CLAUSE, & hope he can deliver a fix for christmas.

      Nov 26, 2011 26:47 AM

      Mr Irish,

      They need to get a tree first!

      Big Al

      Plus, they would probably get coal in return!

        Feb 24, 2012 24:23 PM

        It seems that I’m going to be in a foot race with sveeral others to pull papers to recall the person that makes a motion to eliminate public comment, as well as those that vote to approve those approving of this motion.I have had sveeral emails challenging me to be the first in line to Town Hall to do this. So I say,, BRING IT ON, I’m ready and willing to fight this right to public opinion to the end. So Mr. Haley, the line has been drawn in the sand, and I’m throwing sand in your face. Democracy does not silence those that are not elected by the majority, but it does bring forth those of strong minds.

      Nov 26, 2011 26:05 AM

      Irish……italy…france…all piigs…want germany to pitch in the gold first….and
      then they breakup….or shall I say kiss and make up….

        Nov 26, 2011 26:06 AM

        Hi Jerry,

        Everyone does seem to need the Germans!

        Big Al

    Nov 26, 2011 26:43 AM

    Hi al, My question is for Mr. Reaugh from American Maganese. Lots of big names are interested in AMY and I’m hearing pepple say this could 1 day be a $50-$100 stock. What happens with the patent (when and IF they get it) Who does it belong to? Kemetco or AMY? With AMY Slated to go into production in 3-4 years, what will they do until then?

    I hope we get some tax-loss selling here, as I would love to scoop up some cheap shares in early January before the PEA.. 😉

    Nov 26, 2011 26:48 AM

    HI MAX,

    I will pass this comment on to Larry.

    Big Al

    Nov 26, 2011 26:15 AM

    Current worldwide economic problems are without doubt the cause of a many decade expansion in the fiat money system. No nation is immune from this, nor unaffected because all are infected with this papering over of debt.

    Perfect example of this is the explosion in derivatives during last decade where it went from several trillion to hundreds and probably thousands of trillions of dollars. Most of the expansion in derivatives is the result of counter party risk bets between financial operatives in a kind of insurance. There has not been any kind of adequate account or regulation of these derivatives which have all the primary dealers of the treasury at extreme risks beyond any possible paper cover.

    A year and more ago the politicians in Washington talked about expansion of powers for the Fed to regulate these derivatives. I don’t think anything substantial happened and in fact the derivatives have expanded since. I can only imagine the discussions going on behind closed doors at the Fed between its governors, and from all appearances of the Fed statements and minutes it is probable that dissatisfaction, disagreement and division is increasing.

    We all would love a true crystal ball to tell us how this will play out, but there are key indications and road signs which strongly suggest what we can expect. One strong indication which has been slow to develop is the suggestions, ideas and comments from deflationists (not to name any here) that are less sure about what to do and how to pay for all this. I never could understand how anyone could think that a majority of impoverished and increasing number of poor, working or not, could pay for the profligacy of expanding government and its debt. The poor are easily convinced of these government expansions when offered benefits they personally do not think they have to pay for. Politicians get into power and stay there so long as they can expand the population of dependents and pay for these programs through using other peoples money or by kicking the debt can down the road. But eventually politicians run out of others peoples money and the can kicking road comes to an end. Is it possible that all this is happening at the same time for reason? And were the derivative expansions just another mechanism to extend the road a little bit further?

    One think I can see very clear from big roadsigns of what is coming, and this is we are going to see Government falling, and among some it will be whole Nations.

      Nov 27, 2011 27:12 AM

      Hi Clay,

      Sorry I am late getting back to all of you. I had to access yesterday and right now I am flying to Oakland to attend the Hard Asset Conference in San Francisco. Fortunately, Southwest Airlines affers WiFi! Another reason to fly Southwest.

      I think you comments above are well thought out and accurate.

      Entitlements do assure votes and fiat currencies do assure eventual collapse. Really frieghtening that we are in this situation now!

      Big Al

      Feb 22, 2012 22:31 AM

      Keep up the wfdoernul work, I read few blog posts on this site and I believe that your web blog is very interesting and holds sets of superb info.

    Nov 26, 2011 26:39 AM

    What scares the heck out of me is that the price of gold and silver will fall untill the disconnect with precious stocks no longer exists. Based on world situations gold should be a lot higher yet we’re falling. Every time we think that PM stocks/gold etc are ready to blast off, they don’t and our wish for higher prices is pushed out another 6 months. Somebody is pulling the strings.

      Nov 26, 2011 26:13 AM

      Don: Risk trade on and then off, at least that is what technicians are saying. But I agree with you.

      Decades ago and even more recently a story is told about “Horses and the burning barn”.

      One night during a lightening storm a bolt struck the barn and started a fire. The ranchers son yelled “Fire”, whereby his father yelled out to run into the barn and let all the horses out which his son did in no time. The Ranch hands and everyone else immediately attempted to put the fire out, but the fire grew faster. Meanwhile the lightening storm continued whereby the freed horses began to panic and they all ran back into the burning barn to perish.

      After the fire had consumed all the horses but everyone else was safe, the Son went up to his Father and asked “Dad why did all the horses run back into the burning barn?” His father answered “Son, the barn was a place of safety their whole lives, so they just instinctively sought the only place they felt safe from the lightening despite the fire”.

      This is like the Moses effect recently mentioned by several long time writers (Richard Russell), where investors seek their perceived safest place during the severe economic storms, which in this case is the Dollar or some other currency. Gold has not been a barn of safety for most western people for several generations, however people in India and to extent China, see gold as wealth preservation and today we are seeing record buying in these places.

      Someone older than me recently told me to think, in how much gold will one dollar buy not how many dollars it takes to buy gold, because like the above story it is safer to seek safety in a barn that can never burn down during these severe economic storms.

        Nov 26, 2011 26:12 PM

        Great anecdode (sp?) Clay, and you’re right, that’s exactly what gold isn’t yet. Although it’s getting there. Judging by the experiences and comments in this forum about buying physical, or James Turk mentioning yesterday how he was watching physical buying in Spain, etc. we’re in that inflection point now where there is net demand for physical.

          Nov 27, 2011 27:17 AM

          Great point, John W,

          Big Al

        Nov 27, 2011 27:16 AM

        Hi Clay,

        I agree with John W, that is a great example.


        Big Al

      Nov 27, 2011 27:14 AM

      HI Don,

      Somebody could very well be pulling the strings, but remember that in spite of it all gold has appreciated from $254 about ten years ago to about $1700 today.

      Our time will come, as the old song says!

      Big All

    Nov 26, 2011 26:05 AM

    hello Al and Roger,

    In listening to segment 8, Roger mentions “people” going to US Treasuries for
    lack of opportunities which will be supportive of the USD. With a bid under the
    dollar that will consequently put pressure on the PM’s, do you still believe in
    Santa Claus?
    Happy Thanks,

      Nov 27, 2011 27:19 AM

      Hi Mary,

      I disagree with Roger regarding the Santa Clause rally. His logic is sound except that,at least in my mind, logic will not work at this time.

      Things are just too bad

      Big Al

    Nov 26, 2011 26:48 AM

    Keep stacking as funds allow.

      Nov 27, 2011 27:20 AM

      Hi Keep Stacking,

      A big YUP!

      Big Al

    Nov 26, 2011 26:35 PM
    Nov 27, 2011 27:24 AM

    The disconnect between the value of mining shares and the PMs is partly due to these companies. Excuse me for saying so, but why do they hold so much cash anyways? Why do the not invest in PMs adn record their value as an asset under Inventory and reduce their cash holdings?

    I find that it is very easy to buy silver rounds and bars. I have never seen a slow down, despite what I read.

    So if these companies were to buy rounds with their exess cash, this will help the value in gold and silver to rise. We can not do it ourselves. If these companies do not want to help, then what can we do.

    If the companies are already doing this, then I will keep my mouth shut until spoken to.

    Also, I find that the US dollar is doing quite well.

    Just spent the day yesterday in Upstate NY. Busy busy. restaurants, attractions, recession??

      Nov 27, 2011 27:23 AM

      Hi James B,

      We spent yesterday in Seattle and I have the same question, Recession?

      Well, I know that something bad is there because the amount of street people; people living in their cars; etc. is growing.

      Restaurants and bars were jammed and this is a sign of hard times as it has been proven in the past that folks are just trying to “escape”.

      Sad but true,

      Big Al

        Nov 27, 2011 27:08 PM

        Al and James,

        They’re great observations, but there’s two issues (at least). I’ve seen the crowded malls in urban areas too…Dallas, Toronto, Scottsdale, San Francisco (albeit not on Black Friday weekends, but during several trips over the last couple of years). Go to some suburbs, or certain ‘inner city’ malls, or small towns, and it can be abysmal. There are definitely two economies, for those who are employed, and those 99+ weeks out of employment. Al, your example about Ballard is wonderful, but that homelessness is happening in a lot of other places too. So it depends. There are still those 49 million on food stamps.

        The other issue, of course, is what we talk about all the time…debt and upcoming future commitments, which transcend the immediate spending ability of consumers today. If the country didn’t have $14.9 T of debt, a trillion plus deficit per year, and the ability to balance a budget (give or take a few billion), consumer spending might work.

        Feb 02, 2014 02:07 PM

        Your posting really steanghtried me out. Thanks!

        Feb 03, 2014 03:23 PM

        I am forever indebted to you for this inatomfoirn.

    Nov 27, 2011 27:24 AM

    Re: Segment 8.
    It worries me, Big Al, that you seem to use Bloomberg commentaries.
    I used to subscribe every year to Time and Newsweek. For years I would automatically renew. And then about 7 or years ago I realized that while these magazines were providers of great intereting information, they also ALWAYS slanted the REAL truth, and I just got sick of their perpetual propaganda. It seems to me Bloomberg has similar tendencies. Occasionally facts are ignored or omitted. Is this spin deliberate or are the reporters less competent than I had given them credit for?
    I tend to give benefit of the doubt, but when time after time the slant is anti-capitalist or pro-democrat when something is in error or omitted, I just have to wonder.
    I am less optimistic than you or Traderrog. With many major european banks leveraged at 25:1, I not only believe there is deep, deep trouble over there, but I am surprised that many more have not already collapsed. (they just do not appear to be conforming to either accepted accounting principles or even the law! Nothing is being marked to market any more. Jim Puplava might have talked about perfect financial storms when the Perfect Storm movie came out 10 years ago, but I have not in my lifetime seen the set-up for such a financial storm as we are now entering.

      Nov 27, 2011 27:28 AM

      Hi cfs,

      Couple of comments.

      First of all,I use a variety of sources. Regarding Bloomberg, I usually just use the numbers. The quotes I used last week were, I believe, not really positive.

      I completely agree with you, by the way, and that is why I used a variety of sources.

      Regarding opimism, I am not particularly optimistic and, other than thinking we will have his “Santa Claus” rally, trust me neither is Trader Rog.


      Big All

      P.S. Regarding the perfect storm, I wrote about that a number of years ago and I agree with you completely about the conditions today.

    Nov 27, 2011 27:39 AM

    China real estate bubble about to collapse.
    European banks insolvent.
    Many countries insolvent or out of power to increase taxation, even emerging countries.
    Political LYING or deception at an all-time high. (Have you actually listened to Obama’s speeches, claiming to be pro-job creating, when they are just mostly union financing!) What part of broke does the muslim prince of darkness not understand? Sorry AL, but I’m still not sure he is not deliberately trying to destroy the United States of America as we have known it, and I used to think this was the best country in the world.
    General level of corruption/dishonesty at an all-time high. (e.g. MF)
    These are times, when this time really is different!

      Nov 27, 2011 27:30 AM

      Okay cfs,

      I agree with everything you have stated above. I am even starting to believe your comment about the President.

      My view of politicians, with a few major exceptions, is getting lower and lower each and every single day.


      Big Al

        Nov 27, 2011 27:37 PM

        I am from Canada and even I can see that Obama is deliberately not only ruining and confusing Americans but also the West.

        The GOP is not being bold and look and sound like a bunch of wealthy muppets during these “debates”.

    Nov 27, 2011 27:03 PM

    Congress to Vote Next Week on EXPLICITLY Creating a Police State


    The ACLU’s Washington legislative office explains:

    The Senate is gearing up for a vote on Monday or Tuesday that goes to the very heart of who we are as Americans. The Senate will be voting on a bill that will direct American military resources not at an enemy shooting at our military in a war zone, but at American citizens and other civilians far from any battlefield — even people in the United States itself.


    The Senate is going to vote on whether Congress will give this president—and every future president — the power to order the military to pick up and imprison without charge or trial civilians anywhere in the world.


    The power is so broad that even U.S. citizens could be swept up by the military and the military could be used far from any battlefield, even within the United States itself. The worldwide indefinite detention without charge or trial provision is in S. 1867, the National Defense Authorization Act bill, which will be on the Senate floor on Monday.

    In support of this harmful bill, Sen. Lindsey Graham (R-S.C.) explained that the bill will “basically say in law for the first time that the homeland is part of the battlefield” and people can be imprisoned without charge or trial “American citizen or not.” Another supporter, Sen. Kelly Ayotte (R-N.H.) also declared that the bill is needed because “America is part of the battlefield.”

    The senators pushing the indefinite detention proposal have made their goals very clear that they want an okay for a worldwide military battlefield, that even extends to your hometown.


      Nov 27, 2011 27:39 PM

      On the face of it as described S.1867 would violate the 5th and 6th amendments to the constitution. However, after reading…..
      S.1867 — National Defense Authorization Act for Fiscal Year 2012 (Placed on Calendar Senate – PCS)
      I could not find any section that claimed to do what could be described as arresting US citizens in the US, except possibly on military bases, or if martial law is declared.

      Have I missed something?

        Nov 28, 2011 28:27 AM

        This is what the ACLU is posting on their site:

        Their lawyers have been scrutinizing this bill, specifically sections 1031 and 1032 of the NDAA.

        They claim these sections would:

        If enacted, sections 1031 and 1032 of the NDAA would:

        1) Explicitly authorize the federal government to indefinitely imprison without charge or trial American citizens and others picked up inside and outside the United States;

        (2) Mandate military detention of some civilians who would otherwise be outside of military control, including civilians picked up within the United States itself; and

        (3) Transfer to the Department of Defense core prosecutorial, investigative, law enforcement, penal, and custodial authority and responsibility now held by the Department of Justice.

        I’m not a lawyer, so I can’t vouch for the accuracy of these assessments. I doubt they’re worked up over nothing..

    Nov 27, 2011 27:39 PM

    anna: your hubby is lucky. You are one smart cookie. The Santa rally will happen as the French and Germans are ready for some big announcement. Keep in mind it will be smoke and mirrors but will prop the markets. The US Dollar and bonds are toast in the long run.. up now (temporarily) on a sinking euro. Dollar index sinks to 40-46 but this takes months. When Europe comes with a restorative moment, markeys will fly. The USA media fixers will help too. I have been seeing these for years and do not see a change. Never underestimate old age and treachery by central bankers and big fund managers. The stock market is not the economy. The economy is a separate issue but stocks can be temporarily slammed with economic news as we all know. Watch the news this forthcoming week and the arrival of Santa-Fixer taking shares to new heights. I know its hard to be a contrarian but that is my forecast. Ignore expecting any good things coming from Washington. They have an agenda and it is far from ours or legitimate. Its going worse in the second half of 2012 making trading really scary during that cycle. Traderrog

    Nov 27, 2011 27:21 PM

    My belief is that the orchestrated but gradual erosion of civil liberties in the U.S. will ultimately be used to silence criticism from all corners, and the military will be employed for this purpose. But because the military is mostly composed of American citizens who DO believe in liberty and in the Constitution, they will largely be in conflict within themselves until it is recognized that allegiance to the current government/business/banking cartel is not congruent with their higher oaths of service. Human nature being what it is, within the military forces, some will choose one way, and some will choose the other. It’s easy to guess what that eventually brings…

    Nov 27, 2011 27:58 PM

    Finally this, The Judge tells it like it is:

    Al, Roger, this is one you should see…

    Nov 27, 2011 27:41 PM

    Hi Mark,
    Just watched your youtube link. Truly a great 5 minute speech by the Judge.
    So true! Thanks much.

    Nov 28, 2011 28:46 PM

    Hi Al,Rog,
    One interesting thing about every miner I spoke to at the Hard Asset Show in SF(especially the Canadian Miners) is that crushers and mills are in extreme demand. To meet any of their guidances, the miners need to pound ore through the machines at a good clip-good ones are running between 3000-6000 tons a day of ore.
    There are so many explorers who wish to sell their projects(or convert them to miners) but don’t have the 25 million to build an average mill.
    Are there companies that are public that review ore core samples, or build miner infrastructure? These guys are going to rake it in. The whole malartic zone has a deficit in mills with a ton of small miners who need the infrastructure to convert the gold and silver to money.

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