Now is the time to start accumulating mining stocks
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Would have thought Smith & Wessons would be a growth stock Paul in the current climate?
http://www.paulcraigroberts.org/2014/08/27/americas-corrupt-institutions-paul-craig-roberts/
Guns and gold should have a good future. I bought some today.
Transocean has turned up with a good 2nd day up. I bought back my Seaworld near the lows. Had taken profits when it had a bad day but it was just a normal correction.
I thought the best time was last year. Now all my mining stocks are much higher.
In general, you are right, but there was less certainty then and much more technical repair needed. I was a buyer last year but there are still some good cheap specs right now. Even many of the one’s that have had good moves are probably still cheap in the bigger picture.
Yes I think you are right. However, all my silver mines are losing money like crazy. It is major bleeding not a little bit. Ver scary. I don’t think they can survive at this price for much longer. The most important ones are Endeavour silver, Endeavor mining, Silver corp, Pan American Silver. Only silver Wheaton makes a little money but it is a marketing company.
Lawrence keep hanging on! I know it’s get very wearisome emotionally.
If you need perspective and a peak at a possible, future silver price ($200 !) consider the multi-decade cup-and-handle:
http://economati.blogspot.ca/2013/08/another-techincal-analysis-modeling-of.html
The greater risk right now is being out, not in. I agree with Rick (and Doc), definitely time to accumulate miners.
There is one problem. Miners will not be able to make money due to suppression of gold/silver price for a long time. Some of them may die if the PM price does not go up quickly. The increase of production cost is 10-20% a year and mine grade is much lower. I read an survey saying the ore grade for silver mines is 50% of 10 years ago since the good ore becomes less and less. Mines are trying to survive so they don’t spend money for exploration. I am a little scare to load a lot of miners.
Anybody has any idea about this?
As long as they have enough cash for the next year or so and the share price is right, I don’t really care if they’re making money.
Until someone figures out hot to create silver out of thin air, the price must rise eventually. I think “eventually” is coming very soon.
Buying miners now that are not profitable below $20/oz is like buying an out-of-the-money call option. We don’t need anything remotely close to $50 silver in order to see massive gains in the miners. Miners with marginal deposits/projects are going to smoke their higher quality peers if silver rises even a few dollars as their assets will go from zero market value to substantial market value.
Make sense.
“As long as they have enough cash for the next year or so and the share price is right”.. I recall hearing something like that from the mainstream pundits about GM before it went bankrupt!
In any case, we are entering a season when gold has been historically strong. A season when past pundits out here on this site ended up eating crow predicting by predicting a strong up move that didn’t happen. Well, I hope they’re right this time and too, that momentum continues through year’s end cause it getting harder and harder to hold your breath when you’re under water.
I hope you can explain how mines can still produce when they lose 20-30% their share price every year and no money to keep going. It is well documented that the chance of raising money is nil. A world without gold is fine but without silver will kill a lof of industries. Forget about solar if there is no silver.
Talk about apples and oranges. My favorite miners really aren’t miners at all. They produce nothing. They burn money, they don’t earn money, but I usually don’t own such specs if they have any debt at all. Still, “enough” money for a year means having enough to service ALL obligations for the year.
I’m not holding my breath; this year has been very good.
Lawrence, AXU closed their mine last year yet were still able to raise $7M last week.
Btw, you can forget about a lot more than just solar if there is no silver. I wouldn’t worry about silver becoming unavailable.
Yes, without silver we are back to the 30s.
Mathew ~ I’m looking for a second SILVER miner (I own AXU). Do you know of (or can recommend) any based exclusively in Canada or USA? I don’t like to buy miners outside of these two jurisdictions (countries). By the way, my two gold miners are Pretium (PVG) and Claude (CLGRF). Thanks in advance. I understand that you are not giving me investment advice ~ Brian
Brian, my favorite one remains Impact Silver (ugly chart and all), but their projects are in Mexico. Anyone interested in it might wait until after a financing is announced (and buy the price dip that might follow) or the silver price turns up decisively. Though IPT has cashflow, their treasury is getting tight.
What are your requirements, market cap, explorer/developer/producer, etc?
If you have some ideas, I can give an opinion.
Let me think about this a bit more (I am researching today and tomorrow). Basically, I am just looking for pure-Canadian or pure-USA explorers/developers.
Actually it looks like (Pretium) PVG might be the one I compare to. Even though PVG looks like a gold miner, Brucejack has 30M oz @ 57 g/t. Nothing like AXU’s 60 M oz @ 300 g/t of course. ~ Brian
It’s hard to beat AXU’s risk/reward profile in my opinion. If you don’t have way too much of it already, you might consider simply buying more instead of searching for a duplicate.
Good point Matthew.
As usual…..”professor”…I mean Matthew…always a breathe of clear thinking and crystal clear analysis!
Yes miners are losing money but there are profitable mines out there and these companies are finding ways to lower costs… which I think was necessary.
Cory, do you know any profitable primary silver mine? Please share.
I agree Matthew you don’t want to be left behind when the stocks start to move. I feel the downside is limited and the upside far exceeds.
Conventional Market Up! Dollar Up! and Gold is still hovering around the 1280 to 1300 area which is very positive and I agree with Rick and Doc, time to go on shopping for Gold miners
Will wait to buy gdx. I need to see some panic first.
I’m not so sure we need panic for gdx to move higher. Just a shift in sentiment and traders looking for undervalued areas.
How many folks are eyeing the June GDX breakaway gap?
Been looking at that. Right around Doc’s $24.75
Nice bounce in Chaarat Gold today.
From the Expected Returns blog:
Why Being a Full-Time Bear is Hazardous
As I scour the internet, I sense misplaced bearish sentiment and a growing chorus of people expecting a stock market crash. I don’t think a crash is likely, which puts me in an uncomfortable position. Most of my peers in the “government debt is out of control, gold is going to rally, prepare now or forever hold your peace” crowd are bearish on everything. I just don’t agree, and I haven’t agreed in years. The sad thing is that this wholesale bearishness is about 90% right. It’s just the 10% where these bears are wrong destroys your entire portfolio.
Balance is critical in investing. A balanced approach in recent years would have left you in a very comfortable position. In the back of your mind you know about the debt crisis, but you would have taken the gift of yield and the value that it implied in stocks and real estate. This yield would have given you the patience to sit, shrug your shoulders, and profit during this curious period of no volatility in markets while the world is going haywire. And you would be able to accumulate a cash position for the future panic when dollars are becoming more valuable against other currencies AND on an opportunity cost basis.
Compare this to the “the dollar is going to 0 right here, right now and the market is going to crash 90%” crowd. Perhaps you shorted the market all the way up to new all-time highs. Or you went all-in on gold instead of hedging with yield. This means you might be in an emotionally-charged position right now. You need the market to decline. You need a rally in gold now. If gold drops another 20%, you must sell in panic. This is not a good position to be in and it stems from a lack of balance.
In theory, each investment decision should be based on opportunity costs and expected value culled from current information. In practice, our decisions are influenced by past decisions. And this is the danger most of us face when volatility reappears with a vengeance.
What’s At An Extreme?
You should be asking yourself: What’s at an extreme now? What looks out of place? If nothing looks extreme, you don’t force the action. Patience is one of the hardest traits to learn.
The extremes I see are on the government’s balance sheet and in government bonds. That’s about it. This doesn’t mean short government bonds, it means accumulate assets that will do well if bonds crash.
Stocks and real estate are in the range of fair value. The dollar is probably not crashing, and in fact, is likely to head higher. Gold is undervalued, but the timing isn’t right. You buy gold on true panic sell-offs and on the way up, not on normal corrections down when hardly any gold bugs have thrown in the towel. Long-term, yes, even buying at all-time highs near $2000 will be forgiven. But short-term if gold is the only investment you made, not very good.
The debt crisis will arrive in a blaze of glory. But make sure you are positioned to profit from it. Leverage will not be necessary when the tenor of the market shifts to panic. Dollars will be extremely valuable. This is your ammunition. This trend by no means has expressed itself fully yet. If you missed out on the recovery in stocks and real estate, investments based on short-term deflation (rising dollar) are probably your best bet
New here (Howdy!) — Does that mean his target bottom is 24.75 (which would close the gap)?
BDC – My take on Doc’s comments on GDX is that he is quite confident it will see $24.75 and then depending on the way that price was reached he’ll reassess the technicals and likely have a better read on the direction from there.
Thanks! … It is possible that the gap will not be broken before the gold (GLD – Spot) down-trend line is tested. Should be an interesting fall season.
P.S. Happy to have found this site — followed the Kitco chat years ago, until its demise.
Correct.
The loonie is doing very well against the buck today. A strong loonie is generally to be expected when resource stocks are in an uptrend.
It would be good to see a strengthening loonie for many reasons. One being it makes the beer down in the US cheaper 😉
Cory ~ When in BC, I have found that the Bowen Island beers are very good and reasonably priced; the Honey Brown Ale, specifically.
http://64.64.22.10/~bowenisl/beers/wildwood-honey-brown-lager/
Right you are Brian. Bowen Island makes some good beer and is cheaper than around here. My favorite is Red Racer beer but that is priced slightly higher. Unfortunately due to taxes we do not have a truly cheap option.
Another good time to buy, where have I herd that before? lol
Concening solar. silver isn’t the issue, its another metal, according to Mickey Fulp.
I forget the name, began with a g I think. Anyway, only 2 places to get it and one of them is from coal burning furneces,chimmneys?
Anyway, there is supposedly far from enough of it, I guess solar will only service one city so I guess its not our energy answer.
Mickey Fulp explains it all in an interview he did.
gallium
Neat stuff. Melts in yer hand.
I am left shaking my head after reading this thread. Too many here willing to stick their nuts in a vice and wait for a twist on the screw (again). What is the rush to buy BEFORE the market makes its decision on direction? Especially when that decision point is as close as it is now.
That is called gambling in my books. Simply sitting tight and waiting for the move is totally risk free and shows better discipline. I would rather let a few points get away on me than risk prices might actually fall versus rise.
Look, we have a very clear trend that has developed regarding the dollar/euro pair and it is negative not only for gold but for most commodities. The ECB is perhaps just a month away from pulling the trigger on European QE which would accelerate that trend. Meanwhile we are slowly being prepped for a rise in rates which could come as early as first quarter 2015 in the US.
Sentiment continues to be dismal to very poor for most precious metals at a time when inflation expectations are barely on life support. Investors are still ignoring the metals for the most part and even the miners have been giving up gains.
In the event we do get a more worrisome correction come October (15 to 20%) it is far more likely that gold will be sold off than it will be shoot to the stars. Keep in mind there are plenty of people who are already betting we get a corrective selloff in stocks as the Fed finally terminates QE and it becomes apparent to all they will not extend another round in its place.
It therefore strikes me as imprudent to jump the gun in this environment when the odds,(in my opinion), appear to favour further declines before this year as out. But hey, do as you please. Bottom calling never goes out of fashion. And that nut-vice has room for everyone.
Bird,
Please allow other people to have their way of investing. In particular, there are many very successful investors like Livermore, Buffett, Rick Rule, Sprott, etc. These people started as nobody to become super rich. Fundamental investing is the method which can give you multiple return on your investment. Only thing you need is clear thinking and strong will. Unfortunately most people don’t have.
My experience with catching break out, trend following is very disappointing. After I jumped in, the market most likely was not going the previous way. This is particularly true in PM market. Fake break out and trendless spikes are the norm instead of exception. That is why if you set a stop, you will be stopped out at a loss. Nobody can give you money for free.
Bird, all good points. However, there are also very good points to be made for slowly taking positions in selected PM stocks now. This is your garden variety market where you can just buy a slew of stocks irregardless their fundamentals and situations and then expect them to all ride up in tandem. Markets are all gambles at one point or other. In fact the conventional markets are a huge gamble the longer they move in a positive direction. And that’s why people have to do their due diligence. You can mitigate taking positions by using a conservative approach and TA. An example is a stock like Hecla mining. The stock has moved in a trading band for for the last 11/2 years—–that’s right 11/2 years. The company is over 100 years old and will be around in all probability for another 100 years. The trading range has been from $2.75 to $4.00. This has been true for all the scary moves in gold, the dollar, etc. during this time frame. I won’t get into the fundamentals of the company but it’s been doing what a lot of these PM companies have been doing——getting their balance sheets and costs under control. If one bought stock when pricing hit the lower part of the trading range at about $2.75, I believe the odds are with the gambler in the sense that there is obviously strong support at this level and if the stock finally decided to break out of the range to head lower, the buyer could then sell and mitigate any loss. If you look at the pricing of Hecla over 40+ years, the stock price has been lower then $5.00 only about 25-30% of the time while only being lower then $3.00 about 15% of the time. So if one purchased stock around $2.75 and it headed lower; holding the stock until it ultimately made it’s move would not be worrisome to me at all. I’ll go with those odds and ultimate benefit/risk position anytime. When one has fundamental knowledge along with technical knowledge in his favor, ultimate large risk is compromised. One man’s risk is not necessarily another man’s risk. I could give other examples of stocks I’m beginning to purchase since I believe the risk is no longer unfathomable—–in my view, risk was unfathomable when everyone was piling into these stocks when gold was hugging $1900.00—-and I’ll bet there weren’t many that saw the risk that subsequently occurred. Once again, if one does their homework here, one can mitigate risk even in these uncertain markets.
Second sentence correction—this is NOT your garden variety—
I appreciate you point of view Doc. In principle I don’t object to taking selective positions or averaging in when a market like gold has been down this long. The real issue for me though is that we are quite clearly nearing an important turning point. We rarely get such a obvious setup playing out for all to see and so I can understand how most assume the next move will be up. But caution is warranted here and I think it makes more sense to bide ones time. I have serious doubts the optimists in the crowd are going to be rewarded by a positive move in gold or silver. For my money I would rather let others take the risk here and God bless them if they are successful. I am more inclined to taking stategic short positions actually. So miners are not on my menu until the direction is defined.
Your very correct that the ultimate move can never be divined as some would wish. In fact, we could go both ways yet in this market——-the only bold statement I could make is that I feel we are still in a bull market for the PMs. The problem is that it’s anybody’s guess on when the bull begins to ernestly snort again. I can pretty much anticipate short term moves and major turning moves in the PM market but I don’t have the hubris to predict price movements that noone can predict. One thing I’m encouraged about is the fact gold has not been hammered as one would expect with the current dollar move—-which probably has room to run a little further. We should move lower yet with the PMs well into September (which is often a very strong month) and then we’ll see what happens at that time. At time the PMs don’t reveal any major move down except for a slow slide.
Bird,
You, me & only a few others still believe gold is still going down…and have said so repeatedly.
I wish it wasn’t….but I still believe it will…unfortunately. The time for gold to shine will come but not yet (imo).
I look forward to when it does.
Cheers.
The miners have been shining all year and they will continue to shine much brighter than gold but gold is already shining compared to the Dow.
Good article on protecting the dollar:
http://www.safehaven.com/article/34926/will-the-us-succeed-in-breaking-russia-to-maintain-dollar-hegemony
Great piece Paul. Clive Maund always talks a lot of sense.
Really good article…………..thanks……….the article is a nice summary.
“the sheeple are like mushrooms…………..”they get feed sh t, and are kept in the dark” that is a good one.
Was interesting to listen to Armstrong’s take on gold on Kerry Lutz’s show via podcast.
…if he’s right we’ll be out the backyard staring at the moon for another year + yet.
Bad earnings report on Smith & Wesson. Down 14% (11.32). It will take a few days to settle down and might be good for a bounce then from around 10 to start.