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Rick’s thoughts on Monday

Big Al
March 16, 2015

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26 Comments
    Mar 16, 2015 16:21 AM

    810..

    Mar 16, 2015 16:20 AM

    Rick do you have any timelines with these calls of 810 or it’s just mathematical and when it comes it comes?

    Thanks

      Mar 16, 2015 16:42 AM

      Yes I am curious with how he came up with a target that low as well Glen.

      A target of 810 would be way below even the old 1980 high of 890. In addition, 890 is also the 61.8% retracement of the 1999 low of $252.80 and the 2011 high of 1920.

      Personally I have a hard time getting my head around both those numbers 890 and 810, because most miners will be totally out of business at those prices.

        Mar 16, 2015 16:58 AM

        Shad personally I like rick rules thoughts. This is a bear and we must respect it. Up until recently I have only heard of one or two bankruptcies with allied nevada being the biggest. We have yet to go through more bankruptcies/mergers which I have not heard off and acquisitions that also have yet to happen. I believe we are still quite away from this bottom in gold. Where the dollar is headed longer term guarantees in my books a 1000 dollar print at this point. The volume in miners in November was not one of capitulation. Like rick says, there has to be no bid and almost nothing of volume then the bottom will be in that is what im looking for. Maybe it comes in summer or october or 2016? But come it will comes imo.

          Mar 16, 2015 16:26 AM

          Good thoughts Glen. I absolutely respect the bear and have spent much more time shorting gold over the last few years than going long, but I do trade both directions and understand that markets don’t travel in just one direction.

          However, I would say there have been quite a few mergers starting recently which I feel is a good indicator of other companies picking majors.

          Coeur just bought out a company Paramount Gold that I owned (nice profit on that one), and they bought The warf mine from Goldcorp.

          Goldcorp just completed the Probe mines acquisition.

          Scorpio mining just acquired US Silver and Gold.

          Sandstorm gold just acquired 10 more royalty streams.

          Duluth Minerals that owned was just taken over by Antofagasta (that was a profitable trade).

          There are plenty of quality Junior explorers that will likely get taken over this year or next like (International Tower Hill mines, Exeter, Rye Patch, Polymet, Golden Queen, Romarco Minerals, Torex Gold, Bear Creek, Alexandria minerals, Inca One Gold, Garibaldi Resources, and maybe Aurizon Silver or Endeavour Silver.

            Mar 16, 2015 16:28 AM

            crocodile gold also has an interested update today and I could see them being a takeover target now that they are done with the profit sharing portion of their financing.

            Mar 16, 2015 16:55 AM

            Thanks for the reply well written.

            Mar 16, 2015 16:13 PM

            Wildcat Silver has an RSI of 17 and is making new yearly lows today on pretty big bottom. I don’t own any but it use to move with the silver price quite nicely.

            http://stockcharts.com/h-sc/ui?s=WS.TO&p=D&yr=3&mn=0&dy=0&id=p06880803677

            Scorpio got bombed a bit again at the end of day.

            Mar 16, 2015 16:00 PM

            Hey Dan,

            I am not very familiar with Wildcat Silver, but have seen it on different Silver lists.

            As for Scorpio, yes, it has been getting hammered with most of the Silver stocks, and I have been waiting to average back in until I was sure all the merger and acquisition fallout was done. Tomorrow may be the day depending on the market reaction to the FOMC.

            As for Silver these are the main companies I follow and either have, have had, or intent to take positions in during the bottom in pricing this summer.

            1) Hecla is my standout favorite Silver miner. The acquisition of Aurizon made me a huge fan of the combined company, it has been fairly price stable, and I expect it to grow about 4-5 fold over the next 3 years.

            2) Fortuna Silver Mines – big fan.

            3) Endeavour Silver – Great company, over sold, they’ve done a great deal to improve themselves, but got punished extra hard because of the tax laws and violence in Mexico lately.

            4) Great Panther Silver – Love the assets and management, and have no idea why it sold off so hard. They did have a mine uprising/riot last year briefly, but their annual numbers were better YOY, and they are poised for big increase.

            5) Aurcana Corp. – Despite the disaster of market timing for their announcement of Shaftner in TX right as prices went south, and the horrible market timing of their reverse stock split to do a lame financing, I still like this company. They have done a great deal to reduce costs and have substantial base metal credits that are helping them out at present. Should go up considerably from the level it is at.

            6) Scorpio Silver – Dave, I like them for a few reasons despite the rock bottom pricing: (a) Good deposits and mines, and they know how to work the mines to capitalize on the higher grade viens. (b) Base metal credits are very helpful to average out price swings in Silver (c) the have cashflow and are small producers so they can weather the pricing lows, and it makes them a potential takeover target (d) their recent takeover of US Silver and Gold was a smart acquisition, but nobody seemed to care and their price has declined during this phase, but again, that is normal for the company acquiring another. (e) They own a percentage of Scorpio Gold (I believe around 9%), and that company that they spun off a few years ago just paid off all it’s debt and will be cash-flowing soon.

            7) McEwen Mining – I believe Rob McEwen to be a wise businessman, experienced mining executive, and I like that he puts his money where his mouth is. While they are a gold company, a lot of what they produce is actually silver, and they should respond well to pricing rebound, and look waaaayyy oversold at present.

            8) Argonaut Gold – Same story as McEwen Mining. Gold producer, with a substantial amount of Silver, and waayy oversold.

            9) Sierra Metals Inc – Silver, Gold, and base metals. Good company.

            10) Santacruz Silver – sponsor on Al’s Site

            11) Bear Creek Mining – Reigniting interest in their deposit and go to mine strategy.

            12) Silver Wheaton – (Of Course!)

            Mar 16, 2015 16:33 PM

            Thanks Shad, I own Scorpio and Argonaut and still own some Cangold (take over in progress by Great Panther. They share some of the some board members).

            Mar 16, 2015 16:11 PM

            Great point Dan. That is yet another Merger that was just announced recently for Great Panther to acquire Cangold. I think that will be a wise move for both companies, but I think it still requires the shareholder approval

            It seems like the silver space has been more active in M&A activity than the gold market, but it is a healthy sign that these companies feel they are bottom fishing for quality assets or assets that consolidate land and resources under one umbrella.

    Mar 16, 2015 16:39 AM

    Good interview with Rick. Good thoughts about bottom fishing in gold. I still think that we’ll have a good pop post the FOMC meeting, but then after that gold may head lower, and later this spring will be a better long-term entry point.

    It is also clear, and has been for a while that the Fed can not really raise rates (especially with the huge surge in the dollar). They’d be shooting themselves in the foot to raise rates, because if the dollar gets too much stronger, it will be a major headwind.

      Mar 16, 2015 16:52 AM

      I doubt there will be any bottom fishing ………., because there will not be any FISH.available and it will all be in the EAST.

        Mar 16, 2015 16:30 AM

        A valid point J….The Long. So much of the gold has flowed out of Western world and ETFS and into the East, that I doubt it will see the light of day again any time soon. When the investor sentiment does improve and people want to invest again in ETFS, there won’t be enough gold left to support them, and it will put a price squeeze in place. I don’t see that taking until 2016 personally.

          Mar 16, 2015 16:05 PM

          thanks Shad…………………….ootb

          Mar 16, 2015 16:49 PM

          correction….I do see that taking until 2016 before the investor sentiment really returns. I think the momentum at the end of 2015 in PM will be based on the normal metals traders and hedge funds taking positions first. In 2016 & 2017 the masses will be back in mining investment vehicles and physical bullion, and this is when the West to East supply flow will finally surface as a real supply issue.

    PF
    Mar 16, 2015 16:12 AM

    Rick mentioned his $810 gold target in early January, so this is nothing new.
    He also has an oil target of $31.

    Mar 16, 2015 16:43 PM

    Long term support is around the 750 to 800 area and eventually it should get there by next summer at least and this summer it might bounce off 1000. I purchased some cisco & intel and have sold my oil XOP but like to get back into it soon. Also bought into the material UYM as it has had a big correction.