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The markets keep on trying to drop but traders will not let it happen

June 25, 2015

Gary has some comments on the conventional markets and gold. It’s hard to get on either side of the trade as these markets continue to trend sideways. See below for the transports chart Gary mentioned at the onset of the interview.

Click download link to listen on this device: Download Show

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Discussion
104 Comments
    Jun 25, 2015 25:57 AM

    Silver Miners Composite Chart for some of the Majors and Mid-Tiers.

    Hecla & Mandalay remain at the top of the heap, with Fortuna in 3rd position.

    http://stockcharts.com/freecharts/perf.php?AG,FSM,HL,PAAS,CDE,SSRI,TAHO,FNLPF,DBEXF,MND.TO#

      Jun 25, 2015 25:58 AM

      Here’s a nice chart of some smaller producers and explorers in the Silver space:

      Featuring the last 200 days with : Scorpio, Mag Silver, Minco, Alexco, Silvercorp, Trevali, Mirasol, Impact Silver, Santacruz, Sierra Metals.

      http://stockcharts.com/freecharts/perf.php?SMNPF,MVG,MISVF,AXU,SVM,TV.TO,MRZ.V,IPT.V,SCZ.V,SMT.TO#

      Jun 25, 2015 25:35 AM

      The safer, higher quality bargains always get repriced first after a bear market low. I would not expect the recent leaders to continue to outperform when silver gets beyond $19.
      Junior golds have trounced the seniors for the last few months and I expect the silver juniors to soon do the same against the silver seniors.
      http://stockcharts.com/h-sc/ui?s=GDXJ%3AGDX&p=W&yr=3&mn=1&dy=0&id=p91152817807

        Jun 25, 2015 25:44 AM

        Matthew, I absolutely agree with you with on the multiplier effect on the smaller producers once the Silver prices rebound. I’m with ya man, I’m with ya.

        However, not everything I invest in nor others invest in is that high of risk, and all I’m pointing out is that Hecla has lead the pack in this low price environment (Compared to even the other Majors & Mid-Tiers like Couer, Pan American Silver, Silver Standard Resources, Endeavour, Fortuna, or First Majestic). Some people like the more conservative larger companies with more liquidity, and I have mentioned since the end of last year that out of that group of larger companies that Hecla was my favorite. I just thought the chart was more telling than just another opinion.

        Lastly, if people have wanted to preserve money and be more conservative for the last year, then they were better off in Hecla than Impact, Alexco, Scorpio (now Americas Silver mining), Great Panther, Aurcana, or Santacruz. That was the only point I was making.

        When I go shopping this summer for Silver miners at their bottoms, I’ll likely have the heaviest weighting on the smaller producers that can capitalize on $18-$20 Silver, but I’ll also have positions in Hecla, Mandalay, and Fortuna. (I also still think Endeavour is due for a rebound later this year)

        I’ve been told by you and Bob M. to watch Defiance Silver, and I like what I see technically and spent time on their website fundamentally on the deposit. Looks great (see the 4th chart above)

        Also, several people on other blogs tipped me off to Kootenay Silver. Check it out and let me know what you think.

          Jun 25, 2015 25:47 AM

          Also: Sierra Metals (mostly silver but polymetalic) and Mag Silver have done better than many with little fanfare or following. Like Mandalay, they are well kept secrets in the Silver mining space that I rarely hear discussed.

          Jun 25, 2015 25:04 AM

          I looked at Kootenay after you mentioned it and I like it. I bought some @ a little above and a little below .40 then sold for roughly a 20% because I didn’t think the gains would stick based on the action in the sector. Sure enough, it’s down again but I haven’t bought my shares back yet. Looks like a fine spec to me.

          As for the larger silver (and gold) plays, for the most part, I would rather hold more bullion or trade options on them than hold the shares. Notice that Hecla’s rallies in 2013-2014 were between 30 and 50% while AXU’s were 60 to 168%.
          A well chosen junior has less risk than the market perceives while nearly all seniors tend to have more risk than the market perceives (except at a big bear market low, of course). Large market caps and high share prices tend to make most investors too comfortable most of the time.

            Jun 25, 2015 25:15 AM

            Thanks for the feeback on Kootenay. Yes I’ve been watching it in 2015, and don’t currently have a position, saw it spike up, and saw it pull back, but it’s on my speculative higher risk list with Defiance and Bear Creek.

            As for the well chosen Jrs and small producers, I am in complete agreement on Silver and Gold for these same reasons Matthew. My posts are just for information that I’m sharing, and there are many people on this site that have mentioned investing in the larger Silver miners or Mid-Tiers because they don’t like the liquidity of the smaller producers or explorers. There is the “perceived” risk of the JR space in their minds, so for that sector, companies like Hecla, Mandalay, Fortuna, should still outperform the Silver spot price, and aren’t as recognized as names like Pan American Silver, Silver Wheaton, Silver Standard Resources, First Majestic, or Coeur.

            We just differ slightly in our investment approaches, which is OK. When the metals turn around I’ll be 50% in Jrs, 25% in Mid-Tiers with good cost controls and ETFs like SILJ, SGDJ, and SGDM,, and 25% in the Streaming companies (like Sandstorm, Silver Wheaton, Royal Gold, and Franco Nevada, and Osisko).

            Jun 25, 2015 25:40 AM

            Yup, it’s all good. We should both share what we feel like precisely because we might differ.

            I should note that even what most consider to be juniors are still very large compared to much of what I bet on. The average market cap represented in GDXJ, for example, is $700 million. For SILJ it’s $316 million. Even after a 5-fold increase, gold company Claude Resources is still just over $100 M (U.S.) while, on the silver side, AXU is under $26 M at the moment and Impact is about $11 M.

            Jun 25, 2015 25:42 AM

            Fwiw, the average market cap for GDX is $6.51 billion and $2.77B for SIL. No thanks!

            Jun 25, 2015 25:56 AM

            Variety is the spice of life my friend 🙂

            Yes, I look at Juniors as the bigger movers in a price recovery, but due to the lower liquidity in many of them, they can have big swings back and forth (which is where TA comes in). That can be mentally exhausting to follow, so I throw a portion into the Mid-Tier producers I like in Silver & Gold, (and other commodities), some into ETFs like SILJ, SGDM, SGDJ, and some into the Streaming Companies so I don’t have to do as much thinking on those. Also, the ETFs and Streaming companies are more stable and a hedge against some of the wild moves in the positions I take in smaller producers and exploration companies, in case I’m wrong in my analysis :-).

            For me personally (in my TRADING account – not the Retirement account) I’d rather hold SILJ, SIL, or Silver Wheaton for silver exposure over SLV tracking just the spot pricing, as they’ll normally outperform Silver, which will likely out perform Gold on recovering prices the next few years.

            Hey, I’m willing to admit that I may be a big dummy though…..

            Jun 25, 2015 25:24 AM

            I like that you can risk less money in a good junior to make the same gain that you might in a senior. If you’re going to leave your money in a brokerage account, then I would choose SLW, HL, etc over SLV, too. I don’t consider SLV to be physical and one of the main reasons for holding physical is to eliminate counterparty risks which include your broker. The miners are going to smoke the metals for quite awhile.

            For any account, retirement or otherwise, I don’t like the opportunity cost that comes with buying the large caps —especially now. I’m up 2.5% today, overall, while GDX/GDXJ and SIL/SILJ are all down. When the bear is finally and convincingly over, the previously riskiest stuff will provide the quickest, biggest, easiest gains as the bears abandon their view that everything is going to zero.

            You might have noticed that Al isn’t interested in even large juniors let alone the mid-tiers or seniors. He knows the sector!

            Jun 25, 2015 25:03 PM

            I love the small quality speculative Jr explorers and producers In Silver I have traded Aurcana, Scorpio, Alexco, Mirasol, Avino, Tevali, Excellon, Silvercorp, and Santa Cruz in the past, and will again in the future. I also have companies like Bear Creek, AZ mining (previously Wildcat), Defiance, Mag Silver, Kootenay, Huldra, El tigre, Avrupa, Levon, Minco, Sabina, Starcore intn’l, Silvercrest, Silver Bull, and now Silver Stream on my watch list.

            Again, I agree that the most upside is in these smaller plays in a recovering market, but we also are recovering yet. I believe it will start later this fall and escalate in 2016 – 2018 into a new bull for PMs.

            As for the holding bullion for the no counter-party risk, again, we agree on this point. I held silver coins from 2008 through 2011 and sold them when I realized the world wasn’t ending, so I could trade the Silver miners or ETFS. I was actually waiting to see if Silver would get down to $14 again was thinking of buying some Maple Leafs.

            However, I highlighted in caps the word TRADING above, because that is the advantage to people globally with SLV, and it is based roughly on the spot price action, even though it is a paper asset itself. My point was simply that I’d rather hold and trade the ETFs for the miners like SIL, SILJ, or the streamers like Silver Wheaton over just the SLV because the miners will outperform the spot price. You had said you don’t hold the larger ETFs, Majors, or Mid-Tiers but just hold bullion or trade options, but shares will out perform the bullion was my point.

            Now for a system collapse you’d want the bullion or bars…agreed. I don’t think the world is ending tomorrow, so I continue to trade the equities. More risk, but more reward. Now if the UN summit is September starts getting freaky with a Global currency, then I’ll load up on bullion. Until then, I’m in and I’m out, but once we bottom, I’m taking 1-3 positions in some of the better names because everything is on sale right now.

            Again, I agree on the small Jrs for the rebounding market, and I like companies like Rye Patch & Exeter (which I do hold) and Santa Cruz once we bottom. But if you look at who came in last place over the last 200 days on all those silver charts above it was Santa Cruz Silver, not the Mid-tiers. This also means it has the most opportunity to rise, and why I will be picking some up in a month or so. I just don’t like riding something down waiting for the bottom is all, so I have been trading positions in Hecla, Sierra Metals, Silver Wheaton, Great Panther (until this week) and still have some Scorpio shares that are at 100% profit while I evaluate the markets over the next few weeks. If I miss the initial move out of the starting gate, it is OK because I think we can agree the bull will last a few years after that.

            Jun 25, 2015 25:12 PM

            2 corrections up above:

            Again, I agree that the most upside is in these smaller plays in a recovering market, but we also are (Not) recovering yet.

            Until then, I’m in and I’m out, but once we bottom, I’m taking 1-3 (Year) positions in some of the better names because everything is on sale right now.

            Jun 25, 2015 25:30 PM

            I’ll just point out that the lows will be far behind us once a recovery in the sector is recognized by more than a few people. Yes, there are risks to being early, but being late can cap a huge amount of upside. People simply have to know what they can tolerate.

            Jun 25, 2015 25:39 PM

            On that note, those who like to blame others for their actions should ignore all of my opinions about anything and everything.

            Jun 25, 2015 25:48 PM

            Agreed. Ditto that. I’m just sharing info, not giving investment advice. Everyone should take personal responsibility for their own investment decisions.

        Jun 25, 2015 25:48 AM

        I thought GDXJ was a mix of gold AND silver junior miners? Is there a separate silver juniors ETF?

          Jun 25, 2015 25:50 AM

          Yes Check out SILJ.

            Jun 25, 2015 25:55 AM

            On May 14, 2015 at 9:32 am,
            Shad says:

            There is a very interesting ETF (SILJ) that gives someone an exposure to almost every company in the Junior Silver mining and some of the mid-tiers. I like holding some of these stocks separately to trade, but I may just take a long term holding in this ETF because it does have a nice mix. I’ll list it here so people can also check out these companies individually:

            PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (SILJ) as of 05/08/2015

            Silver Equity % Total Net Assets Quantity Market Value (Base)
            HOCHSCHILD MINING 13.80% HOC LN 429054 678043.51
            MAG SILVER CORP COM 12.60% MAG CN 88406 618699.39
            FORTUNA SILVER MINES INC COM 10.69% FVI CN 140790 525261.94
            MANDALAY RES CORP COM 7.61% MND CN 507500 373640.24
            ENDEAVOUR SILVER CORP 5.82% EXK 140719 285659.57
            TREVALI MINING CORP 5.21% TV CN 262278 256018.56
            SILVER STANDARD RESOURCES 4.91% SSO CN 45095 241357.20
            SILVERCORP METAL INC COM 4.56% SVM CN 176837 223816.53
            BEAR CREEK MNG CORP COM 4.54% BCM CN 230358 222954.76
            SIERRA METALS INC 4.30% SMT CN 182230 211045.21
            SILVERCREST MINES, INC. SVL CN 189718 200884.34 4.089809295
            GREAT PANTHER SILVER LTD GPL 356526 195732.77 3.984928352
            SABINA GOLD & SILVER CORP COM SBB CN 530000 157835.96 3.213386251
            ALEXCO RESOURCE CORP AXU 292228 117504.88 2.392284786
            SCORPIO MNG CORP COM SPM CN 559618.96 115733.75 2.356226306
            GOLDEN MINERALS CO AUMN 231794 95267.33 1.93954995
            AURCANA CORPORATION AUN CN 244602 49573.97 1.009277693
            SANTACRUZ SILVER MNG LTD SCZ CV 260311 41990.85 0.854892764
            EXCELLON RESOURCES INC EXN CN 92854 39942.16 0.813183433
            MIRASOL RES LTD COM MRZ CN 52414 37721.95 0.767982122
            SILVER BULL RES INC SVBL 275352 30288.72 0.616648807
            KOOTENAY SILVER INC KTN CN 70964 27590.75 0.561720768
            MINCO SILVER CORP COM MSV CN 34514 14275.55 0.290636279
            IMPACT SILVER CORP IPT CN 78054 14205.14 0.2892028
            REVETT MNG CO RVM 7000 3232.6 0.065812584

            If you want some exposure to some of the Majors then you’ll like Coeur, First Majestic Silver, Pan American Silver, Silver Standard Resources, Silver Wheaton, Hecla, Mandalay, and Fresnillo.

            Jun 25, 2015 25:58 AM

            BTW- that list is a little old, as Scorpio is now Americas Silver mining, and Revett Mining was just acquired this month by Hecla. Here’s the press release on that one.

            Hecla Completes Acquisition of Revett Mining Company, Inc.
            06.15.15

            http://investors.hecla-mining.com/phoenix.zhtml?c=63202&p=irol-newsArticle&ID=2059491

            Jun 25, 2015 25:09 AM

            Thanks…. So, is there a silver majors ETF like GDX?

            Never heard of SILJ before – is its performance similar to GDXJ in a rising metals market?

            Jun 25, 2015 25:20 AM

            Sure Bob UK. Glad to share info.

            As for a Major ETF for Silver Miners like (GDX) there is (SIL).

            SIL – Global X Silver Miners ETF Fund Holdings Data as of 6/24/2015

            Name Shares Held Market Value($) % of Net Assets
            INDUSTRIAS PENOLES CP 1,172,972.00 20,146,161.38 11.19
            SILVER WHEATON CORP 1,089,745.00 19,550,025.30 10.86
            MAG SILVER CORP 1,405,393.00 11,453,952.95 6.36
            SILVER STANDARD RESOURCES 1,588,126.00 10,275,175.22 5.71
            PRIMERO MINING CORP 2,430,999.00 10,234,546.96 5.68
            TAHOE RESOURCES INC 739,118.00 9,639,114.49 5.35
            FORTUNA SILVER MINES INC 2,396,719.00 9,278,370.19 5.15
            HOCHSCHILD MINING PLC 5,399,790.00 8,657,726.39 4.81
            FRESNILLO PLC 749,739.00 8,420,524.64 4.68
            COEUR MINING INC 1,459,324.00 8,405,706.24 4.67
            POLYMETAL INTERNATIONAL P 974,265.00 8,239,221.75 4.58
            PAN AMERICAN SILVER 878,047.00 8,042,910.52 4.47
            FIRST MAJESTIC SILVER 1,490,919.00 7,544,050.14 4.19
            HECLA MINING CO 2,562,794.00 7,329,590.84 4.07
            AURICO GOLD INC. 2,402,884.00 6,944,334.76 3.86
            ENDEAVOUR SILVER CORP 3,317,394.00 6,734,309.82 3.74
            MCEWEN MINING INC 6,466,912.00 6,150,033.31 3.42
            SILVERCORP METAL USD 5,435,165.00 6,141,736.45 3.41
            SILVERCREST MINES INC 3,739,895.00 3,860,848.13 2.14
            BEAR CREEK MINING CORP 2,469,505.00 1,951,862.97 1.08
            FIRST MAJESTIC SILVER COR 132,000.00 667,505.44 0.37
            ALEXCO RESOURCE CORP 533,385.00 197,299.11 0.11
            CASH 188,075.24 188,078.15 0.10

    Jun 25, 2015 25:08 AM

    Is it a coincidence that the transports topped just as the Fed’s balance sheet peaked in December??? I think not.

    The only thing keeping this market afloat I central bank intervention–both direct (buying futures and ETFs like the BoJ, bank of Israel and SNB have openly said they are doing) and indirect (currency manipulation via QE–was ot any coincidence that a day after QE infinity was announced the BoJ announced the biggest QE they have ever done?). Currency flows into the US are without a doubt helping to prop up the markets).

    Given infinite balance sheets, where does this all end???

    Jun 25, 2015 25:24 AM

    The stock market will never break free of the manipulation. It’s probably headed for a Zimbabwe style moonshot. It’s the currencies that will ultimately be destroyed. Central bank coordination can keep this charade going for a very very long time IMO. After all, they can short commodities or at least influence it via carry trades.

    Jun 25, 2015 25:37 AM

    Gary-
    I am not a cycle guy; however, something is very obvious here. You should do an analysis with cycles on gold, oil, interest rates, interest rate spread compared to the stock market. I am convinced this market action is all related to derivatives and implosions that you and I are not privy to.
    I would argue that the market simply has lost it’s concept of valuation. When you see HUGE companies worth billions double or triple in valuation and then fall right back, how can the markets be efficient pricing mechanisms?
    One example would be Sandisk, SNDK. In one year the valuation went from $13B to $22B and right back to $13B. This is not normal, how can a company’s value change in this manner? It is not just limited to SNDK, but many others.

      Jun 25, 2015 25:51 AM

      Maybe smartphone makers removing SD card slots from their phones – an increasing trend – is the reason for the Sandisk decline?

      Jun 25, 2015 25:53 AM

      Doc,
      They gave the money back to the Fed. A buy-back.
      That’s how QE propped up the markets.

    Jun 25, 2015 25:53 AM

    The following video simply repeats one created several years ago by the same person trying to sell a 1oz. gold coin on the streets of San Diego. He couldn’t give the darn thing away. http://www.silverseek.com/article/selling-10-oz-silver-bar-10-when-its-worth-160-experiment-14573
    Also, the following article yesterday by Hemke, who has been on this show I believe, is quite telling concerning Silver paper markets: http://www.silverseek.com/article/silver-short-bubble-14570

    Jun 25, 2015 25:58 AM

    Sorry, didn’t notice that Cory had already posted the Hemke article.

      Jun 25, 2015 25:37 AM

      Any thoughts on any of the Silver Majors, Mid-Tiers, small producers, or Silver Explorers you are watching Silverdollar?

        Jun 25, 2015 25:53 AM

        Yes, a few thoughts…..I owned Hecla for years until recently. Bought the original stake at around $1. Rode it through the shaft clean-up and still believe they have the finest underground mine on Admiralty Island I believe. The Lucky Friday in N. Idaho has a long, successful history. Plan on buying back in but like you, waiting to get past June and maybe July. Made some good money on Coeur 7-8 years ago but never really cared for their management. I think Hecla will run when silver recovers and it climbs above $5. Many big funds won’t touch anything below $5, which is one of their problems presently. May even be one of the reasons that Coeur is holding up some.
        Hecla has a better gold component now than it did in the recent past so I think it has a bright future; just don’t know when. Also watch Endeavour and MUX. If Mux sinks much below $.95, think I’ll take a taste. Watching AUY also and its bound to rebound from the big boys buying when things turn around. Lost a few bucks on MDW but a Chapter 11 beats the crap out of a 7. Thanks for asking. Best to you.

          Jun 25, 2015 25:08 AM

          Thanks Silverdollar. Very good thoughts on Hecla, Coeur, Endeavour, Yamana, and McEwen mining. I like all of those companies.

          Yes I agree that stocks under $4-$5 don’t get as much institutional investing, but those roadblocks will be removed in a recovering metals environment.

          Yes, what many market participants missed with Hecla was their acquisition of Aurizon a few years back which used to be a $6 stock before it sank into oblivion. That was when I realized Hecla had an insane pipeline of projects for years to come. Just this month they also acquired Revett Mining. So I like their acquistions.

          Coeur has also been on a streak of acquisitions lately and have made some better decisions. I like that Idaho North explores in a JV fashion for them, and that Rye Patch has the Net Smelter Royalty from them, and adjacent lands. Eventually both of those explorers could be acquired by Coeur.

          Endeavour will come flying back with higher silver prices, so its on my summer shopping list.

          Yamana, has had a series of unfortunately timed issues in the falling metal prices, but I have high hopes for them and really think they’ll be a 3-4 bagger in recovering prices.

          Yes, MUX – McEwen is so low that I can barely stand it. I was asking people about it last week and this week, and almost bought some yesterday and today at $.95, because it seems insane. However, if metal prices go even lower, there still may be a better entry point. I’m torn on that one though as Rob is a quality CEO, they have quality assets, and have beat guidance in several metrics lately. If it gets down below $.90 I’m taking a position.

          Good luck to you as well sir!

            CFS
            Jun 25, 2015 25:52 PM

            I have been in and out of Hecla over the years and while from 2014 it has been in recovery mode, I would not rate it as second silver stock.
            Hecla data:
            Profile for Hecla Mining Co. (HL)
            $ 2.81 RTB -0.05 (-1.75%) Volume: 2.18m 3:40 PM EDT Jun 25, 2015
            Income Statements
            Revenue (LTM) ($): 494.09m
            Revenue per Share (LTM) ($): 1.33
            Revenue per Employee (LTM) ($): 364,908.44
            Revenue Growth 3 Yr: 8.16%
            Revenue Growth 5 Yr: 3.84%

            Dividends & Splits
            Annual Dividend Rate ($): 0.01
            Annual Dividend Yield: 0.35%
            Dividend Growth 3 Yr: -37.66%
            Dividend Growth 5 Yr: N/A
            Ex-Dividend Date: 05/20/15
            Payment Type: Cash
            Stock Splits: N/A
            Financial Strength (LTM)
            Quick Ratio: 0.50
            Current Ratio: 3.50
            Long Term Debt to Total Capital: 0.26
            Total Debt to Equity: 0.37
            Interest Coverage: 1.40
            Leverage Ratio: 1.60

            Profitability (LTM)
            Gross Margin: 16.80%
            EBIT Margin: 7.50%
            EBITDA Margin: 30.10%
            Pre-Tax Profit Margin: 7.60%
            Profit Margin (Cont. Op): 3.79%
            Profit Margin (Total Op): 3.79%
            Management Effectiveness LTM 5 Yr Avg
            Return on Equity 1.32% -0.15%
            Return on Capital 0.97% 2.18%
            Return on Assets 0.81% -0.07%

            Assets
            Asset Turnover: 0.20
            Inventory Turnover: 9.40
            Receivable Turnover: 12.10
            Valuation Measures
            P/E Ratio: 57.20
            P/E High – Last 5 Years: N/A
            P/E Avg. High – Last 5 Years: N/A
            P/E Low – Last 5 Years: N/A
            P/E Avg. Low – Last 5 Years: N/A

            Price to Sales: 2.14
            Price to Book: 0.75
            Price to Tangible Book: 0.75
            Price to Cash Flow: 8.00
            Price to Free Cash: not meaningful because of cap ex.
            It will produce about 35 mil ozs of silver again this year, but still has heavy cap ex as it is growing its mines, but 2 years before production really increases.

            Jun 25, 2015 25:35 PM

            Thanks for the analysis CFS. I didn’t understand your comment “I would not rate it as second silver stock.” It is a silver stock and it’s performance beat everyone the last 200 days including Mandalay, so I guess it would be a #1 stock.

            http://stockcharts.com/freecharts/perf.php?AG,FSM,HL,PAAS,CDE,SSRI,TAHO,FNLPF,DBEXF,MND.TO#

        CFS
        Jun 25, 2015 25:59 PM

        I’m not a chart follower, but use fundamental analysis. Hecla’s recent performance has been due to increased production over the last 5 quarters. That production level will now remain constant for a couple of years. Hecla is spending most of their cash flow to build a new mine in Mexico and expand existing capability.
        This cap ex will eventually pay off, but first their P/E or cash flow numbers will not look to be improving.
        I rank it about at the bottom of the top third of gold and silver producers.
        Not bad, but not great. Just my personal analysis, but I have been living off only my investments for decades, which allows me the freedom to travel the world. Phil Baker says HL will not do another placement for financing for another couple of years, but a healthy 50 year old company should have enough cash flow to completely self-finance. It is not like they give out a generous dividend.

          Jun 25, 2015 25:26 PM

          What are your thoughts on their acquisition this month of Revett mining? Could that change the dynamics?

            CFS
            Jun 25, 2015 25:05 PM

            If this down period of the mining cycle is shorter than 10 years, Hecla’s purchase will look good in retrospect. But we live in interesting times.
            I had a grandfather who expanded his business during the Great Depression and went bankrupt inthe 30s, running the business for its buyer for the next 20 years.
            One never knows how long a cycle will last.

            Jun 25, 2015 25:52 PM

            Very astute point CFS. Nobody, even the owners of these companies, has any clue how long these cycles will last.

            You probably have seen that I feel we are getting close to the typical 7 year cycle low in the CRB commodities index, and near the end of the 4 year bear in PMs, so I’m leaning the direction of this is a good time to start bottom fishing for the companies with the means to do it.

            May you have prosperous end to your week!

        CFS
        Jun 25, 2015 25:43 PM

        HL buying RVM for 20 million in paper is a good deal for RVM, and not very meaningful for HL.
        The assets will be better run by HL management.
        I lack knowledge of the land package RVM has.

          CFS
          Jun 25, 2015 25:46 PM

          In general, it is a good time to buy cheap assets, if it does not stretch a company financially.

            Jun 25, 2015 25:55 PM

            Thanks CFS. I agree that Revett shareholders will do good in the takeover, and that Hecla has the experience and that it wasn’t a big financial hit for them.

            Here is why they feel it could boost their future production:

            From their March 27th press release:

            “Hecla intends to continue to advance permitting of the Rock Creek project. Located in Northwest Montana, Rock Creek is considered one of the largest undeveloped silver and copper deposits in North America. Revett has reported inferred resources of 229 million ounces of silver and 2.0 billion pounds of copper. The project is approximately 50 miles north of Hecla’s Lucky Friday Mine in Idaho.”

            “We are acquiring Revett with an eye to the future, as Rock Creek is a world-class silver-copper deposit that we see becoming another Greens Creek,” said Phillips S. Baker, Jr., Hecla’s President and CEO.

            John Shanahan, Revett’s President and CEO, commented: “Current market conditions do not allow us to maintain the Troy Mine on care and maintenance and pursue our objective of developing Rock Creek. We share similar core values with Hecla and see them as the company with the financial and technical capabilities to develop the potentially world-class Rock Creek deposit in an efficient and responsible manner. We believe our shareholders, along with the communities of northwest Montana who have been so supportive in our endeavors, will benefit greatly from this merger.”

    Jun 25, 2015 25:20 AM

    I bought BP, BCE and At&t the past few days and they appear to be breaking out. BP pays a 5.8% dividend and the other 2 are also over 5%.

    Jun 25, 2015 25:50 AM

    Shad, check Gary’s audio from yesterday. I responded to your question. My big plays right now are NUGT, JDST, and UWTI. Might add DWTI before end of Summer.

      Jun 25, 2015 25:08 AM

      Jason,
      DWTI is a buy right now IMO. I did yesterday. So far so good…

      Jun 25, 2015 25:12 AM

      Thanks Jason. So you’re long the Majors and short the Jrs in gold, and long crude oil.

      I am thinking that Oil will still get another big pullback in a month or so, so DWTI would make sense when that is signaled.

      Cheers!

    Jun 25, 2015 25:59 AM

    Shad,
    Good thoughts on the miners. I like Hecla too.
    I’m looking at Silver Stream. They have put together a good management team with a lady ( can’t remember her name ) that is good at raising capital and has a great track record for building junior miners. The stock price is 0.1 ( a penny )
    Would like to know what you folks think.

      Jun 25, 2015 25:16 AM

      Very interesting Chartster. I was unaware of Silver Stream, but saw where they released all the news in March and had the blip up to $.15 and then it fell into April. Now may be a good time to build a speculative position at $.01 if they are getting ready to get things going.

      The chart has limited data, so it’s a mess 🙂

      http://stockcharts.com/h-sc/ui?s=AGSM&p=D&yr=0&mn=6&dy=0&id=p89976988525

        Jun 25, 2015 25:17 AM

        The bollinger bands have definitely narrowed though, so the market is complacent.

          Jun 25, 2015 25:25 AM

          It look to me like they are gearing up for when the bottom is in. They are positioned nicely.

            Jun 25, 2015 25:30 AM

            Thanks for the heads up on it. Now I have 47 companies on the silver watch list.

          Jun 25, 2015 25:34 AM

          Lol, just saw your chart. Uh, yeah, that’s some thin BBands alright…

            Jun 25, 2015 25:08 PM

            Ha! They are narrowing though, and there isn’t much liquidity (yet), but I’ve watched many stocks go from $.01, to $.001, and then to $.0001, so I’m waiting to see what happens over the next month or so in Silver before getting overly invested. It is very likely that it will be backup over $.02 and beyond though once things get cookin’ again.

            Thanks again Chartster!

            Jun 25, 2015 25:09 PM

            Chartster, I’m sure you know more about the AGSM than I do, but I would be careful with it.
            It looks overvalued to me. Correct me if I’m wrong, but I think they’ve got about $80,000 and a market cap that’s about 12 times that puny amount. A much greater concern is that they’ve got much more debt than market cap ($1.74M vs $1.1M according to Yahoo Finance).

            Adding it all up, I don’t like that it only trades under an OTC listing and is based in Las Vegas. This is pure speculation on my part, but I have to wonder if the company was thrown together to take advantage of the coming bull market which is bound to “lift all boats.” I hope I am dead wrong on that particular opinion but even if I am, it doesn’t look appealing to me so far.

            I would prefer to take a shot with a company like Typhoon Exploration. It has no debt and a market cap that’s about half of its cash balance. It also has a much tighter float at less than 33 million shares (AGSM has 110 million out). It would have to go up 14 times just to reach book value AND Hecla is spending all the money on their Fayolle property.

            The main risk (not the only risk) here is that money invested could be “dead” for awhile. Bankruptcy is not a threat.

            Jun 25, 2015 25:17 PM

            Very good points Matthew. It is likely put together to capitalize on the coming bull market. However, if it does take off, I’m not opposed to making money on the way up and then sell at a multiple. It is extremely high risk though.

            As for Typhoon Exploration (we discussed this in the past) but I also have a position in it, from when Aurizon was doing JV work with them. They have a lot of neat properties and a tight share structure, and every so often have a blip. My hope now is that since Hecla bought Aurizon, that Hecla will buyout Typhoon. You may still be a Hecla shareholder yet Matthew 🙂

            Jun 25, 2015 25:33 PM

            I owned Aurizon when Hecla bought it out! I want to be clear that I think Hecla is a good company. It’s just not for me.

            Jun 25, 2015 25:36 PM

            Just messing with ya brother….. 🙂

            Jun 25, 2015 25:38 PM

            Matthew, what are your current thoughts on Niogold Mining, who has a similar vibe to Typhoon, and also used to have an Aurizon JV for exploration?

            Jun 25, 2015 25:09 PM

            Yeah I know you were just messin’ with me. 😮

            I think Niogold is good but, like a dumbo, I sold it too soon and didn’t buy it back. At least I did buy into that major low when it approached a nickel. It’s now up almost 600% from there.

            Jun 25, 2015 25:41 PM

            Yeah, I’m sold out of Niogold too but it was a while ago. I haven’t kept up with what they’ve been doing lately, but I remember us talking back in 2012 or 213 about Typhoon, and you were the one that pointed out Niogold to me. Just circling back around my good man.

    Jun 25, 2015 25:13 AM

    Hey Chart. I own physical gold and silver (US Mint) and I buy/sell paper gold. I agree DWTI is a buy under $60.

    Jun 25, 2015 25:34 AM

    I find it strange Janet Yelling is on record saying stocks are pricy but then she simultaneously props said “market” up? This is absurd logic. If the Fed controls the “market(s)wouldn’t it follow that said market would never go down or crash and that we would live in a beautiful paradise:))

    Jun 25, 2015 25:46 AM

    Of course they are pricey, but we are in a phase where the “fear of missing out” is taking place. I believe the FED is confused because they thought that an increasing interest rate warning would push stocks lower. It is not happening… yet.

    Jun 25, 2015 25:21 PM

    When valuating silver stocks or putting them on a physical or mental ‘watchlist’ the AISC of each company should be front and center.
    I don’t see one AISC example,never mind a list.
    Those silvers that have placed their companies production below the price of spot are the companies that will have the largest profits coming out of this paper carnage.

      Jun 25, 2015 25:44 PM

      Agree that All In Sustaining Costs are critical, as free cash flow will be the focus on this next bull. However, that isn’t the only metric to consider.

      There are also things like liquidity of the stock, share structure, the amount debt obligations coming down the pike, scalability of their projects to ramp up production, ability to increase mill throughput, what currencies and countries the companies are operating in, changes in taxes in those countries, risk of nationalization, and how many resources reserves will get updated once the metals are back at higher prices. All of these go into the equation.

      Jun 25, 2015 25:29 PM

      I talked about this recently. When silver finally starts to trend higher, the miners with healthy margins today are unlikely to perform as well as those that have tiny margins today.
      For example, the company that’s making $3 per ounce today, at $16 silver, would see a 33 percent rise in profitability if silver were to go up one dollar. However, the company that’s making 10 cents per ounce today would enjoy a 1,000 percent rise in profitability in the same scenario. That’s a 30 times greater increase in percentage terms. The performance of the shares in the second example would blow away that of the first.

      That’s very roughly the difference between a company like Hecla and Americas Silver Corp (SPM).

        Jun 25, 2015 25:48 PM

        I agreed with that analysis when you made it then and will agree with it again today. As mentioned multiple times now, I think the smaller producers will outperform the Mid-tiers and Majors and most explorers, once the silver price gets up over $18-$19.

        The reasons for owning Hecla the last year or so were to preserve instead of sinking money into smaller producers that were clearly still correcting further (as evidenced by all the charts at the top of this page). I sold Hecla and cashed out of a big share of the profits I made in Amercias Silver Corp (SPNPF) in the US OTC, in early May (but still hold a small position in Americas Silver corp) for just these reasons.

        Here is the chart with Hecla and Americas Silver Corp (still displaying as Scorpio) to show how the last 200 days have gone if you had a position in both for clarity.

        http://stockcharts.com/freecharts/perf.php?SMNPF,HL#

          Jun 25, 2015 25:07 PM

          Hecla is definitely safer than a lot of juniors to hold through hard times, but even Impact offered good trading opportunities last year. In Q1 ’14 it went up 100% then it had two more short rallies of over 50% each.

            Jun 25, 2015 25:09 PM
            Jun 25, 2015 25:11 PM

            Opps, that didn’t work. It was supposed to be your chart but 50 days instead of 200. 😐

            Jun 25, 2015 25:39 PM

            Yeah it won’t let you change the time frames. I kept trying to make them longer than 200 days and it just defaults to the default position.

            I get your point though and concur. If you are diligent watching the smaller producers and explorers, then you can make out-sized gains for small windows of time (if you buy and sell at opportune timing). However, many people don’t sell when the stocks take a huge jump, holding on for more, and then they reverse back down.

            I don’t work for Hecla or anything 🙂

            My only point at the end of last year and this year when I posted on it was that it was a solid company and my favorite Mid-Tier producer, and was a fairly safe bet. While I still think Hecla will do fine in a recovering Silver market, and will outperform the Silver price movement. I’ll likely take another small position in it during the late summer, along with Mandalay, Fortuna, Silver Wheaton, and SILJ for a little stability in my trading account.

            Having said that, I really am much more focused and excited on the small Jrs we’ve been discussing like Americas Silver mining, Alexco, Impact, Avino, Sierra Metals, Mag Silver, Santacruz, Silvercorp, and maybe good ole Aurcana (now that the worst is behind them).

            Jun 25, 2015 25:47 PM

            It let me change it to 50 days but it didn’t link that way. SPM looked a lot better than Hecla on that one. 🙂

            Jun 25, 2015 25:58 PM

            Yeah, you can move the time horizons, or switch from lines to bar chart, but when you post the link it switches back to the 200 day default. That is what I was trying to say.

            Jun 25, 2015 25:00 PM

            BTW – I am happy Americas Mining did look better because I still have a small position in it and already sold out of Hecla in May. I sold in May and went away!

    Jun 25, 2015 25:03 PM

    Those companies operating below the spot price are burning what capital they have remains and will have to refinance at basement levels or sell off projects at the bottom.Those with the lowest AISC’s are poised for the greatest gains in profits and will be the ones able to finance additional production by increasing throughput and acquiring assets of and / or companies with high overhead.
    AISC is the metric to note and it was not even mentioned herein.

      Jun 25, 2015 25:33 PM

      I mentioned AISC just this morning under the Bill Holter piece:

      On June 25, 2015 at 6:54 am,
      Matthew says:

      I can’t speak for Shad, but I like AXU because I believe silver will be substantially higher in the months and years ahead. Post-SLW amendment, all-in sustaining costs are estimated at $15 -lower than many miners like Endeavor; First Majestic; Pan American; Coeur; Silver Standard; and Great Panther.

    Jun 25, 2015 25:08 PM

    Should read : Those companies operating above the spot price are burning what capital remains….
    There are only a handful of seniors and mid-tiers that operate below spot.
    The junior space has one that I know of.
    I despise Fortuna for what they did to Continuum and the native population.
    That leaves less than a handful.

    Jun 25, 2015 25:09 PM

    Here is my favorite silver stock.
    Avino gold & silver mine
    http://www.europeangoldforum.org/egf15/egf15-webcast/egf15-webcast-stream.html
    What do you think about Avinos future?

      Jun 25, 2015 25:32 PM

      Avino is a good company Blue. I’ve been in and out of it over the years but it stacks up well in the small producers, and should have a nice multiplier effect once the silver prices rebound:

      Here’s another update with a different lineup of small producers and Mid-tiers, with the following companies (Great Panther Silver, Aurcana, Alexco, Hecla, Americas Silver Corp, Fortuna, Avino Silver & Gold, First Majestic, and Endeavour Silver)

      http://stockcharts.com/freecharts/perf.php?GPL,AUNFF,AXU,HL,SMNPF,SZSMF,FSM,ASM,AG,EXK,EXLLF#

        Jun 25, 2015 25:41 PM

        Thanks Shad, great chart

      Jun 25, 2015 25:58 PM

      It’s not a company I’ve followed or owned but I like what I see so far. Reserves are a little low but it looks like there’s plenty of exploration upside. Looks like my kind of situation.

      CFS
      Jun 25, 2015 25:10 PM

      Not a question asked of me, but I stated in this forum that I was buying ASM. actually being responsible for much of the volume earlier this week.
      I like the prospects, but don’t particularly like the long-term management.

        Jun 25, 2015 25:12 PM

        I sure remember that.

        Jun 25, 2015 25:38 PM

        That’s good to hear CFS. After today’s discussion and pouring over their website, press releases, interviews, and discussions, I’m more a fan that even of Avino Silver and Gold.

          Jun 25, 2015 25:39 PM

          more a fan that (Ever) not even.

    Jun 25, 2015 25:15 PM

    They have a good management, money on the bank , low mining costs and making money.

    Jun 25, 2015 25:16 PM

    I wrote Wolfin 10 years ago and his claim to fame was that he was going to process Orko’s ore. Since they had zero production it sounded too good to be true.
    It was. Don’t see any AISC numbers on their web site.
    So,tell us what their AISC numbers are,please?

      Jun 25, 2015 25:28 PM

      “We are pleased to report another solid quarter of operations that resulted in positive cash flow despite lower metal prices. Our primary goal for 2015 is optimization and curtailing capital spending with the goal of sustaining positive cash flow. Our quarterly consolidated AISC per Ag Eq ounce of $12.36 improved by $0.49 and remains competitive amongst our peers. We anticipate further cost improvements in the second half of this year as the Avino mine expansion contributes to higher output and economies of scale.”
      – David Wolfin, President, CEO & Director

      Highlights of the Three Months Ended March 31, 2015 (Compared to 2014)

      Operational

      Silver equivalent production for the first quarter of 2015 increased 102% to 652,620 oz* compared to 323,200 oz in the first quarter of 2014;

      Silver production for the first quarter of 2015 increased 56% to 363,210 oz compared to the first quarter of 2014;

      Gold production for the first quarter of 2015 increased by 37% to 1,750 oz compared to 1,273 the first quarter of 2014;

      Copper production continued from startup phase in late 2014, and 872,884 lbs were recovered during the first quarter.

      Financial

      Consolidated all-in sustaining cash cost per AgEq ounce1 was $12.36 in the first quarter of 2015 compared to $12.85 in the first quarter of 2014;

      Revenues reported for the quarter were $4,285,541 compared to $5,774,127 in the comparable quarter of 2014, a decrease of 26%;

      Income from mine operations was $2,087,856 in the first quarter of 2015, a decrease of $752,146 from the first quarter of 2014;

      General and administrative expenses were $960,727 in the first quarter of 2015 compared to $1,317,524 in the first quarter of 2014;

      Earnings before income taxes were $1,163,094 in the first quarter of 2015 compared to $2,236,701 in the first quarter of 2014;

      Earnings for the first quarter of 2015 were $376,287, a decrease of $968,029 from the first quarter of 2014;

      Earnings per share, basic and diluted, was $0.01 in the first quarter of 2015 compared to $0.05 (basic) and $0.04 (diluted) in the first quarter of 2014;

      Average realized prices per ounce of silver and gold were US$16.22 and US$1,188.47 respectively for the first quarter 2015, and US$20.15 and US$1,299 respectively for the first quarter of 2014;

      Cash flows from operations before movements in working capital were $1.1 million for the first three months of 2015, compared to $1.6 million for the corresponding period of the previous year;

      Cash flow per share1, basic and diluted, was $0.03 per share for the first three months of 2015, compared to $0.05 per share for the corresponding period of the previous year.

      Operational Review

      Total silver equivalent production in the first quarter of 2015 increased to 652,620 silver equivalent ounces*, an increase of 102% compared to the corresponding period in 2014. The production growth was due to the completed refurbishment of the 1,000 tonne per day Mill Circuit 3 used to process new underground material from the Avino Mine.

      Total mill feed processed during the first quarter of 2015 was 114,453 dry tonnes compared to 39,567 dry tonnes during the first quarter of 2014, an increase of 189%.

      Financial Review

      The Company generated revenues of $4,285,541 during the first quarter of 2015, a 26% decrease compared to the first quarter of 2014. The decrease is primarily due to a decrease in the average realized metal prices for silver and gold.

    Jun 25, 2015 25:27 PM

    AISC is 13 dollars 2014

      Jun 25, 2015 25:30 PM

      This is from their May 2015 Quarterly report (right on their website)

      “We are pleased to report another solid quarter of operations that resulted in positive cash flow despite lower metal prices. Our primary goal for 2015 is optimization and curtailing capital spending with the goal of sustaining positive cash flow. Our quarterly consolidated AISC per Ag Eq ounce of $12.36 improved by $0.49 and remains competitive amongst our peers. We anticipate further cost improvements in the second half of this year as the Avino mine expansion contributes to higher output and economies of scale.”
      – David Wolfin, President, CEO & Director

      May 12, 2015
      Avino Reports Q1 2015 Financial Results: Earnings of $376,287 ($0.01 Per Share) and Cash Flow from Operations of $1.1 million ($0.03 Per Share)

      http://www.avino.com/s/news.asp?ReportID=707424

    Jun 25, 2015 25:34 PM

    They just bought Bralorne gold mine which they want to take to full production in the future.
    http://www.stockhouse.com/news/newswire/2014/06/30/avino-silver-v-asm-set-to-add-bralorne-gold-v-bpm-mine-to-production-roster

    Jun 25, 2015 25:37 PM

    http://m.youtube.com/watch?v=6RdsVXZ2KHE

    Good interview with Mr Wolfin from January 2015

      Jun 25, 2015 25:54 PM

      Thanks for posting the interview Blue.

        Jun 25, 2015 25:36 PM

        I better understand the merger, and tailings recovery plan better now after listening to that….and didn’t even know about their 5 exploration targets in Durango Mexico.

    Jun 25, 2015 25:56 PM

    Doubled their shares o/s since Q3/10 and they are primarily producing copper.
    AISC does not include the fact they are going to have to mine tailings and integrate Bralorne ,which means they are skimming the Mexican barrel,which was always the rub with them.
    They may be in the silver space but they will be stretched to produce 1 million oz of silver in 2015.

    During the first quarter of 2015, net income decreased by $968,029 to $376,287 or $0.01 per share, compared to net income of $1,344,316 or $0.05 (basic) and $0.04 (diluted) per share during the first quarter of 2014.

    $375k in profits with tailings as their objective and Bralorne to put together.

      Jun 25, 2015 25:18 PM

      From the May 12 Quarterly report:

      Avino Mine

      On January 1, 2015, Mill Circuit 3 began processing new material taken from underground at the Avino Mine.

      Silver equivalent ounces* produced during the first quarter of 2015 totalled 355,924. This represents an increase of 100% compared to the first quarter of 2014 as there was no production from the Avino Mine during the comparable quarter in 2014.

      San Gonzalo Mine

      Silver equivalent ounces* produced during the first quarter of 2015 totalled 206,956. This represents a decrease of 20% compared to the same period 2014.

      All-in sustaining cash costs during the first quarter of 2015 were $12.36 per AgEq ounce1 compared to $13.01 in the first quarter of 2014, a decrease of 5%.
      __________________________________________________________________

      So First Quarter Silver equivalent ounces at the Avino Mine were 355,924 and at the San Gonzalo Mine were 206,956. That’s a total of 562,880 Silver equivalent ounces for just the first quarter, and you think they’ll be stretched to produce 1 million for the year?? They’ll have that by the 2nd quarter. I don’t understand that comment.

        Jun 25, 2015 25:26 PM

        Silver,Shad,not copper credits.

          Jun 25, 2015 25:04 PM

          Oh gotcha. They also have gold credits. Since most silver miners are poly-metallic, it is important to look at the base metal credits like Lead, Copper, Zinc, etc… but when most people evaluate production they are typically going to use “Silver equivalent ounces”. It looks like they’ll have well over 2 million Silver equivalent ounces based on the first quarter.

    Jun 25, 2015 25:12 PM

    Avino will start up Bralorne nice and easy. Bralorne Gold will produce a small amount of gold at first, enough to reinvest in the Bralorne project. The gold mine have been producing 4 million ounces of gold before.
    Here is some info about Bralorne gold

    http://www.avino.com/s/news.asp?ReportID=661637

    Jun 25, 2015 25:24 PM

    My family grew up in Bralorne when my grandfather was s shift boss in the Bralorne Mine. Avino already gave up on Bralorne once. Check out their latest drill results(2014-15). The best intercept was 1.7 metres from 7,800 metres of core.
    So,tailings in Mexico and expensive ore in Bralorne.The tailings pond is not even in place and tailings ponds are the big no-no in B.C. these days.
    No word on costs or duration of construction.Be interested to see if they can put it together this summer because nobody in Bralorne has noticed any construction yet.
    Meanwhile,back to $1170 gold….

    Jun 25, 2015 25:46 PM

    Anyone notice the huge blocks trading at close in gdx – 1.25m then 1.75 at $18.17???