Rising Yields – It’s Just Getting Going

October 4, 2018

Doc joins me today to comment on the breakout in yields. The 10 year is now about the 3.11 resistance level and there are a number of factors that will continue to drive it higher. If you listen closely you can even hear my 5 month old Gigi agreeing with what we are saying at the 9:30 mark 🙂

Click download link to listen on this device: Download Show

    Oct 04, 2018 04:42 AM

    Doc sell off in stocks today but do you think this market will climb higher up to midterm elections? We will be entering earnings next few weeks and should prop up stocks, and maybe we get that profit taking event after midterms especially if democrats win the house and talm of impeachment.

    Oct 04, 2018 04:10 AM

    long VLRX

    Oct 04, 2018 04:02 PM

    Today’s move in yields kinda blows up the whole theory of Chris’ that we potentially had seen the high for the year………….

      Oct 04, 2018 04:43 PM

      I think they’re going higher than most people think.

        Oct 04, 2018 04:45 PM

        Dollar buoyancy could continue for a little while longer…

          Oct 04, 2018 04:11 PM

          I have been following your comments on IPT. How do you buyb a position? There is just no volume!

            Oct 04, 2018 04:00 PM

            It’s not easy but it would have been easier 1-2 months ago on the first dips below 30 cents. After two months of very negative sentiment, a lot of sellers have been wrung out.

    Oct 04, 2018 04:55 PM

    Matthew, I thought Rick Ackerman said the dollar was going up to 120? That would surprise me. Let’s hope USAS knows what they are doing buying Perseus. After hours of research I’ve narrowed down my concealed pocket gun purchase to either the S&W 642 or the Ruger LCR .38 and am leaning toward the LCR even though it costs more. People rave about its trigger and also say it has less recoil because of its grip. I wonder what Doc, Rick, AL, Cory, and Bob Moriarity carry?

      Oct 04, 2018 04:12 PM

      Bonzo, I would also be surprised if we see 120 for the dollar.
      I’m sure the LCR is a great choice. As for who carries what, for various reasons, I doubt that any of those boys carry anything regularly.

        Oct 04, 2018 04:27 PM

        I’ll bet Doc carries a Colt .45 on his hip or a Colt Detective Special in his pocket…He strikes me as a Colt man.

          Oct 04, 2018 04:57 PM

          Ok, I’ll guess he’s a Smith & Wesson guy (not the new ones) and only carries occasionally.

            Oct 04, 2018 04:07 PM

            I’ve a concealed permit for a “stovepipe” collapsible M20a1B1 super-bazooka. When I have it hidden in my anterior waistband, I’ve often been accused of being well endowed.


            Oct 04, 2018 04:04 PM

            It’s just too bad you need a permit for that. At least Wyoming sets a good example.

            Oct 04, 2018 04:19 PM

            I wish I could buy a 4″ mortar in TX. Mortars killed more people in WWII than any weapon.

      Oct 04, 2018 04:52 PM

      I have heard that some of them carry pea shooters………and others conceal their thoughts

      Oct 04, 2018 04:09 PM

      I have been following your search for a new carry gun as I am looking for something smaller. I found the one below for about $420 a my local great gun store……do take a look if you have not decided. Things I like are the laser built in, one tap solid, second tap flashes. plus a good safety, seven round of 38. Let us know what you decide, both good choices. I may buy this one next week.

        Oct 04, 2018 04:50 PM

        Nice gun………..built in laser is sweet…..jmo

          Oct 04, 2018 04:31 PM

          I loved my dad’s 380 and was looking at those for carry guns… until I ran across the P365. Haven’t picked one up yet, but I have a birthday coming up. 😉

      Oct 05, 2018 05:53 AM

      Bonzo Barzini – It was definitely a good pickup for America Silver, and Pershing Gold is an interesting development stage company that consolidated its land in Nevada from Victoria Gold & Newmont years ago, and did all the right things to move the project from an initial resource estimate, to PEA, to metallurgical testing, then a PFS and more drilling, and finally a Feasibility Study that outlines their economics. While I don’t like the 5% discount rate and feel they should have used 7-8% , the low economic risk and cost imputs in of one of the best mining jurisdictions (Nevada) are fairly well understood by the industry now, so maybe that is why they went with 5%. USAS is also a solid operator of mines, and may be able to further optimize things. They got a great development project, in a Tier 1 jurisdiction, for pennies on the dollar in such a depressed market, so it was a good transaction.



      “Highlights from the FS include a pre-tax net present value (“NPV”) of $154 million, a pre-tax internal rate of return (“IRR”) of 91% and pre-tax Net Cash Flow of $204 million. The NPV, IRR and Net Cash Flow figures assume pre-tax economics using $1,290 per ounce (“/oz”) of gold (“Au”), $16.75/oz of silver (“Ag”) and a 5% discount rate.

      “The Feasibility Study validates the previous technical work we have done at Relief Canyon, confirming it to be a low CAPEX, low cost, high IRR project,” stated Stephen D. Alfers, Pershing Gold’s Chairman and CEO. “Pershing Gold thanks MDA, Kappes Cassidy, Jorgensen Engineering, and their staff for their high quality work in assisting with the development of this Feasibility Study,” stated Alfers.

        Oct 05, 2018 05:04 AM

        Pershing Merger Was An Opportunity That Couldn’t Be Missed – Americas Silver

        Neils Christensen – Monday October 01, 2018

        “Simply put, this is a great project from our perspective,” he said. “There are very few oxide heap-leach, open-pit mines with low capital intensity available today,” he said. “Whether the gold price is good or bad, the rationnale to own this mine is there.”

        Blasutti said that unfortunately, in the current market conditions, single-project companies like Pershing Gold, face significant development risks when trying to bring a project online. However, he added that Americas Silver will be able to leverage its current production and cash flow to overcome potential development risks.

        “We are building a $28 million capital project on the top of a $160 million company,” he said. “I think it could take us less than a year to get this project up and running in one of the best jurisdictions in the world.”

        Blasutti explained that the project’s low capital costs means the company will see a strong return on its investment even if prices remain at current levels.

        “Even with acquisition costs and after building the mine, we still expect to see a return of more than 15% and that is just something you don’t see in this business,” he said. “We think this project will be able to fund itself.”

          Oct 05, 2018 05:18 AM

          Thanks Excelsior, I’ll sleep better now. Which is the best bargain: USAS, NGD, or NSRPF ?

            Oct 05, 2018 05:51 AM

            That is a tough question to answer on USAS, NGD, or NSRPF (one is a Silver & Base Metals producer that just added more Gold during their takeover, one is a gold producer that just gave up a good asset, and the other is widely followed exploration and development stage story).

            USAS is the safest bet, and will transition their production output over the next two year from a more base metals (Zinc/Lead) mix with minimized Silver, to more Silver and Gold with a balance of Zinc/Lead/Copper. If PMs rise in value as their production mix grows in Silver/Gold then they should get more leverage to the metals prices.

            New Gold has definitely pulled back hard, and represents a good value, but rightly so … They were way over valued a few years back, ran into snags during the downturn in metals prices, and were cash starved and just had to sell off Mequite to Equinox.

            This hurt some of their future growth and attraction to own them in first place. EQX definitely got the better end of the that bargain for the long haul, so I’d rather own Equinox than New Gold. Ross Beaty has it backstopped as well as number of other key investors. New Gold will bounce eventually and it is cheap here, but there are other Gold stocks I like much more.

            With Novo Resources, who knows? It has pulled back by 3/4 the move it made, and while I don’t own it at present, I did and caught some of the move up and made money, while many investors jumping on the bandwagon or adding at much higher levels have lost money. Now it has almost returned to where I sold it, so I may add it back, but Quinton needs to answer questions to the marketplace about how to economically mine such a huge area of land, and trial mining will likely tell the tale. If it works it could be a true grand slam and outperform most companies, but only more data will remove the uncertainty.

            Oct 05, 2018 05:05 AM

            A final note on New Gold (NGD) (from IKN489)

            IKN – 10/4/18


            Oct 05, 2018 05:13 AM

            I love how people fall for the “bigger is better” routine by the likes of Rick Rule and others. Many are just debt laden sheeple vessels.

            Oct 05, 2018 05:17 AM

            Not talking about Bonzo, btw. He obviously is not afraid of tiny caps.

            Oct 05, 2018 05:09 PM

            Yes New Gold is very debt laden and is not necessarily better, but then again, neither are most micro cap Jr explorers for that matter which are serial dilution machines, that just pay the company officers as they do capital raise after capital raise. At least the producers can generate rising revenues if the metals prices rise and pay off their debt.

            In the case of Americas Silver, they don’t have much debt after this transaction, and are going to be generating money hand over fist over the next few years, so they seem like the better option of the 3 he mentioned but it was odd group to compare.

            Equinox that I mentioned is getting bigger, but they are better off for acquiring Mesquite and will benefit in the longer PM cycle from owning it than New Gold will be for the cash they received which was $228 million less than it’s carried position within NGD. EQX got the better end of the arrangement.

            As for Novo, it isn’t really a microcap anymore with valuation of over $1 Billion at the end of last year without even have defined resources or a mine yet. It has pulled back to $435 Million, and is a special case where it either has hit the jackpot and will be worth many multiples higher, or they are still way overvalued if this doesn’t work out for mining that deposit economically.

            As far as micro or nano caps of $10-$100 Million in the Jr space, I’m a huge fan and own dozens of them, but most are not anywhere near as stable, safe, or assured future success, as the more highly valued Smaller or Mid-tier producers. The micro cap Jr explorers are insanely more risky at the end of the day than revenue producing Jrs, but it is a more risk/more reward scenario, just like biotech, pot stocks, or cryptos. Those companies are much more speculative bets with many unknowns in comparison to more established companies, and the odds of failure are much higher.

            Oct 05, 2018 05:45 PM

            The bigger companies are no less dangerous than the tiny ones and often are much worse because of their debt. Well-chosen juniors are safer in my book. Dilution is a necessary part of the junior world and can be done right. Look at giant FCX – down 90% in 18 months a few years ago and nearly that decline in just 7 months in 2008. Then there’s Allied Nevada…

            NGD was worth many billion just two years ago. Size does not equal safety all by itself.

            Oct 05, 2018 05:41 PM

            I agree with you there, as there is no safety in any sector, especially resources, but those producers were the worst of the worst, and the exception to most companies producing revenue. FAR more Jr Explorers and over-extended Developers go belly up before they crash and burn, or get sold at a fire-sale price to the next taker.

            Only 1 in 3000 deposits end up being an economical mine, where maybe 1 in 30 producers craps the bed. There is far more leverage in the explorers over the producers for that reason, because they are so risky but the reward is epic if they hit paydirt.

            Oct 05, 2018 05:46 PM

            This is also why I’m so keen in smaller scale producers with some revenues coming in to fund their exploration upside. Most companies never get done with all the discovery on their own properties, but at least smaller producers don’t have to dilute so much to keep the drills turning.

            Oct 05, 2018 05:13 PM

            It’s easier for the average guy to buy safe juniors than safe seniors due to the complexities of what the seniors are up to. With every single bad junior that I’ve owned, I knew beforehand that I was taking a much greater risk than my favorites had. Also, if you consider the upside of each, then the juniors look better still.
            FCX is one of the worst of the worst? I don’t think so. Rio Tinto also fell 90% in 2008 and Barrick fell 90% during the bear that ended in 2015. There’s no shortage of seniors that have plunged like juniors and they can be much more destructive to Joe Blow since they are all marginable. When the average guy thinks he’s nailing a bottom, he often can’t resist borrowing to the max to either get even or get rich. Almost without exception, he gets smoked instead.

            Remember, my point was about large versus very small market cap, not senior producer versus riskiest explorer.

            Of course, none of this matters to decent traders or those who can manage their risk.

    Oct 04, 2018 04:46 PM

    Interesting commentary by Jimmy Rogers: