Tag Archives: GDXJ

Animal Spirits Are Percolating In The Gold Market

The use of the term “animal spirits” is most commonly attributed to John Maynard Keynes. But it originates from the Latin term, “spiritus animales” in reference to the spirit that drives human thought, feeling and action. We saw animal spirits at work in gold and silver on Tuesday this past week when the Dow dropped 237 points and gold quickly popped up $16. Silver jumped 72 cents, much to Wall Street’s surprise, on March 16th after the FOMC issued its latest monetary policy statement despite an assurance that the Fed would raise rates three more times this year.

At some point the paper control of the gold market is going to fall prey to animal spirits. I think the reaction of the metals after the FOMC policy release and when the Dow plunged are evidence that “animal spirits” are percolating in the precious metals market. (Excerpt from yesterday’s issue of the Mining Stock Journal)

In the latest issue of the Mining Stock Journal I review a junior mining stock that was heavily promoted last summer ahead of a big issuance of stock. Many of you may own it thinking you sitting on junior with close to 20 million ounces of gold in the ground. What I found when I examined the background of management and quality of the alleged mineralization on the company’s properties, with no plans for advancing the properties, might shock you. This stock is down 50% from its highs last summer and insiders were dumping shares in September before the stock sold off. This is a stock you want to avoid and you can find out more about it by subscribing:  Mining Stock Journal subscription info.

When I asked a colleague and subscriber who invests in junior mining stocks and participates in select financings if he had an opinion on the above-mentioned company, this was his partial response: “No, I have never looked at it principally because of the people behind it, who are well-known to front run their own subscribers.”

Stunning Development In Comex June Gold Deliveries

If the Comex were allowed to issue paper contracts representing no more that 10 or 20% of the actual amount of gold held by Comex vaults, what would the price of gold be?

1.176 million ounces of gold have been delivered – or should I say “delivered” – for the June contract six days into the June contract delivery period.  I don’t follow the delivery patterns as closely as I used to, but this is a massive amount of stated deliveries.  Even more interesting is the fact that there’s still 6,683 Juno contracts open representing 668,300 ozs of potential deliveries.   This is a relatively high number of contracts still open this far into the delivery period.

One other interesting point of note is that over the last few months, a couple new “players,”  beyond the standard Comex bullion banks (JP Morgan, HSBC, Scotia) have been participating in the deliveries:  B of A (Merrill), International FCStone Financial, Morgan Stanley and SocGen.   All four of these have been taking an increasing amount of deliveries the past couple of months, primarily on behalf of customers (vs. for their own house account).

I have no idea what would be triggering this sudden increase in delivery activity on the Comex – other than the obvious.   And who knows to what extent the physical gold is actually being moved from the accounts of the delivering parties to segregated accounts of the parties taking delivery.   It would be even more interesting if a lot of this gold was being removed from the Comex, which would reinforce the likelihood that it really exists in unencumbered physical form.

On another note, the stock portfolio portion of the fund I co-manage was up 4.7% today vs. the HUI up .23% and the GDXJ “junior” ETF up 1.7%.  We own highly concentrated positions in true junior exploration stocks.  My point here is that a lot of money is flowing into the highest risk/return segment of the mining stock sector.  In my opinion this is a signal that the “smart” money is expecting a big move in the entire sector.

I publish the Mining Stock Journal, which is a bi-monthly subscription report which features a junior mining stock in every issue.  I try to find lessor known ideas because I want to put my money in good ideas before the wider universe of newsletters begin to discover them.   The next issue out this Thursday will be featuring a very small silver exploration company that appears to have found what could be very large silver (polymetallic) deposit.   You can access the Mining Stock Journal here:   MSJ Subscription Link.   I am sending all-back issues to new subscribers.

Considering the research and content, both the Mining Stock Journal and Short Seller’s  Journal are remarkable bargains.  – from subscriber “Jay”

 

Junior Mining Stocks: A New Bull Market On Steroids

Apparently that imbecilic Goldman Sachs commodities analyst, Jeff Currie, was on CNBC’s Power Lunch urging viewers to short gold.  He’s been wrong since his initial $800 target on gold he set about 2 years ago.   In fact, using Currie as a contrarian indicator for buying gold has become possibly more reliable that the legendary “Cramer” and “Gartman” contrarian indicators.

What you won’t hear discussed on CNBC, or Bloomberg or Fox Biz for that matter, is the powerful move that’s being made in the mining stocks, especially the junior mining stocks. Since hitting a low of 100 on January 19, the HUI is index is up 94% as I write this.  If the SPX or Dow went up 94% in 2 1/2 months, Maria Bartiromo and Liz Clayman would be doing naked cartwheels on tv.

GDXJ 1yrThe junior miners as represented by the GDXJ ETF since January 19th is also up 94%.  But the GDXJ is not a true junior mining stock index.  Many exploration stocks are up 300-400% YTD.  And they are still substantially below the highs they reached in 2010 and early 2011.  I pointed out earlier this year that the HUI index doubled from late October 2008 to December 31, 2008 – and then it more than doubled again over the next 2 1/2 years.  I suggested that not only could it do that again, but this time around the move would be even more more powerful and produce an even bigger rate or return ultimately.

Why?  Over the last 4 1/2 years the valuation of mining stock sector relative to price of goldHUI reached its lowest point in history.  I don’t time to dig up the graphs illustrating this that have been published recently, but the HUI graph on the right somewhat demonstrates this point.  The HUI index closed on April 7 at 186 with gold around $1230.   As the graph shows, the HUI hit 186 in early 2003 with gold at $350.  In other words, in the early years of the emerging secular gold bull market, in relation to the price of gold the larger cap mining stocks were valued at nearly 3 1/2 times greater than their current level of valuation.

The beat down in the junior miners over the last four-plus years was even worse.  Many of them with proved gold/silver in the ground were trading at valuations below the amount of cash they held on their balance sheet.   The good quality exploration juniors had become insanely cheap.

The current trading action in the miners, especially the juniors, reminds me of the 2002-2003 period, when the sector was largely ignored by the entire market other than a contingent of crazy “goldbugs.”  Back then – like now – stocks would take turns jumping up 20-30% in one day, often on no event news.   I likened the action to that of watching popcorn pop:  you didn’t know when an individual kernel might pop but you knew that at some point almost all of them would.

The market action currently is quite similar to back then.  The juniors have been beaten down to the point at which no one except hardcore precious metals participants are GDXJweeklybuying them and idiots like Jeff Currie are running around advising everyone to short the sector.  The graph of GDXJ on the left (click to enlarge)shows how minor the recent move has been relative to the upside potential.  The move in the juniors has barely started. We have a stock in our fund that was up 37% yesterday on no news (Almaden Minerals).  It’s up another 17% today.  I spoke to management, who attributed the action to a U.S.-based newsletter but noted that the stock is playing “catch up” to comparable companies with $200-million market caps.  AAU’s market cap even with today’s move is still around $85 million.

I will be explaining to the subscribers of my Mining Stock Journal in the upcoming issue (next Wed or Thurs) why AAU is worth at least as much as its comparable companies.  I’ll also be presenting another mining stock that has moved up almost 500% from its 52 week low and is still 300-400% undervalued just in the context of the current prices of mining-stock-journal-bannergold/silver. This company has a hidden asset that is not even contemplated by the market right now.  In the current issue I presented a junior gold stock that has been almost completely ignored by investors.  This particular stock is one of the best risk/return ideas I’ve come across in 15 years of focusing on this sector.  You can subscribe to the Mining Stock Journal by clicking on the graphic to the right or by clicking here:   Mining Stock Journal.

 

Two Low-Risk/High Return Mining Stock Ideas

On the assumption that gold and silver have bottomed and are headed higher from here, the stocks below are my favorite risk/return ideas.  My last one Silver Crest, was acquired by First Majestic.  I believe these companies are potentially “on deck” to be acquired.

These reports are available individually or in a two-report special price package ($30 each or $40 for two).

Note:  Many of you have already purchased these reports.  If you are not sure, please check with me.

This company year-to-date has outperformed both the S&P 500 and the GDXJ junior mining stock ETF. Also, it recently raised just under $30 million and a major mining company bought 44% of the deal  – click image to enlarge:

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You can access this report here – Click on image:
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Or here:   MINING STOCK REPORTS

 

This company has outperformed the GDXJ ETF over the last 52 weeks and recently released 43-101 resource report on a massive copper-gold project in Russia in which this Company owns  a controlling stake. They are in negotiations to transfer its stake in the project with a one of the largest Chinese mining companies for an all-cash price that is more than double the Company’s current market cap:

You can access this report here – click on image:
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You can buy both reports at discount to buying either individually here:

BOTH MINING REPORTS FOR A 33% DISCOUNT

When gold and silver prices finally reflect reality, the gold and silver shares will have represented one of the greatest buying opportunities in the history of finance.  – John Embry on King World News

New Junior Gold Miner Research Report

Note:  If you participated in the Website Fundraiser, you already have this report

James:  Dave: Thanks for all you do. I’ve purchased your stock briefs and have made some nice profits.

This junior gold miner has nearly 5 million ounces of gold in a prolific gold mining district in Canada.  The gold resource is one of the largest gold deposits discovered in the last 15 year.  It is joint developing this project 50/50 with a mid-sized mining company that has deep pockets.  This project has a very high probability of being successfully advanced into a big gold mine.

I suspect as the price of gold advances into the next stage of its bull market, this junior will be swallowed whole by its JV partner which has pre-funded a significant portion of the up-front advancement of this project.  Perhaps this is one of the primary reasons this Company’s stock is up 32% YTD and has outperformed the GDXJ junior ETF by a significant margin – click to enlarge:

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This Company also has some projects in Nevada with huge upside potential.  I doubt this Company will be independent by the time those projects reach an advanced stage.

You can access this report here:    MINING STOCK REPORTS

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This Emerging Producer Could Triple If Gold Moves Higher

If you think the price of gold is getting ready to start its second leg of a massive secular bull market, and I think it is for several reasons, this gold mining stock is one of the best risk/return plays I’ve seen in a long time – and trades below 50 cents.

The Company ran into some pre-production snags and announced that it might need to raise capital in order achieve its first commercial gold pour.   The short sellers savagely attacked this stock – it lost 50% of its value in a month.   Starting up a mine is more “art” than “science.”  Every company runs into engineering and metallurgic issues when they are working to begin to convert a resource in the ground into extracted gold.

But the Company successfully achieved its first gold pour and is set up to produce a lot of cash flow,  especially if the price of gold starts climbing.   Oh, it also achieved its first pour under the budget originally estimated.

We bought a position in this stock after I first published my original report on this Company at the end of the summer.  We added to our position last Wednesday.  I believe it has the potential to triple from here if the underlying gold market fundamentals cooperate.

You can read my report here, which includes analysis based on an extensive conversation I had with the Company last week (click on link or on the graphic below):    POTENTIAL TRIPLE IF GOLD MOVES HIGHER (link)

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After the bounce this stock had late last week, the stock is still performing in-line with GDXJ on an ROR-basis over the last 2 years.

This Junior Miner Was Up Over 9% Today

It is back to break-even from when I first recommended it and has outperformed the sector by significant about (28%) – it’s also up 6.5% from when I posted the original update last week:

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I updated the report from June and explain why I think this stock is outperforming and has the potential for significant upside over the next 12 months:   Junior Miner Outperforming The Sector.
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This Junior Mining Stock Is Outperforming The Sector – Update

This stock is green again today – with the mining stocks getting hit hard by the hedge funds/banks…

Since I posted this two days ago, the stock is up over 5% – I added a technical report which gives advice on accumulating this stock from DenaliGuide’s Summit subscription area.  You can access the updated report here:  Junior Miner Outperforming The Sector.  I explain why this stock can at least double in the next year.

I originally published a report on this Company in early June.  Since then, here is how it has performed vs. gold and the sector (click to enlarge):

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I have updated this report to reflect recent developments and I offer an explanation for why this stock has been outperforming the sector. You can access this report here:  Junior Mining Stock Report.

I know the management was in China late last spring meeting with several of the largest Chinese mining companies.  I believe the Company is engaged in very prelimary discussions about selling one of its huge copper projects to one of China’s largest mining conglomerates.   I’m pretty certain that’s why this Company’s stock has held up well since the takedown of the sector began in mid-July.

Even on its own, separate and apart from the possibility of any kind of M&A event, this stock is significantly undervalued.   It is currently generating royalty revenue from a big gold mine in Nevada.  That mine is going to be operating an expansion project in late 2015. This expansion will increase the Company’s royalty stream.

Furthermore, this Company has a massive prospect/project portfolio, a handbook of which is attached to my report.  As the price of gold and silver recover and move higher again, which will happen sooner or later, I believe this stock can provide close to a double in the next twelve months and a triple over two years.  That’s assuming the metals don’t go parbolic…(click on pic to access this report):

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Putting The Current Gold/Silver Market In Proper Perspective

Follow the money.   My friend and colleague, Nick of DenaliGuide’s Summit blog has done a short video to explain why the current trading action in gold and silver – although seems quite bearish – is really a non-event.   The goal is to help ease everyone of the oppressive negative sentiment the has engulfed the precious metals investing community.

Some Nick’s “hidden” talking points include the fact that:

1)   gold and silver bottomed in last June 2013
2)  June 1st this year:   gold is up almost 3%, silver is up just over 3%;  GDX is up almost 20%

Sure doesn’t feel like the precious metals sector has had positive returns this year, does it?

Please take 2 minutes to watch Nick’s informative video:  Market Sentiment Belies The Numbers.  (Samples of Nick’s T/A research, which I use, are linked at the top of the blog)

Perhaps what’s most interesting can be seen in this graph from Nick (click to enlarge):

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This shows the GDX index since mid-June.  As we know, gold and silver rallied along with the GDX into mid-July and have largely retraced nearly back to their June 1 starting prices. BUT, the mining stocks have been marking time in a sideways pattern.  The black line on the graph shows the amount of “stealth” accumulation that is occurring on every down-tick in the mining shares.  I have noticed this as I watch the tape every day, but this graph illustrates it.  The message:  SMART MONEY IS ACCUMULATING MINING SHARES.

I have several mining stock ideas here:   IRD Research Reports

My “Huge Upside” idea has pulled back on zero news.  I added some to the fund I manage today.  My “Short Term Trade/Long Term Investment” idea is back above my recommendation level.  I expect it to outperform going forward, assuming the precious metals sector starts trending higher.