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Fortuna Silver’s Golden Opportunity

2021 was a rough year for FSM, taking into consideration the royalty payment settlement it made to the Mexican Government, the environmental permit issue with the SEMARNAT, and the disruptions to the ramp-up of Lindero from the virus crisis, among other likely non-recurring issues. In addition, FSM incurred the costs of merging with Roxgold. All of these issues took its toll on the stock price, compounded by the fact that the entire sector was in a downtrend for most of 2021. Going forward FSM management will be able to focus on managing its operating mines, advancing Seguela to production and resource exploration and replacement.

The challenges confronted by Fortuna were compounded Thursday when Stockwatch erroneously (or was it?) released a headline in pre-market reporting that Fortuna lost $59.4 million in 2021. Fortuna generated $59.4 of net income in 2021. It was an inexcusable mistake but the damage to the stock was done by the time Stockwatch ungraciously corrected the error, as hedge fund algos relentlessly sold (and likely shorted) shares based on Stockwatch’s fictional headline, driving the stock down as much as 7.2%  At the very least Stockwatch should issue an apology.

The biggest factor that will benefit FSM’s stock price going forward, and which the market fails to “see” is the upside potential of FSM’s existing mine properties and, even more so, the enormous upside potential of FSM’s exploration properties. Arcadia Economics (Chris Marcus) and I discussed with Fortuna’s CEO, Jorge Gonoza, the Company’s Q4 performance as well the many factors in play that make Fortuna in incredible investment opportunity:

The Petrodollar And Gold (And Silver)

The precious metals market commentary below is an excerpt from the latest issue of the Mining Stock Journal, released on March 17th. The issue also offered an opinion on the $MAG Silver acquisition of Gatling Exploration ($GATGF, $GTR.V), $AEM and Paramount Gold ($PZG), among other companies I cover. You can learn more here: Mining Stock Journal.

By now I’m sure most of you have read the various analyses – not found in the mainstream financial propaganda – explaining why the U.S. sanctions levied against Russia will back-fire and trigger a reset of the monetary system. In brief, the U.S. has “weaponized” the dollar’s status as the reserve currency by imploring western Central Banks to freeze Russia’s foreign currency reserves and banking assets held at western Central Banks (China has not put a freeze on Russia’s currency reserves). This has in turn triggered a move by many of Russia’s trade partners to work around this by settling trade with Russia either in respective domestic currencies or in gold.

While this is going on, Xi Jinping eschewed a meeting with Biden and instead met with the Saudis to discuss settling oil trades in yuan. I don’t know if this will spawn the “petroyuan” but it will certainly advance the removal of the dollar as the reserve currency. Xi also met with Turkey’s President Erdogan, who said that Turkey was more than happy to settle trades with China in yuan, ruble or gold.

Regardless of which side of the Russia/Ukraine/U.S./NATO conflict you might associate, it has without question shined a bright light on the dollar’s diminishing status as the reserve currency. More important, it has pulled gold into the conversation as an alternative trade settlement currency. Gold is, after all, designated as a Tier 1 bank asset per the BIS.

The implication of these events unfolding is that, not only is a monetary system reset in motion, but I believe that, along with this, the price of gold will “reset” to a much higher price in order to reflect a more appropriate valuation relative to the degree to which fiat paper currencies have been devalued from Central Bank money printing.

Though the precious metals sector is technically overbought, it can remain “overbought” for quite some time as an offset to the amount of time it has been technically “under-bought” or “oversold.” Both the HUI and GDX have pulled back to their respective 21 dma’s. This may be all it takes to “reset” the momentum indicators (RSI, MACD, etc) in preparation for another move higher. Similarly, gold and silver are also flirting with their respective 21 dma’s.

Barring any unforeseen exogenous circumstances (primarily a redoubling of the price-capping efforts by the western gold/silver price management team), right now I am confident that the precious metals sector will be considerably higher by the end of the summer.

The Precious Metals Sector Is Potentially Explosive

Though most investors expect some type of pullback in the precious sector to “reset” the various technical indicators that have become “overbought,” the geopolitical situation with Ukraine has given the sector a flight to safety bid. Interestingly, the response by the west to the Russian invasion of Ukraine to freeze Russia’s foreign currency reserves held by western Central Banks has started to shine light on the risk for Governments to hold fiat currency reserves in foreign Central Banks. The Wall Street Journal featured an article on “what is money?” earlier this month:

“The entire artifice of “money“ as a universal store of value risks being eroded by the banning of key exports to Russia…if currency balances were to become worthless computer entries and didn’t guarantee buying essential stuff, Moscow would be rational to stop accumulating them and stockpile physical wealth in oil barrels, rather than sell them to the West. At the very least, more of Russia’s money will likely shift into gold and Chinese assets.”

The point is that, while periods of crises trigger a rush into physical gold (and silver), the measures taken by the west in an attempt to punish Russia financially and economically could backfire by causing central banks globally to reassess their exposure/reliance on the dollar and other fiat currencies as “monetary reserve” assets and to look at further building physical gold and other hard asset reserves that are not kept in foreign central bank custodial accounts. On top of this, price inflation that is getting worse. Factoring in the fact that the allocation of gold, silver and mining stocks to investment portfolios – particularly institutional portfolios – is at an extreme low as a percentage of assets, and the set-up is in place for an explosive move in the precious metals sector.

Wall Street Silver invited me back onto its podcast to discuss the various factors that could ignite a historic move in gold, silver and the mining stocks:

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Many of the junior exploration/development companies I cover, recommend and invest in have the potential to be 10-20 baggers from their current down-trodden level. I look for ideas that have few “eyeballs” looking at them – I strive to identify junior explorers before the crowd discovers them. I also look for relative value trades in the larger cap miners. You can learn more about my newsletter here:  Mining Stock Journal information.  I do not take compensation of any type from mining companies and I have been doing my own research in the sector for over 20 years.

Carvana ($CVNA): The Drexel Burnham Lambert Of Car Finance

Carvana reported Q4/full-year 2021 numbers on February 24th after the close. The Q4 net loss was wider than forecast at $1.02/share vs 41 cents/share a year ago. Revenues “beat” estimates, as unit sales were 113k vehicles vs 72k in Q4/2020. The operating loss for Q4 and the full-year was $104 million.

Where the numbers really get interesting is in the Statement of Cash Flows. CVNA’s operations burned $2.5 billion in cash during 2021 vs $608 million in 2020 and $757 million 2019. The Company also spent $557 million on capex. Total cash burn in 2021 was $3.15 billion. This was funded by a $3.5 billion increase in debt. Carvana uses debt to fund its massive cash flow burn and to fund Ernest Garcia II’s colossal extraction of cash from CVNA. This by definition is Ponzi Scheme on a scale that would make Bernie Madoff blush.

More shocking than CVNA’s financial performance, the Company announced the acquisition of ADESA’s wholesale physical car auction business. ADESA is subsidiary of KAR Global (KAR – $18.94). CVNA is paying $2.2 billion, all of which is funded with debt. CVNA is also taking down another $1 billion in debt to fund $1 billion in “improvements” across ADESA’s 56 auction sites.

I pulled up ADESA’s numbers as broken out in KAR’s 10-K. First, over the last three years, ADESA’s revenues have plunged from $2.1 billion in 2019 to $1.5 billion in 2021. In 2021 ADESA squeaked out a $21.4 million operating profit. This compares to a small operating loss in 2020, but was down from an operating profit of $264 million in 2019 and $307 million in 2018. On this basis, CVNA is paying 102x the 2021 operating profit.

But CVNA is taking down a total of $3.2 billion in debt for this deal, including an additional $1 billion to fund capex improvements. The total amount of debt being used for this transaction is a whopping 149.5x operating profit. Regarding the $1 billion borrowed to fund improvements, KAR had planned just $115 million in capex for 2022 for ADESA.

While I believe using the operating income multiple is the “cleanest” number on a GAAP accounting basis, using ADESA’s 2021 EBITDA of $194 million, CVNA is paying 16.8x EBITDA. This is a “nose-bleed” multiple for a business with thin profit margins and a shrinking revenue based.

Using an EBITDA multiple to justify the amount of debt used in a buyout is a problematic gimmick popularized by Drexel Burnham Lambert. Based on ADESA’s historical numbers, the amount of D&A and capex is similar each year, which means that in order to avoid cannibalizing the asset base, the cash flow represented by D&A needs to be reinvested. The amount of cash represented by D&A therefore is not available to service debt or pay out dividends to shareholders.

CVNA is thus paying an absurd price for a car auction business with a shrinking revenue base and tiny operating income. What’s worse, it’s funding the entire purchase with $3.2 billion additional debt. This is on top of the $3.5 billion in debt needed to fund its cash flow burn in 2021.

When this deal settles, CVNA will have $6.4 billion in long term debt. It also has $2 billion outstanding under its short-term revolving facilities, which I believe is secured by vehicle inventory (floor financing primarily). Nevertheless total debt outstanding will be $8.4 billion. In 2021, CVNA’s interest expense was $176 million. A good estimate for 2022 interest expense is that it will be close to double to $352 million. Unless Moses appears and parts the Red Sea for CVNA in 2022, CVNA will be borrowing more money in 2022 to fund interest payments.

This leads to the question of what bank would possibly allow CVNA to borrow $3.2 billion to fund the ADESA acquisition, given the numbers as laid out above. JP Morgan and Citi are funding the debt. I don’t know if they will be syndicating part of the loan to other banks or to hedge funds until this deal closes and the 8-K is filed. As part of the acquisition, CVNA will assume KAR’s $2.5 billion in finance receivables plus $579 million in PP&E. The debt will be fully secured by these tangible assets and likely anything else unencumbered on CVNA’s balance sheet (Ally’s warehouse loan facility is secured by vehicle inventory).

The motive to fund this cesspool entirely with debt is profits. Until the docs are filed, we won’t know the rate of interest on the JPM/Citi loan. But in all likelihood the rate of interest will be higher than the rate paid by a company like Carmax on its secured debt facilities. My best guess is that JPM/Citi are going into this with an asset package that, at least on paper, over-collateralizes the amount of debt.

JPM/Citi will earn a huge fee on the transaction plus they will earn a big spread on the rate charged to CVNA vs the near-zero cost of capital for these banks. I’m also guessing that the two banks will lay off part of the credit risk via credit default swap transactions with hedge funds. From this standpoint, the loan package at least cosmetically entails low risk relative the amount of fees and interest the two banks will skim.

Why would CVNA want to do this deal and why would CVNA’s Board of Directors approve it? As for the Board approval, I don’t know. Maybe someone can write Dan Quayle (he’s a director) and ask him. Recall that CVNA outsources several operational functions to DriveTime (Carvana’s Cash Burning Ponzi Scheme). This is a corrupt, related-party arrangement used by Earnest Garcia to suck $100’s of millions in cash out of CVNA.

It looks like this deal was put together in order to give Garcia’s DriveTime business the ability to mine huge fees securitizing and servicing the ADESA finance receivables. In addition all of ADESA’s used car reconditioning needs, similar to Carvana, will presumably be outsourced to DriveTime.

CVNA is a house of cards riddled with conflict of interest, securities fraud (the finance receivables business) and financial fraud (the DriveTime relationship). Its operations went from burning $35 million in 2015 to burning $2.5 billion in 2021. CVNA requires outside investor money from the issuance of equity and debt – mostly debt – to fund the cash burn. It has been doing this for seven consecutive years.

Eventually this company will collapse and the shares will be worthless, but not before Ernest Garcia has extracted many billions from this scheme – sale of his stock plus the cash sucked out by DriveTime. In a different era (30 years ago), CVNA would have been shut down by the regulators similar to Drexel Burnham Lambert. If the bear market takes the SPX down another 30-40% in the next 12-24 months, CVNA will hit the wall.

This analysis is from the February 27th issue of my Short Seller’s Journal. At the time CVNA was trading at $152. My subscribers and I cleaned up shorting and buying puts on CVNA. In every issue I provide put option ideas to accompany my short ideas. I am still long puts on CVNA because I think it will go below $10 within the next 24 months. You can learn more about my newsletter here: Short Seller’s Journal

Liquidity Will Sink Cathie’s ARKK

The following commentary on $TSLA is an excerpt from my latest Short Seller’s Journal – I’ve hit several home runs over the last year, including $DKNG, $HOOD, $Z and $NAIL. There’s still a lot of money to be had on the short side before the stock bubble fully deflates…

I wanted to share this chart prepared by a colleague (@BradMunchen):

The chart is a list the top 20 holdings across all of ARK Invest’s six ETFs. The first two columns show EV/Sales and EV/EBITDA based on the Wall Street consensus 2023 estimate for those companies. EV = Enterprise Value, which is the market cap + debt (most of the companies likely do not have much debt because they don’t generate cash flow and can’t service debt obligations).

The estimates are for 2023, mind you, which have far less certainty than full-year forecasts for 2022. These companies collectively are trading at 24x EV to 2023 sales. So, despite the big decline in the share prices of these stocks, they still trade at idiotically high valuations. For point of reference, in the 1990’s leveraged buyouts for companies that generated enough cash flow to service the high amount of debt were transacted at between 5-7x EBITDA generally. And many of these businesses had easy cost-cuts to improve cash flow. Even in today’s reckless, rapid money supply growth environment a multiple of 10-15x is considered absurd.

The next two columns show the relative liquidity of ARKK’s holdings, measured in terms of the position size relative to the 30-day average daily volume. It’s a measure of how many days it would take ARKK to liquidate a position if ARKK were the only entity selling shares. For instance, it would take ARKK 4.3 days to unload its TDOC position based on the average daily volume and based on ARKK being the only seller over those 4.3 days.

Recall that there are some $ARKK “clone” funds out of Asia. The biggest one is run by Nikko Asset Management. It replicates ARKK’s holdings. This serves to compound the illiquidity of many of ARKK’s positions. Referring back to the TDOC example, the ARKK + Nikko combined position would take, best case, 8.5 days to liquidate.

Compounding this problem even more, in all likelihood ARKK would need to liquidate a sizeable percentage of many of its holdings in a short period of time during a time when the market is going into a multi-day “bear spiral” and big redemptions kick in. The problem is that ARKK/Nikko will not be the only entities trying to unload these shares. The point here is that ARKK is one of the largest holders of many of these stocks. In a panic sell scenario, ARKK/ Nikko’s selling alone will drive these positions much lower in price because bid-side liquidity dies, especially in the crap that ARKK owns.

One other point, despite the 50-70% price decline from their respective 52-week highs, many of the stocks owned by ARKK are still insanely overvalued. Referring to TDOC again – which I recommended as a short about a year ago (maybe the summer of 2020) – it’s down 77.8% from its 52-week high of $294. Yet, it still trades at 24x estimated 2023 EBITDA. Most stocks with earnings, and TDOC never has nor likely never will produce net income, trade for less than a 24 p/e.

Cathie Wood took her farce to a new level last week. She went on CNBC on Thursday and proclaimed that her “innovation” stocks are “way undervalued.”  She referred to her funds’ holdings as a “deep value portfolio.”   I nearly fell off my chair laughing when I heard this. Based the earnings blow-ups with three of her stocks last week, her fund is now even deeper value.

Meanwhile, three more of ARKK’s holdings were decimated last week. Hours after her absurd proclamations about the quality of her firm’s research and her funds’ holdings, ROKU reported after hours and missed badly plus warned. The stock was trounced for 22% on Friday. I have been pounding the table on ROKU as a short for quite some time. ROKU is ARKK’s third largest holding. It’s down 76.6% since its ATH just seven months ago. I guess Cathie would say it’s even better value now than a week ago…

But there’s more. ARKK had three stocks blow-up after earnings. Draft Kings ($DKNG), which I recommended as a short in the low $40’s about five months ago, plunged 21% on Friday after reporting a miss and warning about user growth. No surprise there and DKNG still burns cash at a rate of about half a billion per year. Wood added several hundred thousand shares of DKNG over  the several days prior to its earnings announcement.

In addition, Palantir Technologies – which boosted its stock price many months ago by announcing a Bitcoin position – tanked 21% on Thursday and Friday after reporting an earnings miss. $PLTR is yet another one of Woods’ many stock holdings that burns cash, has never generated earnings and likely will continue to do both until the capital markets stop funding these financial disasters.

Amazingly, ARKK is only down 59% since its ATH close on February 12, 2021. A big part of the reason it is not down quite bit more on a percentage basis is attributable to the fact that TSLA is 8.8% of ARKK’s assets – at one time is was over 10%. TSLA is down 30% from its ATH on November 4, 2021. Ironically, the biggest financial fraud in history is preventing ARKK from incurring a considerably worse ROR performance – at this point in time, that is.

At some point TSLA will start declining in a “step function.” I suspect that could happen this year. I am still strongly convinced that ARKK will eventually go below $20, if not $10.  When Tesla goes, the implosion of ARKK will accelerate. Plus, even though they are down 60-70% right now, stocks like TDOC, ROKU, SHOP and Z have a lot further to fall.

To be sure, ARKK will participate in the massive short-squeeze rally that is somewhere in the near future, where “near” is defined as “sometime in the next 3-12 months.” But I like long-dated, deep OTM puts. Unfortunately the lowest strike price right now is $35. I like puts in January 2023, June 2023 and January 2024 in the $35-$50 strike price range.

Tesla And Musk May Finally Be Unraveling

The following commentary on $TSLA is an excerpt from my latest Short Seller’s Journal – I’ve hit several home runs over the last year, including $DKNG, $HOOD, $Z and $NAIL. There’s still a lot of money to be had on the short side before the stock bubble fully deflates…

Another interesting week for Tesla. It’s starting to feel like the world around Tesla is unravelingi8, Musk inclusive. It was revealed in a footnote disclosure in Tesla’s 10-K filed last week that the SEC issued a subpoena on November 16, 2021 seeking information about Tesla’s compliance with the settlement that was reached in 2019 over Musk’s tweets – specifically the infamous “funding secured” tweet. Neither Tesla nor the SEC provided information about what might have prompted the subpoena.

In response to this both Musk and Tesla accused the SEC of “unrelenting” harassment. Quite frankly, Musk is fortunate that, for whatever reason (likely pay offs), the SEC doesn’t open up a thorough investigation into Tesla’s accounting. It will likely wait until Tesla hits the wall, like the SEC did with Enron (it was known among those who dig for the truth that Enron was committing fraud many months before it filed for bankruptcy – I was short the stock at the time).

It was also reported that the NHTSA, after receiving 354 complaints about Tesla’s well-documented “phantom braking” problem, has opened up an investigation to determine the “scope and severity of the potential problem and to fully assess the potential safety-related issues.” The probe covers approximately 416,000 Model 3’s and Y’s. This is the second ongoing investigation of TSLA by the NHTSA.

Whether or not Musk has sprinkled enough cash around the upper echelons of the NHTSA to deflect potential regulatory crackdowns, there’s been so many complaints and fatal events involving Tesla’s auto-pilot that the agency at the very least has to give the appearance of investigating the Company. That in and of itself is a PR problem for Musk.

In addition, Insideevs.com, which has been a Tesla cheerleader for a long time, admitted that the Semi won’t happen in 2022. Recall Musk originally said in 2017 that the Semi would go into production in 2019. That was later pushed to 2021. Then 2022. Car and Driver reported than the Cybertruck, Roadster and Semi will not happen in 2022. Insideevs then finally capitulated, though it still reported that Pepsi is expecting a few of the Semis the Company ordered by the end of 2022. I hope the Pepsi CEO isn’t holding his breath waiting…

With respect to Tesla losing market share, Consumer Reports designated the Ford Mach-E as the magazine’s “Top Pick” for an EV in 2022. Among the attributes that set apart the Mach-E from the Tesla were reliability, quality control and the “hands free” driving technology. Overall Tesla dropped seven to 23rd place in CR’s ranking of 32 major auto brands. It’s the poorest showing in the seven years that Tesla has been included in the Top Picks issue.

Adding fuel to the nascent Tesla dumpster fire, India has declared that it will not award Tesla any special concessions because of Tesla’s refusal to manufacture its vehicles locally. Note that Tesla will soon have a demand problem for its Shanghai vehicles (having exported the majority of January’s production to the EU) and was looking export Shanghai production to India.  Worse, the German Government appears to be somewhat hesitant to issue Tesla the required permits to start production at the Gruenheide “Gigglefactory.”  Last year Musk horrified the local community with his flippant, if not hubristic, remarks about the water supply

I believe that the walls are starting to close in on Tesla and Musk. I think institutional investors are reaching the same conclusion, as the latest data from the Nasdaq shows that institutional holdings are down to 40% as of the end of 2021 from as high as 76% in Q1 2018. A high percentage of that 40% represents shares held by passive index funds. TSLA’s shares have underperformed both the SPX and the Nasdaq since the beginning of November 2021. I expect this under-performance to accelerate this year.

In my opinion, based on extensive analysis and observing the Tesla saga for over four years, the share price is headed below $100 sometime with in the next 12-24 months.

Musk horrifies the local Gruenheide community: 

“This region has so much water – look around you”  [actually the region has water supply issues]

Super Bowls, Economic Calamity And Failed Tyranny

PPI came in much worse than expected – that was predictable. A bona fide measure of PPI would show that real PPI is considerably higher than the shit on stick the Government waves in our face. Also, predictably, Biden’s “Russia will attack Ukraine” fantasy smashed abruptly into reality. Welcome to 2022 – for as horrifying as 2020 and 2021 turned out to be, expected the unexpected and expect that 2022 will be even worse.

James Kunstler’s penmanship is one of the places I turn for a “barometer check” on my sanity. His commentary Monday is priceless in that regard:

If the ads on the Superbowl each year are like a Rorschach test for the nation’s mental condition, then this year’s ad-roll was a cavalcade of frantic hallucinations suggesting a near-complete detachment from reality for an audience of ADD-disabled cell phone slaves locked into a Big Tech induced consensus trance. You could barely tell what these advertisers were trying to sell in their commercials, the psychotic dazzle of half-second jump-cuts was so ferocious…

All this hearty good fellowship marks the journey of our country from a convocation of be-wigged founding fathers wielding quill pens in defense of liberty to a security-and-surveillance state of hebephrenic zombies lurching to a kind of failure that will make the fall of the Roman Empire look like a lawn sale of someone’s dead uncle’s chattels and effects. The drain-pipe beckons… but will America answer that call… or take a different turn?

If World War Three doesn’t pan out for “JB,” there’s always a global meltdown of financial markets, banks, and currencies waiting in the wings to amuse and distract everybody from the post-Covid call for a long, hard look at what the pandemic was actually about. The story, in all its multiple, gruesome levels, has gotten away from them. So many public officials are standing naked that Washington looks like a nudist colony.

Here’s the entire piece: Speed Wobble

Gold, Silver And The Mining Stocks Are Poised To Explode Higher

This commentary plus the quickie review of Gatos Silver is an excerpt from the February 3rd issue of my subscription newsletter. You can learn more here: Mining Stock Journal

Gold is trending higher in correlation with the 10-yr Treasury yield. This is what happens when the Fed begins an interest rate hike cycle, contrary to the mainstream narrative that gold moves inversely with interest rates. I didn’t show the comparison chart because it was “messy.” The RSI/MACD momentum indicators are positioned bullishly – at least for now.

GDX and silver both are also in an uptrend but it’s not as pronounced. Gold has been resilient at the $1800 level, even with China closed for this week in observance of the Lunar New Year. Imports into both India and China have picked up considerably over the last 12 months. I expect that continue if not increase in the quantities imported.

I think the next bull move is beginning, though as with the stock market, I expect increased two-way volatility. I continue to see significant downside risk to the stock market that might affect the pm sector briefly. But I’m also seeing indications that a lot of money is flowing into all flavors of precious metals (GLD, SLV, Comex futures, physical). Premiums for sovereign minted silver bullion coins have risen considerably over the last few weeks.

It’s still not clear whether or not the Fed will actually hike the Fed funds rate in March. If it does start to raise rates, I don’t expect the Fed to follow-through with the number hikes being discussed by Wall Street (6-7). The economy is rapidly deteriorating. The Fed will eventually have to reverse its monetary policy stance or risk a severe financial and economic crisis. This will be jet fuel for the precious metals sector.

Gatos Silver (GATO, GATO.TO – US$3.47) – GATO was massacred on January 26th after it reported on January 25th that there were errors in its resource estimate from July 1, 2020 that could lead to a reduction of 30-50% in the resource estimate. The Company is working with independent consultants to figure out what went wrong and to produce a revised resource estimate.

The stock plunged 69% on January 26th from US$10.17 to $3.17. It fell another 37 cents to below $3 the next day. It has since dead-cat bounced to $3.47. Several subscribers asked me if it was worth taking a position in the stock. I like to have more information before diving into a potential turnaround play. GATO will still be producing silver profitably. But we have no idea what the resource estimate will look like or how it will affect the mine life. It’s possible that the stock could double or triple from here but the stars have to align.

Other than a continued decline in the share price that correlates with any decline in the sector overall, this is probably the bottom. But keep in mind that the Company will be facing numerous class-action lawsuits as well has having regulators breathing down its neck. It might be worth taking a flyer on December $5 calls if you can get them below 80 cents (December is longest option expiry) or August $2.5’s, if you can get them close to the current bid.

Note: with ITM calls, you want to minimize the premium to parity paid. But the option will move almost 1:1 with the stock – up or down – so if GATO falls another $1, you’ll lose that much on the call. With the December $5’s, the full risk is the price paid for the call. I may take a shot at the December $5’s but only in my personal account. I also want to make it clear that I am not recommending buying into GATO yet. I’m just laying out some ideas if this is a risk you want to take.

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Many of the junior exploration/development companies I cover, recommend and invest in have the potential to 5-10 baggers from their current down-trodden level. You can learn more about my newsletter here:  Mining Stock Journal information.  I do not take compensation of any type from mining companies and I have been doing my own research in the sector for over 20 years.

Time To End The Covid/Vax/Mask Insanity

It was only a matter of time before the Covid “bug” was smashed by the windshield of reality. Time to start holding the perps accountable, like Fauci, Pfizer and the Biden Government, among many others. Cui Bono from this madness?  And no one knows the long term side effects from the substance known as “the vax.”  I just hope all of the medical professionals who went along with this scam suffer just consequences…shooting up children who have a near-zero risk of an adverse health reaction to Covid should be punishable by death.