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”
That is an impossible question to answer with any degree of conviction because the extreme degree to which the precious metals market is manipulated. I think now is a good spot to add to positions or start new positions. As an example, in my latest issue of the Mining Stock Journal, I recommended a high quality junior that had almost pulled back to its 200 dma. I said I was buying it for what I thought would be a “low risk” 25-40% bounce if the pullback cycle in the sector is over. That stock bounced 7% today.
A good way to protect yourself somewhat is to find high quality junior mining companies that are exceedingly cheap to their underlying “intrinsic” value. I presented a company in the latest MSJ issue that, despite a big move already, has the potential to be a 5-bagger from here. Insiders control 44% and put in millions of their own money over the last 5 years to keep the Company going. This Company is on its way to becoming very significant mining company.
Today I sent around to subscribers an update of a stock previously presented because the Company announced an acquisition of an existing operational mine and is paying roughly $20/oz for proved gold in the ground. This company is “off the radar screen” but Goldcorp just paid over $100/oz in the ground for Kaminak. This acquisition will be the catalyst that enables management to build a 200-250k oz gold producing operation by 2019. It’s market cap is well under $100 million. Companies that produce 200-250k ozs/year trade in the $200 million to $400 million market cap range. You do the math on this Company…
You can subscribe to the Mining Stock Journal and get the current issue, the current update and all the back-issues (March 4th debut) by clicking here: MSJ Subscription.
At the beginning of this week, almost every so-called gold market analyst was predicting a wash-out in precious metals because of the huge bullion bank short being reported in the COT report. A few of us believe that character of the market has changed and paper market price manipulators are losing traction – for a lot of reasons.
This week shows that the banks covered a portion of their shorts and the hedge funds and little guys sold down longs and increased their shorts. This information may be largely irrelevant. Interestingly, in data I’ve parsed and presented in a previous blog post, the beginning of two of the best gold/silver rallies since 2001 occurred at a time when the bullion banks held their biggest short position in gold futures (expressed as a ratio of total open interest).
The latest issue of the Mining Stock Journal was released last night. In it I discussed the use of JNUG (the 3x junior mining stock index ETF) and I explain why we could be on the cusp of the best move yet in the sector. And of course I present a remarkably undervalued junior mining company (a royalty company) in which insiders bought a boat-load of shares in January and now control over 30% of the equity. You can access the MSJ here: Mining Stock Journal.
A subscriber had an interesting question that is a common question I get currently: I really enjoyed this latest edition of your newsletter. I find myself getting less and less nervous about a price smash as it feels that the powers that be can no longer stem the tide of reality. One question I do have is whether you think a massive asset deflation event (similar or greater than 2008-09) will have a negative or positive impact on the shares
My reply: I think there’s is going to be a collapse in all “assets” that have been inflated in price by the use of debt: housing, NYSE stocks, bonds, etc. That is different than general price deflation. We may see a LOT more money printing as the Fed/Government attempts to prevent a debt-driven asset collapse. This will could drive the price of necessities up a lot. But this will really fuel the entire precious metals sector, especially the junior miners which have proved gold/silver/poly-metallic deposits. (click in image to enlarge).
Any asset valuation collapse because of debt implosion will act like a heavy dose of Viagra on the value of mining stock shares. Look at what happened in the 1930’s to stocks like Homestake Mining when the Dow was crashing. When the initial stock plunge occurs, the miners might correlate lower for a bit but then they’ll do a life-style changing moonshot.
If anyone has been watching the trading action of the mining sector, they’ll notice that the “character” of the action has changed since the end of December. The way I expressed it to my fund partner the other day: “Rather than shorting the rallies and covering the sell-offs, it’s time to start going long on the sell-offs and taking profits on the rallies” (while keeping a core position intact, of course).
It’s easiest to see this point illustrated using JNUG, the 3x leveraged junior gold miners index ETF. JNUG has carved out a nice rounded bottom and appears to be grinding higher. The entire sector is behaving like this, but it’s easiest to see it visually using a 3x ETF graph:
Today is a perfect example, as the mining sector was hammered from the opening NYSE bell, with JNUG trading down over $3 from yesterday’s close (roughly 9.5%) to $30.15. It’s rallied back close to $34, up nearly 1% now. This trading action has been fairly consistent.
What’s even more striking, and something I had not really paid attention to until today, was the massive volume that has been occurring on a daily basis since early November. This is the unmistakable of the last of the weak hands puking out their positions and the smart, patient money accumulating the shares.
I’m the first to admit that I’ve made so incorrect bottom calls on this sector since last summer. But then again, is there anyone out there who can say they’ve succussefully been able to predict the direction of any highly manipulated market? Having said that, I believe that the mining stocks may be rolling down the runway, preparing for a lift-off…
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):
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):
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):
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.