Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
Sunday
Jul122009

Randgold Resources Limited Options Trade Exit Strategy

Randgold Chart 11 July 2009.JPG

Chart courtesy of Stockcharts


Our Randgold Resources Limited (GOLD) Options Trade is Up 88.00% since our purchase on the 11th June 2009 when we purchased the September $65.00 PUT contracts in Randgold Resources Limited in anticipation of a pullback for $5.00 per contract. We now need to implement an exit strategy for this trade.

The symbol for this contract is GUDUM and it closed on Friday with the bid at $9.40 and the asking price at $9.60. As we can see from the chart above the trend is still down for Randgold however the gap between the stock price and the 200dma is closing. Also note that the technical indicators are no longer in the overbought zone as they were when we made the purchase and they are now suggesting that this stock is oversold.

Randgold closed at $58.73, however, we still think that it has further to fall and could go as low as $50.00 before coming to rest. As it stands we are sitting on a paper profit of around 88% on our outlay which has been generated in exactly one month. The market has been good to us so we have decided to place a sell order at $10.00 on these PUT Contracts which we hope is achieved next week, if not will we re-evaluate the position over the coming weeks.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

The time is drawing close when the situation will reverse with gold and the gold producers heading north, so the possibility could well present itself whereby we purchase CALL Contracts on some of the beaten down gold and silver stocks. You may want to start looking at the charts for stocks that have been oversold and set some parameters such as entry points, exit points, capital outlay, etc, that you are comfortable with.


As an example take a look at Agnico-Eagle Mines Limited, one of our favourites, the stock price has been beaten down and is now close to its 200dma with the technical indicators heading for the floor. Investors in the silver space might want to take a look at SLW and SSRI a couple of stocks that have lost 40% or so of their value recently.

We hope that these ideas help you to formulate your own strategies and investment plans in these unusual financial times.

Next week we are off to Auckland to meet with an investor who does a lot of work in China and another colleague who is heavily involved in the dairy industry so we hope to glean their views on the economy etc. We will touch base from time to time but will not be able to write too much as the Chardonnay will no doubt interrupt normality.

Any thoughts – then please fire them in.

Have a sparkling day.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.




Thursday
Jul092009

A 20-Year Bear Market?


Bear Market 10 July 2009.JPG

In this mornings post bag we received this article by David Galland, of Casey Research which we think is an interesting read and have printed the article in full for your information and enjoyment.

In November of 1997, my partner and co-editor of
The Casey Report, Doug Casey, wrote an article titled “Foundations of Crisis,” which leaned heavily on the research of Neil Howe and the late William Strauss.

Howe and Strauss have written many books on how generations determine the course of history and how they will shape America’s future. Their forecasts on a wide variety of indicators have turned out to be amazingly accurate. They were among the first to predict (back in the late 1980s) the rise of Boomer-driven culture wars and the simultaneous rise of Gen-X-driven free agency and distrust of government. And they were completely alone back then in predicting, for the post-X “Millennial Generation” (a label they coined), a decline in youth crime and risk taking and an increase in youth civic engagement that would first become apparent around the year 2000. Guess what? For the last ten years, everyone has been noticing exactly these trends among teens and 20somethings.

Howe and Strauss also made extensive predictions, based on generational aging, on how America’s entire social mood would likely change, in dramatic fashion, during our current 2000-2010 decade. To quote Doug’s prescient 1997 article, which was reprinted in Outside the Box late last year…

“… an excellent case can be made the U.S. is approaching another time of secular crisis, a Fourth Turning, with an expected due date of 2005 – seven years from now – plus or minus a few years in either direction.

The Stamp Acts catalyzed the American Revolution, the election of Lincoln catalyzed the Civil War, the Crash of ‘29 catalyzed the Depression/WW II era. What might precipitate the elements now floating in solution? The answer is practically any random event that's sufficiently traumatic. Any of the theses of current disaster/action novels and movies will do nicely. Perhaps the accidental or intentional release of a super plague vector. The crashing of an airliner into the Capitol during a joint session. An all-out assault on the IRS computers by an armed group – or perhaps the computers just melting down due to the Year 2000 Problem. Perhaps a financial disaster that cascades into the Greater Depression. In any of these, or a hundred other scenarios, the federal government would almost certainly act precipitously and with a heavy hand, which would bring on a whole other set of consequences.

There's no way of telling where the Crisis will lead, or how it will end. That's going to depend not only on exactly who's in control, but what they do, who they're up against, and a hundred other variables we can't even anticipate.

One thing that seems certain is that real crisis brings out strong leadership. Because of its age and size, it will come from the Boomer generation, and it will be in the mold of Roosevelt or Lincoln – both very dangerous precedents. The boomers in elderhood will be dogmatic, harsh, puritanical, and quite willing to burn down the barn in order to destroy whatever rats they see. Admix that attitude to a time resembling the Revolution, the Civil War, or WW II, overlain with today's ethnic strife, urbanization, financial overextension, and powerful, compact new weaponry in the hands of foreign fanatics out to teach the Great Satan a lesson and it's a real witch's brew.

(Click to read the full article)

As eye-opening as Doug’s predictions were, they brought us only to the onset of the current crisis. Consequently, we thought it both timely and important to check back with the source of much of the research he relied on. And so it was that I spent several hours talking with Neil Howe, co-author of the seminal work on generational cycles, The Fourth Turning, and, just recently, the subject of the DVD “The Winter of History.” Howe is not just an historian, but also a Washington DC-based economist and demographer. While our conversation covered a great many topics, the overriding focus was on how things are likely to unfold from here.
Many bullish readers won’t be thrilled to hear Howe’s latest findings about the future, but given his predictive track record, dismissing them out of hand could be a costly mistake.

The summary outlook, according to Howe, is that we are in the very early stages of a 20-year period of economic and institutional upheaval – an era denominated by a crisis during which we’ll likely witness the tearing down and reconstruction of many aspects of society as we know it.

As individuals, understanding Howe’s views and taking some reasonable precautions makes a lot of sense. As investors, those views also have the potential to make us a lot of money.

Following is my high-level recap of my long conversation with Neil Howe, along with some general thoughts on the investment implications of a 20-year bear market.

Remember the Sixties?

If you’re old enough -- or possess even a rudimentary sense of history -- think back to the 1950s, with roller-skating waitresses, crew cuts, and nuclear families of the sort represented by the iconic Leave it to Beaver. Fathers worked, while many mothers stayed home. Life had a certain predictable quality and, as far as anyone knew, would continue along the same lines for time immemorial.

But then something happened… the 1960s. Literally no one saw it coming. It was as if someone had flipped a switch that electrified America and, quickly, the world. Most everything changed, and a society accustomed to conformity was blown away with a fierce individualism expressed with long hair, sex, drugs, and rock and roll, topped off with civil disobedience and bloody riots in the streets.

What happened?

According to Neil Howe, in the mid-1960s, generational change pushed society around a dramatic corner as idealistic, individualistic young Baby Boomers (born 1943 to 1960) rebelled against the midlife leadership of their G.I. Generation parents (born 1901 to 1924).
These periods of transitions are part of a larger cyclical pattern made up of four distinct eras, or “Turnings,” each lasting approximately 20 years. It can be helpful to think of the four turnings as you might think of the four seasons, repeating predictably in their own natural rhythm. A full cycle of turnings takes place over a period of about 80 to 90 years -- roughly the span of a long human life. A new turning begins as a new youth generation comes of age, bringing a new social ethic that compensates for the excesses of the midlife generation then in power.

While we don't have the space here to go into the full details of Howe’s research, it’s important to the topic at hand that we quickly recap the Four Turnings.

The First Turning is referred to by Howe as a High. As this follows a period of crisis, one of the hallmarks of a First Turning is a heightened sense of community and collective optimism, driven in part by the fact that the society has just come through a difficult and challenging time. Consequently, during First Turnings, societal institutions tend to be strong while individualism is weak. The post-World War II “High” of the mid-1940s through early ‘60s is the most recent example of a First Turning.

The Second Turning, called an Awakening, typically starts out feeling like the high tide of a High, with signs of progress and prosperity everywhere. But just as everything seems to be going along swimmingly, large swaths of society begin to chaff under the social conformity of the High, beginning to gravitate to more individualistic pursuits and demanding that their personal interests come first. You may recognize the “Consciousness Revolution” of the mid-1960s through early 1980s, correctly, as the Second Turning.

Next up, the Third Turning, which Howe calls an Unraveling, is much the opposite of a High. To wit, individualism dominates, while institutions are increasingly weak and discredited. Quoting Howe on the Unraveling…

"This is a time when social authority feels inconsequential, the culture feels exhausted, and people feel bewildered by the number of options available to them. It is a time of celebrity circuses and a tremendous amount of freedom and creativity in our personal lives, but very little sense of public purpose. 

The most recent Third Turning began in the mid-‘80s with Morning in America, and continued through the ‘90s. Previous periods of Unraveling in American history were also decades of cynicism and bad manners. Think of the 1920s, the 1850s, the 1760s. And history teaches us that the Third Turnings inevitably end in Fourth Turnings.
  
Finally, there is the Fourth Turning, called a Crisis. The recent Third Turning appears to be winding down, and we are currently on the cusp of a Fourth Turning. This is a time of great turmoil, when society’s basic institutions are torn down and rebuilt, and seemingly insurmountable problems are addressed. During Fourth Turnings, America engages in a struggle for its very survival and redefines its identity as a nation. Large wars are often a part of this process. The American Revolution, Civil War, Great Depression, and World War II were all features of past Fourth Turnings.

In sum, Howe’s research has shown that, with remarkable predictability, history is not a straight line extending toward a better and brighter (or increasingly awful) future, but rather a repeating cycle of the four distinct social eras. These four turnings have recurred with remarkable consistency throughout Anglo-American history, as Neil Howe outlines at length in Generations and The Fourth Turning. It is therefore no accident that America has experienced great cataclysms or “Crises” about every 80 years. Travel back eighty years from Pearl Harbor Day, and you land in the middle of the Civil War. Eighty years before that takes you to the Revolutionary War. If the rhythms of history hold, America is now poised to enter another Fourth Turning.

Bad News, Potentially Good News


You don't need me to tell you that the United States and in fact the world are now facing a plethora of intractable problems. The world's former powerhouse economy, the U.S., is now the world's largest debtor nation – and by a wide margin. The nation has trillions in unpayable liabilities coming due on Social Security and Medicare, to name just two of many broken government programs weighing on the country. And our much vaunted democracy is increasingly dysfunctional – rotten to the core, truth be known – thanks largely to entrenched special interests and a voting public clamoring for their own piece of the pie, while trying to hand the bill off to somebody else.

Meanwhile, the economy – despite rigorous jawboning by the government and its many friends in the large banking institutions -- is in serious trouble, with the housing market buffeted by tsunami-like waves of defaults, foreclosures, overvaluations, historic levels of personal debt, and tight credit that has left the U.S. government as the sole lender in many markets.
Bernanke and his ilk may see green shoots, but what they're really seeing is the deep, green sea rising up once again to bury the economy.
That's the bad news.

The potentially good news, if you credit Howe’s research, is that the Crisis we’re now entering will change pretty much everything. While this change will entail a great deal of pain and a reduced standard of living for a large number of people, by the time the Crisis subsides, society will have pretty much remade itself in ways that no one can predict at this point.
Put another way, today's intractable problems will be solved... one way or another.

What's Next

When discussing what's likely to follow next, Neil Howe turns to his generational profiles and points out that the rising societal power today belongs to the generation he calls the Millennials, individuals born between 1982 and 2004. They are a “Hero” generation, just like the G.I. Generation that coped so well with the turmoil of the Great Depression and World War II -- the last Fourth Turning. Coddled as children, the G.I.s were ultimately called upon to help society through a dark and dangerous period and rose to the occasion. Again, quoting Howe on the Millennials…

“These are today's young people, who are just beginning to be well known to most Americans. They fill K-12 schools, colleges, graduate schools, and have recently begun entering the workplace. We associate them with dramatic improvements in youth behaviors, which are often underreported by the media. Since Millennials have come along, we’ve seen huge declines  in violent crime, teen pregnancy, and the most damaging forms of drug abuse, as well as higher rates of community service and volunteering. This is a generation that reminds us in many respects of the young G.I.s nearly a century ago, back when they were the first boy scouts and girl scouts between 1910 and 1920.  

Unlike the Baby Boomers, who are largely individualistic and anti-establishment, the Millennials are good team players. We hear a lot these days about working together for a common cause, volunteerism, and the need for stronger government institutions, largely because these are the new priorities of the Millennial Generation.

As you may recall, out of the devastation of World War II, a spate of transnational political and economic institutions were born, including the United Nations, the World Bank, the World Health Organization, and the International Monetary Fund. By the time the current Fourth Turning is over, expect more of the same -- but probably even bigger and more ambitious.

What Does This Mean to You?

Most importantly, if Howe is right, this crisis is far from over. In fact, when I asked him where we are today on a scale from 1 to 10 -- with 10 representing as bad as the crisis will get -- he replied that we are at either 2 or 3. In other words, the worst is very much yet to come. And, per above, he expects this period of turmoil to take 20 years to play out. Thus, if nothing else, you may want to continue approaching matters of personal finance cautiously.
Secondly, if you're the type of individual that tends to get steamed up by larger and more intrusive government programs, you may want to take a few deep breaths and resolve yourself to the fact that this phenomenon is likely to get far worse before we see a return to celebration of individual rights. (And the cycle shows that we will see such a return -- about 40 to 50 years from now, when the next Second Turning comes around.)

If it is any consolation, the Millennial Generation places a great deal of weight on teamwork and the notion of doing things "smart." That doesn't mean, of course, that the various programs that are kicked off in an attempt to fix the many problems now confronting society will in fact turn out to be technically smart. But they will almost certainly be better thought out than some of the numbskull initiatives we've seen over the last 20 years.

You can also take some comfort in the fact that Millennials are builders, not destroyers. By contrast, the individualistic Boomers that dominate today’s aging political class are world-class dissenters, radio talk show aficionados always ready to scrap it out for their beliefs. Millennials want to skip the philosophical debate and get straight to fixing things.

Other insights about Fourth Turning periods gained from my conversation with Neil Howe…
Government grows powerful, and sweeping new legislation is enacted. The old 1990s rule was: just compete and stay off the state’s radar screen. The new 2010s rule will be: better have a presence in Washington so you’re not dealt out of the “new” new deal. One political party tends to dominate. The Democrats under FDR during the last Fourth Turning offer a good example. While Neil Howe doesn't think it will necessarily be the Democrats this time around, they are certainly in the pole position at this point.

While public history speeds up, personal life slows down. Families will spend more time together, like in the old Frank Capra movies. Ever more households will be multi-generational, a trend now spurred by Boomers with large, empty McMansions and Millennials without jobs. There will be a blanding of the pop culture, with the entertainment of the young (put Miley Cyrus or “High School Musical” on fast forward) increasingly regarded as tamer than the entertainment of the old.

Innovation tends to stagnate, while a few new technologies will be chosen to be adopted on a large scale. We will see the equivalent of canals or railroads or interstates being built across America. To borrow from Carlotta Perez’ four-stage description of technological revolutions, we are moving from the “innovation” to the “implementation” stage.

New laws and regulations will do less to referee a free market and more to pursue one or another national priority. They will increasingly favor the large producer over the retail buyer, investment over consumption, planning over risk, debt over equity. Businesses will hustle to reposition themselves. Anti-trust will weaken.

The authority and obligations of community will strengthen at all levels, from local to national and possibly beyond (if our alliances prove durable). Personal reputation and membership will matter more. A “new localism” will reshape town and urban planning. A global slide toward national or regional protectionism will loom as a real danger.

It is too early to tell whether the crisis will ultimately be inflationary or deflationary, though we at Casey Research come down on the side of inflation for the simple reason that the government possesses the means to inflate. Due to the gold standard, that was not the case early in the Great Depression.

In the past, Fourth Turning periods have always resulted in the nation redefining who we are in some essential way. That was certainly the case during the American Revolution, when we transitioned from a British colony into a collection of independent states -- and the Civil War, when those states were hammered into a single nation. And, again, after World War II, when the U.S. went from being a relatively isolated nation to a global empire. A wild card, for instance a terrorist nuke going off in a city anywhere on the planet, could similarly take the country, and the world, into unforeseeable new directions.

Baby Boomers will continue to be respected for their cultural achievements (it’s not a fluke of history that Boomer music and other entertainments are still wildly popular among the young), but will be increasingly ignored in the political debate. The term “senior citizen,” already in decline, will disappear entirely. And if push comes to shove, Boomer’s financial interests – including Social Security – will be subjugated “for the greater good.”

There will be a growing push to rebuild the middle class. The wealthy and the impoverished alike will both come under pressure thanks to new pro-middle class initiatives. If you are a high-income earner, it’s a certainty your taxes are going up, and likely by a lot. If you want to make a fortune, don’t pursue the niche or the “long tail.” Invent the next big brand that will appeal to Everyman.

Don’t Worry, Be Happy

That is, at best, a sketch of my long conversation with Neil Howe and doesn't do justice to his research. If nothing else, however, I hope I’ve succeeded in giving you at least some sense of the man and his unique research and encouraged you to think outside the box about the nature of today’s crisis.

A couple of final observations.

First, Neil Howe is not a negative person, nor a professional doomsayer. Rather, he is a social scientist and historian with decades of experience in the social sciences. As you speak to him, you get the sense that he doesn’t view the world through any particular philosophical bias, but rather is simply reporting what his research is telling him about the current players on the global stage, and which act we are currently in.

Secondly, speaking as a Baby Boomer and someone with a lifelong distrust of government and its meddling institutions, talking to Neil left me feeling oddly relaxed -- letting go, if you will, of some of the frustration that has been building within me as I watch the nanny state grow more and more bloated.

That is not to say we won't continue to speak out against government waste and prolificacy. We will. But it seems increasingly clear that we’re now caught up in a powerful trend toward bigger, not smaller, societal institutions -- and that these institutions will, over the period ahead, change the world as we know it.

Of course, being active investors, at the same time we raise our voices in protest, we’ll deal with the reality of the situation by strategically positioning our portfolios to profit from the coming changes.

And so, like the Rockefellers and J.P. Morgan during the Great Depression, we’ll make the trend -- to matter how negative -- our friend. You may want to consider doing so yourself.

Making the trend your friend is more important than ever, if your assets are to make it through the Fourth Turning intact. The Casey Report discovers and analyzes budding economic trends and turns them into hands-on, actionable recommendations for its subscribers. Read the latest report from Casey Chief Economist Bud Conrad about our favorite investment of 2009… a play on an all but inevitable economic development. Click here to read more.

Have a good one.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.



Wednesday
Jul082009

Stocks: How Many Should You Own

chess 09jul09.JPG



A friend of ours who is also an investor called us up to tell us that he had just purchased another dozen or so gold stocks and then proceeded to pepper us with questions about each one. Well we knew a little about some of them but what became apparent was that our friend also knew very little about his purchases which caused us some concern.

As the conversation developed our colleague revealed that he owns approximately 150 stocks which amazed us as we just cannot keep track of that many stocks. Our watch list is huge but its a giant leap from that list to actually putting our hard earned cash into a stock and even then we can still get it wrong. As the debate developed we defined three categories or strategies for investment as follows:

Strategy one is his approach of using a scatter gun and buying stocks with little knowledge of them in the hope that they will all be successful and some of them may turn out to be hugely successful by becoming ten baggers. A ten bagger is great dinner party topic where one can wax eloquently about the stroke of genius that brought about this success. However, it will also prompt the question of just how many of the stocks in your portfolio actually underperformed.

Strategy two is to be selective about what you purchase and try to learn everything there is to know about your stable of gold explorers and producers and keep a track of them. Watch for changes in management, the political situation in which they operate, any acquisitions that they make, changes to the incentives scheme for management etc.

Strategy three is to take the snipers approach to investment and dedicate yourself to just one stock. This stock you will learn to understand inside out, its history, how it reacts in any given situation, etc. You will still need to understand the precious metals market sector and the economic and political influences that affect your chosen star performer.

This latter strategy will be put down by many as having all your eggs in one basket and therefore carries with it an enormous downside risk but it does have a certain appeal for investors who do not have the time to spread their energies over a wide range of stocks.

We could also mix and match some of the above with the precious metals element of a portfolio being 40% spread over half a dozen companies, 40% in your star performer and 20% in cash for future opportunities.

So the question we have is what is your investment strategy and why does it work for you? Please drop us a line with a brief explanation of just how you play it as we are sure that our diverse readership are as keen as we are to think outside of the box now and again.


Have a sparkling day.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

PS:

For those of you following our options trade on Randgold Resources Limited (GOLD) the PUT Contracts closed yesterday with a bid of $9.90 and a asking price of $10.20 which is a paper profit of 100% in less then a month. You could now sell half of your holdings in this trade and take your money off the table leaving the remaining 50% in place in the hope of greater profits should Randgold continue heading south. Alternatively you could sell this position completely and treat yourself to a bottle of bubbly. We have not made a decision as yet, however, taking profits now is a sensible move.

A big thank you to those of you who took the time to email us regarding this trade your responses are very much appreciated. We also apologies for not having the time to answer every email we get and thank you for your patience. We would suggest however that your questions and comments can always be placed on our site where it would get a lot of exposure to better brains than ours and attract alternative views to our own.





Monday
Jul062009

Randgold Resources Limited Options Trade Up 60.87%

Randgold Chart 07 July 2009.JPG



Chart courtesy of Stockcharts

Our Randgold Resources Limited (GOLD) Options Trade is Up 60.87% since our purchase on the 11th June 2009 when we purchased the September $65.00 PUT contracts in Randgold Resources Limited in anticipation of a pullback for $5.00 per contract. Yesterday these contracts closed at $8.10.

As we can see from the above chart Randgold closed down 5.33% yesterday at $61.15 which is just below its 50dma. If you followed us into this trade then you could now bank the profits and walk away. Our opinion for what it is worth, is that Randgold could still go a little further down so we will continue to hold this position for now. Anyway you can sit back and watch us struggle in our attempts to maximize the profit on this trade.



On the 28th May 2009 we reported our intention to take profits on Randgold Resources Limited as depicted on the chart below and on the 29th May 2009 we sold our entire holding for an average price of $68.69 for a return of 82.44% in less than one year.

Randgold Chart 28 May 2009.JPG

We acquired this gold producer on the 18th of June 2008 for $37.65 and the stock quickly rallied to $55.00 before being caught in the ensuing sector sell off to trade as low as $27.70, so it has been a volatile ride making us smile and cry as the stock oscillated from being in favour to unwanted over short periods of time.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Have a sparkling day.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Randgold logo.JPG




Wednesday
Jul012009

Canadian Mint Lost C$15 Million in Gold

Canadian Mounted Police 02 July 2009.JPG


This story of the Canadian Mint actually losing Gold is distressing in itself however it also has deeper ramifications for those of us who want to own gold. This incident raises the question, that if the mint can lose gold so can others such as banks and gold funds.

Please read this excerpt from an article on Bloomberg:

June 30 (Bloomberg) -- Canada’s mint plans a review of its security and other procedures in a bid to find C$15.3 million ($13.2 million) in lost gold and other metals, a spokeswoman said.
The Royal Canadian Mint can’t account for 17,500 ounces of gold, according to an audit by Deloitte & Touche LLP released yesterday. The audit said the mint should consider reviewing its security and technical procedures.

“It’s still not clear” how to account for the loss, Christine Aquino, a spokeswoman for the Ottawa-based mint, said in a telephone interview today.

The Deloitte & Touche audit found the discrepancy wasn’t an accounting or transaction error. The Royal Canadian Mounted Police are probing the matter to determine whether there’s enough evidence to launch a criminal investigation, Aquino said.
In a statement yesterday, Transport Minister John Baird said the “unexplained loss” of the metals was “inexcusable” and the mint needs to be “held accountable.” Baird is responsible for the mint.


If its not an accounting error what is it?

We also draw your attention to this snippet found on found on Jim Sinclair's Mineset

Jim Sinclair an experienced gold trader has said that some of his contacts have told him that when they request to withdraw their 100oz gold bars from Comex they have received a bar, but not one with the correct serial number or weight – another honest error?

In our humble opinion the only secure way to own gold is to get your hands on it.

Have a good one.







To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.












Wednesday
Jul012009

A “New GM”?

GM Casey 02 Jul 09.JPG


By Olivier Garret, CEO, Casey Research

A friend of mine mentioned to me that he was surprised that “bankrupt GM” was spending some serious advertising dollars to try to lure customers to its website.

My comment to him: It makes sense, if it is done properly!

Yes, it is often necessary for a distressed company to communicate with its customers (advertise) and assure them that the future is brighter. That said, GM appears to have it all wrong once again.

What brought GM to where it is today is a lack of focus on what mattered to its customers – while it was losing market share to competitors that built higher-quality cars at competitive prices and strived to anticipate what customers needed. GM tried to remake its image several times over the past 20 years… without ever changing.

You might remember the slogan “An American Revolution.” The fact is, GM was led by insiders and bureaucrats. They climbed to the helm of the corporate ladder, not because they were good leaders but because they were effective at corporate politics and financial management. While GM employs scores of very competent and dedicated mid-level managers and union workers, they never got a clear signal or a commitment from the top that the company’s culture had to change in order to survive. People then did what they do best: they tried to protect the status quo and retain their perks. It worked for many years.

Unfortunately, the world of manufacturing has changed, and the strategies that made GM the world leader between the ‘40s and ‘60s have not worked since then. The company has needed a complete makeover for decades, and yet it has failed to embrace real change.

In this respect, bankruptcy could be an incredible opportunity for General Motors to get a fresh start and leave the chains of its legacy behind once and for all. It would be able to focus on building a successful company around its best assets (many great people, some good products, and physical assets). If the company could commit to doing much more than just a financial reorganization, it would have a bright future ahead.

So I looked for visible signs of change at the “New GM,” its first post-bankruptcy communication with its customers.

But let me first summarize the key elements of a “crisis” communication campaign. To be successful, it needs to be:

1)Reassuring. Show that the company is in control of its destiny.

2)Focused on the customer. What is the company doing for them (more exciting cars, more reliability, financing programs, excellence in service)? The message needs to be credible and – in the case of GM – should demonstrate how the new GM is different from the old one:
Focused on fewer models – the best – to make them even better;
Committed to improved productivity, as it means more value for the same price;
Run by people that truly love cars vs. accountants – Henry Ford was an industrialist that knew cars, lived and breathed them; Wagoner never inspired the same passion).

3)Truthful. Unless the company is committed to meaningful changes, why bother? Customers will be disappointed by the message if they find out that the reality does not match expectations built by the campaign. This will lead to failure, as customers don’t forgive disingenuousness.

4)Vibrant and exciting. Why should a customer come back to GM? While “vibe” won’t be successful by itself, it is an essential differentiation tool to keep people interested in the rebirth of an American icon.

So, what is the initial verdict?

After I let the ads entice me to visit the new GM website, I landed on a page titled “Our Mission.”

Here are my impressions: The page I landed on was cold and boring, almost amateurish. Also, I did not get their “mission.” There was a bold statement saying, “Reinventing the company,” yet they talked about a new battery lab, the SAAB spin-off, and the Penske purchase of Saturn. No sign of excitement, passion, or true change. Note to GM: Talking about yourself does not engage your customers.

Alright, maybe I didn’t land on the page where GM meant for me to go first. So I checked the “Our Company” page… with the same sinking feeling.

Couldn’t GM marketers find a better picture of Fritz Henderson or a more engaging subject matter to tell me what they are going to do for me, their potential customer? By the way, Mr. Henderson has been with GM since 1984. Is he the guy that will change the culture of the company? Can he really make GM a leading carmaker after being part of the management team that took it on a downward spiral for a quarter of a century?

Oh wait! I can see that GM just appointed a new chairman: Edward Whitacre. He must be the inspiring new leader. Interestingly enough, Mr. Whitacre is a retired chairman of AT&T. He spent 43 years in the telecom industry; he hardly looks like a man whose life’s passion is cars.

A quick googling of Mr. Whitacre’s background tells me that he brings with him a real passion for technology (he didn’t even have a computer in his office at AT&T), the Boy Scouts of America (he was their national president from 1998 to 2000), and M&As (the highlights of his career in telecom). Not exactly the profile I had in mind for GM’s leadership at this point… oh well.

Further down on the page is an article on the GM/Segway joint venture. Clearly the new PUMA must be the answer to GM’s customers most pressing needs. To me, though, it looks like a rolling coffin that will at best serve a small niche of yuppies, or airport security staff, or municipal police force. Hardly what GM needs for a makeover.


(Photo: Reuters) above

The next article tells me that the era of combustion engine vehicles is just about over. (If that’s true, why should I buy a car now?) But rest assured, even though the “New GM” may not have what I need today, it is working on tomorrow’s vehicles.

Well, if I remember correctly, GM’s competitors were the ones that produced the first commercially successful hybrids, while GM was promoting monstrous, gas-guzzling Hummers. Why should I trust that these guys now have a“feel” for the market? Do they truly understand where the future lies for this industry?

Maybe it is because President Obama stated that the American car industry will lead the green revolution and bring us the solution to the U.S. energy dependency problems. If I were Mr. Henderson and my job security were contingent on serving the wishes of my largest shareholder instead of the needs of my “potential” customers, my best strategy would be to pursue an all-electric vision. All I really needed anyway would be another five years before I could get full pension benefits guaranteed by the U.S. taxpayer.

My conclusion: Unfortunately, the first piece of communication from the “New GM” is all but reassuring; it fails all the tests for a successful crisis management campaign, leaving the visitor anything but excited about the struggling company. It leads me to believe that the “New GM” may have to file again shortly after emerging from its current “pre-packaged” bankruptcy. Alas, by that time, there will be a lot more job losses, and the brand will probably never recover.

I have been convinced for years that bankruptcy could save our domestic auto industry. However, I never had in mind a politically driven process like this – Washington technocrats and union leaders getting together and concocting this kind of an ill-conceived “solution.”

What I envisioned was a much more standard process where all the stakeholders put their claims in front of a restructuring team and a bankruptcy court. Then they collectively try to find the best compromise to move forward. They generally end up accepting significant losses but will vote in support of a plan that highlights a clear path to recovery and hope for future upside. In the absence of such a plan, they will push for liquidation and try to preserve the few assets they still have.

In some cases, the company cannot “remake” itself. Liquidation may then turn out to be the best thing that can happen. New owners pick up the pieces for ten cents on the dollar, and with a low-cost investment, they can start a truly new company focused on well-defined opportunities/customer needs. These new companies could again become icons of American entrepreneurship.

In either case, the American taxpayer would not be on the hook for tens or hundreds of billions of dollars, and the “New GM(s)” might have a chance to survive and thrive. Of course, this is not what is happening here. So, speaking with the legendary Mogambo Guru… second note to GM: You’re all freakin’ doomed.

All things considered, GM will most certainly not save the U.S. economy… or even be a part of it in the long run. And if you want to preserve and even multiply your assets, we wouldn’t recommend investing in GM – or any “blue-chip stock” – at this time. Instead, take a look at our Chief Economist Bud Conrad’s favorite investment of 2009… a play that is almost guaranteed to pay off handsomely this year. Click here to learn more.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Jun302009

Eye Catching Gold

Gold Vending Machines 01 July 2009.JPG


Has anyone noticed the number of shops that have opened for the purpose of buying and selling gold?

A friend of the site has told us that there is now a trader in The Glades shopping center in Bromley, Kent, UK who has set up a stall and is offering to buy anything golden, broken jewelry, scrap gold etc.

Here in New Zealand there are a number of shops in and around Auckland that are also offering a similar service.

And then there is the latest craze of gold vending machines, excuse me, yip gold vending machines such as the one pictured above.

In today's market, gold bullion can be bought from dealers, jewelers, auctions, private investors, and now from gold vending machines.

German gold bullion dealer TG-Gold-Super-Market says it plans to install as many as 500 gold vending machines throughout Germany, Austria, and Switzerland this year.


The Stuttgart-based company aims to introduce the gold vending machines in train stations, airports, shopping malls, and anywhere else retail interest for gold bullion is likely.

The new gold vending machines will sell small 1, 5, and 10-gram gold bars as well as South African Gold Kuggarand Coins. TG-Gold-Super-Market says each vending machine will hold up to 1,500 pieces of gold bullion.


Prices for bullion from the vending machines will be about 30% higher than market prices and will be updated every 10 minutes to keep pace with gold spot prices.

Interest in gold has risen during the financial crisis, particularly in Germany


So, does this mean that the public are becoming more aware of gold and its value, not really, however, the entrepreneurial spirit is alive and well and positioning itself in front of the public via ever more creative ideas. Anyway would you trust gold to be gold if purchased from a machine and would you pay a 30% premium for the privilege?


Wherever you live please have a look round and let us know if any of these trends are gaining prominence in your area.




To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


























Tuesday
Jun302009

Should Bernanke be reappointed as Fed Chairman?

As well as dealing with near 10% unemployment, an economy in recession and severe inflationary pressures looming right around the corner, Ben Bernanke must also work to assure his reappointment, with his term ending this January.

In addition to this, Bernanke is attempting to convince Congress that the Federal Reserve should have a more leading and powerful role in a new restructured financial system.

Ben Bernanke Tony Soprano

Do you think Bernanke should be reappointed for another four years as head of the Federal Reserve?

We do not think he should, since we view his policies to be very damaging in the long term, with respect to the massive issues of inflation and a ever weakening currency that America will face in the not so distant future. Our preference would've been for a recession to be allowed to happen, severe though it may have been, but a sustainable, organic recovery would have followed, without the inflationary hangover.

As for giving the Federal Reserve more power, we feel this is absurd and wholeheartedly agree with Connecticut Senator Christopher Dodd who referred to the plan as “like having a parent giving his son a bigger, faster car, right after he crashed the family station wagon.”

Unfortunately however, we are in the minority. A Reuters poll showed economists give Bernanke 8 out of 10 for his handling of the crisis, and the wonderful President savior Obama has praised his work.

Therefore it is highly likely that Bernanke will be reappointed for another four years.

The trouble is, Bernanke is not the problem. Replacing Bernanke will not solve the problem. Another with near identical policies will replace him and so we will be stuck in the same situation. The entire Federal Reserve needs to be overhauled and replaced with officials that are dedicated to letting the free market run its course, and gradually reduce the Fed's power until it ceases to exist.

Until that happens we will be stuck with an unelected, interfering institution that holds more power that the President and constantly undermines free market principles – regardless of whether the head of the snake is Bernanke, Yellen or Tony Soprano!

What do you think?

Does Ben Bernanke deserve another four years?

Who should replace him?


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Monday
Jun292009

Gold-Prices.biz Portfolio Update 30 June 2009

Gold Chart 30 jun 09.JPG
Chart courtesy of Stockcharts


At the time of our last update on the 26th May 2009 we said that the dollar now looked oversold and a short term bounce could be on the cards thus capping the progress in gold prices. We also said that Gold was technically close to the top of its range so it too could experience some short term consolidation or a slight pull back. Gold has moved down since then from $957.90/oz to $935/oz as we write however the dollars rally appears to have stalled as it is still hovering around the '80' level.

For short term traders we suggested taking some profits on both Randgold and Yamana, we decided to sell all of our holdings in Randgold Resources and we then took an aggressive stance and bought PUTS on Randgold as we perceived that it was more overbought than similar stocks in the pack. We do however remain tight hold of our core position as gold could take off in an explosive manner catching many by surprise. We hope to close our down bet on Randgold shortly and re-position ourselves for the coming rally in gold prices.





Our portfolio as been updated as follows:

Randgold Resources Limited (GOLD) On the 18th of June 2008 we bought Randgold Resources Limited for $37.65. This stock quickly rallied to $55.00 before being caught in the ensuing sector sell off to trade as low as $27.70, on the 28th May 2009 we sold our entire holding for an average price of $68.69 for a return of 82.44%. This is a quality gold producer so we must now wait patiently for a suitable entry point at cheaper price levels.

Agnico Eagle Mines (AEM) we originally paid $30.88 and it now stands at $31.15. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $63.27, locking in a profit of 104.8%. On the 24th July 2008 we bought again at $59.17 doubling our position with the average cost now standing at $45.03. Agnico Eagle closed at $54.43 on Friday.

Kinross Gold (KGC) we originally acquired Kinross at $10.08, Kinross then went through a bit of a pull back so we signaled to our readers to “Add To Holdings” at those discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January 2008 we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July 2008 we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50. Kinross closed on at $18.92 on Friday.

Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.013 up slightly from $0.0125 at the last update. We are disappointed in the poor performance of this stock. The B.C. Securities Commission had issued a cease-trade order against the company, citing a host of filing deficiencies. On the 5th August 2008 this order was revoked the B.C. Securities Commission.

Silverado (OTCBB: SLGLF) has managed to arrange a line of credit of up to a staggering $US100 million as detailed in a news release by the company recently, which came as a surprise to us considering their recent performance. We are holding at the moment however we are not buyers of this stock until things become a little clearer.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, and we bought again at $12.89 on the 7th December 2007 and so our average price moved up to $11.13. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $16.50 locking in a profit of about 49.41%. Then on the 3rd April 2008 we bought our Yamana position back at $14.43 in expectation of a bounce, which arrived on The 23rd May 2008, and we sold for $16.00. On the 11th July 2008 we bought again at a price of $14.95 taking our average purchase price up to $13.04. This stock closed at $9.12 yesterday, having traded as low $3.99 not so long ago.

Yamana has agreed to sell some of its properties to Aura Minerals as per this news release from Aura Minerals:

The Company intends to use the net proceeds of the Offering to acquire from Yamana Gold Inc. (collectively, the "Acquisition"), the San Andrés GoldMine located in Honduras (such Honduras property being hereinafter referred to as the "First Stage Property") and the Sao Francisco and Sao Vicente Gold Mines located in Brazil (such Brazil properties being hereinafter referred to as the "Second Stage Properties"). Please refer to the Company's June 9, 2009 press release announcing the Acquisition.



We need to take a closer look at this deal before determining whether or not it is a good move from an investors standpoint.



High River Gold Mines: (HRG: TSX) We bought this at $2.49 and we increased our position in the company on December 7th, 2007 when we wrote; We strongly believe in the company’s long-term fundamentals, especially with rising gold prices. However it was a victim of this recent sell off, which has dragged the price down. HRG is a small gold company and so its stock price is very volatile, but this pullback has been devastating. Production last year of 140,000 ounces, this year 280,000 ounces, next year 350,000 ounces going to an estimated 600,000 ounces by 2012. We will hold and watch for now. HRG closed at $0.235 on Friday, having traded as low as $0.04. In a recent news release the company had this to say:

TORONTO, ONTARIO--(Marketwire - June 25, 2009) - High River Gold Mines Ltd. ("High River") (TSX:HRG) and ZAO Severstal Resources ("Severstal Resources"), the mining division of OAO Severstal (LSE:SVST)(RTS:CHMF), jointly announce that High River and Severstal's affiliate, Lybica Holding B.V. ("Lybica"), have mailed a take-over bid circular dated June 24, 2009, a directors' circular dated June 24, 2009 and related documents (collectively, the "Offer Documents") to High River's shareholders today. The Offer Documents are in connection with the previously announced offer (the "Offer") by Severstal for all of the issued and outstanding common shares ("Shares") of High River (excluding Shares currently held by Severstal and its affiliates) at a price of $0.22 per Share in cash. The Offer expires at 5:00 p.m. (Toronto time) on July 31, 2009, unless extended or withdrawn by Lybica.



Sadly we are now in the hands of the bigger shareholders who will decide whether or not to accept this offer, it would be nice to see another bid on the table which could drive the price up, but there we go.

Fronteer Developments Group (FRG) Fronteer was originally bought as both a uranium and gold play as FRG owns the lion’s share of Aurora Energy Resources making it a gold/uranium play. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. Fronteer is currently trading at US$3.51 up from US$1.51 recently, Our original purchase was made on the 15 July 2006 at around the $4.70 level, so we are sitting on a large lose. Hopefully FRG established a bottom at $1.25 and will continue to make progress. Fronteer Development Group Inc., announced that it has acquired all of the remaining common shares of Aurora Energy Resources Inc. So this investment is well and truly a two pronged attack via both gold and uranium.

Options Trades:

We purchased the September $65.00 PUT contracts in Randgold Resources Limited (GOLD) in anticipation of a pullback for $5.00 per contract as Randgold looked vulnerable as the stock price had increased from $41.59 on 17th April 2009 to $70.93 today, an increase of 60% in two months, and the P/E ratio was standing at a large 148. Randgold fell quickly but then staged a mini recovery just to keep our nerves tingling. The last trade was at $5.80 so we are up slightly.

Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

Have a sparkling week and please feel free to share your comments with our readership.

Conventional wisdom suggests having 5% or so of your portfolio in precious metals with some commentators upping this figure to around the 15% mark. We however are far more cavalier in our approach to investment and only invest in the precious metals sector such is our enthusiasm for it.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Thursday
Jun252009

Beware of Zombies Wearing Lipstick

spot gold vs gold resources.JPG


The chart above depicts the price of spot gold when compared to gold resources and was sent to us by Louis James, Senior Editor, International Speculator accompanied by the following article:



Before last fall’s crash, our economic views here at Casey Research were regarded by many in the mainstream as being extreme and alarmist. Unfortunately, they were also another thing: correct.

Predictably, having been proven right hasn’t changed anything; Wall Street still pooh-poohs us as being part of the lunatic fringe. But that’s okay; while the Suits are wondering if they can back-date their stock options far enough if the economy doesn’t recover, we are poised to profit whether it does or doesn’t.

Personally, I think the U.S. economy has decayed from dead-man-walking status to that of a zombie in the grave. The jury is still out on whether or not the zombie will rise and stumble on for another year or two. That introduces a lot of uncertainty into the markets now, with everyone unsure of what will happen next.

The reality is, beneath all the bravado, that no one is ever sure of what will happen next. And the fools who proclaim certainty should be treated kindly, not left unsupervised around sharp objects, and never trusted with money.

But there is one thing we’re very confident of: if the zombie rises, it won’t be real life we see.

In other words, there is no credible scenario in which the efforts of the U.S. and other world governments to cure the global economic crisis will succeed, not before the mistakes from the past are liquidated. With increasing doses of the same bad medicine that caused the illness in the first place, how could it? You can’t make bad medicine work better by prescribing more – but if you believe the patient just needs a stronger dose, you’ll keep trying. And there can only be one result: dead zombie.

Before the zombie gives up the ghost, however, it may show signs of rosy life – but it will just be lipstick, not the healthy flow of living blood. Though an imitation of a thriving economy is all it will be, it could be a very impressive likeness.

Abandoning my gruesome metaphor, I’d say we are approaching a fork in the economic road. Both paths before us lead to continued liquidation of decades of bad economic decision-making, differing only in how long it takes to get there. The short path drops sharply downward from here, with the decline perhaps triggered by another round of depressing economic news. This is what happens if the various stimulus and rescue plans simply don’t work, deflating the Obama Rally.

The longer path takes us through a reflationary boom for the record books. In this scenario, the stimuli “work,” a last hurrah for the old economic order. And in the end, the artificially simulated (not stimulated) good times will have created an even more gargantuan level of ill-advised consumption, unnecessary construction, and massive misallocation of capital – all charged to an already maxed-out MasterCard.

What Happens Next?

The near term is the hardest to predict, but there are good reasons to assign additional weight to the probability of an imminent correction.

If the U.S. and global economies take the short path, another market meltdown will hammer everything again, even assets that “should” do well in that context, like gold. Any correction in gold would be temporary and create spectacular buying opportunities.

If it’s the long path, a delayed Shopping Season may set in (normally, it’s “Sell in May and go away”), and with the market so jittery, it could be a vicious one this year. With a lot of money still on the sidelines that “wants” to be reinvested, and people desperate to believe things will get better, the Obama Rally could go on for another month or so, but it seems likely to us that it won’t last much more than that, even if the resulting correction is followed by the longer path’s reflationary boom.

Long path or short path, either seems to lead downward in the near term (if only for a few months, initially, in the case of the longer path). Yet, no one can say that precious metals won’t be surging higher as you read this, or next Monday, or next week… I have no crystal ball with which to read the future – but barring an immediate and major breakout in gold, I’m inclined to expect a short-term weakness in the junior mining sector, followed by continued recovery and growth among the quality companies with solid fundamentals.

Why should anyone continue to own these volatile shares if a short-term correction seems likely? Aside from possibly missing a sudden and decisive jump in gold (and silver) prices, consider that most companies’ assets are selling cheaper.

Take a look at the chart above showing the spot price of gold and the dollars per ounce in the ground the market has been willing to pay among junior miners and explorers.




Note that the left and right axes are scaled differently. This magnifies the effect, to better show the widening gap between the two over the last two years, but it’s real.

Here’s the same divergence for silver:



spot silver vs silver resources.JPG


This silver chart supports our bullish call on silver last month. The per-ounce price of gold in the ground has not kept up with spot gold, but it is close to being back to its level before the credit crisis started heating up in 2007. Silver in the ground, on the other hand, is still close to the bottom hit last fall.

Short version: whether or not there’s a correction just ahead, a jittery market has both gold and silver in the ground on sale, and that’s an opportunity.

Owning physical gold and silver is a must in these uncertain times. But the real money-makers are select, high-quality junior mining stocks with sound fundamentals, enough cash on hand, and high-grade deposits that can propel the share price to the moon when the company hits paydirt. We call them “Toronto’s Secret Gold Investments”… click here to take a look.




Have a good one.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.