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Stansberry’s “Metropolitan Club” plan for the Gold Bull Mania

Friday File look at Porter's ideas for NIRP, currency crisis, and gold mania as he teases "The Gold Decade: How to Prepare for the Coming Bull Mania in Gold"

Porter Stansberry is probably the best marketer out there in the financial newsletter world, and has access to the biggest email lists both within his company and in partnership with all of Agora’s other subsidiaries and affiliates… so when one of his ideas or letters gets a big marketing push, it tends to have a big impact and drive a lot of questions my way.

That’s certainly the case with his new push for gold, which he’s been ramping up over the past week or two — starting with a “special presentation” earlier on Wednesday. This is all in service of his new letter, which he’s calling Stansberry Gold Investor… and he’s also selling it in a different way, with a $1,500 up-front fee and, after that, a monthly $49 charge for “portfolio updates,” neither of which is refundable.

So, again, I feel like I should be raising prices here at Stock Gumshoe (kidding!). But we’ll put that aside for the moment — what’s Porter’s big idea, and what is he going to suggest for that $1,500 fee?

I can’t give you the whole story, of course, since I haven’t subscribed or seen his report — but he does hint at several investments and ideas in the ad, and we can explain those and feed ’em into the Thinkolator to see what pops out. And if you’ve got ideas or suggestions, we can listen to those, too.

The basic idea from Porter is that we’re about to have a “bull mania” in gold — with a gold price that could rise parabolically, perhaps hitting $10,000 an ounce or more. Here’s a taste of the ad to give you some idea (you can see the whole ad here, if you feel like sifting through it yourself):

“I recently returned from a private meeting in Manhattan with one of the most powerful men in the world. Based on this meeting, I believe gold and gold stocks will soon be worth 10-30 times what they are today. If You Missed My Emergency Briefing… Read this presentation immediately….

“The men at this table began to outline an economic scenario that horrified me.

“It’s a scenario akin to what happened in 1933 — a vast conspiracy to steal trillions of dollars from the U.S. Treasury.

“I would have never believed this if I hadn’t been at the dinner. Fortunately, two of my most senior colleagues were with me.

“They heard every word, too.

“And today, I want to show you what we learned and tell you how to prepare.”

Gets your attention, right?

The scenario that horrified Porter, to paraphrase a bit, begins with negative interest rates — going from ZIRP (Zero Interest Rate Policy) to NIRP (Negative Interest Rate Policy). That has already happened to some degree in Japan and Europe, and the big fear, he feels, is that it could h happen in the US as well… and in that case, in his words:

“… we’d likely witness not just a run on the banks… but an economic collapse like our country hasn’t experienced since the 1930’s.

“Why?

“Because overnight, banks would no longer be a safe place to keep your money.

“You see, no one in his right mind would keep his money in a bank if the bank were to force him to pay for the privilege. Likewise no one in his right mind would buy Treasury securities or any other bond that would charge him to hold it.

“Worse, as a country, we’d essentially be broadcasting to the world that our government and our banking system is broke….

“The world’s biggest hedge funds and U.S. government leaders are worried that if the dollar — the last reserve currency to pay any substantial rate of interest — goes into negative interest rates… there could be a panic out of paper currency and into gold.

“This wouldn’t be your typical ‘bull market’ in gold. It would be a ‘bull mania.'”

Porter ties this in with some of the other “big picture” arguments he’s made over the years, like his “End of America” promotion back in 2011 that got everybody riled up…

“I’ve recounted a number of potential scenarios in my essays throughout the years, including the likelihood of riots — perhaps even revolt — as a result of this recklessness.

“We saw hints of that with the Occupy Wall Street movement that sprouted up in the wake of the last financial crisis.

“And that’s why, also for many years, I’ve been warning that you absolutely must own gold and high-quality gold investments.

“I recommend that you, as I do, keep a good portion of your wealth invested in them — as much as 20%.

“Today, I’m here to warn you: If you haven’t done this yet — you must absolutely do it now…”

So he’s predicting a huge ramp-up in gold prices in the future — the near future, really, though he does not claim to have a date in mind.

And while he thinks the gold price will move up rapidly just because folks will want to rush out of NIRP currencies (which could be almost all the major currencies soon), he’s also got a “next step” scenario where the move out of the dollar becomes like a “bank run” on the currency in general, and gold could then soar to what now look like ridiculous levels….

Is $10,000 Gold Just the Beginning?

“You see, according to my source — who has held some of the most powerful, senior economic positions in U.S. government — the plan being discussed involves the ‘confiscation’ of over 8,100 metric tons of gold — essentially all of the gold held by the U.S. Treasury.

“That’s all the gold in Fort Knox, all the gold in New York, all the gold at the Denver mint.

“The plan is to swap out all of the worthless Treasury bonds that the Fed currently owns — that’s the $2.46 trillion in paper that the Fed purchased during quantitative easing.

“This QE is what’s been financing the government’s large scale deficits and what was used to essentially bail out the banking system following the 2008 crisis.

“The plan is to use those bonds to ‘buy’ all of the Treasury’s gold.

“This plan would have the appearance of legality. It would look like a transaction.

“But in reality, what’s really happening is all of the government’s worthless debt is being traded for something that rightfully belongs to all Americans.

“In short, our government’s most valuable remaining monetary reserve will be liquidated to stop the global run on paper currency.

“This will dramatically devalue the dollar… by government force….

“The conversation at the dinner I had at the Metropolitan Club in New York was a discussion about how to actually affect this change in the dollar… how to communicate this change to the markets… and the legal structures that would have to be created in order to affect this policy.

“Immediately after this ‘swap,’ a single ounce of gold would be worth, in the open market, somewhere in the neighborhood of $10,000 an ounce.

“That price is based on exchanging roughly $2.5 trillion in Treasury bonds for over 8,100 metric tons of gold.

“This would put the dollar on a much sounder footing, because instead of backing the dollar with worthless Treasury bonds that are paying a negative rate of interest, the dollar would now be backed and fully convertible into ounces of gold — a form of money that everyone around the world trusts and respects….

“Which is why I think you could make a fortune buying gold — and an even bigger fortune buying certain gold investments — today.”

So that, of course, is what perks up the ears of Stock Gumshoe readers… I don’t know whether this move by the government is feasible, an effective return to the gold standard (it seems far-fetched, particularly for elected officials, but much of the financial world has seemed ridiculous for a decade now), but I can at least look into the gold investments Porter thinks we should be considering if it turns out that Porter and his secret confidant are correct (to be fair, lots of other people have similar thinking even if they might not describe it as enthusiastically — a great many hedge funds and wealthy folks are looking at gold again).

For that, we do get a few clues that we can sift through in search of answers… ready?

Porter has four steps for us, we’ll go through them and see if we can add some specifics to his hints.

First is “own physical gold” — and here, as his newsletters have done in the past, he’s looking at collectibles as a particular opportunity…

“… regular bullion coins should do well in the upcoming bull mania in gold. And I recommend you buy some if you haven’t already.

“But in compiling this specialized portfolio, we consulted with the man I believe to be the world’s number one expert on gold coins: Van Simmons….

“He’s the cofounder of the Professional Coin Grading Service, or PCGS. If you’ve ever bought or sold a collectible gold coin, chances are you know the name….

“Van told us about a number of gold coin investments that will simply skyrocket — and could return thousands of percent more than regular bullion.

“For example, in my report, you’ll learn about a commemorative gold coin set that first became collectible in the early 1900s… but is still available for purchase, in its entirety, today.

“You can buy just one of the coins in this set right now for around $2,000. Should gold prices spike, however, this coin could easily be worth 10 times that amount.”

Steve Sjuggerud has recommended some gold coins for his Stansberry-published newsletter several times, so it could be that some of the ones they like are in that same vein (that was mostly the widely-available St. Gardens Double Eagle coins that were the equivalent of a US bullion coin before FDR seized private gold in the 1930s). But that’s not the “commemorative” mentioned here — that was a regular $20 gold coin (roughly an ounce of gold).

I’m no numismatist, but I would guess that they’re talking about the first gold commemoratives, which began to be minted in 1902 or 1903 and continued every few years up until the 1926 Sesquicentennial coin. Collectors now consider this to be a set called the “Classic Commemoratives” — either 11 coins or, for those who have hundreds of thousands of dollars to spend on the biggest 1915 Panama-Pacific Exposition coins, which are extraordinarily rare, a 13-coin set.

There’s a good summary of the “classic commemoratives” here from NGC, the other major coin grading service. Most of the big coin dealers also have at least a few of them in stock at any given time — do keep in mind that this is a market of collectibles, and these commemoratives are priced based at least as much on scarcity and collector appeal (condition, principally) as they are on gold content.

The “melt value” of these coins would, at least theoretically, provide a backstop of value, but none of them trade anywhere near “melt value” — the $1 coins, which is most of them, are very small and have a melt value of about $60 currently, the $2.50 coins have a melt value around $150…. most of the relatively common ones are currently available for sale in the $400-$2,000 neighborhood, depending on the specific coin’s rarity, appeal and condition. There’s a list of available graded coins here from Apmex, for example, that’s a coin dealer I’ve bought from in the past (not specifically recommending them, it’s just one that I know that has some inventory to provide examples).

So that’s my guess on that, and it is just a guess. These seem to be a pretty hot item for collectors and who knows, maybe they will zoom in value if gold prices soar and a mania develops — that is indeed what happened in the late 1970s gold mania, which is the example Porter calls on in looking for mega returns. But they could easily fall, too, if coin collecting loses its allure, and it would take a steep drop before they hit “melt value.”

The more widely available St. Gaudens Double Eagle coins that Sjuggerud talked up for most of the past decade are priced much closer to “melt value,” at least at the lower levels of condition, as are many of the other more widely-minted pre-1933 US gold coins. Personally, my feeling is that anyone I deal with when buying or selling collectible coins is going to know a lot more about them than I do… so I’d rather just stick with bullion or modern coins, try to buy them when they’re priced without much premium over the gold “melt” price, and think about them just as a direct play on gold. Though I confess I’ve got a soft spot for the Canadian “call of the wild” 99.999% coins.

And step two?

“Step 2 is also simple: You want to own stakes in some of the world’s most preeminent gold-producing properties.

“To do it, we’ve identified companies with tremendous track records of success (one has been operating for 100 years)…

“Collectively, these companies own — or own stakes in — hundreds of the best deposits across the globe…

“And perhaps most important, they tend to do extraordinarily well when gold prices rise.

“For example, from January 2001 to the peak of the bull market in September 2011, the price of gold went up roughly 570%.

“But these companies did far better.

“One soared 1,019%…

“Another soared 1,859%…

“And still another soared 2,698%.

“Keep in mind, these are some of the biggest players in the industry — with billion-dollar market caps.”

OK, so that’s basically “own the gold majors” — you can do that, and you can sift through the top 20 or so gold miners to decide which ones might be most appealing to you in a “gold mania” market… but frankly, I don’t see the point. If you want easy exposure to big, established gold mining companies I’d suggest just buying the index — either the Market Vectors Gold Miners ETF (GDX), which tracks the largest operating miners and ranks them by market cap, or the somewhat tweaked Sprott Gold Miners ETF (SGDM) ETF, which I prefer because it applies a quality screen to try to adjust for how much the companies would benefit from a rising gold price. Both are relatively inexpensive, with expense ratios around 0.58% per year, and both will give diversified exposure to big gold producers. Easy peasy, and you don’t have to worry that one big mine accident or government seizure will wipe out the favorite stock you selected.

And it’s worth noting that although the usual assumption is that miners will provide leveraged exposure to gold during upside moves, that’s not always true — at least not in any kind of dramatic fashion. Here’s what the GDX index of big miners did versus the gold price (the GLD ETF) during the last big run for gold, from 2008 through 2011:
GDX_GLD_chartcherrypick
So you can see the leverage in terms of volatility, that blue line of the GDX moves a lot more than the steadier orange gold price — but over that time of rising prices GDX went up 160% versus 107% for the gold price. That’s leverage, but it’s not very dramatic leverage. That’s why it might be worth picking the best performers — but it’s not necessarily easy, the biggest “name brand” gold miners like Barrick (ABX), Goldcorp (GG) and Newmont (NEM) all did worse than the GDX and, in some cases, worse than the gold price. And over the past five years, the metal itself has outperformed the average big miner by a substantial margin — so that leverage certainly also works on the downside.

Over a decade or so, gold has done better than the average big miner, and better than most of the ones you could easily name offhand — the most consistently strong big gold names during the last ten years have really been the royalty players, particularly Franco-Nevada (FNV), the pioneer in that business, but also Royal Gold (GRLD). Should gold soar higher, presumably that leverage would work on the upside and the producing miners would likely outperform gold. Perhaps Porter’s got an eye on some big miners that will be better than others, I don’t know, but the big guys do generally travel in a pack so it’s an analysis challenge to identify favorites.

(For full disclosure, I have positions in both those ETFs — I own some SGDM shares, and have call options on GDX.)

Porter’s going pretty big on this, recommending a stiff allocation to gold, and he seems to be listing these in order of importance — first bullion or collectible coins, second big miners…

“If you invest in nothing else, I urge you to put at least 20% of your overall portfolio in the recommendations we cover in Steps 1 & 2.”

And what, then, are steps three and four for those who want to go a bit further? “Gold banking” and “Junior Miners” — we’ll see what the hints are and try to name the investments for you….

“Step 3 is what I like to call ‘gold banking.’

“You may have heard us mention this technique before. We’ve also called it ‘buying gold in the ground’… or buying a ‘synthetic option on the price of gold.'”

That’s something we’ve gone over a few times — most recently when Nick Hodge was pushing his “golden loophole” earlier this week. Basically, it means buying gold deposits that have been discovered but aren’t yet mines — there’s a long continuum of possibilities there, from “gold banks” who have no intention of ever operating a mine and are just buying up properties from “distressed” sellers in hopes of another bull market in the future, to companies that have fully delineated a big resource and are fairly close to actually financing or building a mine.

So which one is Porter hinting at? Here are our clues:

“This involves buying stock in world-class companies with world-class deposits… that are not quite ready for production.

“These are companies that have gone through the extremely risky and expensive stage of actually exploring for gold. They’ve found it. And they’re ready to produce it.

“But because mining is still a risky and costly business, even after a company has discovered a worthwhile deposit, you can often buy this ‘gold in the ground’ at a huge discount to actual value on the open market.”

And he gives some specifics about one of the stocks in the Stansberry Gold Investor portfolio:

“For example, one company in our model portfolio has partnered with Barrick Gold to develop one of the largest, richest gold projects in the world.

“Just to give you an idea of this project’s potential, Seabridge Gold — the best-performing recommendation in the history of our company — owns a property called the Kerr-Sulphurets-Mitchell deposit or KSM.

“KSM has an average ‘grade’ of .55 grams per ton. That means for every ton of rock, they’re getting roughly 0.55 grams of gold.

“The ‘gold in the ground’ company I’d like to tell you about has a current grade of 2.2 grams per ton. That’s four times richer than Seabridge’s deposit.

“And today, you can own this ‘gold in the ground’ for just $81 an ounce — that’s a 93% discount to the current price of gold.”

That’s almost certainly a reference to the Donlin mine in Alaska, which is 50/50 owned by Barrick Gold (ABX) and the company Porter must be referring to here, Novagold Resources (NG). They also own half of the Galore Creek deposit in British Columbia, which is partnered with Teck Resources (TCK).

Novagold is indeed valued at about $80-90 per ounce for their half of the Donlin Gold reserves, depending on exactly which numbers you use — and that doesn’t include the Galore Creek copper mine. The current market cap of $1.75 billion, divided by their total reserves and resources of 19.5 million ounces (half of the 39 million ounces of proven and probable reserves plus measured and indicated resources, not including the “inferred” resources) and you get about $89. Close enough to be a match, particularly considering the stock has jumped almost 10% in just the past week as gold fever has taken hold a bit.

That doesn’t account for what the financing might cost to actually build the mine, but they’re probably at least a year or two away from that point and they have plenty of cash to get through permitting — they are currently in the environmental permitting process, near the end of the public comment period, and that process should be complete next year if all goes well (which it sometimes doesn’t). Building the mine once permitting is complete will take four years, Novagold says, and then they’ll be producing 1.5 million ounces of gold a year for the first five years — which, if gold is still at $1,200 an ounce then, would mean about $900 million in annual revenue for Novagold.

If Porter’s right about gold heading toward $10,000 an ounce, then that would obviously make things far rosier. If he’s wrong and gold drops to $800 an ounce in 2017 (just a hypothetical), financing would probably be much more expensive and the stock will probably be dropping, though the preliminary economic assessments filed for Donlin several years ago indicated that they could produce for at least a few years at a cash cost of well below $500 an ounce — though the construction would still require a capital investment of $7 billion to build the massive infrastructure required, including maybe a gas pipeline and a power plant, which means Barrick and Novagold need a pretty solid comfort with gold prices before they proceed (Barrick, which says it’s planning based on gold prices being about $1,100, notes that they’re also exploring a lower-cost plan to open incrementally instead of getting to full production right away).

They don’t seem to have the strong opposition that the Pebble Creek mine faced in Alaska a few years ago, but I have no idea whether they’ll get approval or not — I would guess the odds are pretty good, given Alaska’s general interest in developing projects that will support the economy (especially with oil prices low) and don’t obviously pose specific environmental risks… but that’s just a guess, I don’t know for sure whether or when the Donlin mine will be built. It is, when built, expected to be one of the biggest open pit gold mines in the world, and one of the highest-grade. You can see their latest investor presentation here to get a bit more of a picture if you like.

So that’s one — and it is a favorite of Wall Street folks and some well-known investors, Marc Faber is on the board, John Paulson’s hedge fund has a major position, as does Seth Karman’s Baupost.

Porter doesn’t hint at the other “gold bank” stocks they’re recommending, but if you’ve got some you’d like to suggest I’m sure we’re all ears. To find stocks of similar size, though not necessarily similar prospects, you could also poke around in the Market Vectors Junior Miners ETF (GDXJ), which has Novagold as one of its top ten holdings. Those aren’t the real “juniors” that most folks think of when they daydream about penny mining stocks hitting it big, I’d think of them as more “midsize” emerging gold stocks, some producing and some with large deposits that have a relatively clear path to possible production, the top ten holdings in that ETF are all, roughly speaking, billion-dollar companies.

So… speaking of “juniors” … how does Porter close us out with “Step 4?”

“Step 4: Junior gold stocks.

“As you probably know, junior gold stocks can absolutely soar during bull market… but also fall much farther during a bear.

“In other words, “They’re among the riskiest publicly traded stocks… but potentially far, far more profitable. Think of them like ‘golden lottery tickets.’

“If we’re going to see the kind of bull market in gold like I believe we are, investing even a small portion of your portfolio in these stocks could help to ensure you live a comfortable and carefree retirement.”

He gives some examples, like Golden Star Resources and Seabridge Gold, of stocks that had blistering returns in prior gold bull runs — so with this last, riskiest step he’s essentially looking for massive leverage to the gold price. Here’s what we get by way of some hints:

“… we’ve uncovered a select handful of stocks… each of which we believe has the potential to ultimately replace Seabridge at the top of our “Hall of Fame” list.

“One of these, in fact, is a tiny gold company with a major deposit right next door to Seabridge.

“Its CEO was once at the helm of a company called Silver Standard. When he took over Silver Standard in 1985, silver was trading for around $6 an ounce. And Silver Standard was worth about $2 million in the stock market.

“When he left, in 2010, the price of silver had gone up about 400%.

“But his company had grown exponentially… to $1.9 BILLION.

“That’s a growth of nearly 100,000%.

“Now that he’s at the helm of this tiny gold company, will he do it again?

“Of course, it’s impossible to say. I certainly wouldn’t bet against it.

“But even if this stock’s performance is only a fraction as good, you could make a killing.”

Well, this one won’t surprise many folks who follow mining stocks, or follow the discussions here at Stock Gumshoe (we have several readers who are enthusiastic about the stock) — and I suppose it’s technically a junior miner, but from my inexpert perspective it’s about as de-risked as junior miners get. They are building the Brucejack/Valley of the Kings mine in British Columbia, and that’s not an expression — it is permitted and under construction now, and they’re targeting commercial production in 2017. That probably means 18 months, at least, since something always happens with mining projects, but according to their updates they seem to be making fine progress.

The company? Pretium Resources (PVG). The CEO who led Silver Standard (SSRI) was Robert Quartermain, and it was Silver Standard who owned both the Brucejack deposit and Pretium’s other asset, the Snowfield deposit. Snowfield is more of a long-term “maybe” for Pretium, and the odds are pretty good that it will someday be combined with Seabridge’s neighboring KSM project and sold or developed together in some way — it’s a low-grade deposit and would probably entail a huge capital commitment to move it forward, so bigger is better.

Silver Standard sold Brucejack and Snowfield to Pretium in 2010, in exchange for a big slug of cash and partial ownership. Silver Standard has sold off some of its holdings in Pretium but is still a significant owner, as is the Chinese mining giant Zijin. And neither of them have made much money on their Pretium shares as of yet, with the stock essentially stuck in a range right around the current price for three years or so as they’ve continued with permitting and fundraising for the Brucejack mine. Now the mine construction appears to be well-financed, and it’s just a waiting game for production late next year.

How will it work out financially? Well, this is an extremely high-grade underground mine, but it’s also probably going to be relatively difficult to mine as they have to find and follow the rich seams. Their 2014 feasibility study, which is based on $1,100 gold, $17 silver and a US$0.92 Canadian dollar (other than silver, that has all moved in their favor so far — particularly the exchange rate, which will help with their Canadian expenses), has them producing 504,000 ounces of gold a year for the first eight years at average operating costs of about C$350 per ounce over the life of the mine (that’s not the “all in” cost — it’s the C$163/tonne operating costs combined with the 15.7 grams/tonne average grade — 15.7 grams is almost exactly half a troy ounce).

So that high grade gives them quite a bit of flexibility and a pretty low operating cost, though their non-operating costs might be pretty substantial (their interest costs on their latest financing will be over $25 million/year, and that $350 million loan matures in 2020 so they do have to make sure that the startup goes pretty well).

If they can produce 504,000 ounces, giving up about 40,000 of those ounces each year connected to their streaming deals, they would net about 460,000 ounces. Sell that at $1,200 an ounce and that’s a little over $550 million. The project capital cost is only about $750 million, most of which has been financed already, so as long as the mine startup goes pretty well and they’re not completely wrong about their operating costs, I can see how this would be a very solid business even though production is scheduled to drop by about 20% after the first few years. They estimate a pre-tax Internal Rate of Return of about 35% and payback of capital costs within three years, and a mine life (not including any exploration they could do to extend it in the future) of 18 years. You can see their other scenarios in their most recent investor presentation, which lead to a five-year payback even at $800 gold.

If this was a riskless operation, and gold was certain not to drop, this would be a no-brainer — but because it’s a single mine, and it is not necessarily a simple mine (since it’s not just an open pit, and the seams are narrow), there’s some reason to be cautious. The company calculates the after-tax Net Present Value (NPV) of the Brucejack project as being in the range of $723 million ($800 gold) to $3.6 billion ($1,400 gold), using a 5% discount rate. I don’t think that’s a high enough discount rate to use for a miner, but even with a higher discount rate it’s easy to see that the company should be far more valuable than the current trading price IF gold rises considerably and stays high.

So by those metrics it’s not nearly as discounted as many “junior” miners — but that’s because it’s just about fully funded for construction, the capital costs are not outlandishly high, and it’s roughly a year and a half away from pouring gold, and investors have some trust in management. So it’s not necessarily cheap — but I’d agree that odds are pretty good that it will be a very successful investment if gold rises in value… and, of course, if Porter’s right about gold going to $10,000 you can pretty much smile while holding any mining stock.

Pretium is relatively safe for a miner that hasn’t mined anything yet, but that safety means it’s not nearly as levered to a gold mania as a lousier mine would be — Pretium is already worth $800 million, according to the market, and the assumption is that they’ll generate a nice profit in a few years. The most leverage you’ll probably see to a gold mania (at much higher risk) is in the low-grade mines that no one wants to invest in today because they’re too expensive — if gold is at $10,000 in a few years, people will be excited about the huge, expensive, low-grade potential mines that are currently on life support (like Livengood in Alaska, owned by International Tower Hill Mines (THM), for example — that’s not a suggestion that you look at THM, it’s just an example of a large, high-cost potential mine that I came across in my reading).

So that’s a handful of the 15 or so gold ideas Porter says he’s recommending in his new Stansberry Gold Investor report — and he does hint at just one more idea…

“More than 2x the Return of Gold?

“Yes, I’ve been telling you that gold stocks are the best opportunity in the markets today.

“But that might not be true — not quite.

“Don’t get me wrong. I’m not taking back anything I’ve said about the insane revaluation plan… or Negative Interest Rates, or the major, long-term reversal we’re seeing in gold.

“Gold stocks are on the verge of an incredible move.

“But I believe that the move in silver stocks could just as big. Perhaps even bigger.”

OK, silver is often considered the “even more levered” junior cousin to gold when it comes to precious metals, though it’s a tougher metal to forecast because it’s got a history of being both an industrial metal and a precious metal and currency. Porter mentions the gold/silver ratio, which comes up a lot among precious metals enthusiasts — the chart he shows indicates that over he past 45 years gold has averaged out to be 56X as expensive as silver per ounce, though it has fluctuated from about 15X to 100X. Right now it would take about 80 ounces of silver to buy an ounce of gold, so we’re at the higher end of that historical relationship.

Does that mean anything? I don’t know. There’s no fundamental reason for most pricing of non-industrial metals, just as there’s no fundamental reason why gold should be priced higher than platinum, a far rarer and equally shiny metal (and an industrial metal as well). These numbers make sense in showing long-term relationships, but I would shy from reading causality into the correlations or guessing at the specific turning points. Then again, I’m not generally much of a chartist, so perhaps I’m just being cantankerous on that point.

What silver does Porter like? More from the ad:

“I wouldn’t be the least bit surprised to see a move up in certain silver stocks like the ones we saw during the last silver bull run from roughly late 2008 to mid-2011, when…

“Silvercorp Metals skyrocketed more than 800%…

“Pan American Silver shot up 254%…

“Hecla Mining exploded 444% higher…

“And one of the world’s largest silver miners, Fresnillo, shot up more than 1,000%…

“As a charter member, I’ll give you the full details on the number one silver investment I think you should make right now.

“During that same bull market, this stock soared 1,140%.”

So is that enough for the Thinkolator to ID this stock? Not with 100% certainty, but it’s very likely that he’s teasing Silver Wheaton (SLW), which did indeed have exactly that kind of return from 2008 to 2011, in comparison with the other major silver miners mentioned.

Silver Wheaton is probably a good first step into silver investing, but it’s not a miner — SLW was the world’s largest streaming/royalty company until fairly recently, when the crash in silver and some aggressive expansion right before the end of the commodities bull market put a big dent in the shares (Franco-Nevada, FNV, is now larger). And over the long term Silver Wheaton, which really pioneered the “streaming” model (where you finance a mine that’s near production in exchange for receiving a set percentage of their ounces in perpetuity at a below-market fixed price), has more or less tracked with the price of silver, though with more volatility — as this chart comparing SLW to the iShares Silver Trust ETF (SLV) indicates:

SLW_SLV_chart10yr

Though yes, for some periods the outperformance can be dramatic — like that 2008 lows – 2011 highs number that Porter cites:

SLW_SLV_chartcherrypicked

What will all this mean? Your guess is probably as good as mine. I find many of the arguments of the gold enthusiasts to be quite compelling — I really do. That’s why it’s sometimes hard for me to be as skeptical as I want to be, and it’s also why I try to prevent myself from messing around with junior gold stocks very often.

Why do I find them compelling? Mostly because the history of paper currencies has been one of steady depreciation — and, over time, gold has been a good way to maintain some sort of purchasing power against that (usually gradual) devaluation of the dollar, the yen, whatever.

The rub, of course, is that “over time” might mean over decades or centuries — and gold has often provided no solace at all for many, many years at a time, or even done much worse than “cash” or other assets for a long time. Partly that’s because of shifting fashions and demographics, partly because of changing patterns of economic or political tumult that have driven people into or out of gold as a “safe haven” in the decades since gold ceased being the backstop for our currency… but regardless of the reason, the fact is that gold is real and shiny and humans have coveted it for millennia. That can change, as anything can change, but it seems unlikely.

I continue to hold some portion of my savings in gold, and to allocate some portion — around 10% right now — of my equity portfolio to commodities-related investments that have at least some exposure to precious metals, including those positions mentioned above in the big ETFs SGDM and GDX and my “hard asset” positions in Sandstorm Gold (SAND, SSL.TO), First Mining Finance (FF.V, FFMGF), Altius Minerals (ALS.TO, ATUSF), and a few dinky speculations on warrants or options (including those Brazil Resources Warrants I mentioned earlier in the week).

Those commodities positions have all generally been drags on my portfolio in recent years, but I think this kind of exposure is worth holding largely because of the potential for further currency devaluation — and, I suppose, because of the potential for something more abrupt and frightening like Porter describes in his ad. I don’t personally expect a gold standard to return, but there’s obviously a global financial imbalance that creates the potential for really worrisome events, particularly with countries both ramping up borrowing at absurdly low (or negative) rates and competitively devaluing their currencies in an attempt to boost exporters… and generally when worrisome events hit the currency markets, a lot of investors think that gold is a good place to be.

So far, the currency fretting around the world in recent years has sent folks to the dollar, driving the dollar up and gold down and boosting the relative standard of living in the United States (even as it gives some multinationals fits)… but I can see the logic that the next step might be for the dollar to drop in favor of gold, particularly if the US, the last major sovereign borrower in the world that’s paying a non-trivial interest rate to borrow, goes NIRP. When you can’t make money by lending to a safe borrower, or even in the bank, then gold as a “store of value” with some perceived safety is no longer at a competitive disadvantage… and the gold market is far, far smaller than the currency markets, particularly than the market in US Treasuries, so the impact of that kind of move could certainly be magnified.

Whether that turns into the kind of all-out chaos that Porter predicts, or leads to a genuine currency crisis with hyperinflation and a restoration of the gold standard that could send gold prices soaring, I don’t know. We don’t know what would happen with a sustained period of negative interest rates, because such a thing has never happened before. Porter pushes the assumptions out a few steps more than I’d be comfortable with, and it might mean underestimating the power of inertia and the status quo and the ability of governments and central bankers to continue manipulating currencies, but that doesn’t mean he’s wrong — just that his logic, persuasive though it is in ad form, does not mean there’s just one possible outcome.

I don’t know where to place the odds of such a cataclysmic currency event, or even of a more mundane gold bull market in a given time frame, so I try to keep a level of gold and precious metals exposure that’s meaningful in providing insurance and some speculative potential, but not large enough to be of material harm to my retirement prospects if gold is at $800 in ten years. My feeling tells me to have an above-average exposure to gold right now… but that’s a feeling, and I’ve never found that my feelings are particularly good at predicting market movements.

Gold tends to bring out strong opinions, so if you’ve got one to share I’d be delighted to hear it — have a forecast for what you think will happen with the shiny stuff in the next five or ten years? Favorite ways to invest in or speculate on gold? Let us know with a comment below.

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pinnacle1263
pinnacle1263
April 10, 2016 3:21 pm

13 above. Think there are 15 total…although a couple may not be right. Hard to imagine AG and Fnv are not on list. Both heavily promoted in past be Casey and crowd. They might be last two

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pinnacle1263
pinnacle1263
April 10, 2016 3:23 pm

Outside of Midas and NewMarket…I like the list a lot. Most have very good prospects to outperform if gold rises

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hendrixnuzzles
April 10, 2016 3:49 pm
Reply to  pinnacle1263

How many does one need?
I think one should also make groups and select according to the individual perceived need…
large and small and cap (and exploratory/speculative if so inclined), royalty/streamers, gold vs silver.

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faz
Irregular
faz
April 11, 2016 8:59 am
Reply to  pinnacle1263

Hi pinnacle1263, I would be keen to hear your reservations against midas and newmarket.. care to share ? Thanks..

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pinnacle1263
pinnacle1263
April 11, 2016 11:44 am
Reply to  faz

I do not follow them and have never invested in these two. More familiar with rest of list. They could be great…uncertain to me

ksand52
Member
ksand52
April 10, 2016 6:06 pm

I must begin this comment with a big Thank You to Travis for all of his dedicated work and to all the Gummies that actively participate in this forum. I have been a member of this group for approx.. 6 months and probably like most I have never posted and yet I so look forward to seeing a new entry in my Email from Stock Gumshoe. The collective spirit, intelligence, and experience of this group are absolutely priceless, regardless of the subject.
I felt compelled to share my own experience in this discussion on gold. One of the first articles I ran across after becoming a member had a link to Myron Martin article dated 11/21/2015 (THANK YOU MYRON). I apologize I do not have that link but Travis or one of the other Gummies can provide. I took the entire month of December to actively investigate the companies mentioned in his article. By January I was ready to make my move (gold and gold stocks were at an all-time low) I set up a portfolio just for this. Here are my results so far:
I went with Myron on this one, Silver play- First Majestic Silver (AG) bought 1/3/2016——- as of market close 4/8/2016 ——-UP— 94.10%
Jumped on this one after announcement that South African Government would let the Rand Fall— Harmony Gold (HMY) bought 1/6/2016—-as of market close 4/8/2016—–UP—–174.48%
Barrick Gold (ABX) bought 1/19/2016——as of market close 4/8/2016—–UP—–85.25%
ETF Play— Market Vectors Junior Gold Miners (GDXJ) bought 1/25/2016——as of market close 4/8/2016—–UP—–61.51%
I do not offer this as investment advice. If you are interested DO YOUR OWN HOMEWORK BEFORE INVESTING. Check the 3 month charts on these companies, the charts go straight up with no substantial draw backs. Most have met or exceeded their 52 week highs
Will this gold rally continue (don’t know)
Has gold hit a bottom (don’t know)
Is there a gold rally in play (at least on some stocks?)
It has been a nice first quarter so far!

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SoGiAm
April 10, 2016 7:51 pm
Reply to  ksand52

Ksand52, Welcome to Stock Gumshoe. Fabulous initial post. Thank you for the well deserved shout out to Myron, Travis and recognition of the esprit de corps of the Gummunity. Your research and analysis in late November and December really paid off and I congratulate you. To further realize the awesome benefits of being an Irregular member, may I suggest that you subscribe to articles/threads you wish to receive e-mails as posts are made. Another article that Travis penned that provides a look under the hood of this site is here: http://www.stockgumshoe.com/2014/11/first-steps-and-favorite-tools-for-new-investors/ Stock Gumshoe is also the home of THE best biotechnology forum on the planet, lead by Dr. KSS, MD. PhD., whose articles may be found here: http://www.stockgumshoe.com/author/dr-kss-md-phd/ What’s not to like. 🙂 We look forward to hearing from you soon. Best2You-Ben

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Ramaswami Venkateswaran
Ramaswami Venkateswaran
April 10, 2016 6:49 pm

Excellent analysis of Gold and Silver. Thank you all for the comments and discussion. I have followed mNy of these leads and besides physical gold ( mainly 22 and 24 K hold jewelrt that my wife has inherited and that we have bought over the years), we now have positions in CEF, AU, GDX, GDXJ, IAU, GLD , SLV, KGC, SGLD, ABX and IAG. Iam also looking at PAAS and FNV. I have avoided SLW so far, but would look it again same for AUY, HL, BVN. SGDM as an alternative to GLD sounds worth looking at, any views on OUNZ or PHYS?

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jamespaul108
jamespaul108
April 26, 2016 11:28 pm

GLD and OUNZ hold gold in London. Maybe I am too nervous, but I personally hesitate to buy them. London is near a major earthquake fault line.
http://www.mirror.co.uk/news/uk-news/monster-earthquake-could-hit-britain-5551394
I own some CEF and PHYS in IRAs. If held outside IRAs, I believe one is required to file IRS Form 8621, which TurboTax and similar software do not support.

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hendrixnuzzles
April 10, 2016 9:21 pm

$SAND…long $SAND…a reference was made to the CEO of Sandstorm Gold. It is Nolan Watson. I suggest anyone interested in the sector take a look at the videos on the Sandstorm website, and also this You Tube recording of the year-end 2015 investor conference call.

https://www.youtube.com/watch?v=QRllT5a969Q&feature=youtu.be

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hendrixnuzzles
April 11, 2016 9:18 am
Reply to  hendrixnuzzles

Gold Lists and ETFs…for those interested in making precious metal investments,
you might want to take a look at the royalty assets held by FNV, SAND and other streamers before picking individual miners or an ETF.

Franco Nevada even has a banner on their site page with their deals, that says
“WHY BUY AN ETF?” (when you can buy FNV).

As far as individual stocks, the royalty lists are a good fishing ground. For example, SAND
has a large deal with Yamana Gold that gets prominent billing in their financial projections. Thus Yamana is confirmed as a reasonable speculation, and SAND is confirmed as a low risk way to profit from Yamana.

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hendrixnuzzles
April 11, 2016 11:40 am
Reply to  hendrixnuzzles

$SAND…Accepting applications to the Nolan Watson Fan Club.
$SAND up over 11% today, touched $ 4.03. Just getting started, IMO.
Looks like a real bull move across mining commodities.

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trader132
trader132
April 11, 2016 10:27 am

Regardless of the stocks being teased, who do you think this mystery government figure is behind this ‘metropolitan plan’? 🙂

pinnacle1263
pinnacle1263
April 11, 2016 11:50 am

My list of 13 may be incorrect on a few as it relates to stansberry. Just guessing. At one point the gold newsletter crowd has promoted most of the 13..and the price action and volume on almost all has exceeded the market by a lot Since the offering of a list to buy by stansberry. Some…like Slw, Fnv and gdx cannot be moved by a newsletter recommendation…too large..but the small and mid size ones can exceed the market with a recommendation

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pinnacle1263
pinnacle1263
April 11, 2016 12:02 pm

Link to a blogger who is also speculating. Never heard of his site found in Google search. Dyod. Appears to be a free site.
http://incakolanews.blogspot.pe/2016/04/three-of-15-stocks-porter-stansberry-is.html

hendrixnuzzles
April 11, 2016 7:05 pm

Commencement of commodity bull market ?
In case you didn’t notice, the one-day gains were pretty impressive in the gold and silver patch today. Long everything but FNV.
SLW +4.42%
PVG +10.1%
NEM +6.7%
RGLD +5.42%
SAND +8.76%
SSRI +11.46%
AEM +5.48%
TCK +9.1% not in gold and silver, they do ordinary rocks and minerals and caused me a lot of heartache last year.
BCEKF +16.57%…they have a silver claim, no mine yet.
FNV +3.84% I went to buy this today but typed in ZFGN by accident. A nervous tic.

Feels like a seismic move, broad and strong. Apparently triggered by a measly jump in gold and silver prices, Janet Yellen yawning, and Porter Stansberry’s excellent marketing.
No seriously, I think people’s attitudes are changing and a whole lot of them decided to do something about it.

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hendrixnuzzles
April 11, 2016 7:32 pm
Reply to  hendrixnuzzles

Bull move today not universal…checking other commodities, the move today seemed localized to gold and silver stocks, and also to miners. Checking quickly there was not a similar widespread move in foodstuffs or oil and gas.

Ballpark action was precious metal small cap up roughly 10%, the bigger guys 5%.

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pinnacle1263
pinnacle1263
April 11, 2016 9:44 pm

Feels like a pullback starting now…but if we are in bull market who knows. Us goldbugs are always ready for another shellacking. If we get hit over next few days I may buy a few more gold stocks.

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hendrixnuzzles
April 12, 2016 7:39 am

April Credit Suisse Outlook…Hi friends, Credit Suisse report from April this year
is bullish on gold and silver. For those of you looking for tickers, their picks are NEM, AEM, ABX, LUN, THO, HBM. Long here NEM and AEM.

In passing they are bearish on the dollar and copper. One other interesting note, they show India and China accounting for over 40% of world physical demand; whereas holdings of ETFs are 55% in the United States.

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trader132
trader132
April 12, 2016 7:49 am

I think the marketing that Stansberry do has some considerable clout. If you look at the 5 day charts for symbols like NG, PVG etc, you can see that they’ve been pretty much straight up since Wednesday last week, which ‘coincidently’ is exactly the day that Stansberry held their ’emergency presentation’ and launched the service.

An offer going out to, say, 50,000 names, needs only a few thousand people to get on board to see a considerable amount of volume transacting on the promoted stocks, and the 5 day charts (since the launch day) certainly confirms this! You wouldn’t think that a simple newsletter promoter would have any market-moving clout at all, but when you have the list size that Stansberry does, you actually have a considerable amount of market-moving power!

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trader132
trader132
April 12, 2016 9:08 am

Porter himself said the email went out to 48k names…

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Eric
Guest
Eric
April 24, 2016 1:42 am

Stansberry claims they have 500,000 subscribers….nut more than that are viewing their “commercials”…probably > 1 million at least

Gui_
Gui_
April 12, 2016 9:03 am

The Yen looks to be confirming uptrend, so if the USD breaks below support Gold is going to continue up folks.

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SoGiAm
April 12, 2016 9:19 am
Reply to  Gui_

SGS Metals 2016 Calendar available at: https://calendar.google.com/calendar/render?tab=mc&pli=1#eventpage_6%7Ceid-NTdzcHAwMHI2bzBtbzk2bHVkMmZxaGgxNWMgZmdtYXRzbjluMHU2YW4zdWk0cmkyMHQ0ZzBAZw-1-0-

For access see: SGS BIO 2015 Calendar: http://www.stockgumshoe.com/2015/04/microblog-biotechmedical-catalyst-calender/

Hendrixnuzzles, BioLong, SuperSpeuth, ZKSS , alanh, arch1, LarryG, JeanP and, subramania currently have access to add, update and view rights. FeedTheCalendars-Benjammin’ Long StockGumshoe, Gummunity 🙂 Best2All-Ben

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ksand52
Member
ksand52
April 12, 2016 11:56 am

Could This Be a Possible Buyout in the Making or at the Very Least a JOINT JOINT VENTURE.——– OR Maybe a Big Cat Fight——–Opinion’s Anybody?

Barrick to become NuLegacy’s Largest Shareholder at 16.7%
RENO, Nevada, March 3, 2016 /PRNewswire/ —
NuLegacy Gold Corporation (NUG.V: TSXV) (OTCQX: NULGF) (“NuLegacy”) reports that it has closed the previously announced transaction with Barrick Gold Corporation (“Barrick”) whereby NuLegacy has acquired Barrick’s 30% working interest in the Redhill property (the “Property”) in Nevada hosting the Iceberg gold deposit.
In exchange, NuLegacy has issued 32 million shares (the “NUG Shares”) to Barrick and granted a 2% net profits interest royalty from commercial production on the Property. Barrick now has the right to nominate one director to NuLegacy’s board and to participate pro rata in all future issuances of shares or convertible securities. Barrick has provided NuLegacy with certain stand still and voting restrictions in favour of NuLegacy in respect of their shares for a period of two years, subject to certain conditions. NuLegacy now owns 100% of the Property, subject to the underlying royalties.

7 April 2016
OCEANAGOLD ANNOUNCES STRATEGIC INVESTMENT IN NULEGACY GOLD
(MELBOURNE) OceanaGold Corporation (TSX/ASX/NZX: OGC) (the “Company”) is pleased to announce that it has entered into an agreement (the “Agreement”) to make a strategic investment in NuLegacy Gold Corporation (“NuLegacy”) (TSXV: NUG), and, by way of a private placement, purchasing 47.66 million common shares of NuLegacy at a price of C$0.14 per share for gross proceeds of C$6.67 million.
Under the terms of the Agreement, upon the completion of the transaction, so long as the Company holds not less than 5% of the then issued and outstanding common shares of NuLegacy, it will have the right to nominate one director to NuLegacy’s board, appoint one representative to NuLegacy’s technical committee, participate in all future equity financings of shares or convertible securities to maintain and/or increase its then equity ownership interest in NuLegacy to 19.9%, and have the right of ‘first offer to negotiate’ should a joint venture be contemplated for the purposes of financing the Iceberg Project.
Upon completion of the transaction, which is expected to close on or about April 13, 2016, the Company will own approximately 19.9% of NuLegacy’s issued and outstanding shares on an undiluted basis, prior to giving effect to any shares purchased by Barrick Gold Corporation (“Barrick”) and/or Waterton Precious Metals Fund II Cayman, LP (“Waterton”) pursuant to their existing equity participation rights to maintain their current equity ownership interests in NuLegacy. The Company also has the option to purchase up to an additional 9,303,845 common shares of NuLegacy, subject to Barrick and/or Waterton, LP exercising their participation rights.

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hendrixnuzzles
April 19, 2016 1:02 am
Reply to  ksand52

Sounds very friendly and co-operative. Obviously Barrick and Oceana
think the NuLegacy holdings are pretty interesting.

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hendrixnuzzles
April 19, 2016 1:21 am
Reply to  hendrixnuzzles

$NULGF…NuLegacy Gold…I’m going to take a position. Lots of
really important people in addition to Barrick and Oceana
are very interested in this mine. BOD includes folks from SAND and FNV.

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hendrixnuzzles
April 19, 2016 8:06 am
Reply to  hendrixnuzzles

Thanks ksand52 !

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letitbe
Irregular
letitbe
April 12, 2016 4:23 pm

Regarding the Stansberry Metropolitan Plan, there was a little blurb at the end talking about who their analysts thought were the best “major managers” and the 2 names that were mentioned were Morgan Poliquin with Almaden Minerals (AAU) and Ross Beatty with Pan American Silver (PAAS)…Just an FYI for those who might be interested…..

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Eric
Eric
April 14, 2016 12:48 am
Reply to  letitbe

Letibe I was interested in that, thanks for that.

845bayside
845bayside
April 16, 2016 4:12 am

I just switched to IRR from freebie a couple of days ago, therefor I am not sure that I am doing this correctly so far as participating in this discussion. If there is anyone who is not familiar with Porter Stansberry I would like to inform you he is a great Publisher just as Travis has stated. He has a publication called Credit Opportunities that he is using to play the debt crises by buying company’s distressed bonds at distressed prices but not before he and his team due a completely detailed study of every aspect of the company who’s bond debt is in big trouble. He gives the most detailed analysis I have ever read including Morningstar. Concentrates in 2-5 year debt and includes the recovery numbers if that bond defaults. Next month one of his first recos comes due and the bond is already at par. Nice profit yielding 11% in 7 months. None of his other picks look like they are in trouble. I was very surprised on his new Gold Venture. I am an equity investor so the Bond venture was completely new to me. As far as gold and silver I feel that I know the trends inside and out. This is the best time frame ever to come along that I can remember where there are so many factors converging on the bull side of precious metals, to the point that I have sold all equity positions not related to this sector except one bio-pharma, OPK and one inverse interest play. The precious metals are at the beginning, in my opinion, of the biggest bull run in modern day history. The junior minors are up over 60% in the last 3 months. Their ETF, GDXJ collapsed much more severely than Gold. As a matter of fact down to the tune of 90+% while gold went from about $1900 down to $1050. This move of 60% this year was in a blink of an eye. Gold up 16% GDXJ uo 60%. In most recent days silver has moved better than gold and SLW has sprinted up with silver but I believe SIL, an ETF of Silver Minors has done much better. The currencies are racing to the bottom which increases the dollar price for the metals and what makes this a very beautiful set up is that the other currencies are collapsing with the most recent down move in the dollar. Canada sold more then 90% of their gold culminating in March and the bulk of that bullion went to China of all places. The same country that has seen the yuan voted in as the next reserve currency. If China does not announce in a very short period of time that they will back the Yuan with a certain % of gold they will be missing one of the best opportunities to gain respect from the majority of world currencies and countries. The U,S. dollar has started correcting from a totally over bought and over valued position and will rapidly pick up steam in a race to the bottom which I really don’t think they ultimately wanted to actually win but we have put ourselves into this precarious position. Now add our debt problem that has resulted in many of the foreign competitors not buying our debt but selling trillions of debt they had previously were buying as the Treasury experimented with our systems and financial way of life. How many times have we heard that the ultra wealthy citizens of America as well as the millions of millionaires around the world were not interested in Buying Gold and Silver because the metals paid no interest and would cut their interest based investments if they decided to indulge in asset based commodities buying; well that has stopped and has gone negative to the point of paying to have their money held in “safe places”, well that has reversed also, at least investing a good amount of their reserves in precious metals gives those monies a chance of earning a profit instead of a guaranteed 1/2 to 1 1/2% decrease. The world has changed from all currencies intentionally being manipulated down to very shortly looking to normalize the deadly result of this experiment by searching out gold, silver and other hard assets to once again stop the decline of their financial death spiral no matter what they have to pay for these hard assets. Let’s not even mention the collapse of the zero interest auto loans (bubble) the student loan bubble, another housing bubble, etc. Just for good measure add in an ISIS attack in the U.S. at a mall, reservoir, power plant, electronic grid, the government confiscation of gold and silver, the government forcing investors to buy our debt……..There are additional convergences, but I shall leave this for the next time we are discussing the flash before your own eyes as the prices of gold and silver and other hard assets. There will be commotion in our states, cities, neighborhood, streets and our next door neighbors. Welcome to the real future of our world.

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hendrixnuzzles
April 19, 2016 12:56 am
Reply to  845bayside

“How many times have we heard… Buying Gold and Silver [pays] no interest…”
Numerous gold royalty companies and miners PAY DIVIDENDS. They are small and I never really paid much attention to gold and silver companies as dividend payers. But the returns are POSITIVE, and in a world of negative interest rates, these dividends are meaningful.

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Faz
Irregular
Faz
April 23, 2016 4:43 pm
Reply to  hendrixnuzzles

Indeed it is pretty crazy that one can get a 5% yield at the depressed gold prices of the last few years… from companies like these that I have been holding onto:
Canada.. nevsun , mandalay
USA… GORO
Oz… Registered Resources
Looking forward to seeing the last 5 years of patience pay off in the next five.

Best regards all

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jamespaul108
jamespaul108
April 26, 2016 11:04 pm
Reply to  Faz

Did you mean Regis Resources?
It currently pays about 2% dividend.
I couldn’t find “Registered Resources’.

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hendrixnuzzles
April 19, 2016 12:49 am

$PVG…Long $PVG. Sure wouldn’t want any unsolicited offers to buy my gold mine. It can be a real problem when somebody comes along and doesn’t want to pay you fair value for your gold mine. It takes a lot of effort to build these things.

Pretium Resources Says Brucejack Project On Track for Commissioning in Mid-2017; Adopts Rights Plan
6:44 AM ET, 04/18/2016 – MT Newswires
06:44 AM EDT, 04/18/2016 (MT Newswires) — Pretium Resources (PVG) reported an update on its Brucejack project on Monday and announced late Friday it is adopting a shareholder rights plan.

The metal explorer said construction and development remains on-schedule and on-budget for commissioning of the underground mine in mid-2017, with the foundation for the 330-person camp substantially completed, along with the excavation to level the site for the mill facility.

In a separate release, the company said it has adopted a shareholder rights plan, subject to regulatory approval, to provide the board and shareholders with sufficient time to fully consider any unsolicited take-over bid.

The stock closed up to $6.47 on Friday, near the top of 52-week range $3.99 – $6.95.

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hendrixnuzzles
April 19, 2016 3:15 am

Junior gold producers of interest….$AAU, $NULGF, $BCEKF, $BRIZF…KLONDEX…these are speculations in which I am long (AAU, BCEKF, BRIZF) or am strongly interested (NULGF, KLONDEX). They are not my main investments in the gold/silver sector, but they are interesting enough for me to take a position. I am also long $PVG but I do not consider them a junior or exploration company any more, they are graduating to the big leagues…or at least to Triple A.
DYODD. Briefly here is what I like about them:

$AAU…$1.15…very respected management and has a 100% owned, potentially large claim in Mexico. They recently acquired an option on the cheap for a mothballed gold mill, which will reduce their capex in the event the Mexican project goes into production. Minor detail is that the dead gold mill is in Alaska, and the target mine property is in Mexico…but hey, if it was shipped it to Alaska and assembled, then it can be disassembled, packed up and shipped to Mexico. Almaden also spun off to their stockholders a royalty company ALMADEX which will get 2% NSR on the production of the Mexican plant. That’s a lot of trouble to go to unless you believe the Mexican project is going to get of the ground and produce royalties. To say nothing of taking apart a mill in Alaska and shipping it to Mexico.

$NULGF…NuLegacy…16 cents…thanks to a reader who mentioned this one. Just looking at their website, these things jump out: Nevada jurisdiction, in a major gold belt, huge size, open pit processing. No clear mention of a mill but there is a lot of infrastructure in the area. What really sets it apart is the degree of interest in the project from big shots who have geologists and mine operating experience. ABX and Oceana have acquired stakes and SAND and FNV are involved. If the project passes due diligence from the likes of ABX, SAND and FNV then it’s probably been checked out pretty well.

$BCEKF..$1.60….tiny firm has a big claim in a silver/zince deposit in Peru. It is run by a woman, she must be pretty good and motivated to survive in this field. There is a long way to go before production, there is no mill; and the company was having government problems. These are big negatives that would usually keep me away. But listen: There is so much potential collateral mineral income, that the cost per ounce of the silver production could be ZERO dollars per ounce after the secondary mineral income is applied. The stock will be extremely leveraged to the price of silver and has zoomed up from $ 1 to 1.60 the last few weeks.

$BRIZF…75/80 cents… Brazil Resources…this company is popping up in a lot of gold newsletters and I own some, but I do not consider it a first-class gold speculation. To me it is a uranium speculation because of an important claim they have in the middle of a very rich and developed Canadian uranium zone. The CEO is Mr. Adnani of UEC.

KLONDEX…did well with this one but sold it to raise cash for something else. Would re-enter on a pullback.

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hendrixnuzzles
April 20, 2016 11:56 pm

CHINESE PEG…THE GOLDEN RULE…He who has the gold, makes the rules…well this is interesting. China has a pseudo move to currency -to-gold convertability…but not quite, since only 18 entities will be able to exchange yuan for gold at the official price. Sort of like the Fed window…in the US, the banks line up to borrow at near zero; but in China the Chosen Ones will line up to exchange yuan for gold.

The difference is that the Chinese will be getting real money at their window.
And the Chinese want in on the price rigging, which is only fair. Short-term they
want to keep the price down like everybody else. But I think with the attempt to control
the price, there will still be problems. The Yuan/USD rate will be the key and I think that the USD price of gold will start to creep up. Don’t see how it can be avoided now that China has taken this step.

At first blush I see a weakening USD, stronger Yuan obviously, gold rising in USD over the Chinese peg, and the yuan-to-gold fix a direct result of the aims of Chinese economic social imperialism, as opposed to the aims of the Atlantic social democratic bank plutocracy.
In the end price controls will not work and real currency-to-gold convertability is the best solution. So I think there is some good in the move, but it looks more lke an attempt to cap the price of gold. We’ll see how long the Chinese can keep the window open, and at what price.

Liking silver more and more. The attempts to fix the price are not as urgent for the big governments, and it is still worth something. The traditional ratios and short-term technicals argue for silver appreciation.

It is not a free market, but I think the move is designed

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hendrixnuzzles
April 21, 2016 12:00 am

to gain some influence in the price of gold that China will manipulate in a tug of war as she sees fit.

Still bullish on gold though tempered now short-term; bullish on silver; still don’t have faith in the direction of the dollar, worse now with the Chinese move. Open to disagreement.

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