TheDailyGold

I read a piece this morning by Josh Brown, the Reformed Broker, in which he destroys the 1999 comparison for the stock market.  He makes some excellent points about why the stock market is not only not over valued compared to 1999, but is actually a bargain.  You should read it because we should all be considerate of rational views.

I also read The Fed is NOT Printing Money by Jesse’s Cafe’, which offers a view into a money creation process that is more geared toward the gaming of the financial markets through intermediary banks than it is the normal inflation of old.  I mean seriously, I do not call Ben Bernanke an evil genius for nothing; it seems that he and his associates have taken monetary policy to the Nth degree and figured out how to paint inflation as non-inflationary.  Our hero.

The point is that I think Josh Brown is 100% right.  There is no mania in stocks.  In fact, stocks’ worst offense right now is that they are strenuously over bought and sponsored by ‘dumb money’ aggregates that are equal and opposite to one year ago, when the same dumb money was exactly as bearish as it is bullish today.  As he notes, the mainstream public may no longer be interested in the markets, but whoever that dumb money is, they proved a good indicator on an imminent bull phase last May.  Again, we present the proof compliments of Sentimentrader.com:

Smart-Dumb money sentiment 1 year ago

Smart-Dumb money sentiment today

I have absolutely no problem being bullish on the stock market because it is made up of companies both bad and good; very good.  After Memorial Day, my wife will re-start her career at a currently non-public technology company about which we are very excited.  Its technology began as the founder’s MIT thesis and is now rolling out into major markets and outlets.  One brilliant kid, an idea, a market and voila.

I totally believe in human progress and what great companies like Microsoft, Intel and later Google and Apple have brought us.  I believe in the software systems that are making the burdensome healthcare system more manageable and great companies the world over that fill a need, improve lives and win out in the markets of public opinion and financial transaction.

But the point I think the Reformed Broker is missing is what underpins the market of stocks in these corporations.  Looking at the stock market as a stand-alone, I tend to agree with his viewpoint.  But when policy makers are woven into the fabric of the market to this degree, they must be factored.  Questions must be asked like “why on earth, with this excellent and healthy stock market and sufficiently functioning economy are they continuing to repress interest rates by buying $85 billion in bonds per month?”

Aren’t those bonds debt?  Where did that debt come from?  Does bloated debt not imply that the economy in which the stock market’s components ply their trade is a leveraged thing, as opposed to an organically thriving thing?  Why can’t we just let the debt float on the open market and let it get resolved by the market if things are so good beneath the surface?

I think you know the answers to those questions.  That is the main point of bears questioning the stock market’s fundamentals.  Not the old PE Ratio canard.  We are now in the post-PE world.  What matters is policy because it is policy that has created the seemingly healthy stock market.  So which side are you on; the side that sees the stock market and the stock market only, or the side that sees the stock market within the context of the universe in which it exists?

Biiwii.com, Notes From the Rabbit Hole, Twitter, Free eLetter

1. Huge rallies begin from these conditions

Below is the NYSE Gold Miners Index which is tracked by the GDX ETF. Look at the RSI. Not only did it reach a multi-decade low but it has remained oversold far longer than during the comparable periods. In the four previous periods, the market rebounded suddenly and strongly in percentage terms. Meanwhile, the bullish percent index, a breath indicator is more oversold than in 2008. We plot the indicator with a 10-week moving average that shows it as far more oversold than in 2008. While this indicator does not go back that far, odds are it is likely at a 13-year low.

 

 

2. Springtime is usually a turning point for gold stocks.

According to seasonal analysis, precious metals usually peak in the late spring. However, a study of the past 12 years shows that its more apt to say that spring is a turning point. In the above chart we mark the tops or bottoms that occurred in April or May. Assuming we are presently at a bottom then spring will have marked a turning point in gold stocks during 11 of the past 13 years.

 

3. A selling climax already occurred and the recent low is a false breakdown.

The selling climax occurred in April when GDX declined 24% in only six days. The 20-day volume average peaked days later at 30 million shares. The previous high was 21.5 million shares in June 2012. GDX has also formed a bullish RSI divergence and Monday reversed on record up volume. Prior to Monday, recent weakness was on average volume which was substantially less than during the selling climax. This is a subjective thought but this potential bear trap and false breakdown could be the retest. When you get a failed retest that is a trap or false move it can result in a V bottom. Look for a potential head and shoulders bottom or a V bottom. Finally, if the RSI pushes above 50 then that is a good sign.

 

 

4. History suggests the cyclical bear is just about over

Each secular bull market in gold shares has endured two major cyclical bear markets. The chart below, which uses weekly data shows the four corrections. It is possible this correction could last a bit longer and move a bit deeper but in the big picture, the next big move is higher, not lower.

 

 

5. There is potential for a huge short squeeze.

Gross short positions are at all-time highs. Some short positions were covered as Gold rebounded from its crash low at $1320. After the rebound fizzled short positions reached an all time high. Gold has formed a short-term double bottom. Without a doubt, short covering contributed to Monday’s huge reversal. If Monday’s rebound is sustained, look for a torrent of short covering to follow.

 

 

6. Cyclical rebounds usually are huge in percentage terms

The chart below shows the first five months of performance of the cyclical bull markets within secular bull markets. The advances that began from the least oversold conditions were the least powerful. If the next rebound is similar to 2000 or 2008 then it will achieve more than 50% in the first five months.

 

 

There you have it. It’s been a tough road for precious metals but the path ahead has strong potential of being significantly profitable compared to these levels. If you’d be interested in our analysis on the companies poised to recover now and lead the next bull market, we invite you to learn more about our service.

 

Good Luck!

 

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com

Falling Prices Are Natural

The following is excerpted from a commentary originally posted at www.speculative-investor.com on 16th May 2013.

The US government usually admits to “price inflation” of about 2%/year. As far as we can tell, the actual rate is probably at least 5%/year, but no more than 7%/year. Let’s say 5%/year for the sake of argument. Considering what the Fed has been doing on the monetary front, 5%/year still seems low. It’s certainly a long way from the hyperinflation that some gold and commodity bulls expected to happen by now due to the Fed’s profligacy. Why?

In previous commentaries we’ve discussed the apparent discrepancy between what has been happening to the money supply and what has been happening to “price inflation”. We don’t want to go back over this ground in today’s report, other than to note the following: First, there is plenty of “price inflation” if you know where to look for it. The new all-time nominal price high for the US stock market and the surging demand for junk bonds are two examples. Second, monetary inflation’s effects on prices are always non-uniform and can encompass large and variable time lags, making the exact price response impossible to predict and difficult to correctly interpret.

In today’s report we want to make the additional point that the central bank’s historical effect on the “general price level” is much greater than most people realise, for a reason that never occurs to most people: the natural tendency in a market economy is for prices to trend downward over time.

Most people have been conditioned to believe that rising prices are the natural way of things and that a strengthening economy leads to higher prices. The opposite is actually true. Real economic growth involves producing more via greater productivity and/or population. If more is produced within an economy and the money supply remains constant, then the so-called “general price level” will have a downward bias. In other words, if the supply of money is stable then the increasing production of goods and services will lead to lower prices for most goods and services. The purchasing power of money will increase over time.

An implication of the above is that to bring about a rising trend in consumer and producer prices the central bank must first engineer sufficient monetary inflation to counter the natural downward trend in prices. In the US, for example, increases in production due to productivity improvements and population growth would probably result in an average rate of decline in the “general price level” of about 3%/year, so if prices are rising at 5%/year it effectively means that monetary inflation is adding about 8%/year to the price of the average good/service. It actually isn’t that straightforward, but the general point is valid.

If you are having trouble imagining the combination of falling prices and strong growth, just take a look at the computer industry. In this industry the rate of real growth has been so rapid up until now that even the Bernankes of the world have been unable to prevent prices from falling.

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There has been a growing shift in favour of assets relative to bank deposits. This was initially encouraged by zero interest rates, but more recently there is little doubt that Cyprus’s bail-in has accelerated the trend. This explains the bull markets in bonds and equities, which conveniently underwrites the entire banking system. It is however too early to offer evidence of falling deposit balances held by non-banks and the general public because depositors as a whole have been remarkably complacent, but there is ample evidence that liquidity from monetary expansion is inflating financial assets faster than bank deposits.

This helps explain why, for example, Italian 10-year bonds are on a 4% yield. The reason, doubtless reaffirmed by the Cyprus bail-in, is that investors with cash balances think over-priced sovereign debt is less risky than adding to their euro deposits. However, the central banks are relaxed because weakness in deposits at any single bank is easily covered through the banking system, insulating individual banks from depositor-withdrawal systems. Presumably, banking counterparties are also complacent because they can be reasonably sure to be exempt from any bail-ins. They have the comfort of knowing the banking system is underwritten by all those complacent enough to leave money on deposit beyond the insured level.

However, some of depositors’ cash balances post-Cyprus will have gone into physical gold and silver, which explains why the bullion banks operating in the futures markets and the central banks behind them are so keen to dissuade us that gold and silver is a safe haven. I recently interviewed Ronnie Stoerferle, the Vienna-based analyst, who put his finger on it: since Cyprus, there has been a sharp rise in European demand for physical gold, with the pressure being felt by the bullion banks unable to deliver bullion.

At least one bank was recently reported to be only prepared to settle bullion liabilities in cash. Therefore the price knock-down in April was a logical response by the bullion banks, which had to defuse customer demand for physical delivery. But given that the driving factor was not speculation but a reluctance to add to deposits in the banking system, the jump in demand for bullion at lower prices was inevitable.

Where does this leave things? The crisis in bullion markets is worse than it was before. A good example of how little physical stock there is can be gained by tracking bullion deliveries on the Shanghai Gold Exchange. In the last few weeks they have dwindled to virtually nothing, having been a truncated 190 tonnes in April and 297 tonnes in March. Yet we know from reports that retail demand in China has taken off; so it is only a matter of time before prices are bid up on the Shanghai Gold Exchange enough to replace lost inventory.

It will be interesting to see how many more bullion banks are forced to admit the fiction behind their customer accounts in the coming weeks. For the moment the temporary solution amounts to rationing bullion supplies to the public.

 

Alasdair Macleod

Head of research, GoldMoney

Alasdair.Macleod@GoldMoney.com

Twitter @MacleodFinance

WHOLESALE PRICES for gold and silver rallied from a fresh plunge in early London dealing on Monday, rising to stand unchanged and 2.3% lower respectively from the end of last week’s trade by lunchtime.

Asian stock markets closed sharply higher, even as the Japanese Yen reversed Friday’s drop to new 4-year lows against the US Dollar.

Commodities ticked lower as did major government bonds. Silver prices today touched the lowest level in 44 months, dropping within 25¢ of $20 per ounce.

This morning London’s silver Fix came in at $21.66, very nearly one-third below the start of 2013.

Initially extending Friday’s late drop to touch $1340 per ounce for only the second time since January 2011, gold rallied from new 5-week lows for Euro and British Pound investors.

“Investors are very bearish at the moment,” said Bruce Ikemizu at Standard Bank’s Tokyo office to Reuters this morning.

“The stock market and the Dollar are quite strong. It’s a natural move for investors to switch their money from commodities to equities.”

Versus private households buying gold coins and small bars, most notably in India and China, “Financial investors hold the upper hand,” says a note from Denmark’s Saxo Bank, “[with] hedge funds now holding the biggest ever bet on falling prices.”

New data released Friday showed the net long speculative position in US gold derivatives held by money managers and other non-industry players as a group falling to new four-and-a-half-year lows in the week-ending last Tuesday.

Down to the equivalent of 214 tonnes, the difference between bullish bets and bearish bets on New York gold futures and options has shrunk by 55% since the start of 2013, driven by a doubling in the number of “short” contracts.

The amount of bullion held to back shares in exchange-traded gold trust funds shrank again Friday, taking the combined total of the GLD and IAU products down 16 tonnes for the week at 1,230 tonnes altogether.

The two largest US gold E.T.F.s have now shed 22% of their holdings since New Year.

Despite silver E.T.F. holdings remaining much steadier, the silver price “is trekking a similar path to gold,” reckons analyst Yang Xuejie at Galaxy Futures Co. in China – a division of a state-owned brokerage group.

More particularly, “Investment demand is slowly falling and there are doubts about industrial demand, which is the primary driver.”

Some 60% of annual offtake in the silver market goes to industrial uses, rather than jewelry and other store-of-value forms like coin or bar. That compares to less than 15% for gold.

Solar panel demand, which has helped plug some of the gap left by the collapse in photographic demand for silver over the last decade, flat-lined in 2012 according to analysis from French investment bank and bullion dealer Natixis.

Back in gold bullion, “We have some left over consignment stocks,” an Indian importer told Reuters this morning, pointing to the Reserve Bank’s latest import restrictions to the world’s largest gold-consumer market.

Local premiums over and above the world’s benchmark London pricing doubled and more in response to the Indian central bank’s new rules, imposed a week ago.

“For the time being we are catering to jewelers,” the importer speaking to Reuters added today. But despite this tightness in domestic supplies, Indian gold prices continued to fall on Monday, dropping 1.5% in line with international prices.

The drop in Indian gold prices is hurting the gold-backed consumer loans sector, India Today reports, with non-performing loans – raised with the pledge of gold jewelry as collateral – tripling over the last year to 1.5% of the largest gold-loans book, built by Muthoot Finance.

Shares in competitor Manappuram Finance, India’s first stockmarket-traded gold loan company, have dropped by 40% in the last month, says the paper.

“Gold, I think, is deep in our psyche and to take people away from gold, greater steps are needed,” says State Bank of India chairman Pratip Chaudhuri, quoted Saturday by ZeeNews.

Commenting on the central bank’s campaign to deter gold demand – first by imposing those new import restructions, but also by asking commercial banks to promote coins and bars less aggressively, in a bid to reduce India’s trade deficit – “I don’t know whether it would lead to reduction in consumption,” Chaudhuri says.

“In India there is such a fascination for gold. What stops people from going to the jewelry shops and banks?”

 

Adrian Ash

BullionVault

 

Gold price chart, no delay | Buy gold online

 

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

 

(c) BullionVault 2013

 

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Dave Skarica comments on the markets…

Find Dave at Addicted to Profits.

 

We discuss the markets with David McAlvany, President & CEO of McAlvany Financial. 

David has a 3-part series titled “The Fuse is Lit” which can viewed on YouTube

 

Based on the May 17th, 2013 Premium Update. Visit our archives for more gold articles.

 

The latest World Gold Council Gold Demand Trends report shows that the gold market is driven by diverse global demand, and the appetite for owning gold jewelry, bars and coins continues to grow.

“The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries,” said Marcus Grubb, Managing Director of Investment at the World Gold Council. “What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”

 

The report, for the period between January-March 2013, shows that total jewelry demand was up 12% year-on-year in Q1 2013, driven mainly by Asian markets. For example, jewelry demand in China was up 19% on the same period last year and stood at a record 185 tons. Demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.

 

Demand for gold in China and India was also fuelled by an increase in bar and coin sales – up 22% year-on-year in China and a whopping 52% in India. The US also saw a growing hunger for bars and coins– up 43% compared with the same quarter in 2012.

 

There’s significant investment demand for physical gold bullion at the current prices – what does it mean for the market? That it’s going higher in the long run and that the current move down is just a correction. It doesn’t imply, however, that the bottom is already in or that it will form without additional temporary downswing.

 

To gain some insight into short- and medium-term picture of the market, let’s take a look at the charts. In today’s essay we will discuss the implications of the current situation in the USD Index and the general stock market for, gold, silver and mining stocks, and we will also provide a follow-up to our recent essay on gold stocks and gold. We will start with the very-long-term USD Index chart (charts courtesy by http://stockcharts.com.)

 

In this chart, we see that more moves to the upside took place this week. As we stated in our essay of two weeks ago:

 

The index has actually confirmed a breakout above the very long-term resistance line. It has closed above it now for three consecutive months (yes, months). While a correction to the 80 level is still possible in the short term, an eventual move to the upside is now more likely than not.

 

This week’s price action was in tune with what we expected after the recent breakout and the situation remains bullish.

 

Let us move on to the general stock market.

The stock market (S&P Index in this case) continues to move higher this week as expected. The situation is overbought on a short-term basis, but we do not expect to see a move below 2007 high. If anything, we could see stocks move back to this level, which could further verify the breakout and allow them to gather strength in advance of the next rally. After all, the breakout above the 2007 high was confirmed.

 

To see how the situation in the USD and stocks may translate into the prices of gold and silver, we now turn to the intermarket correlations.

The Correlation Matrix is a tool which we have developed to analyze the impact of the currency markets and the general stock market upon the precious metals sector, (namely: gold correlations and silver correlations).

 

The short-term situation here is mixed and no real implications can be drawn at this time. The medium-term correlations are negative for the precious metals with both the USD Index and the general stock market. The precious metals are still pretty much anti-asset at this time. The medium-term odds, which favor a rally in the USD Index and the general stock market, have now painted a bearish picture for gold, silver and the precious metals mining stocks.

 

To finish off, let us have a look at the situation in gold stocks relative to the yellow metal itself.

On the above chart, the situation hasn’t changed much this week. Hence, comments made in last week’s essay remain up-to-date at this time and the bearish outlook continues to be supported by this chart:

 

The trading channel and the next horizontal support intersect at a point much lower than where this ratio is today. Of course, the existence of a target level by itself is no indication that it will be reached; the trend has to be in place as well. The point here is that the ratio has already broken below the previous late 2008 major low and is now a bit more than 5% beneath it. This is a major breakdown and it was confirmed. The implication is that the trend is still down.

 

With the trend being down and accelerating and the recent breakdown being confirmed, there is a good possibility that the miners will decline significantly once again. This makes the previously mentioned target level a very important one. At this time it seems likely that the ratio will move to its 2000 low – close to the 0.135 level.

 

If gold stocks decline relative to gold as they did late in 2000, and gold declines to $1,300 or slightly higher, the target level for the HUI Index would be slightly above the low of 2008 – around the 180 level.

 

Summing up, the long-term and medium-term outlook is bullish for the USD Index at this time. As for stocks, the situation remains bullish for the medium term, and although a short-term correction is likely not too far off, we don’t expect to see it immediately. Finally, gold stocks’ performance relative to gold continues to provide us with bearish indications. Overall, it seems that the final bottom in the precious metals market is not yet in.

To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold investment newsletter. Sign up today and you’ll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It’s free and you may unsubscribe at any time.

 

Thank you for reading. Have a great and profitable week!

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold Trading & Gold Investment Website – SunshineProfits.com

* * * * *

About Sunshine Profits

 

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Pension Funds “Selling Gold ETFs”, Dollar Weakness Seen Offering “Only Hope” Short Term

 

GOLD PRICES failed to hold a rally above $1380 per ounce in London on Friday morning, trading 5% down for the week as world stock markets held steady.

 

Both the Euro and British Pound also cut their mid-week rallies against the Dollar, holding gold prices at €1070 and £904 per ounce respectively.

 

New data overnight showed Japanese machine orders leaping 14% in March from February, while China’s leading economic index rose slightly for last month.

 

Eurozone construction output sank 8% in March from a year earlier.

 

“A spell of Dollar weakness looks like gold’s only salvation at the moment,” says one wholesale dealer in a note.

 

“So another disappointing data point could encourage more short-covering [when bearish traders close their position] ahead of the weekend.”

 

The US Dollar crept towards a 10-month high vs. a basket of major currencies this morning.

 

US consumer sentiment data were due for release Friday at 09.55 New York time.

 

“Bullion’s price break below the psychological $1400 an ounce level may introduce additional near-term pressure on gold,” says bullion market-maker HSBC’s James Steel.

 

“However, physical demand is likely to pick up further given the price drop, to help stem potential losses.”

 

Over in India – the world’s biggest gold buying nation on an annual basis – “There is no supply,” Reuters today quotes Prithviraj Kothari, head of Mumbai importers Riddhi Siddhi Bullions Ltd.

 

Thanks to this week’s sudden imposition of Indian gold import restrictions, supply is so tight some distributors are charging up to $20 an ounce above international benchmark London prices, Kothari says.

 

Hong Kong premiums have jumped this week to record highs of $5 per ounce, with the kilogram gold bars favored by China’s investment market now “hard to come by” according to one Singapore dealer.

 

Even so, “Many people are waiting on the sidelines,” reckons Singapore dealer Brian Lan at GoldSilver Central Pte, “as they are expecting another drop” in global gold prices.

 

Amongst Western money managers, “We’re seeing some of the pension funds selling via the

ETFs,” reckons analyst Daniel Smith at Standard Chartered bank, “which is a bit of a worrying sign.”

 

Exchange-traded trust funds backed by gold shed yet more metal on Thursday, with the two leading US funds – the GLD and IAU – dropping 7 tonnes between them to reach the lowest combined level since April 2010 at 1,233 tonnes.

 

Since Dec. 2012′s all-time peak, the GLD and IAU have lost 21.4% of their combined gold ETF holdings.

 

“The price of silver in 2013 will primarily be determined on the demand side,” says the latest Commodities Weekly from French investment bank and London bullion dealer Natixis, forecasting “relatively stable” supply with a slight dip in recycling.

 

On the industrial side it says, and “despite promising expectations from the rest of the world, we expect a slight drop in [photo voltaic] installations due to weak European [solar panel] demand” thanks both to low subsidies from government and the continued Eurozone crisis.

 

Silver ETF holdings have yet to follow gold trust funds sharply lower, Natixis notes – primarily because private investors own the former, as opposed to money managers in gold.

 

“[But] at some point these retail investors are likely to start selling.”

 

Total silver ETF. holdings of 19,400 tonnes currently equate to 60% of last year’s total market supply, the bank’s analysis adds, and “an outflow…could introduce substantial downside risks for silver prices.”

 

Adrian Ash

BullionVault

 

Gold price chart, no delay | Buy gold online

 

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

 

(c) BullionVault 2013

 

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Vancouver, B.C., Corvus Gold Inc. (“Corvus” or the “Company”) – (TSX: KOR, OTCQX: CORVF) announces significant progress in securing electrical power for the North Bullfrog Project near Beatty, Nevada.  Valley Electric Association (VEA) of Pahrump, Nevada will upgrade its existing electrical facilities, on the eastern portion of the project, beginning in mid-2013 and complete the necessary upgrades by 2014.  This upgrade assures that adequate power will be available for all future mining operations at the project.

Carl Brechtel, COO of Corvus, stated: “An adequate and economical power source is a key infrastructural component to this project which already has excellent access, favourable topography, a low strip ratio, good heap leach gold recovery, and a talented local work force.  These improvements to the power supply infrastructure represent a significant benefit to Corvus Gold in the development of the North Bullfrog mining project.”

Director Departure

The Company announces that Daniel Carriere will be leaving its Board of Directors effective today to focus his efforts on his primary business interests.  The Company would like to thank Mr. Carriere for his important contributions to Corvus Gold over the past two and a half years during its start-up phase and wishes him well with his current and future endeavours.   

About the North Bullfrog Project, Nevada

Corvus controls 100% of its North Bullfrog Project, which covers approximately 68 km² in southern Nevada just north of the historic Bullfrog gold mine formerly operated by Barrick Gold Corporation.  The property package is made up of a number of leased patented federal mining claims and 758 federal unpatented mining claims.  The project has excellent infrastructure, being adjacent to a major highway and power corridor.  The Company’s independent consultants completed a robust positive Preliminary Economic Assessment on the existing resource in December 2012.

The project currently includes numerous prospective gold targets with four (Mayflower, Sierra Blanca, Jolly Jane and Connection) containing an estimated Indicated Resource of 15 Mt at an average grade of 0.37 g/t gold for 182,577 ounces of gold and an Inferred Resource of 156 Mt at 0.28 g/t gold for 1,410,096 ounces of gold (both at a 0.2 g/t cutoff), with appreciable silver credits.  Mineralization occurs in two primary forms: (1) broad stratabound bulk-tonnage gold zones such as the Sierra Blanca and Jolly Jane systems; and (2) moderately thick zones of high-grade gold and silver mineralization hosted in structural feeder zones with breccias and quartz-sulphide vein stockworks such as the Mayflower and Yellowjacket targets.  The Company is actively pursuing both types of mineralization.

A video of the North Bullfrog project showing location, infrastructure access and 2010 winter drilling is available on the Company’s website at http://www.corvusgold.com/investors/video/.  For details with respect to the assumptions underlying the current resource estimate and preliminary economic analysis, see the technical report entitled “Technical Report and Preliminary Economic Assessment for the Mayflower and North Mine Areas at the North Bullfrog Project, Bullfrog Mining District, Nye County, Nevada” dated December 6, 2012 and available under the Company’s profile at www.sedar.com.

Qualified Person and Quality Control/Quality Assurance

Jeffrey A. Pontius (CPG 11044), a qualified person as defined by National Instrument 43-101, has supervised the preparation of the scientific and technical information (other than the resource estimate) that form the basis for this news release and has approved the disclosure herein.  Mr. Pontius is not independent of Corvus, as he is the CEO and holds common shares and incentive stock options.

Mr. Gary Giroux, M.Sc., P. Eng (B.C.), a consulting geological engineer employed by Giroux Consultants Ltd., has acted as the Qualified Person, as defined in NI 43-101, for the Giroux Consultants Ltd. mineral resource estimate.  He has over 30 years of experience in all stages of mineral exploration, development and production.  Mr. Giroux specializes in computer applications in ore reserve estimation, and has consulted both nationally and internationally in this field.  He has authored many papers on geostatistics and ore reserve estimation and has practiced as a Geological Engineer since 1970 and provided geostatistical services to the industry since 1976.  Both Mr. Giroux and Giroux Consultants Ltd. are independent of the Company under NI 43-101.

The work program at North Bullfrog was designed and supervised by Russell Myers (CPG 11433), President of Corvus, and Mark Reischman, Corvus Nevada Exploration Manager, who are responsible for all aspects of the work, including the quality control/quality assurance program.  On-site personnel at the project log and track all samples prior to sealing and shipping. Quality control is monitored by the insertion of blind certified standard reference materials and blanks into each sample shipment. All resource sample shipments are sealed and shipped to ALS Chemex in Reno, Nevada, for preparation and then on to ALS Chemex in Reno, Nevada, or Vancouver, B.C., for assaying.  ALS Chemex’s quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025:1999.  Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Finally, representative blind duplicate samples are forwarded to ALS Chemex and an ISO compliant third party laboratory for additional quality control. McClelland Laboratories Inc. prepared composites from duplicated RC sample splits collected during drilling. Bulk samples were sealed on site and delivered to McClelland Laboratories Inc. by ALS Chemex or Corvus personnel. All metallurgical testing reported here was conducted or managed by McClelland Laboratories Inc.

About Corvus Gold Inc.

Corvus Gold Inc. is a resource exploration company, focused in Nevada, Alaska and Quebec, which controls a number of exploration projects representing a spectrum of early-stage to advanced gold projects.  Corvus is focused on advancing its 100% owned Nevada, North Bullfrog project towards a potential development decision and continuing to explore for new major gold discoveries. Corvus is committed to building shareholder value through new discoveries and leveraging noncore assets via partner funded exploration work into carried and or royalty interests that provide shareholders with exposure to gold production.

On behalf of
Corvus Gold Inc.

(signed) Jeffrey A. Pontius
Jeffrey A. Pontius,
Chief Executive Officer

Contact Information:   Ryan Ko
Investor Relations
Email: info@corvusgold.com
Phone: 1-888-770-7488 (toll free) or (604) 638-3246 / Fax: (604) 408-7499

Bull Market Thinking Reports:

A breakdown of the 13-F data indicates that during the first quarter, the Soros Fund:

1. Maintained a $32mm stake in individual miners.

2. Added a staggering1.1 million shares of GDX to its holdings, at a reported price of $37.84 per share. Total Soros Fund GDX holdings now stand at 2.666 million shares, at a reported value of over $100,000,000.

3. Reduced it’s long position in the GDXJ Junior Miners Index fund, from1.998 million shares to 1.2 million shares—only to turn around, and purchase 1.510 million call options on the same index, at a reported value of $25,200,000. 

4. Lastly, the fund reduced its stake in the GLD gold fund from 600k shares to 530k shares, for a total reported value of $82,000,000.

In summary, as of May 15th, 2013, Soros Fund Management LLC reported owning over $239.2 million in gold related positioning, with over $25 million dedicated to call options on junior mining stocks.

 

Source: Bull Market Thinking

FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the “Company” or “First Majestic”) is pleased to announce the unaudited condensed interim consolidated financial results for the Company for the first quarter ending March 31, 2013. The full version of the financial statements and the management discussion and analysis can be viewed on the Company’s web site atwww.firstmajestic.com or on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

2013 FIRST QUARTER HIGHLIGHTS

• Silver ounces produced increased by 33% to 2,437,664 ounces compared to 1,826,803 ounces in Q1 2012
• Silver equivalent ounces produced increased by 36% to 2,731,792 ounces compared to 2,007,219 ounces in Q1 2012
• Net Earnings after Taxes amounted to $26.5 million, a 1% increase from Q1 2012
• Earnings per Share (basic) amounted to $0.23, representing a 9% decrease from Q1 2012
• Cash Flow per share (non-GAAP) of $0.38, representing a 9% increase from Q1 2012
• Adjusted Earnings per Share (non-GAAP) amounted to $0.21 after excluding non-cash and non-recurring items
• Revenues increased 16% to $67.1 million, compared to Q1 2012
• Mine Operating Earnings amounted to $34.6 million, a decrease of 3% from Q1 2012
• Total Production Cost per Tonne was $31.79, an increase of 9% from Q1 2012
• Total Cash Cost, net of by-product credits, was $9.49 per ounce, up 6% compared to Q1 2012
• Average revenue per ounce was $29.63 a decrease of 10% from $32.79 compared to Q1 of 2012
• Substantial budget cuts have been made for 2013 including a 49% reduction in exploration to $12.5 million and a 21% reduction in mine development to $68.2 million equaling a total reduction to capital expenditures of 16% to $162.3 million
• At the end of the quarter, Cash and Cash Equivalents stood at $110.1 million and Working Capital of $108.3 million

2013 FIRST QUARTER HIGHLIGHTS TABLE

(1) Payable Silver Ounces Produced is equivalent to Silver Ounces Produced less metal deductions from smelters and refineries.
(2) The Company reports non-GAAP measures which include Total Cash Costs per Ounce, Total Production Cost per Tonne, Average Realized Silver Price per Ounce and Cash Flow Per Share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions.

Keith Neumeyer, President and CEO of First Majestic states, “Despite the recent fall in silver prices we remain committed to aggressively growing our business while at the same time monitoring our investments and our production costs. This year marks a pivotal year for First Majestic with four major expansion projects underway simultaneously. These expansions remain on track and will set the stage for major growth in the coming years. However, we need to be sensitive to the current market conditions and be smart about our use of capital. We are committed as usual to focus on cost reductions and capital optimization without affecting our aggressive growth plans.”

FINANCIAL HIGHLIGHTS

• Generated revenues of $67.1 million for the first quarter of 2013, a decrease of 6% compared to the fourth quarter of 2012, primarily due to 9% decrease in average realized silver price per ounce. Revenues increased 16% compared to the first quarter of 2012, primarily due to 36% increase in production, partially offset by 10% decrease in average realized silver price per ounce.
• Generated net earnings of $26.5 million for the first quarter of 2013 (EPS of $0.23), an increase of 19% compared to $22.4 million (EPS of $0.19) in the fourth quarter of 2012, and an increase of 1% compared to $26.4 million (EPS of $0.25) in the first quarter of 2012.
• Adjusted EPS (a non-GAAP measure) for the first quarter of 2013 was $0.21, after excluding non-cash and non-recurring items which include the realized one-time net gain of $9.1 million as a result of the termination fee from the Orko Silver Corp. arrangement agreement.
• Cash costs increased 2% from $9.26 in the prior quarter to $9.49 in the first quarter of 2013, primarily due to a 2% increase in the Mexican peso relative to the US dollar on average quarter over quarter. Compared to the first quarter of 2012, cash cost per ounce was 6% higher primarily due to the addition of the La Guitarra mine, and a 3% appreciation of the Mexican peso against the US dollar.
• Recognized mine operating earnings of $34.6 million compared to $39.5 million in the fourth quarter of 2012, a decrease of 12% due to lower gross margin resulting from a 9% decrease in silver prices, a 2% increase in cash costs, and higher depreciation, depletion and amortization expense related to the increased size of plant, equipment and mineral properties. Mine operating earnings for the quarter decreased 3% compared to the first quarter of 2012, as the 36% increase in production was offset by a 10% decrease in silver prices, 3% appreciation of the Mexican peso, and higher depreciation, depletion and amortization expense.
• Cash flows from operations before movements in working capital and income taxes in the first quarter of 2013 increased by 4% to $44.9 million ($0.38 per share) compared to $43.2 million ($0.37 per share) in the fourth quarter of 2012, and increased by 21% compared to $37.1 million ($0.35 per share) in the first quarter of 2012.
• In March 2013, the Company received approval from the Toronto Stock Exchange to repurchase up to 5,848,847 common shares of the Company over the next 12 months through normal course issuer bid in the open market. Since April 1, 2013, the Company has repurchased 115,000 shares for a total consideration of CAD$1.4 million, of which 75,000 shares have been cancelled.
• In December 2012, First Majestic entered into an arrangement agreement with Orko Silver Corp. (“Orko”) to acquire all of the issued and outstanding shares of Orko. In February 2013, Orko declared that another company made a superior offer and First Majestic elected not to match the superior offer. Upon termination of the arrangement agreement, the Company received an $11.4 million termination fee from Orko in February 2013. Net of professional fees, legal and investment banking costs, the Company recognized a gain of $9.1 million in other income.

RECENT DEVELOPMENTS

As reported in February 2013, the Company planned to invest a total of $192.3 million in capital growth projects in 2013, of which $86.2 million was earmarked for mine development and $24.5 million towards exploration. Following the recent decline in silver prices, the Company has re-evaluated its company-wide discretionary capital investments for the first half of 2013 and has made several cuts. If silver prices do not improve prior to the third quarter, further cuts in capital commitments will be made. These current cuts do not affect production guidance for 2013.

The Company has earmarked the following capital expenditure reductions for the first half of 2013:

• Global exploration reduced by $12.0 million to $12.5 million, representing a 49% reduction
• Global mine development reduced by $18.0 million to $68.2 million, representing a 21% reduction
• Total budgeted capital growth requirements including priority construction and expansionary activities at various mines are now $162.3 million, representing a 16% reduction

The revised $162.3 million budget consists of $81.6 million for plant expansions for Del Toro, San Martin, La Guitarra and the underground rail system of La Parrilla and $80.7 million of discretionary exploration and development for all of the Company’s properties. Of the $81.6 million budget for plant expansions, $19.6 million has already been expended and, for the $80.7 million exploration and development budget, $23.7 million has also already been expended as at March 31, 2013. Therefore, remaining planned expenditures is $119.0 million, which includes $62.0 million for committed plant expansion and $57.0 million for discretionary exploration and development for the remainder of the 2013 budget year.

Furthermore, each of the Company’s on-going expansion projects at the Del Toro, La Parrilla, San Martin and La Guitarra Silver mines remain unaffected as a result of these reductions with the La Guitarra mine already ramped up to 500 tpd in the second quarter and the Del Toro and San Martin mines scheduled to ramp up in the third quarter. Therefore, global silver production guidance remains on track to achieve 11.1 to 11.7 million silver ounces or 12.3 to 13.0 million ounces of silver equivalent in 2013. The Company remains well financed with $110.1 million in cash and cash equivalents on hand at the end of the first quarter, allowing all priority construction and expansionary activities to continue on schedule towards achieving the Company’s estimated 2013 annual production growth rate of 40%.

During the first quarter, the Company completed a full implementation of SAP ERP financial and operational reporting software throughout and integrating all 24 of the Company’s head office and various subsidiaries. This investment is expected to provide enhanced and in-depth real-time analytical tools for operational performance and efficient analyses, monitoring of its operations’ cost accounting and various key performance indicators on a company by company basis and on a consolidated basis.

IN SUMMARY

First Majestic experienced another solid quarter of earnings and cash flow due in part to record production of 2,731,792 silver equivalent ounces, an increase of 36% compared to 2,007,219 silver equivalent ounces produced in the first quarter of 2012. Silver production hit record levels during the first quarter with 2,437,664 ounces of silver being produced, representing an increase of 33% compared to 1,826,803 ounces of silver produced in the first quarter of 2012. Cash cost per ounce in the first quarter increased $0.23 or 2% from $9.26 in the fourth quarter of 2012, primarily due to the 2% appreciation of the Mexican peso against the US dollar.

Total ore processed in the quarter reached 730,357 tonnes, an increase of 31% compared to the first quarter of 2012. The increase in milled ore is a direct result of the successful plant expansion at La Parrilla and the additional ore processed at the recently acquired La Guitarra Silver Mine.

The overall average head grade for the first quarter of 2013 was 181 grams per tonne (“g/t”), a 2% increase compared to 177 g/t in the first quarter of 2012 and 3% increase compared to 176 g/t in the fourth quarter of 2012. The increase from the previous quarter was primarily attributed to 15% higher head grades from La Encantada, due to increase in head grades from fresh ore, offset by 11% lower head grades from La Parrilla due to an increase in oxides production from the lower grade open pit. Combined recoveries for all mines in the first quarter were 57% and consistent compared to 57% in the first quarter of 2012 and 58% in the fourth quarter of 2012.

At the Del Toro Silver Mine, the Phase one construction for the 1,000 tpd flotation plant was completed and inaugurated in a special ceremony on January 23, 2013. Phase two construction, which will include the addition of a 1,000 tpd cyanidation circuit, is now in progress. Phase two start-up is expected by July 1, 2013, at which time, the mill is expected to start ramping up to a combined throughput rate of 2,000 tpd (1,000 tpd flotation and 1,000 tpd cyanidation). The cyanidation circuit construction is progressing well with tanks, foundations for SAG mills and platforms for the Merrill-Crowe having been completed, and tailings filter #1 was fully installed and operational. As of March 31, 2013, 30 shipments totalling 933 dry tonnes of concentrates had been shipped. During the quarter, silver-lead concentrates have contained an average of 34% of lead, 4,875 g/t of silver and 1.3 g/t of gold. Further ongoing daily improvements are underway with a focus on daily tonnage, recoveries, quality of concentrate production and other plant optimizations. During the month of April, 12 additional shipments had been shipped containing 371 dry tonnes of concentrates. Production of Zinc concentrates began in May and eight shipments have been delivered containing 225 dry tonnes of concentrates. The Company remains on schedule for the third and final phase of production (2,000 tpd flotation and 2,000 tpd cyanidation) by the third quarter of 2014, at which time Del Toro is expected to become the Company’s largest producing operation, producing approximately six million ounces of silver per year, with significant amounts of lead and zinc.

At the La Guitarra Silver Mine, the expansion of the processing plant from 350 tpd to 500 tpd was completed in April 2013. This new circuit consisted of the installation of a new ball mill, new flotation cells and related infrastructure. The expansion is expected to increase La Guitarra’s output to approximately 1.2 million ounces of silver equivalent annually, representing over one million ounces of pure silver plus a modest amount of gold. Permitting for a 1,000 tpd cyanidation processing facility is expected to be completed in the next few months with an anticipated commencement of construction in the second half of 2013. At 1,000 tpd throughput from cyanidation, production is anticipated to reach over two million ounces of silver doré production per year when completed.

The Company’s third expansion project at the San Martin Silver Mine is progressing according to plan. The current 950 tpd mill and processing plant consists of crushing, grinding and conventional cyanidation by agitation in tanks and Merrill-Crowe doré production system. The plant operates between 850 to 900 tpd, and a plant expansion is currently underway that will see the production rate increase to a planned throughput of 1,300 tpd. The expansion project is expected to be completed on time and on budget in the third quarter of 2013. The Company is planning to release a new NI 43-101 Technical Report very shortly which will include updated Reserves and Resources from the Rosarios/Huichola areas as well as an economic assessment on the current expansion.

First Majestic is a producing silver company focused on silver production in México and is aggressively pursuing its business plan of becoming a senior silver producer through the development of its existing mineral property assets and the pursuit through acquisition of additional mineral assets which contribute to the Company achieving its aggressive corporate growth objectives.

FOR FURTHER INFORMATION contact info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.

FIRST MAJESTIC SILVER CORP.
“signed”
Keith Neumeyer, President & CEO

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

The following is excerpted from a commentary originally posted at www.speculative-investor.com on 9th May 2013.

The last long-term bull market in gold-mining stocks, which ran from the early-1960s through to 1980, occurred in parallel with a major upward trend in interest rates, a steady undercurrent of “inflation” fear, and the occasional dramatic “inflation” scare. However, the current — we think it’s still current, although this won’t be proven until the gold-stock indices exceed their 2011 peaks — long-term bull market in gold-mining stocks has unfolded in parallel with a major downward trend in interest rates, a steady undercurrent of “deflation” fear, and the occasional dramatic “deflation” scare. These differences could have — and preferably would have — resulted in gold-mining stocks performing differently relative to gold and the broad stock market during the current bull market than they did during the last bull market, but that wasn’t to be. Gold-mining stocks are putting in a similar showing this time around.

The following weekly chart of the BGMI/gold ratio (the Barrons Gold Mining Index relative to the bullion price) reveals that the gold mining sector did very well relative to gold during 1964-1968 and then embarked on a substantial long-term decline. The major bottom for the BGMI/gold ratio actually coincided with the major peak in the gold price in January of 1980, at which point the gold-mining stocks commenced a 2-year rally relative to gold. Something similar has transpired during the current bull market, in that strength in the gold-mining sector during the first few years of the bull market was followed by a substantial long-term decline.

Notice that BGMI/gold’s long-term decline of 1968-1980 was interrupted by two meaningful (1-2 year) counter-trend rallies, one during 1970-1971 and the other during 1973-1974. To date, the long-term decline in BGMI/gold that began in 2006 has only been interrupted by one meaningful counter-trend rally (the sharp 12-month rally that began in October of 2008). It’s a good bet that a second counter-trend rally will begin this year — from either an April-May low or an October-November low.

The next chart reveals that while the BGMI/SPX ratio (the gold-mining sector relative to the broad US stock market) trended higher during the 1960s and 1970s, there were two substantial counter-trend moves. The current long-term upward trend in the BGMI/SPX ratio is immersed in its first substantial counter-trend move.

The bottom line is that rather than being evidence that the gold sector’s long-term bull market has come to an end, the recent extreme weakness in gold mining stocks relative to gold bullion and the broad stock market is consistent with what happened during the middle stages of the last bull market.

Regular financial market forecasts and
analyses are provided at our web site:
http://www.speculative-investor.com/new/index.html

We aren’t offering a free trial subscription at this time,

but free samples of our work (excerpts from our

regular commentaries) can be viewed at:

http://www.speculative-investor.com/new/freesamples.html

Jim Rogers recently said in an interview to Morningstar, that he is not disturbed by the recent tumble in gold prices.

 

“Gold had gone up 12 years in a row, without a down year, which is extremely unusual in any asset. Equally important, gold has only had one 30% correction in 12 years. Again, that is extremely unusual. Most things correct 30-40% every year or two. So the action in gold has been very unique and gold needed a correction. The main thing that caused it, as far as I am concerned, was that the market was ready. It needed it and it is good for gold to have a proper correction,” said Rogers. We agree. At the same time we would like to point out that this has no implications on the short term.

 

How does he see the future for gold?

 

“Certainly, over the course of ten years gold will go much, much higher because I don’t see any possibility that governments are going to stop printing money in the next decade,” he said.  “And as long as that’s going to happen then gold is certainly going to go higher and probably much higher.” We agree once again.

 

In a recent interview in the South China Morning Post, George Soros says, “Gold was destroyed as a safe haven, proved to be unsafe. Because of the disappointment, most people are reducing their holdings of gold.” However, he also notes that central banks are still buying gold, so he doesn’t “expect gold to go down.”

 

One humorous headline asked: “Who’s smartest on gold – Chinese housewives or George Soros?”

 

As weird as this may sound, if we’re talking about the long term, we tend to side with the Chinese housewives who have been buying physical gold in unprecedented amounts.

 

Hong Kong government data this week shows that imports by China from Hong Kong more than doubled to an all-time high in March. India’s purchases are set to exceed 100 metric tons for a second month in May as jewelers rush to beat central bank curbs on imports by banks.

 

Buyers in mainland China purchased 223.52 tons of gold in March, including scrap, compared with 97,106 kilograms in February, according to Hong Kong government data. There were also reports of similar huge surges in demand for physical gold in India, Dubai and many other countries. Just the China purchases would account for roughly 10% of the gold mined each year.

 

According to the China Gold Association there is a shortage of gold jewelry inventory in the country after consumers bought up supplies.

 

As we enter the summer, we want to know who is right, George Soros or the Chinese housewives who have been stocking up on gold. Let’s take a look at the charts to find out. In today’s essay we will focus not only on gold itself, but also on the most versatile commodity – crude oil – and how it could impact the prices of gold in the near future(charts courtesy by http://stockcharts.com.)

When we examine the crude oil chart, we see that another attempt to break out above the declining resistance line based on the 2008 and 2011 tops is underway. If prices move above this resistance line, it could very well trigger a rally in other commodities and in the precious metals prices.

 

At this time, since the breakout has not yet been completed and verified, and since several attempts have failed in the recent past, we prefer to wait for a confirmation of this breakout before discussing the bullish implications for the precious metals in any detail.

 

Let us move on to the yellow metal itself and have a look its long-term chart

Here, the situation has changed very little as gold’s price pretty much moved back and forth last week. The long-term cyclical turning point is now a few weeks away and could very well coincide with the end of gold’s current decline. Whether this holds true or not, it seems likely that gold’s current decline will continue for now at least as it appears to not yet be completed.

 

Let’s have a look at Dow to gold ratio chart now.

We see the ratio getting close to a key resistance level. This is due almost entirely to the Dow’s rally last week. The “problem” here is that if gold prices decline and stocks continue to rally (a real possibility), this ratio could break out above the declining resistance line and move toward 12.5, thus leading to even bigger declines in gold (below $1,200). We do not feel that such a breakout will be confirmed, however.

 

Summing up, a decisive breakout in crude oil could trigger a significant rally in gold. However, Since we saw several failed attempts for the crude oil in the past months, it seems best to wait for a confirmation of the breakout before discussing meaningful bullish implications for gold. For now, it still seems that the final bottom is not yet in.

 

To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold newsletter. Sign up today and you’ll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It’s free and you may unsubscribe at any time.

 

Thank you for reading. Have a great and profitable week!

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold Investment & Silver Investment Website – SunshineProfits.com

* * * * *

About Sunshine Profits

 

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Toronto, Ontario – (May 14, 2013) Argonaut Gold Inc. (TSX: AR) (the “Company”, “Argonaut Gold” or “Argonaut”) is pleased to announce its financial and operating results for the first quarter ended March 31, 2013. All dollar amounts are expressed in United States dollars unless otherwise specified.

  1st Quarter Change 2013 2012 Financials (000s) Revenue $43,080 $24,353 ↑77% Net income $11,615 $7,260 ↑60% Income per share – basic $0.08 $0.08 N/A Cash flow from operating activities before changes
in non-cash operating working capital and other items $19,351 $8,141 ↑138% Cash and cash equivalents $168,514 $17,779 ↑848% Gold production and cost: Gold ounces loaded to pads 39,786 44,169 ↓10% Gold ounces produced 28,907 20,884 ↑38% Gold ounces sold 25,441 14,498 ↑75% Average realized sales price $1,622 $1,677 ↓3% Cash cost per gold ounce sold $594 $639 ↓7%

 

 

 

 

 

 

 

 
FIRST QUARTER 2013 & RECENT HIGHLIGHTS

• Capital expenditures of $18.8 million on mineral properties, plant and equipment
• El Castillo operations:

• • Pad 8 construction well under way with stacking of ore and leaching
  • Argonaut is now operating all mining internally, having assumed prior contractor mining activities in March 2013
  • Over 360,000 gold ounces were added to the in-pit resources relating to sulphide mineralization

• La Colorada operations:
• Pad construction initiated in 2012 continues to progress well and we have now begun loading and leaching

• • Crushing circuit expansion continues and is scheduled to be completed and operational in the third quarter of 2013
  • Updated resource for the Veta Madre deposit added 110,000 inferred gold ounces, with potential for further expansion

• San Antonio and Magino permitting process underway

CEO Commentary
Pete Dougherty, President and CEO of Argonaut Gold stated “2013 will see a substantial investment in both the El Castillo and La Colorada operations as we bring forward our capital expansion programs. At El Castillo, the addition of the new heap leach pads and west side crusher/overland conveyor is aimed at reducing operating costs and providing production growth; both should be fully functional in the third quarter of this year. At La Colorada, the Company continues to open the ore body and construct the new crusher; both are anticipated to provide improved production in the second half of the year. Overall operations are showing steady improvement toward our 2013 goals and objectives and we are poised to make our guidance provided earlier.”

Financial Results – First Quarter 2013
During the first quarter of 2013, revenue was $43.1 million from gold sales of 25,441 ounces, compared to $24.4 million from gold sales of 14,498 ounces in the first quarter of 2012. Cash cost per gold ounce sold in the quarter was $594, compared to $639 in the same period of the prior year (cash cost per gold ounce sold is a non-IFRS measure, see note below).

During the first quarter of 2013, gross profit was $21.0 million, compared to $12.3 million in the first quarter of 2012. During the quarter, profit from operations was $17.2 million, compared to $9.7 million in the same period of the prior year. Net income for the period was $11.6 million, or $0.08 per basic share, versus $7.3 million, or $0.08 per basic share, in the first quarter of 2012.

Cash and cash equivalents was $168.5 million at March 31, 2013. Capital expenditures in the first quarter were $18.8 million primarily as a result of infrastructure improvements at the El Castillo and La Colorada mines.

This press release should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements for the quarter ended March 31, 2013 and associated management’s discussion and analysis (“MD&A”) which are available from the Company’s website,www.argonautgold.com, in the “Investors” section under “Financial Filings”, and under the Company’s profile on SEDAR at www.sedar.com.

El Castillo Operating Statistics   Q1 2013 Q1 2012 Change Tonnes ore 3,172,772 3,050,527 ↑4% Tonnes waste 3,013,605 2,914,397 ↑3% Tonnes mined 6,186,377 5,964,924 ↑4% Waste/ore ratio 0.95 0.96 ↓1% Tonnes ore direct to leach pad 1,729,396 2,183,893 ↓21% Tonnes crushed 1,431,686 838,378 ↑71% Average grams per tonne of gold to leach pad 0.35 0.36 ↓3% Gold loaded to leach pad (oz) 36,023 35,283 ↑2% Gold produced (oz) 23,125 17,799 ↑30% Gold ounces sold 19,509 14,498 ↑35% Silver ounces sold 8,687 1,410 ↑516% Cash cost per gold ounce sold $702 $639 ↑10%

 

 

Summary of Production Results at El Castillo
As of mid-March, we assumed the day to day mining operations at El Castillo from the former mining contractor. We hope to bring further efficiencies to the mining process through this investment. Total tonnes mined in the first quarter 2013 were up 4 percent, compared to the first quarter of 2012. Of note, the 1.4 million tonnes crushed in the first quarter was a new record for El Castillo and represented a 71 percent increase in crushed tonnes, over the first quarter of 2012. The total ounces loaded to the leach pad were 36,023 in the first quarter of 2013, a 2 percent increase over the first quarter of 2012. The stripping ratio of waste to ore remained relatively consistent between periods.

The 2013 production guidance at El Castillo is expected to be between 90,000-100,000 ounces with a cash cost between $700 and $725 per gold ounce sold.

La Colorada Operating Statistics   Q1 2013 Q1 2012 Change Tonnes ore 556,637 - N/A Tonnes waste 3,798,625 - N/A Tonnes mined 4,355,262 - N/A Waste/ore ratio 6.82 - N/A Tonnes moved 4,355,262 678,310 ↑542% Tonnes ore direct to leach pad - - N/A Tonnes crushed 402,548 680,396 ↓41% Average grams per tonne of gold to leach pad 0.27 0.41 ↓34% Gold loaded to leach pad (oz) 3,763 8,886 ↓58% Gold produced (oz) 5,782 3,085 ↑87% Gold ounces sold 5,932 - N/A Silver produced (oz) 44,879 17,182 ↑161% Silver ounces sold 54,269 - N/A Cash cost per gold ounce sold $240 $- N/A

 

 

Summary of Production Results at La Colorada
Overburden removal began in the fourth quarter of 2012; we have now increased the daily mining rate to roughly 50,000 tonnes per day. During removal of the overburden we have encountered some marginally mineralized material at 0.27 g/t for the first quarter. We are on schedule to have the pit opened to ore in the third quarter. As a result, we anticipate mineralization to increase during the second half of the year.

The 2013 production guidance at La Colorada is between 30,000-40,000 ounces, back loaded to the second half of the year, with a cash cost between $450 and $475 per gold ounce sold.

Expansion Projects for 2013 
The Company plans on investing a total of between $64 million to $74 million on capital expenditures and exploration initiatives in 2013. Major capital expenditures in 2013 are expected to include approximately $25 million at El Castillo, $19 million at La Colorada, $6 million at Magino, between $5 million and $11 million at San Antonio and between $2 million and $3 million for other capital expenditures. Exploration expenditures in 2013 are expected to amount to between $7 million and $10 million.

Non-IFRS Measures
The Company included the non-IFRS measure “Cash cost per gold ounce sold” in this press release to supplement its financial statements which are presented in accordance with International Financial Reporting Standards (“IFRS”). Cash cost per gold ounce sold is equal to production costs less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-IFRS measures.

Qualified Person, Technical Information and Mineral Properties Reports
The technical information contained in this document has been prepared under supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut’s Vice President of Exploration, a qualified person as defined by National Instrument 43-101. Mr. Alberto Orozco, Argonaut’s Mexico Exploration Manager also supervised the drill programs and on-site sample preparation procedures at La Colorada. Bret Swanson of SRK of Denver, CO, who is an “Independent Qualified Person” as defined by NI 43-101 and the lead person responsible for completing the updated Veta Madre resource has reviewed this press release as it relates to Veta Madre.

For further information on the Company’s properties please see the reports as listed below on the Company’s website or on www.sedar.com:

El Castillo Mine NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico dated November 6, 2010 La Colorada Mine NI 43-101 Preliminary Economic Assessment La Colorada Project, Sonora, Mexico dated December 8, 2011 Magino Gold Project NI 43-101 Technical Report and Mineral Resource Estimate on the Magino Gold Project, Ontario, Toronto, Canada dated October 4, 2012 San Antonio Gold Project NI 43-101 Technical Report and Mineral Resource Estimate on the San Antonio Gold Project, Baja California Sur, Mexico dated October 10, 2012

About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production stage El Castillo Mine in Durango, Mexico and the La Colorada Mine in Sonora, Mexico, the advanced exploration stage San Antonio project in Baja California Sur, Mexico, the recently acquired advanced exploration stage Magino project in Ontario, Canada and several exploration stage projects, all of which are located in North America.

Creating Value Beyond Gold

Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management’s current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

For more information, contact:
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
Tel: (775) 284-4422 x 101
Email: nichole.cowles@argonautgold.com 
www.argonautgold.com

In August 2011 I wrote to the Financial Services Authority to seek confirmation that the London-based custodians of SPDR Gold Trust (GLD) and iShares Silver Trust (SLV) were being regulated as custodians, despite the fact that physical bullion is not a regulated investment. After some chasing on my part I finally got a response, kicking my letter firmly into touch. The FSA accepted that the custodians (HSBC Bank USA NA for GLD and JP Morgan Chase Bank NA London Branch for SLV) were regulated, but appeared to be unwilling to do anything about it other than to pass my letter on to “the supervisors of the relevant firms”.

My reason for writing to the FSA was to establish if allegations were true that bullion owned by these two trusts was being used in contravention of custody agreements. If they had any foundation there would be an important regulatory risk for the FSA which should be drawn to their attention, and in any event needed clarification to prevent a false market. Suspicions that this was the case were fuelled by obvious conflicts of interest in the firms concerned. The sensible course for the FSA would have been to investigate the matter with the custodians and give them a clean bill of health, or alternatively take appropriate action in the event of a breach. Instead, they ducked the issue, leaving the impression that there was indeed a problem.

This may have been to do with the fact that bullion, being dealt with in an over-the-counter market, operated under a different set of dealing and settlement procedures from a normal regulated investment. Subsequently the 2012 GLD prospectus was amended under “Risk Factors” on page 12, by the insertion of a new clause headed “The custody operations of the custodian are not subject to specific governmental regulatory supervision.” It is now clear that the FSA had ceded its custodial responsibility to the “best practices of the LBMA”.

This matters because investors naturally expect custodians to be properly regulated. It also matters because the bullion market settles through a separate entity called London Precious Metals Clearing Limited (lpmcl.com) owned by five LBMA members, including the two custodians for GLD and SLV. LPMCL is therefore at the heart of the London bullion market.

Because the bullion market in London is over-the-counter, bullion banks are exposed to counterparty risk, unlike traders on a regulated market. And if a big bullion bank fails, which is certainly possible in a global banking crisis, all the bullion held by the members of the LPMCL both for themselves and their clients could become available to central banks managing the crisis through the Bank of England.

In a systemic meltdown it may be naïve to expect central banks to fully respect property rights. So GLD and SLV are only suitable for investors prepared to accept a lower standard of custodial regulation, and who look to benefit from a rising gold or silver price until they decide to take their profits. They are definitely not for those seeking a safe haven or hedge from a financial crisis.

 

Alasdair Macleod

Head of research, GoldMoney

Alasdair.Macleod@GoldMoney.com

Twitter @MacleodFinance

 

Huldra Silver Inc. has filed a technical report titled “Technical Report on the Thule Copper-Iron Property, Southern British Columbia, Canada” for the Thule copper project. The company is also pleased to announce that concentrate shipments in April have increased by 42 per cent for lead/silver and 18 per cent for zinc/silver over the previous month.

The Thule copper project, located 14 kilometres northwest of Merritt, B.C., includes the former Craigmont copper-iron mine, 20 contiguous mineral claims, 10 contiguous mineral leases and seven freehold properties covering a total area of 8,272 hectares. The claims are owned 100 per cent by Huldra Properties Inc., a wholly owned subsidiary of the company.

The former Craigmont copper-iron mine was operated by Craigmont Mines Ltd. from 1961 until 1982 when Placer, the company’s majority shareholder, was forced to cease activity due to falling copper prices. During its operation, 34 million tonnes of ore were mined, grading approximately 1.28 per cent copper. Magnetite stockpile and tailings recovery operations continued from 1982 to 2012.

In 2012, Huldra completed a helicopter aeromagnetic gradient and spectrometer survey over the entire property. A total of 903 line kilometres of magnetic data was collected. From this data package, six magnetic targets were identified along strike of the past-producing Craigmont copper-iron mine. An additional six other exploration targets were identified during the data compilation and review process.

Huldra continues to experience significant monthly increases in production and shipments of concentrates. In April, a total of 233.2 dry tonnes of lead/silver concentrate and 199.3 dry tonnes of zinc/silver concentrate were shipped to the smelter, representing 42-per-cent and 18-per-cent increases, respectively. The total smelter invoices, representing 85-per-cent provisional payments in the month of April, were $1,662,497 (U.S.) plus GST. All payments are made pursuant to the previously announced concentrate purchase agreements. Provisional payments are based on the best available information at the time of invoicing. Final payments are subject to adjustment based on independent assay results and metal prices.

VANCOUVER, BRITISH COLUMBIA–(Marketwired – May 9, 2013) - Balmoral Resources Ltd. (“Balmoral” or the “Company”) (TSX VENTURE:BAR)(OTCQX:BALMF) has been advised by GTA Resources and Mining Inc. (“GTA”) that initial results from the Phase 4 drilling program on the Company’s Northshore Property located near Schreiber, Ontario have successfully continued to expand the Afric Gold Zone. Results reported today confirm the presence of a north-east extension of the mineralized system into an area which has seen little historic testing. Results also continued to demonstrate broad zones of gold mineralization along the previously defined east-northeast (“East”) trending portion of the Afric Gold Zone, including 1.47 g/t gold over 70.0 metres in hole WB-13-38. Drilling also continues to intersect a series of higher-grade gold-bearing structures within the broader Afric Zone along both the Northeast and East limbs of the system (see Table 1 below).

Hole Number Hole Depth
(metres) From
(metres) To
(metres) Interval *
(metres) Gold
(g/t) Target WB-12-36 227 22.0 32.0 10.0 0.66 East Ext. (-50/120°) 64 68 4.0 1.43 94 95 1.0 3.3 WB-13-37 170 80.0 123.5 43.5 1.40 East Ext. (-50/122°) incl 88.0 101.0 13.0 2.50 and 122.0 123.5 1.5 14.2 WB-13-38 212 110.5 180.5 70.0 1.47 East Ext. (-64/122°) incl 110.5 112.5 2.0 12.28 WB-13-39 218 29.8 64.0 34.2 1.35 Northeast Ext. (-50/323°) incl 46.0 54.0 8.0 4.77 WB-13-40 152 73.0 122.0 49.0 0.53 Northeast Ext. (-70/323°) incl 73.0 74.0 1.0 5.63 and 101.0 102.5 1.5 7.97 and 121.0 122.0 1.0 3.33 * Reported drill intercepts are not true widths. At this time there is insufficient data with respect to the shape of the mineralization to calculate true orientations in space.

Highlights:

A new plan map showing the location of the holes released today, along with a schematic cross section through the East and Northeast limbs of the Afric Gold Zone are available on the Company’s website at www.balmoralresources.com. Results from an additional four holes remain pending and drilling is anticipated to resume on the property following spring-break-up.

East Extension - Highlights from 3 holes (WB-13-36, -37 and -38) completed along the eastern extension of the Afric Zone include 2.50 g/t (grams per tonne) gold over 13.0 metres (within a broader zone of 1.4 g/t gold over 43.5 metres) in hole WB-13-37 and 12.28 g/t gold over 2.0 metres (within a broader zone of 1.47 g/t gold over 70.0 metres) in hole WB-13-38. These holes, drilled approximately 50 metres and 100 metres respectively below a previously drilled shallow intersection of 1.51 g/t gold over 50.8 metres (hole WB-12-29) help confirm the strike continuity of the East Extension for a distance of 170 metres from the historic core of the Afric Zone and the depth continuity to a vertical depth of approximately 150 metres in this area. Hole WB-13-36 was drilled 70 metres further east from the above described section and intersected anomalous gold (0.66 g/t gold over 10.0 metres) along the interpreted trend of the East Extension.

Northeast Extension - Holes WB-13-39 and 40 tested the Northeast Extension approximately 130 metres northeast from the historic core of the Afric Zone and were successful in intersecting the northeast continuation of the Zone. The upper hole (WB-13-39) intersected 4.77 g/t gold over 8.0 metres within a broader zone of 1.35 g/t gold over 34.2 metres. Hole WB-13-40 tested the zone 50 metres below and intersected 7.97 g/t gold over 1.5 metres within a 49.0 metre zone assaying 0.53 g/t gold.

Gold mineralization on the Northshore Property is hosted within a sequence of felsic intrusive and lesser volcanic rocks. The Afric Zone is characterized by strong fracturing, moderate to locally strong alteration, disseminated sulphide mineralization and locally abundant visible gold. The mineralization is most similar to that associated with porphyry-style gold deposits and remains open in several directions. High-grade mineralization typically occurs in quartz veins and veinlets hosted by north-northeast trending fracture sets within the broader Afric Zone. Additional high-grade vein systems on the property, including the one associated with the former producing Northshore Mine, also remain to be evaluated.

Located immediately south of the town of Schreiber, Ontario within the Hemlo-Schreiber greenstone belt, the Northshore Property is currently 100% owned by Balmoral and under option to GTA. GTA can earn an initial 51% interest in the Property under the terms of an option agreement between the companies (see News Release NR11-17; July 27, 2011). Balmoral currently controls approximately 8.0% of the issued and outstanding shares of GTA and holds the shares for investment purposes.

QA/QC

GTA is the operator of the Northshore Project and as operator has generated and provided the information herein to Balmoral. As operator GTA is responsible are responsible for the planning, timing, execution and monitoring of exploration programs on the Northshore Project which is under the supervision of Robert (Bob) Duess, P. Geo. (Ontario), VP Exploration of GTA. Mr. Duess is a qualified person as defined by National Instrument 43-101 and is also the Qualified Person for this release. Mr. Duess has supervised the work programs on the Northshore Property, supervised the collection of the samples and drill core described herein and reviewed the assays and QA/QC data. Mr. Duess has also reviewed and approved this release.

GTA has implemented a quality control program for the drill programs on the Northshore Property to ensure best practice in sampling and analysis. GTA maintains strict quality assurance/quality control protocols including the systematic insertion of certified standard reference and blank materials into each sample batch. Analyses in this release were performed by AGAT Laboratories Ltd. of Sudbury, Ontario with ISO 17025 accreditation. Samples are transported in security sealed bags to AGAT and all samples were assayed using industry-standard assay techniques for gold. Gold was analyzed by a standard 30 gram fire assay with an ICP and/or gravimetric finish.

About Balmoral Resources Ltd. - www.balmoralresources.com

Balmoral is a Canadian-based precious metal exploration and development company focused on high-grade gold discoveries along the Detour Gold Trend in Quebec, Canada. With a philosophy of creating value through the drill bit and with a focus on proven productive precious metal belts, Balmoral is following an established formula with a goal of maximizing shareholder value through discovery and definition of high-grade, Canadian gold assets.

On behalf of the board of directors of BALMORAL RESOURCES LTD.

Darin Wagner, President and CEO

This press release contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable Canadian and United States securities laws. All statements, other than statements of historical fact, included herein, including statements regarding the anticipated content, commencement, duration and cost of exploration programs, anticipated exploration program results, the discovery and delineation of mineral deposits/resources/reserves, the timing of the receipt of assay results, and business and financing plans and trends, are forward-looking statements. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions or are those which, by their nature, refer to future events. Although the Company believes that such statements are reasonable, there can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future performance, and that actual results may differ materially from those in forward-looking statements. Important factors that could cause actual events and results to differ materially from the Company’s expectations include those related to weather, equipment and staff availability; performance of third parties; risks related to the exploration stage of the Company’s projects; market fluctuations in prices for securities of exploration stage companies and in commodity prices; and uncertainties about the availability of additional financing; risks related to the Company’s ability to identify one or more economic deposits on the properties, and variations in the nature, quality and quantity of any mineral deposits that may be located on the properties; risks related to the Company’s ability to obtain any necessary permits, consents or authorizations required for its activities on the properties; and risks related to the Company’s ability to produce minerals from the properties successfully or profitably. Trading in the securities of the Company should be considered highly speculative. All of the Company’s public disclosure filings may be accessed via www.sedar.com and readers are urged to review these materials, including the latest technical reports filed with respect to the Company’s mineral properties.

This press release is not, and is not to be construed in any way as, an offer to buy or sell securities in the United States.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

 

Balmoral Resources Ltd.
John Toporowski
Manager, Corporate Development
(604) 638-5815 / Toll Free: (877) 838-3664
(604) 648-8809 (FAX)
jtoporowski@balmoralresources.com

Gold Stocks Are Leading Gold Lower

 

Based on the May 10th, 2013 Premium Update. Visit our archives for more gold & silver articles.

 

T.S. Eliot called April “the cruelest month” in his famous poem, and without a doubt April was cruel to many gold investors. Sunshine Profits subscribers who followed our suggestions in April avoided a share of the pain.  Probably no one suffered more than hedge fund manager John Paulson. He is joined by hedge fund manager David Einhorn whose Greenlight fund took a big hit on its gold miners ETF holdings. Einhorn said recently what we would consider an understatement: “We were somewhat surprised by the swift decline in the price of gold in April.” If they were following fundamental valuations and analysis only, then that’s not surprising. Paying attention to the breakdown below the key support level at that time provided a sell signal.

 

According to reports, Paulson’s $700 million gold fund lost 27 percent in April due to leveraged bets on gold, when the price of the metal swooned by 17 percent over a two-week stretch. What must hurt is that the majority of the money invested in the Paulson gold fund is believed to be the billionaire’s own. Regulatory filings show that at the end of last year Paulson’s firm was the largest holder of the SPDR Gold ETF, with 21.8 million shares. Paulson made his fame and fortune after he made $15 billion for his firm in 2007 by betting against subprime mortgages before the housing collapse.

 

Paulson started his gold purchases in early 2009, betting that gold would rise due to the government money printing machines. Paulson took a $1.3 billion stake in AngloGold Ashanti Ltd. (AU) and $2.8 billion of GLD when the metal was trading around $950 an ounce. He was the biggest holder of both at the end of last year, the most recent figures available. Even with all the negative press gold is still trading more than 50 percent higher than when Paulson started investing in the metal.

 

To analyze if there is more pain to come for Paulson in the coming weeks let’s take a look at one of the more interesting ratios there are on the precious market – mining stocks vs. gold and gold to silver ratio (charts courtesy by http://stockcharts.com).

 

Before we being, we would like to point out that we believe that the long-term picture for gold remains bullish, as the fundamentals remain in place. This, however, does not mean that gold can’t move even lower temporarily.

 

The above chart (gold stocks’ performance relative to gold) provides a very bearish picture. Please note that the trading channel and the next horizontal support intersect at a point much lower than where this ratio is today. Of course, the existence of a target level by itself is no indication that it will be reached; the trend has to be in place as well. The point here is that the ratio has already broken below the previous late 2008 major low and is now a bit more than 5% beneath it. This is a major breakdown and it was confirmed. The implication is that the trend is still down.

 

With the trend being down and accelerating and the recent breakdown being confirmed, there is a good possibility that the miners will decline significantly once again.  This makes the previously mentioned target level a very important one. At this time it seems likely that the ratio will move to its 2000 low – close to the 0.135 level.

 

If gold stocks decline relative to gold as they did late in 2000, and gold declines to $1,300 or slightly higher, the target level for the HUI Index would coincide with a Fibonacci retracement level.

The GDX to GLD ratio chart (another way to look at the miners to gold ratio), seems to confirm that the mining stocks are clearly not leading gold higher also from the short-term point of view. Volatile back and forth daily moves have been the norm recently, and overall the situation is unchanged – still looks like a consolidation within a bigger decline and most likely is one.

 

Additional confirmation comes from the silver to gold chart which is an extension of our analysis from the essay on silver’s underperformance against gold.

We see there has still been no sharp drop in the ratio, which indicates that the silver bulls are not giving up just yet (or that lots of short positions are not being opened just yet). This is something, which is usually seen in the final part of a major decline, so it seems that this decline has some time to go yet.

 

Summing up, the situation for metals and mining stocks remains bearish and the correction is likely still not over. If you’re interested in our target levels for precious metals and would like to be informed when to get back on the long side of the market, please join our subscribers.

 

Thank you for reading. Have a great and profitable week!

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold Investment & Silver Investment Website – Sunshine Profits

* * * * *

About Sunshine Profits

 

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Based on the May 10th, 2013 Premium Update. Visit our archives for more gold & silver articles.

T.S. Eliot called April “the cruelest month” in his famous poem, and without a doubt April was cruel to many gold investors. Sunshine Profits subscribers who followed our suggestions in April avoided a share of the pain.  Probably no one suffered more than hedge fund manager John Paulson. He is joined by hedge fund manager David Einhorn whose Greenlight fund took a big hit on its gold miners ETF holdings. Einhorn said recently what we would consider an understatement: “We were somewhat surprised by the swift decline in the price of gold in April.” If they were following fundamental valuations and analysis only, then that’s not surprising. Paying attention to the breakdown below the key support level at that time provided a sell signal.

 

According to reports, Paulson’s $700 million gold fund lost 27 percent in April due to leveraged bets on gold, when the price of the metal swooned by 17 percent over a two-week stretch. What must hurt is that the majority of the money invested in the Paulson gold fund is believed to be the billionaire’s own. Regulatory filings show that at the end of last year Paulson’s firm was the largest holder of the SPDR Gold ETF, with 21.8 million shares. Paulson made his fame and fortune after he made $15 billion for his firm in 2007 by betting against subprime mortgages before the housing collapse.

 

Paulson started his gold purchases in early 2009, betting that gold would rise due to the government money printing machines. Paulson took a $1.3 billion stake in AngloGold Ashanti Ltd. (AU) and $2.8 billion of GLD when the metal was trading around $950 an ounce. He was the biggest holder of both at the end of last year, the most recent figures available. Even with all the negative press gold is still trading more than 50 percent higher than when Paulson started investing in the metal.

 

To analyze if there is more pain to come for Paulson in the coming weeks let’s take a look at one of the more interesting ratios there are on the precious market – mining stocks vs. gold and gold to silver ratio (charts courtesy by http://stockcharts.com).

 

Before we being, we would like to point out that we believe that the long-term picture for gold remains bullish, as the fundamentals remain in place. This, however, does not mean that gold can’t move even lower temporarily.

 

The above chart (gold stocks’ performance relative to gold) provides a very bearish picture. Please note that the trading channel and the next horizontal support intersect at a point much lower than where this ratio is today. Of course, the existence of a target level by itself is no indication that it will be reached; the trend has to be in place as well. The point here is that the ratio has already broken below the previous late 2008 major low and is now a bit more than 5% beneath it. This is a major breakdown and it was confirmed. The implication is that the trend is still down.

 

With the trend being down and accelerating and the recent breakdown being confirmed, there is a good possibility that the miners will decline significantly once again.  This makes the previously mentioned target level a very important one. At this time it seems likely that the ratio will move to its 2000 low – close to the 0.135 level.

 

If gold stocks decline relative to gold as they did late in 2000, and gold declines to $1,300 or slightly higher, the target level for the HUI Index would coincide with a Fibonacci retracement level.

The GDX to GLD ratio chart (another way to look at the miners to gold ratio), seems to confirm that the mining stocks are clearly not leading gold higher also from the short-term point of view. Volatile back and forth daily moves have been the norm recently, and overall the situation is unchanged – still looks like a consolidation within a bigger decline and most likely is one.

 

Additional confirmation comes from the silver to gold chart which is an extension of our analysis from the essay on silver’s underperformance against gold.

We see there has still been no sharp drop in the ratio, which indicates that the silver bulls are not giving up just yet (or that lots of short positions are not being opened just yet). This is something, which is usually seen in the final part of a major decline, so it seems that this decline has some time to go yet.

 

Summing up, the situation for metals and mining stocks remains bearish and the correction is likely still not over. If you’re interested in our target levels for precious metals and would like to be informed when to get back on the long side of the market, please join our subscribers.

 

Thank you for reading. Have a great and profitable week!

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold Investment & Silver Investment Website – Sunshine Profits

* * * * *

About Sunshine Profits

 

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.