Stocks & Equities

Sprott’s Rule: The Bear in Mining Stocks

Posted by CEO

on Tuesday, 5 November 2013 17:20

Sprott USA Chairman Rick Rule, the Carlsbad, California based natural resource financier with nearly four decades of experience, joined us for a conversation earlier today on the current mining bear market, which is approaching its third anniversary. As expected, Mr. Rule was upbeat, and sounds to be making the most of the opportunities being presented to him.

“Junior capital markets may be closed but Sprott is not. We are aggressively trying to allocate capital in this market.”

Mr. Rule’s only complaint is that issuers (read: small, pre-revenue, hope and dream mining companies) still think they are entitled to financing terms of the 2003-2010 bull market. Mr. Rule said that during that period, half of Canadian listed junior mining companies were spending more than 50% of their capital on general and administrative expenses.

“The exploration industry was stupidly overcapitalized from 2003-2010. Every truly great party causes a truly monumental hangover. We’re in that phase now.”

Mr. Rule is not at all depressed about the current mining bear market, however. He thinks that the top 10-15% of junior companies have already bottomed, and notes that discoveries, such as RMC, FCU or AOI, are continuing to reward investors with five and ten-baggers.

Rule predicted it will take another 18-24 months for resource equities to fully rebound. The largest mining companies are already starting to show compelling valuations, Rule says, which will ultimately attract global capital flows.

We were able to ask Mr. Rule about a few stocks that he’s mentioned in the past, includingFission Uranium, which he feels is being held back by a weak uranium spot price. “Unless I’m wrong and the exploration becomes less predictable, I’ll own the name until it has a different symbol.”

FCU.V 11.4.2013

….3 more stocks & commentary HERE

Pension funds and US institutions are upping their wager on the US dollar as the funds bought the most dollar denominated assets since January of 2009. 

Click here to read more.

Robert Levy

Border Gold Corp.

rlevy@bordergold.com

www.bordergold.com | 1.888.312.2288

Well known gold bug Peter Schiff gives an interview for Bloomberg.

Click here to read more.

Robert Levy

Border Gold Corp.

rlevy@bordergold.com

www.bordergold.com | 1.888.312.2288

Due: 3rd Phase Speculative Blow-Off

Posted by Richard Russell - Dow Theory Letters

on Tuesday, 5 November 2013 11:28

Richard Russell: “My thoughts go back to 1957.  I wrote my first article for Barron’s in December of 1957, in which I noted that we’d never had a third speculative phase in that bull market.  Soon a vicious recession was on, and everybody was bearish.  I predicted that despite the recession, we would see a speculative third phase in the secular bull market.  The third phase did come, and my forecast proved correct.

I’m wondering whether the same situation exists today, with the speculative third phase somewhere in our future.  Despite the sluggish GDP, I believe you will see a third phase speculative blow-off in this bull market.  Often in a bull market’s third phase, profits are larger than anything seen during the first and second phases of the bull market.  For this reason, my current thinking is that subscribers should hold gold and DIAs.  The last thing investors are expecting now is a profitable third phase explosion in stocks, and perhaps something close to hyperinflation in the money market.

I believe you see a phenomenon where increasingly bullish retail buyers are coming into this market, while at the same time institutional money is taking profits and moving to the sidelines.  I expect this action to accelerate in the coming months, leading to an upside boom in stocks, along with a good deal of churning action.  It is now recognized that the forces of deflation are pressing down on the US economy, and that more QE will be needed.  This will halt deflation and gradually lead to inflation, finally being expressed as a boom in the stock market.

Thus the great bull market will end as all bull markets do: with a massive entrance of the retail public and subtle distribution by institutional money.  Our subscribers’ choice: going into what appears to be a growing stock market bubble, or remaining in the universe of gold, which is acting as though it is at a bear market bottom.  

As for gold, China is accumulating all it can at these attractive prices.  It seems to me that China is intent on creating the world’s largest hoard of gold.  The Golden Rule: “He who owns the gold makes the rules,” and owns the reserve currency … I think the present system has, in effect, been destroyed by more debt than we can handle.  I think a new system will be required, a system based on gold, which will automatically put a brake on debt.” 

bubblesandmanias

 

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Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business.

Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron’s during the late-’50s through the ’90s. Through Barron’s and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-’66 bull market. And almost to the day he called the bottom of the great 1972-’74 bear market, and the beginning of the great bull market which started in December 1974.

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That’s a Lot of Silver…

Posted by John Rubino - DollarCollapse.com

on Tuesday, 5 November 2013 11:27

The Indian government has restricted the importation of gold. So Indians have switched to silver:

“Starved of gold, Indians may import record volumes of silver

(Reuters) – Indian silver imports are on pace to hit a record high this year as the wedding and festival season drives up buying of the precious metal instead of the traditional gold, made scarcer and dearer by official measures aimed at cutting the trade gap.

Higher silver demand in the world’s biggest buyer may help support prices, which have fallen almost 30 percent this year on the international market and are on track for their biggest annual drop in almost three decades.

The increase in buying is unlikely to spark a fresh policy response from authorities, as in the case of gold, since the value of silver that is imported is far lower than that of gold and therefore not critical to the trade balance.

“There has been a massive improvement in silver imports and we will continue to see more. Investors are taking advantage of lower prices and the lack of restrictions on silver imports as of now,” said Harmesh Arora, director with the Bombay Bullion Association.

According to the GFMS metals consultancy, India imported 4,073 tonnes of silver from January to August, more than double the 1,921 tonnes in the whole of 2012, when a jump in prices in the peak season hurt demand. The record high was 5,048 tonnes in 2008.

India, also the world’s biggest buyer of gold, has raised the import duty on bullion three times this year, taking it to 10 percent, and in July the government told importers that a fifth of their purchases would have to be turned around for export, leaving only 80 percent for domestic use.

SECOND CHOICE
The import duty on silver was also raised to 10 percent in August from 6 percent, but prices remain far apart: gold is about 60 times more expensive than silver in dollar terms.

Gold has a special place in Indian culture, bought as a hedge against inflation and traditionally used for gifts at weddings and festivals. Silver does not enjoy the same status.

The value of silver imports in 2012 was $1.8 billion, whereas gold imports cost $52 billion. Even record shipments of silver are therefore unlikely to put any strain on the trade deficit, in contrast to the impact of gold, which is India’s second-biggest import item after oil.

For now, much of the silver flooding in is finding its way to rural areas, where industry officials expect a surge in disposable incomes after a bountiful monsoon boosted agricultural harvests.

Some thoughts
Here’s a chart showing Indian silver imports since 2008. Note how they plunged in 2012, which might have had a bit to do with silver falling by over half from its $50 high.

Indian-silver

There are about 32,000 ounces in a ton, so India’s projected 2013 imports of 6,000 tons is nearly 200 million ounces. The total annual supply of silver is a billion ounces (750 million ounces from mines, 250 million from recycling). So 200 million ounces is 20% of total global supply – a lot of silver for just one country.

According to the Silver Institute, industrial users (including jewelry makers) absorb about 850 million ounces of silver each year, which leaves 150 million ounces for investors. But by importing 132 million more ounces this year than last, India is taking almost all of that surplus for itself, leaving the rest of the world’s silver bugs to scramble for what little is left.

Also interesting is the fact that silver is so cheap that a doubling of imports has a negligible impact on India’s balance of trade and therefore probably won’t attract the ire of regulators. So from a policy standpoint, restricting gold imports is working and will likely continue. That means the current level of silver demand might be sustained. Wonder where all the extra silver will come from?

 

 

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