Timing & trends

The US Quarterly GDP came in at 2.48%, the print was below the expected 2.6%. In the data dependant world that we are living in, the market had little movement on the release as it was largely as expected.

 

Drew Zimmerman

Investment & Commodities/Futures Advisor

604-664-2842 – Direct

604 664 2900 – Main

604 664 2666 – Fax

800 810 7022 – Toll Free

dzimmerman@pifinancial.com

Peter Schiff Was Right – Taper Edition

Posted by Peter Schiff - Euro Pacific Capital

on Wednesday, 25 September 2013 23:24

Over the last few weeks, as the overwhelming majority of economists, reporters, and Wall Street insiders expressed certainty that the Fed would begin to taper its QE program, I did my level best to make the public understand that the Fed would do no such thing. As a result, last week’s “surprise” announcement provides us with fresh confirmation that most market pundits remain clueless about the true state of our economy. I knew, as they seemed not to, that the Fed is caught in a stimulus trap that will require them to keep the monetary spigots wide open. For my efforts I was treated to another round of snickers, eye rolls, and outright dismissals. You would have hoped that they would have learned better by now. 

Fortunately all their dazzlingly wrong predictions are caught on tape. In retrospect it makes for hilarious viewing. Click below to view. 

Unfortunately, they have failed to learn anything from their mistakes. The same pundits that were revered before their colossal miscue are still afforded equal respect. The markets still believe the popular consensus that a Fed taper will arrive in October, or maybe by January at the latest. In contrast, I believe that we are now stuck in a state of permanent QE.   But these views remain in the lunatic fringe. How many more times will the markets have to get it wrong before an alternate reality is considered?   In the end it will not be the Fed that voluntarily tapers by easing up on the monetary gas pedal, but an adverse reaction in the currency and bond markets than forces the Fed to slam on the breaks.

 

About Euro Pacific Capital

UnknownFounded in 1997 and headquartered in Westport, Connecticut, Euro Pacific Capital, Inc. is a full-service, registered broker/dealer specializing in foreign markets and securities. Euro Pacific Capital makes direct purchases of select foreign shares, on selected foreign exchanges, in contrast to buying domestic pink sheet listings of the same securities. Through personal discussions with Euro Pacific brokers, our clients receive advice about the importance of diversifying their portfolios to include foreign securities that may simply not be offered by the typical U.S.-based full service or discount brokerage firm. See The Euro Pacific Difference.

Peter Schiff, the firm’s founder and CEO, is known for his vocal and unpopular bearish views of the U.S. economy, voiced prior to the 2008 financial crisis, many of which were outlined in his 5 bestselling books, including “Crash Proof: How To Profit From The Coming Economic Collapse.” Mr. Schiff leads our experienced and diverse team of managers, researchers, consultants and support staff – a team that is literally scanning the globe for investment opportunities – by endeavoring to deliver the highest possible value for our clients.
 
Euro Pacific Capital has grown to include six regional branches – Westport, Connecticut; New York, New York; Boca Raton, Florida; Scottsdale, Arizona; Newport Beach, California; and Los Angeles, California – over sixty investment consultants, a team of research analysts, and three divisions – Retail Brokerage, Wealth Management and Capital Markets.

 

Interesting read into the most recent investigation of the big US banks manipulating the silver market. A widespread conspiracy theory is that the banks supress prices in the futures market as they are holding massive short positions that would otherwise move against them.

Click here to read more. 

Robert Levy – Border Gold Corp. 

rlevy@bordergold.com

888.312.2288

www.bordergold.com 

Can Silver and Palladium Tell Us More About the Outlook for Gold?

Posted by Przemyslaw Radomski - Sunshine Profits

on Wednesday, 25 September 2013 21:16

Last week the price of silver climbed to $23.45 after U.S. Federal Reserve Chairman said its huge stimulus program would stay in place.  In our previous 2 essays we focused on two important links: the one between gold and oil, and the one between gold and the USD Index. In the latter we wrote the following about gold:

As you see on the above chart, gold verified the breakdown below the long-term resistance line created by the July 2005 and the October 2008 bottoms (taking intraday bottoms into account). At this point, it’s worth noting that there was an invalidation of the breakout above the 38.2% Fibonacci retracement level based on the September 2012 – June 2013 decline earlier this month. This was a bearish sign.

From this point of view, it seems that even if gold increases once again in the coming days and reaches the above-mentioned levels once again, the medium-term outlook will continue to be bearish.

Please note that in 2008, when gold moved higher before plunging for the final time, there were several intra-week attempts to move higher after which gold finally declined. Therefore, a double top pattern should not surprise us here. The same goes for a triple top 

Gold has declined since the above was posted, so the medium-term downtrend definitely remains in place. In today’s free commentary we will focus on other parts of the precious metals sector: silver and palladium. After all, it is usually the case that the most important price moves are seen simultanously in all precious metals, so by comparing different metals‘ performance we could spot some confirmations or invalidations of the above.

Let’s take a look at the charts and find out what the current outlook for silver and palladium is. Today we will start with the analysis of silver from the long-term perspective (charts courtesy by http://stockcharts.com).

Click HERE or image to enlarge

radomski september252013 1

When we take a look at the above chart, we see that silver pulled back last week, but in spite of this upward move, it still remains visibly below the 32.8% Fibonacci retracement level based on the entire September 2012 – June 2013 decline.

Taking this into account, the medium-term downtrend was not invalidated. In fact, from the long-term perspective, the pullback was barely visible – the most recent move that we can see on the above chart is this month’s decline.

To see more details, let’s move to the short-term chart now.

 radomski september252013 2

On the above chart, we see that silver pulled back after the cyclical turning point and reached the 20-day moving average last Wednesday. As you see on the daily chart, this moving average was seen to stop rallies multiple times in previous months. 

In the recent days, history repeated itself and we saw a downward move. With this correction silver erased almost all last week’s gains and dropped below $21, which is not a positive sign for silver bulls.

In spite of last Wednesday‘s rally, the situation hasn’t changed much. From today’s point of view we see that silver moved up right after the cyclical turning point (after comments from the Fed, which were an important indicator, but perhaps the proximity of the turning point was what made this upswing so significant) and it seems that what was likely to happen based on it has already happened. Consequently, it seems that the medium-term trend in silver is still down.

Once we know the current situation in silver, let’s find out what has recently happened with palladium and where it is right now.

radomski september252013 3 

On the above chart, we see that palladium declined slightly below the 68 level; however, the metal has pulled back and we’ve seen a rally over the past several weeks, which took it to the previously-broken declining resistance line based on the 2013 top and the May peak (in terms of weekly closing prices).

There was no upward move above this line in the previous week; therefore the breakdown that we saw at the end of August was not invalidated. Additionally, the price of palladium decreased on Friday and closed the week well below the declining resistance line. On Monday, we saw further deterioration and the price dropped below the 70 level. In spite of yesterday’s small pullback, the breakdown was still not invalidated.

Summing up, the recent upward move in both metals was not as bullish as it seemed at first sight and the breakdown in palladium was not invalidated. The implications are still bearish and the bearish case for gold that we made in our previous essay seems to be confirmed by what we see in the silver and palladium markets. At the same time please keep in mind that the analogy to the 2008 decline is still in place and a small move higher should not surprise us (such as the one that we are seeing today). Please note that we mean only the medium term as far as the bearish  outlook is concerned – we are still bullish on the entire precious metals sector over the very long term due to the positive fundamental situation. 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 Price Prediction 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.

 

 

In the fall, an investor’s fancy returns to the market. Michael Curran of Beacon Securities believes that the end of the summer doldrums could result in gold reaching a high of $1,500/oz this year. In this interview, Curran argues that investors should pay particular attention to speculative plays with modest potential downsides and exciting potential upsides.

Ed Note: Curran received the #1 Ranking for Mining and Metals research coverage in The Wall Street Journal’s Annual Best on the Street Survey in May 2013. Michael’s 5 Junior recommendations and analysis is below, I have also posted the headline and lead to one of his other articles below this note. 

Look beyond gold for compelling risk/reward ratios

Diversify, diversify, diversify — that’s Michael Curran’s advice for metals investors. So if you’ve been obsessively eying gold and silver prices, you might want to focus your attention elsewhere in the mining sector, says the Beacon Securities mining research analyst. Nothing wows the market like discoveries, and exploration success in the copper, zinc and uranium spaces are making some shareholders very happy indeed. In this interview with Curran shares his top speculative picks for a diversified mining portfolio.

…..read all recommendations HERE

Search for Speculative Juniors with the Potential to Soar

The Gold Report: The Federal Reserve decided last week against tapering its quantitative easing. Gold rose $55/ounce ($55/oz)—over 4%—as a result, and silver was up 6.5%. Were you surprised by how robust this one-day rally was?

Michael Curran: Not really. We had already been out with our call in early July for a potential 25% recovery in the gold price in H2/13, which is the average fall recovery seen over the past four years. As such, we saw potential for gold to reclaim $1,450–$1,500/oz over the next few months, so we viewed the Fed tapering news as just another “quiver in the bow” to see our recovery scenario come to fruition.

TGR: Now that tapering is off the table, can we expect an end to the downward pressure on gold and silver?

MC: Our view is that with tapering off the table, short-term prospects for gold and silver are materially improved.

TGR: To what would you attribute gold’s spectacular fall earlier this year?

MC: I think it was a stock market malaise leading investors to liquidate gold to cover other losses.

TGR: We’ve been hearing about liquidation bringing down the price of gold for some time. Is there a point at which investors have done all the liquidating they need to do?

MC: That would be our view. In prior pullbacks in the gold price, we didn’t really see much liquidation in gold exchange-traded funds (ETFs). But this year, for the first time, we saw meaningful selloffs, and these investors redeployed their assets elsewhere. I think we’ve seen the bulk of that. August was the first net positive month for gold ETFs since the spring.

TGR: Small- and micro-cap explorers have suffered terribly in the last 18 months. Can we now expect a resurgence of these stocks?

MC: I think we’ve seen the bottom, but it’s the quality juniors that are going to be the beneficiaries. Not all boats will rise. Investors need to be more selective than in past recoveries.

“With tapering off the table, short-term prospects for gold and silver are materially improved.”

Our recommendation is to focus on early exploration or discovery plays. We’re also looking beyond gold. We like select base metals and uranium, and we have a few favorites there as well. Diversification is our focus for investors right now.

TGR: There are a great many low-price metal stocks today, but how do we find the real bargains?

MC: We concentrate on assets, location, management and balance sheets. We’re looking for assets with potential for high-grade discovery. We’re looking for low political risk in the location of these assets. We’re looking for strong management with backgrounds in exploration and discovery or people who have demonstrated past involvement in success stories. And we’re looking for companies that have enough cash to do exploration in the short term or a combination of assets and management expertise sufficient to raise money, which is not the easiest thing to do in this market.

TGR: Which speculative gold play do you find most attractive?

MC: Cayden Resources Inc. (CYD:TSX.V; CDKNF:NASDAQ) is currently our favorite speculative drill play. It has two main projects in Mexico, Morelos Sur in the Guerrero Gold Belt, which many investors will be familiar with, and the El Barqueño property in Jalisco.

TGR: Cayden is up about 50% in the last month to about $1.50 a share. Your 12-month price target is $3, which would be a 100% increase. On what do you base that projection?

MC: We’ve visited Cayden’s properties earlier this year. Morelos Sur is more of a long-term play. This is a blind, buried deposit several hundred meters below surface. It could take some time to discover a new skarn-hosted gold deposit, but certainly the market interest in the Guerrero Gold Belt is so strong that one good drill hole could generate a lot of interest.

“Investors need to be more selective than in past recoveries.” 

Cayden’s neighbors in the area, Goldcorp Inc. (G:TSX; GG:NYSE), Torex Gold Resources Inc. (TXG:TSX) andNewstrike Capital Inc. (NES:TSX.V), have all had very good success on these kinds of targets and found multimillion-ounce deposits.

TGR: Goldcorp has found over 13 million ounces (13 Moz), Torex over 5 Moz and Newstrike over 2 Moz.

MC: That’s right. So Morelos Sur is the big potential discovery. El Barqueño has the lower short-term risk; as recent results have confirmed near-surface mineralization. Drilling will begin shortly and we expect the initial drill program can be successful and delineate resources. We see initial potential of 1–2 Moz at El Barqueño.

TGR: Hasn’t Cayden’s management had success in the past?

MC: A lot of the management team was with Keegan Resources, which was recently renamed Asanko Gold Inc. (AKG:TSX; AKG:NYSE.MKT). Your readers will know about Asanko’s 6 Moz Esaase gold deposit in Ghana.

TGR: What other companies would you like to mention?

MC: One company we like in the gold patch is Premier Gold Mines Ltd. (PG:TSX). The company has a very strong portfolio of assets with high-grade components in both Ontario and Nevada. It has made several additions in the last 18 months from former Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) management. This is a junior with the technical expertise of a mid-tier producer.

TGR: Premier Gold Mines shares rose 19% last Wednesday on results from two holes at its Cove Project in Nevada, including 6.74 grams per ton (6.74 g/t) gold over 9.1 meters and 26.3 g/t gold and 39.8 g/t silver over 2.3 meters. How significant are these results, in your opinion?

MC: We believe Premier Gold’s 19% rise was a result of two positive developments that day—the Cove project drill results reported before the open and the announcement by the Fed regarding tapering in the afternoon. We viewed the drill results as positive as the latter higher-grade intercept you mentioned successfully extended the Helen zone gold mineralization to the east of previous drilling. The other intercept you noted opens up the potential for the Helen zone mineralization to extend several hundred meters to the east, to below the previously mined Cove open pit. Of course, follow-up drilling will be required to confirm this.

TGR: Under a joint-venture agreement, Newmont Mining Corp. (NEM:NYSE) can buy 51% of Cove. How likely do you think that is, and do you think Premier is a possible takeover target?

MC: We believe that it is highly likely that Newmont will be involved with any mine development at Cove, either through the exercise of its right of first refusal or as the preferred partner to process Cove ores, thus holding either a direct interest or via a toll-processing agreement.

TGR: Goldrock Mines Corp. (GRM:TSX.V) was another winner last Wednesday, up 11% after announcing a $9.25 million ($9.25M) strategic alliance with Austral Gold Ltd. Goldrock’s stated objective is to develop its Lindero project in Argentina by 2015 so as to “become a mid-tier gold producer with annual gold production of 250,000 oz.” Does it now have the means to accomplish this?

MC: While we view the news of attracting a new strategic partner as positive for Goldrock, the company still has a long way to go to complete full financing for the development of its Lindero gold project in Salta, Argentina. Even with successful fundraising, the Lindero mine would only represent the first step toward achieving the company’s production target of 250,000 oz/year (250 Koz/year), as the open-pit, heap-leach mine is only forecast to be a 125 Koz/year mine. Thus we assume Goldrock’s target of becoming a 250 Koz/yr gold producer would require a second producing asset, likely via acquisition.

TGR: At its Coffee gold project in the Yukon, Kaminak Gold Corp. (KAM:TSX.V) has already drilled more than 35,000 meters this year and has announced a $2.5M bought-deal private placement so it can drill more. Is Kaminak looking to increase the size of its resource or its reliability or both?

MC: One of the main objectives of this summer’s $11M exploration budget was to delineate additional gold resources in proximity of the main mineralized zones at Coffee. We expect the expanded drill program will continue these efforts, as well as provide some infill drilling to increase the reliability (confidence) of gold resources in the main zones, presumably focusing on areas of higher-grade mineralization.

TGR: How many ounces could we see at Coffee?

MC: We believe drill results this summer could increase total resources at Coffee from the previous 3.2 Moz level to 3.7–4 Moz. Longer-term, we maintain our view that gold resources are likely to exceed 5 Moz.

TGR: Shares of Dalradian Resources Inc. (DNA:TSX) are up almost 50% over the last month. Its flagship project, Curraghinalt in Northern Ireland, has exceedingly high-grade gold, although most of its measured ounces (2.23 Moz out of 2.79 Moz) are Inferred. How close is Dalradian to derisking Curraghinalt?

“Our recommendation is to focus on early exploration or discovery plays.”

MC: We are awaiting a major milestone for Dalradian later this fall, when the company is expected to receive environmental permits that will allow the next phase of exploration at Curraghinalt to begin. This phase centers on 2 kilometers of underground development that will allow Dalradian to perform detailed infill drilling to confirm and upgrade the Inferred resources, as well as test mining methods and provide a bulk sample for metallurgical testwork, as part of feasibility-level economic studies. We expect this phase to begin early in 2014 and take 15–18 months to complete.

TGR: If the price of gold makes a substantial and sustained move toward $2,000/oz, will we see an end to the doom and the gloom and a return to excitement in the junior sphere?

MC: I think so. For some existing companies, it’s probably too late, but if we approach $1,800/oz, $1,900/oz and $2,000/oz, we’ll have a new wave of names coming up. We’d see new money going into new stories, as opposed to propping up existing exploration stories that haven’t worked.

TGR: Mike, thank you for your insights.

Michael Curran, CFA, is a managing director and a mining research analyst with Beacon Securities Ltd. in Toronto. He was previously a managing director and a mining research analyst with RBC Capital Markets. Curran received the #1 Ranking for Mining and Metals research coverage in The Wall Street Journal’s Annual Best on the Street Survey in May 2013. He holds a Master of Science degree in mineral exploration, a Master of Business Administration and is a CFA charterholder.

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DISCLOSURE: 

1) Kevin Michael Grace conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Cayden Resources Inc., Goldcorp Inc. and Premier Gold Mines Ltd. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Michael Curran: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. A principal of Beacon Securities is on the Board of Directors for Cayden Resources Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent. 
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.