Wednesday, May 30, 2012

Gold Bubble Callers are Wrong, Again.

First off, People need to stop focusing on the PRICE of gold and start focusing on the VALUE.

Today was a great day for gold in terms of both price and value, however. Right now, the DOW is down 1 percent to 12,455 and oil is down big, 3.45 percent drop to $87.6. Gold, however, is up nearly 1 percent to $1,563.

Gold bubble callers argue that the "gold bubble" has collapsed the last few months because the PRICE has fallen from $1,900 to the current price of mid-$1500's. However, hasn't the DOW fell in price as well? Hasn't gasoline prices, the price of oil fell? We need to be looking at these figures in terms of gold and not the US dollar. That is how you find the value.

Believe it or not, the DOW:GOLD ratio is currently under 8 (7.96). When the Dow was 13,300 and gold was $1,700, the ratio was still around the same. Interesting...

Meanwhile, gold stocks have been finally showing signs of a reversal. The HUI, GDX and GDXJ have all been outperforming the metal of recent. As I've stated before, I believe that gold juniors will outperform all on the next leg up in gold. And I do think that leg up will be coming sooner rather than later.

Final point on stocks - if you go back to 2002, the HUI has outperformed the metal. Since about 2008, however, the metal has outperformed the stocks. But the HUI will outperform the metal going forward, IMO. We are starting to see that now.

There are great deals everywhere - the juniors, the explorers, the warrants, etc. It's like throwing darts.

One final word for the gold bubble callers - you were wrong in 2008, and you are wrong now.

How is gold a bubble if virtually NONE of the middle class owns it?

The housing bubble - Pizza delivery guys turned "housing experts" overnight. Zero Money down loans.

The tech bubble - Unprofitable businesses with ludicrous valuations. Everybody a speculator. Even your cab driver.

The Tulip Bulb Mania, The South Sea Bubble.... Same deal.

I just hope that people are smart enough not to listen to you.

Wednesday, May 23, 2012

Insider Buy Alert - Petaquilla Minerals and Magellan Minerals

Two gold junior mining stocks that I own and really like have been seeing a lot of insider buying of late.

Petaquilla Minerals have been buying back shares, while Magellan's insiders have been buying over the past 6 months.

below is the chart for Magellan minerals, with the most recent buy on May 22:


Here is the chart:

And this is the chart for Petaquilla. They've been buying back a lot of shares...


Disclosure: I am long V:MNM and V.PTQ. This is not investment advice nor am I an investment advisor. Please do your own due diligence when investing!

Tuesday, May 22, 2012

A Gold Stock With 10-Bagger Potential!

I recently learned of a new micro-cap gold stock that got me pretty excited. There are only a few times before when investing have I felt this sense of conviction - buying shares of Sandstorm Gold in 2010 and Endeavor Silver were two other times. I also really like the 2013 Silver Wheaton warrants as I stated in a recent video.

I frequently post at the message board of the Motley Fool website. Here's what I had to say about my new favorite gold junior, Magellan Minerals: 


"I'm sure you heard of the last Sandstorm deal - they cut a NSR with Magellan Minerals, on two of their projects in Brazil. Well, wouldn't you know, I did some DD on Magellan, and I am very, very intrigued!
Facts: The financing with Sandstorm Gold was for $7.5 million cash, $.5 mill in common shares (at .50 cents - the stock is currently only .20 cents).

At .20 cents, they have a market cap of about $20 million. Not considering what other cash they have in the bank (not sure to be exact but I will check), we know they have at least $7.5 million cash. Close to 40 percent of their current market cap!
*Management owns 11 percent. Both Kinross and Newmont are shareholders.

You can bet that they are going to use this cash to start getting the drills going.
Their two properties have total resource of 2.4 million ounces of gold. Brazil is a great mining jurisdiction. 

I bought yesterday at .20 cents. (I bought 10,000 shares).

The last point I'd like to make is Sandstorm's management and how they choose their deals. They only go for safe political locations, solid management teams, project upside, etc. That only gives me more confidence. 

Courtesy: Yahoo!Finance

(As you see here, shares have been beaten down pretty badly recently. However, I feel that we've either reached a bottom or are getting close. With $7.5 million in the bank and a 20 million market cap, I see little downside).

They are aiming for first production in 2015 and second mine in 2016. I of course like the potential of both of their projects. Check out the presentations on the site -"

*This stock could return 1,000 percent of your money. I'm not kidding. If they can use that cash and get the drills going and update the resource at both of their projects, they could have over 4 million ounces of gold (measured, indicated and inferred). Then an updated Preliminary Economic Assessment should be in store.
*The PEA indicates a robust Internal Rate of Return ("IRR") of 34% and a Net Present Value ("NPV") of US$41M (assuming a 5% discount rate and a gold price of US$950/troy oz (oz). The project payback period is 3.7 years.*** (With gold at a more current price of $1,600, the NPV should be WAY higher - It's worth much more than the measly $41 million!).

The Coringa Deposit is a high grade deposit with roughly 560K measured and indicated and 534K inferred. If they can get constructed without too much dilution, we could see Magellan trading over $2 a share easily.

The hope is that the share price will be higher when they have to go to the market again. Since they have $7.5 mill in the bank, that won't be for a while. When they decide on constructing the mine they will most likely have to issue shares to raise capital, however, I expect the share price to be MUCH HIGHER at that point with the updated resource and drill results, and a better market (hopefully). 

My long-term (2-5 year) price target is $1-2 a share and I think we can easily get there. 

DISCLOSURE: I own shares of V.MNM. This is not investing recommendation, nor am I an investment advisor. Please do your own due diligence when investing!

Agnico CEO Calls for $3,000 gold

Agnico CEO Sean Boyd said today on King World News that he is calling for $3,000 gold in the next 24 months. He's never called for gold to be this high before.

Here's his reasoning: “I think you’re in a situation right now where the problems in Europe are front page and it has hurt the euro. So the US dollar is stronger. If you look at the US dollar, that story is on page 3 or 4. It will be a front page story soon. The debt ceiling has to be raised and we really haven’t fixed a lot of the issues, whether it’s in the US or in Europe.”

This is what I've been saying for quite some time now. The US economy and the US dollar is not front page news - yet. Once people realize how much trouble we are in, I think we will be in for a major rally. This could happen after QE3, this could happen when the debt ceiling needs to be raised, again. They will wait to the last minute to do this...

He is also bullish on the mining stocks, and the juniors, which I think will produce the biggest returns going forward: "When it turns and gold turns, this is where you are going to get the best leverage. You are going to get the best leverage from the quality stocks, and then, ultimately that will move down the chain and you’ll see some huge returns coming out of the juniors at some point.”

GOLD IS GOING TO $5,000 an OUNCE. End of story. 

Read more at King World News.

Monday, May 21, 2012

Peter Schiff's New Book "The Real Crash" to be Released Tuesday

"The Real Crash - America's Coming Bankruptcy" by Peter Schiff will be released on Tuesday, May 22.
I've been following Schiff for quite some time now. He is most well-known as the guy who predicted the 2008 housing crash in the popular YouTube video "Peter Schiff was right." However he deserves to be known by the public for more than that prediction - in my opinion he is one of the best economists out there today.

Schiff has been warning Americans of the coming crash for a while now - "Schiff demonstrates how the infusion of billions of dollars of stimulus money has only dug a deeper hole: the United States government simply spends too much and does not collect enough money to pay its debts, and in the end, Americans from all walks of life will face a crushing consequence."

The media and the public is always chasing yesterday's news, unfortunately. They don't report on what's really important and what we really need to know - that the US is 16 trillion+ in debt and cannot pay its bills.

We are set to hit the debt-ceiling again later this year, currently around August. Of course of politicians will wait until the last minute to reach some sort of agreement. You can bet that it won't be pretty.

Schiff says that we need to reverse course immediately and come to the reality that we cannot keep running these budget deficits, running up the debt and keep printing money... we cannot keep thinking we can live the same lifestyle we have lived.

There are serious times ahead and everyone needs to get informed ASAP to protect yourself and your family from the potential financial crash that Schiff is warning about. 

Stay tuned for a review of the book coming next month.

Thursday, May 10, 2012

Is Charlie Munger a Moron?

"Civilized people don't buy gold....I think gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939, but civilized people don't buy gold, they invest in productive businesses."

I just posted a comment to an article at the Motley Fool titled "A Civilized Rebuttal to Charlie Munger" by Christopher Barker. I strongly urge you to read this article and to follow Mr. Barker at the Fool. He has done a great service to the blog community over there and, in my opinion, is one of the best gold analysts out there today.

Here is my remark:

"Civilized people don't buy gold" - So basically China and India is full of uncivilized people. 

"I think gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939..."

Both of these comments are pretty offensive to a lot of people.

Gold is money.... Gold's value is in its rarity and in the effort it takes to get it out of the ground. It takes a lot of manpower, time and money to do this. It's not easy. And to do it profitably is even harder. Just watch that stupid Alaska show on the Discovery channel, although they are clearly gold mining amateurs, it's funny to watch. 

I have a simple question for people to ask: If you had the choice to hold your savings in the US Dollar or in gold coins, which would you choose? It's a simple question. 

I just think this is all common sense and would think people as "smart" as these two would understand the multiple reasons for owning gold. but JRS is probably right on the mark with the "Rothschilds agents" remark."

The fundamental reasons for owning gold are stronger than they have ever been. Gold is money, and will always be. You can't print REAL money. Gold will continue to rise in price (AND IN VALUE which is more important to understand) as long as the currencies continue to fall in value (which they will). It is crucial to understand this. Good luck to all.

Are The Miners Starting a Reversal?

It looks like the gold and silver mining stocks (especially the juniors) could be reversing the downward trend they've been in for a while now. While gold has remained under $1600, the stocks have gone up a little bit, with the HUI back up to near 420 and the GDX at 43. 

Perhaps people are starting to realize just how ridiculously undervalued this sector has become. These companies are profitable with $1600, $1500, $1400, even $1200 gold.

Wednesday, May 9, 2012

Leeb on Gold Juniors - "Greatest Bull Market of All-Time."

Stephen Leeb is Chairman & Chief Investment Officer of Leeb Capital Management:

"The junior gold stocks, the ones with honest to goodness reserves which have not been developed, they will see one of the greatest, if not the greatest bull market of all-time."

Read more at KingWorldNews

Monday, May 7, 2012

Saturday, May 5, 2012

Triple Your Money in a Year With This Trade

Here is my first video. I feel strongly that a position in the 2013 Silver Wheaton warrants will pay off considerably, potentially 300 percent gains in a year or less!

Always do your due diligence when investing and good luck. I am long SLW and the '13 warrants.

Thursday, May 3, 2012

Sandstorm Gold Releases Great 1Q Results

Another great quarter for this gold streaming company. I've been in since .65 cents and have no intentions of selling anytime soon!

Sandstorm Gold Recognizes Record Gold Sales and Operating Cash Flow of US$9.3 Million

 Vancouver, British Columbia, May 3, 2012 - Sandstorm Gold Ltd. ("Sandstorm" or the "Company") (TSX-V:SSL) is pleased to announce its unaudited results for the first quarter ended March 31, 2012 (all figures in U.S. dollars).

First Quarter Highlights
  • Record operating cash flow of $9.3 million.
  • Record gold sales of 7,946 ounces.
  • Average cash cost per ounce1 of $314 resulting in cash operating margins of $1,380 per ounce.
  • Sandstorm entered into a revolving credit agreement to borrow up to $50 million, which remains undrawn.
"The first quarter proved to be another record quarter in terms of gold sales and cash flow," said President & CEO Nolan Watson. "As our cash balance continues to grow, we are better positioned to complete additional gold streams..."

Read more -

Primero Mining Posts Solid 1Q

How this stock is still under $3 a share is beyond me.

First Quarter Highlights:
--  Improved Earnings and Cash Flow: Adjusted 
    net earnings of $18.8 million ($0.21 per share) 
    were improved from $1.6 million ($0.02 per share) in
    2011 and operating cash flow before working capital 
    changes increased to $21.3 million ($0.24 per share) 
    from outflows of $1.2 million (-$0.01 per share) in 2011; 
    prices to commence in May.
Cash Position Continues to Grow

 The Company's cash position increased to $86.3 million 
 at March 31, 2012(after paying the initial $9.4 million
 principal and interest payment on the promissory note held 
 by a subsidiary of Goldcorp Inc. in January) from the December 31, 
 2011 balance of $80.8 million. The Company continues to invest in organic 
 growth while building on its balance sheet strength 
Expecting big things from Joe Conway (formerly CEO of IAMGOLD) and Primero. 
I am long Primero(Quote - PPP).