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Resource Opportunity Report on Dolly Varden Silver
Lawrence Roulston
Dolly Varden Silver Corp. (DV-TSXV)
Dolly Varden is reactivating an historic silver district in northern British Columbia. The company, with an experienced management team, controls a district which has four mines with extensive underground development in place. Previous work has outlined a multi-million ounce resource (albeit non-compliant with current standards). Beyond the present resource, there is excellent potential to greatly extend the known mineralized zones. On that basis alone, this company represents exceptional value.
The Dolly Varden story has another element that adds enormous upside potential. In simple terms, Dolly Varden is an analog for the renowned Eskay Creek mine. Eskay, located north of Dolly Varden along the same geological trend, was one of the richest silver-gold mines ever.
If this is indeed another Eskay, the presently known mineralized zones at Dolly Varden could be mere outliers for a much larger silver-gold deposit. Further evidence backing that premise would see the share price escalate.
Drilling is about to get underway in a program that is intended to validate and expand the historic resource and also test the broader Eskay theory.
The Dolly Varden district is located in the upper Kitsault Valley, 40 kilometers southeast of Stewart BC. Silver at Dolly Varden was first discovered in 1910. In 1915, a Chicago-based group financed a 23 kilometer narrow gauge railway from tidewater at Alice Arm to the site. With a railway, the operators were able to bring in equipment and supplies and develop a sizable mining operation.
Production began in 1919. The ore was so rich that it was sent without processing, by rail, to the port where it was shipped directly to smelters. Rising costs and a falling silver price saw the mine close in 1922. In its three years of operations, the Dolly Varden mine produced 1.5 million ounces of silver from ore with an average grade of 1,100 g/t (36 ounces per ton).
The railway was replaced by a road in the 1940s to support a 350 tonne per day milling operation at the Torbrit mine, located a kilometer north of the original mine. Torbrit began production in 1949. A silver-bearing lead concentrate was shipped out of Alice Arm until the mine closed in 1959. The Torbrit mine produced 19 million ounces of silver from ore with an average grade of 466 g/t (13.6 oz/ton), along with substantial lead and zinc.
In the 1960s through the 1970s, numerous claims in the district were held by various groups. From 1980 to 1985, several of the properties were assembled into one company for the first time. That private group attempted to develop the district, but was poorly funded and wasn’t able to accomplish much.
Mineralization at Dolly Varden was initially thought to be hosted in veins. Exploration in the early days consisted mainly of following the “veins”. In 1986, it was recognized that the mineralization at Dolly Varden was primarily related to volcanogenic massive sulphide (VMS) deposits, which opened up a whole new approach to exploration.
A small drilling program in 1989-90 was the first exploration recognizing the VMS model. Ironically, the geological crew was called off the project in 1990 following the Eskay Creek discovery. They were sent to the Eskay area to stake whatever they could in the midst of a staking rush following the Eskay discovery. The rush was triggered by a drill hole from Murray Pezim’s Prime Resources: Hole 109 encountered 208 meters that assayed 27 grams per tonne gold and 30 g/t silver.
No further work was done at Dolly Varden until a geophysical survey was conducted in 2010. In 2011, the present management team acquired the property from the estate of the former owner. A high powered team, recognizing the large-scale potential of the Dolly Varden district, came together to acquire the asset and reactivate the district.
John King Burns, chairman, has extensive experience in the global resource sector. He held senior positions with two global financial firms (Drexel Burnham Lambert Commodity Group and Barclays Metals Group) where he was involved in resource-oriented investments.
Ron Nichols, president & CEO, is a professional engineer with over 30 years of successful exploration and mine development experience in junior and senior companies. Mr. Nichols’ career includes 20 years with Cominco Ltd. during which time he was involved in the discovery and exploration of a precious metal deposit in northwest British Columbia which became a profitable mine. He was also involved in the re-start and operation of silver mine in Mexico.
Paul McGuigan, vp exploration, has 38 years of international experience in management of mineral exploration and mining operations. Much of that experience was focused on the Eskay and Stewart regions of northern British Columbia.
The other directors and the advisors bring a wealth of financial and mining industry expertise to the company.
Dolly Varden has a 100% interest in 95 square kilometers of mineral rights, covering two past producing mines (Dolly Varden and Torbrit) as well as two other mines which were developed but not mined (North Star and Wolf). In March, they completed the assembly of all of the claims covering the past producing mines and the prospective areas by securing an option to purchase the Musketeer claim.
The four mines have a total of 7 kilometers of underground workings and 631 drill holes. Resource estimates for the four mines compiled from the 1960s through the early 1980s outlined a total of 5.7 million ounces classed at that time as “proven and probable reserve”, which would be roughly equivalent to measured and indicated resource today. The “possible reserve” category, equivalent to inferred resource today, hosts a further 8.8 million ounces. Note that these are historic estimates only and further drilling and other confirmation is required before they can be considered resources. The grades of the various deposits range from 280 to 750 grams per tonne.
Management believes that the existing mineralized zones have the potential for 40 to 50 million ounces. A drilling program is about to get underway, intended to validate the historic resource estimates and also to extend those zones.
Logistics are quite favorable, with a 23 km road to the property from Alice Arm which is provincially maintained as it also provides access to a hydroelectric facility and another mineral exploration project five kilometers further north. Kitsault, just across Alice Arm, has direct road access to the provincial highway system. Underground workings at the Torbrit mine were opened up last summer and will provide access for underground drilling.
While the geological team are working toward establishing a sizable silver resource in the known areas, they will also continue to evaluate the much larger gold-silver potential suggested by the Eskay model.
A 2002 report from the BC Geological Survey, commenting on the Dolly Varden deposits, states: “It also suggests that the deposits may be silver-rich analogues to the precious metal-rich Eskay Creek deposit.” That report goes on to document the abundant geological evidence in support of that premise.
A technical report on the Dolly Varden deposit noted: “The Eskay Creek deposits are examples of shallow subaqueous hot spring deposits, an important new class of submarine mineral deposits that has only recently been recognized in modern geological environments. They are relatively under explored and poorly recognized within the geological record.”
The analogy to Eskay is extremely important. Cumulative production at Eskay was 3.3 million ounces of gold and 161 million ounces of silver from 2.2 million tonnes of ore. The average grade over the life of the mine was an exceptional 45.7 g/t gold and 2,231 g/t silver (1.3 oz/ton gold and 65 oz/ton silver). During its life, Eskay ranked as the fifth largest silver mine in the world.
The Eskay mine, which was operated by Barrick until its closure in 2008, is located 100 kilometers north of Dolly Varden. The mineralization is found in the same geological setting: rift-related volcanic and sedimentary rocks of the Hazelton Group.
Support for the Eskay model is seen in an extensive sheet of chemical sediment (“exhalative”) mineralization that extends from the Dolly Varden mine, passing through the North Star underground workings and ending in the Torbrit mine. The almost continuous sheet, mostly ranging in thickness from 3 to 38 meters, is exposed for a strike length of 1.5 km on surface. Two other zones, Red Point and Wolf, have geological similarities to the Eskay model and may represent additional target horizons.
The Eskay model is well established at Dolly Varden. The task now is to identify areas which are most likely to host high grade mineralization. The geological team will be conducting further review of the existing geological and geophysical data as well as further mapping, geochemistry, alteration and structural studies to guide a summer drill program to test those targets.
Hecla Mining Company, a major silver producer, holds 19.9% of the Dolly Varden shares. Hecla, the largest primary silver producer in the US, derives the bulk of its production from the Greens Creek mine, located nearby in Alaska. Greens Creek is in a similar geological setting and that company is providing technical assistance to Dolly Varden.
In summary: The nearly 15 million ounces suggested by the historic estimates, and the potential for up to 50 million ounces in the known zones make Dolly Varden an attractive investment even if that is all there was. The potential for further discoveries on the scale of Eskay, while speculative, make this a compelling story. A company like this, with cash, a known deposit, good infrastructure and a capable management team, will be among the early movers as this market recovers. Positive results from the on-going exploration program would have an immediate impact on the valuation.
Price May 24, 2013: C$0.11
Shares Outstanding: 118 million
Shares Fully Diluted: 131 million
Market Cap: C$12.9 million
Contact: Investor Relations
720-273-6224
www.dollyvardensilver.com
http://www.resourceopportunities.com/Articles/Company-Reports.html
Fatal Flaws and Opportunities in Gold Investing: Brent Cook
Source: Brian Sylvester of The Gold Report (3/28/12)
Brent Cook, editor of Exploration Insights, describes the past 15 years of change in gold, copper and iron. In this exclusive interview with The Gold Report, he shares what he sees as the fatal flaws and opportunities in this complex industry, details the most important factors he looks for before investing, and names companies he believes have the right stuff.
The Gold Report: In the late 1990s, when the gold price was falling steadily lower, you vetted companies for Rick Rule's company, Global Resource Investments. Could you give us a comparison of what this space was like then versus what it's like now?
Brent Cook: During 1997–2002, we were probably in the most unloved sector in the whole investment world. Gold had collapsed to less than $250/ounce (oz), copper was under $0.85/pound (lb) and anything that didn't have a dot-com to its name didn't get much respect. The idea of blowing up rocks to make metal out of them was an archaic concept clung to by the remnants of the industrial revolution; it was a brave new world. By contrast, today gold is over $1,600/oz, copper is $3.80/lb and iron ore has gone from $12/ton (t), to $140/t; we're in the 10th year of a commodities boom. Back then, it was very difficult for mining companies to raise money.
Working with Rick, I was fortunate. He'd put together two funds of about $14 million (M), so we had some money. We were pretty much alone in the sector, hence we were able to put some money into really good projects and people. So in retrospect, that was one of the best times of all to be investing, but at the time, it felt horrible in that we'd invest in these companies that we thought were a good value and see the share price continue to fall for a year or so. We were able to buy a company like Virginia Gold Mines Inc. [now Virginia Mines Inc. (VGQ:TSX)] for nearly cash in the bank yet watch it fall to a 20% discount to that cash, and this was a company run by one of the top guys in the industry, Andre Gaumond. Today, however, you have a lot of money chasing everything in this sector, and it's subsequently tougher to get real bargains on projects or people. It's important to recognize that because this is such a risky investment sector that to make money at it consistently, you need to buy companies when they are cheap based on legitimate valuation metrics.
TGR: Is it more difficult for a retail investor to make money today in small-cap mining equities or was it more difficult then?
BC: Both time frames have their challenges. It's always been about finding quality, high-margin mining projects at any stage and buying those at less than what they're worth. A high-margin deposit is one whose cost of production is in the bottom third of the total production costs curve for that metal. Say the average cash cost to produce one ounce of gold is $700—ideally you want to own properties that can produce substantially below that cost.
There have been periods in this sector where all the turkeys flew and everybody made money, but we're back to a period where it's going to be tougher for retail investors to make money if they're not very selective and knowledgeable about what they're buying. The big difference between the late 1990s to early 2000s and now is there's so much more information immediately available to anyone interested, therefore, investors have to research and understand the details of a mineral project before they buy. They need to know why they're buying it, what they expect, what it could be worth and what the fatal flaws might be. This level of due diligence is critical because we know that most mineral projects are eventually going to fail. That's a fact of nature and the Earth's evolution. So, in a way, it's a bit tougher now, because you need to be so much more educated on what it is you're actually buying. Following the stuff that comes in the mailbox doesn't work anymore.
TGR: What are the most typical fatal, or tragic, flaws that are going to lower a share price?
BC: More often than not, it's the realization that after the first few good drill holes into a project you start putting it together and the geology or the continuity doesn't hang together. Bear in mind that it costs money to mine waste and a mine is a terrible thing to waste.
Another typical flaw is metallurgy or metal recovery. You want to find out as much as you can about the metallurgy as soon as you can because that factors heavily into what your production costs are going to be. For instance, is the ore oxidize, sulfide, carbonaceous, refractory etc.? If you're dealing with Carlin-style sulfide gold mineralization, you immediately know that somehow the sulfide has to be broken down to allow recovery of the gold. That's going to take a roaster or an autoclave of some sort, which is extremely expensive to build and consumes considerable energy. If the project is in the Yukon, an investor has to think about the cost of building an autoclave or roaster. That means the grade has to be quite high to cover the capital expenditures (capex) and power costs. However, in Nevada there is excess capacity for refractory ores, you don't have to factor in the cost of an autoclave.
TGR: You were recently at the annual Prospectors & Developers Association of Canada mining conference in Toronto. More than 600 companies had booths at that event. What are some trends you noticed?
BC: Companies are starting to recognize that it's not so much about size as quality of mineral deposits. Grade, or more succinctly margin, is getting more and more important. There are a lot of very large, low-grade deposits out there, and the majors aren't buying these. That's a real issue and you have to question why. If the majors don't buy them, these junior companies with these large, low-grade, low-margin deposits are then doomed to build. I think it's going to be tough to raise the money, or at least the debt portion, to do that. So I think one trend is toward smaller, higher grade, higher margin deposits.
There are still people out there trying to raise money on new deals, new projects as they move from one busted company to the next one. Unfortunately, for companies with average properties, the music has stopped and they are facing terrible share dilution to fund the exploration on their average projects. As I said earlier, average ain't going to cut it this year.
There is also a severe shortage of technically qualified people—resource estimators, mining engineers, geologists—to do the work. Company presidents and VPs of exploration are in strong demand. Because there is more work than qualified people, I'm seeing a lot of sloppy preliminary economic analysis (PEAs) and resource reports. That's a serious and financially dangerous trend. You can no longer blindly rely on a company's scoping study or its PEA. You need to look at the details. I could tell you some pretty scary stories in this regard.
TGR: What are some of the sloppy things that you're noticing?
BC: In resource estimates, there is a tendency toward plugging it all into a computer and generating a model without going through the time and detail it takes to fit the model to the geology and structural controls. So grade is being put out into an area of the deposit where there isn't actually that grade. If these mines eventually go into production or they get down to the very detailed work, these resource estimates are going to be cut back significantly because the model is not honoring the geology or the geostatistics. That's a serious issue I'm seeing. To quote a friend of mine who does resource estimates, these are "faith-based estimates."
TGR: Do you think that sort of shoddy work is responsible for some of these one-mine or two-mine operations not performing as well as expected?
BC: Definitely, although we have to bear in mind that they are called estimates for a reason. It's rare these days that a company goes into production and its production costs are what they were supposed to be according to their PEA and the literature they used to raise money. Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.A) at its Bisha mine in Eritrea had to cut its gold reserves by about one-third because of a mistake in the resource estimate that related to how poor core recovery was handled in the estimate. Remember, in a resource estimate we are extrapolating a small amount of data, basically a 3-inch tube of core, across hundreds of feet of complex rock and assuming that we can know the grade of that rock. There’s bound to be some uncertainty.
TGR: While you were in Toronto, you made an appearance on BNN where you discussed the lack of big discoveries over the last 17 years. One chart that you used showed that in 1992, the mining industry discovered roughly 100 million ounces (Moz) gold in both copper-gold and primary gold deposits but by 2009 that amount had dropped to about 23 Moz in both types of deposits despite the fact that the industry was spending almost $5 billion (B) annually on exploration. Tell us about that.
BC: That data was put out by Barrick Gold Corp. (ABX:TSX; ABX:NYSE), so it's pretty good data that pertains to economic deposits. It shows that over time we are discovering fewer large deposits. Basically, we are mining about 83 Moz gold annually yet only finding in the order of 20–30 Moz a year. So there's a serious gap between production and discovery that we're not filling.
It's getting harder and harder to find quality deposits—and we're talking economic deposits here, not resources that will never make it. Explorationists have pretty well explored most of the Earth's surface and then some. Therefore, it's also getting more expensive because we're going into blind areas and drilling deeper into more complex geologic settings. That is why it's getting tougher to find these big deposits. Then add to the increased geological difficulty the fact that social, political and environmental realities are pushing way out the time to permit and build a mine and it becomes pretty easy to understand the decreased discovery rate. I don't see that changing.
The net result of this discovery gap is that when a company, let's hope it's a junior company, finds a legitimate, high-margin economic deposit, it is going to be worth a lot more money than you would normally expect. The dearth of new discoveries means that those of us who invested early in a company that proves up an economic deposit stand to make some serious change. So now I'm focusing, as best I can, on high-margin deposits, or at least mineral systems that show the potential to produce those deposits and mostly avoiding geologic setting that don't offer that shot at a home run.
TGR: Another reason for the lack of discoveries is the high cost of mining, which has gone up dramatically over the last four or five years, given fuel costs and labor costs.
BC: Yes. In 2004, the capex to build Cerro Casale was $1.4B. In 2011, it's $6B. That's a huge increase in capital costs that throws a lot of uncertainty onto any big capex project a company is considering. That's happening across the board. Your average cash cost to produce one ounce of gold 10 years ago was on the order of $340/oz. Today, cash costs alone are closer to $740/oz and your all-in costs, according to a Randgold Resources Ltd. presentation (GOLD:NASDAQ), are closer to $1,200/oz. Cash costs are just what it costs to produce at the mine. They don't include exploration, depreciation, amortization, royalties, G&A etc.; so it's gotten a lot more expensive to produce all metals.
TGR: How would you respond to someone who says it's easier said than done to find early-stage companies with drill results that hint at the potential for high-margin, multimillion-ounce deposits that majors want to buy?
BC: I agree 100%. It is hard to find projects in an early stage that offer the potential of coming up with a major deposit that shows the profit margins and the size that a major company needs to buy. That's just a function of geology. As the Earth evolves it changes and those changes are recorded as anomalies in the earth's surface. A volcano forms, erupts a few times, cools down and is covered by the next volcano, over and over again. This process is responsible for millions of geochemical and geophysical anomalies that provide the stories the Vancouver resource market is founded upon. However, very few of these anomalies combine the right geological, geochemical and hydrological characteristics to produce a concentration of metal that has the tons, grade and metallurgy located near surface in a favorable jurisdiction to form an economic deposit.
TGR: If there aren't enough early-stage, potentially high-margin deposits, won't companies take the large, low-grade deposits just because that's what's available, and they'd bank on rising metal prices to make those deposits worthwhile?
BC: That's a valid point and investment strategy. It's a different investment thesis than I go with, but certainly there are a lot of these large, low-grade deposits that are marginally economic at $1,500/oz gold. If your gold price assumption is $3,000/oz, then these are the things to buy. In my personal portfolio, I don't need 100 companies—I need 10 that have something that I think is of a high enough margin to be economic today.
Lydian International Ltd. (LYD:TSX) is a company that I've owned since I first visited the property. At that time, it was $0.76/share. It's now about $2.45/share. Lydian owns a nice, simple, high-margin deposit in Armenia. Once the world starts to recognize that Armenia is a good place to do business, then this gets bought by a midtier company. It has about 3 Moz. I reckon its cash costs are about $500/oz. The capex isn't too bad. So that's a deposit that I see out there that offers the margin that a company needs to make money on, and it's selling at a discount today.
Atna Resources Ltd. (ATN:TSX) looks like an interesting company, as well. Its Pinson mine is a good grade deposit, and it should be able to produce at a decent price. So you have a decent, high-margin deposit there. Its capital costs are virtually nil because the infrastructure is there and there are a number of options to ship the ore to, so its capex is minor.
Altius Minerals Corporation (ALS:TSX.V) is a great prospect-generating company that's been incredibly successful. It owns about 32% of Alderon Iron Ore Corp. (ADV:TSX; AXX:NYSE.A; ALDFF:OTCQX); at a cost basis of about $2M, it's now worth about $100M. Alderon owns an iron deposit in Newfoundland that is a good high-margin deposit. Again, the infrastructure costs are low because it is right in an iron-mining district. I think Alderon has a deposit that somebody else will either buy one day or work out a favorable offtake agreement. So you can buy Altius at a slight discount to its cash, royalties and equity holdings and get a management team that has grown a $20M micro-cap company to about $340M with virtually no share dilution. You're paying nothing for the upside in Altius, which sort of reminds me of the good old days in the late '90s.
One way to better your odds at finding a true deposit is to invest in the prospect-generator companies. These are tiny exploration companies that recognize the long odds at success and structure their business models accordingly. They're very good at generating ideas for mineral deposits, but at the point it's time to start spending big dollars on drilling, they bring in somebody else to spend the money. So your financial risk is cut down quite a bit, and the high-risk, high-dollar part of it is covered by somebody else. These companies go on and generate new ideas and new targets and bring in new partners, thereby providing shareholders with many more shots at a discovery for your buck. One of the companies doing that quite well now is called Riverside Resources Inc. (RRI:TSX).
TGR: It has an agreement with Chile's Antofagasta Plc (ANTO:LSE) in British Columbia and one with a steelmaker, Cliffs Natural Resources Inc. (CLF:NYSE) in Mexico.
BC: Exactly. And it has other projects being worked by smaller partners. It has on the order of $10M in the bank plus about $2–3M in equities. Again, $12M has been spent on its properties this year, and its market cap is on the order of $30M.
TGR: In those companies, you need above-average management teams because you have to foster all these different relationships and manage all these different relationships.
BC: Exactly. Eurasian Minerals Inc. (EMX:TSX.V) is another company that has done an exceptional job with that. It has on the order of $35M in the bank. It just bought a royalty that's going to bring it $7M/year, and it has projects in Turkey, Scandinavia, western U.S., Haiti and Australia that are being worked by major companies, including Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE), Newmont Mining Corp. (NEM:NYSE) and Centamin Plc (CEE:TSX; CEY:LSE)—companies that are looking for major deposits.
TGR: Having a paying royalty often is key, too. When you were on BNN, you talked about Virginia Mines Inc.; its royalty on the Eleanore mine is being developed by Goldcorp Inc. (G:TSX; GG:NYSE). Does Riverside have a royalty that could start paying in the near future?
BC: Riverside does have a callback to a royalty on its projects but, at present, none of them is producing any money. The company does, however, make money in many of the deals it structures by way of shares and management contracts. This income covers a fair portion of its general and administrative expenses. So it makes money back on these deals by working the project. Really smart.
TGR: What about Gold Standard Ventures Corp. (GV:TSX.V; GDVXF:OTCQX)?
BC: We're going back to high-margin deposits, or at least high-margin potential. Gold Standard's property is on the Carlin Trend and is a major, very large, Carlin-style gold system. The key to making a big deposit is having a big system—a simple concept that is all too often ignored. Gold Standard's most recent drill hole intercepted potentially economic mineralization over 43 meters. If it's successful, this is a deposit that is big enough and high margin enough to attract the attention of Newmont Mining or Barrick or anyone, for that matter.
This is the important part about why I bought Gold Standard. It's not because of the next few drill holes. It's because we recognize we're into a system that's large enough to produce a mineral deposit, and we know now that this geologic system can produce the grades we need to see. So, it's still going to be a hit-and-miss exercise until the geologists can do the science well enough to find the exact core of the deposit, if it's there. The next results might be fantastic; they might be just encouraging. But we know we're into a big system. You stick with big systems.
TGR: Do you have any parting thoughts for us, in terms of what retail investors should be on the lookout for throughout the rest of this year?
BC: It's going to be, in general, a tough market to make money in if you're just throwing darts. You really have to have a handle on what a company's looking for in terms of deposit type and what that deposit is worth in terms of a net present value on the deposit, if it is successful. Too many companies are out there exploring projects that even if they're successful, the real values aren't worth the risk it took looking for it. So stick with intelligent management looking for high-margin or large deposits. The junior mining and exploration business is such a technical and complex science and industry populated by paid touts, scam artists and people of dubious character, that it is well worth the effort to get good, honest advice. And be very selective in what you buy.
TGR: That sounds like great advice. Thank you.
Read Rick Rule's strategy for taking advantage of volatile precious metals markets here.
Brent Cook brings more than 30 years of experience to his role as a geologist, consultant and investment adviser. His knowledge spans all areas of the mining business, from the conceptual stage through detailed technical and financial modeling related to mine development and production. Cook's weekly Exploration Insights newsletter focuses on early discovery, high-reward opportunities, primarily among junior mining and exploration companies.
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DISCLOSURE:
1) Brian Sylvester of The Gold Report conducted this interview. He personally and/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: Lydian International Ltd., Alderon Iron Ore Corp., Riverside Resources Inc., Goldcorp Inc., Gold Standard Ventures Corp. Streetwise Reports does not accept stock in exchange for services.
3) Brent Cook: I personally and/or my family own shares of the following companies mentioned in this interview: Lydian International Ltd., Riverside Resources Inc., Virginia Mines Inc., Gold Standard Venture Corp., Atna Resources Ltd., Eurasian Minerals Inc., Altius Minerals Corp. Alderon Iron Ore Corp. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this story.
http://www.theaureport.com/pub/na/12931
Equities Will Catch Up to Higher Gold Price: Matt Badiali
Source: Brian Sylvester of The Gold Report (4/25/12)
Ongoing inflation pressures and China's investments in the African gold supply chain point to a higher gold price, according to Matt Badiali of Stansberry & Associates. Bullion in all its forms belongs in every portfolio and when it comes to equities, investors have their choice of business models—dividend payers, prospect generators and royalty companies. In this exclusive Gold Report interview, Badiali outlines companies whose equities should catch up to the higher gold price.
The Gold Report: Matt, in the February 2012 edition of Stansberry's Investment Advisory, Porter Stansberry predicted gold would hit $9,600 an ounce (oz) someday. How should investors protect themselves from this coming crisis?
Matt Badiali: In general, I agree with Porter's thesis. Bullion—gold, silver coins or bars—should be part of everyone's portfolio. It is one of the best anchors against inflation. Gold and gold stocks also are important holdings because as the value of paper money falls, the value of gold rises.
TGR: Stock prices have not gone up as much as the gold price. Will that trend continue?
MB: We have been in an odd scenario. If gold miners were T-shirt makers and the price of T-shirts went up, the market would buy the company to match the earnings. That has not happened for gold stocks.
Last year, the Market Vectors Gold Miners ETF (GDX:NYSE.A) was down 25% while the price of gold was up 15%. Looking at just the last three years, stocks were up 40% while the gold price rose 90%. So, in the short term, the Gold Miners ETF has underperformed gold.
Gold miners' earnings have climbed dramatically, but their share prices have not followed suit. I believe gold miners will outperform the metal just because they have to rebalance.
TGR: What does the volatility in gold tell us?
MB: Generally speaking, the market wants a stable U.S. dollar. It rallies to dollars for all sorts of reasons. I think that is false faith.
So many new dollars have been printed that the value of all tangible things has to increase in response. For example, we all think $110/barrel oil is crazy expensive. But, relative to gold, oil has been less expensive over the last couple of years. The price of oil is falling in terms of real money, but going up in terms of dollars. That is a good indicator of how much new paper money has been printed.
TGR: What effect would higher interest rates have on junior miners? Can the increase in the gold price offset the greater cost of raising capital?
MB: Raising interest rates immediately strengthen the dollar, and a strong dollar is hard on all real assets. They rein in inflation, and inflation is why the price of real things like gold and oil go up. Therefore, if rates increase, the price of gold will probably fall.
Many companies have already adapted their plans to a higher gold price. Recently, I have seen development plans based on $1,000/oz and $1,200/oz gold. If the dollar were to strengthen and the gold price fall, it would negatively affect the gold mining industry.
TGR: How does the price of oil affect the operating expenses of gold mining companies?
MB: A gold mine is essentially a commodity swap. A company uses fuel, diesel, gasoline, electricity, concrete and steel to build out a mine and recover gold. As long as the commodities you put in cost less than the commodity you take out, the mine is in business.
Over the last 10 years, the commodity cost to build mines has increased. In any business, when your costs rise as quickly as your revenue, your earnings stay pretty much the same.
TGR: On the earnings side, some large precious metals producers are offering dividends. Is that working?
MB: Newmont Mining Corp. (NEM:NYSE) pays a 2.9% dividend, tied to the price of gold. That is a spectacular idea if your operating costs are well enough in hand to support it.
The thesis is that the Federal Reserve will continue to stimulate the economy by adding money to the system, thereby driving up the gold price. If you trust that thesis, buying a dividend-issuing gold company now when they are relatively inexpensive will lock in your yield at a lower price.
Newmont's profit went from $4.7 billion (B) in 2009 to almost $6.5B in 2011. The rising price of gold contributes heavily to its bottom line. Investors who get in now stand to see a 5–7% yield in a couple of years.
TGR: Can that same business model work for smaller companies?
MB: It depends. There are some opportunities out there, but there have also been some spectacular failures. For example, I thought the silver miner Hecla Mining Co. (HL:NYSE) would be a great company over the long term, but it had a problem with its Lucky Friday mine and the company tanked.
TGR: But that was a resource problem, not the business model.
MB: Sure, but the point is the dividend model works for the big miners like Newmont, Barrick Gold Corp. (ABX:TSX; ABX:NYSE) or Goldcorp Inc. (G:TSX; GG:NYSE). Companies that can diversify their revenue stream over many mines on many continents mitigate risk. They can absorb more hits and continue to pay dividends. If a company generates most of its revenue and income from one mine and that mine takes a hit, that company is done.
Our first rule is never take a big loss. I typically use a 30% trailing stop on mining companies, which means that if it falls 30% from the highest point reached during my investment period, I sell.
If a mining company falls 30%, there is a fundamental flaw. Either the market has changed or the company has a problem. We limit ourselves to 30% losses because we can recover that. A loss of 50% or 80% is hard to recover.
TGR: What about dividends for royalty equity companies?
MB: I love them. Royalty companies are my favorite. The really big, safe ones are the best: Silver Wheaton Corp. (SLW:TSX; SLW:NYSE), Franco-Nevada Corp. (FNV:TSX) and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX). These companies have 50 to 80 royalty streams. If their royalty stream on one mine ends, it is just a dimple in their revenue stream. Most of these royalty companies could survive 10 losses with only a modest hit to their revenue.
The other great thing about these royalty companies is they have none of the carrying costs of mines. Because they take such a small piece of a lot of mines—typically 2–5% of production—they have very diluted political and mine-specific risk.
TGR: Does the dividend model work there?
MB: Typically, they pay a very modest or no dividend because they reinvest their capital.
Right now, mining companies are coming to these royalty companies for cash to develop their mines. In return for $5 million (M) of its cash, the royalty company gets 2% of the gold produced over a mine's 15- or 20-year lifespan. I would rather see the company reinvest because mining is so cyclical and there are so many opportunities now.
TGR: In February, you produced a report, "How to be an Investor in China's Fort Knox." What is its investment thesis?
MB: We have been watching China's investments in Africa for a while now. China is spending billions of dollars in Africa in very specific ways: financing power plants, building railroads and developing other infrastructure plays.
Why? If you want to build a mine, you need electric power. You need to be able to get ore from the mine to a port. China is laying the groundwork for mine development all over Africa.
Look also at what China is buying: one of the world's largest undeveloped uranium deposits, bullion and shares in African gold miners, from major mining companies to partnerships with juniors and exploration projects.
At the Mines and Money Conference in Hong Kong, I asked representatives of major Chinese investment banks and funds if gold is a major target for Chinese investment in Africa. Across the board, they all said yes.
TGR: How can people outside of China get involved in that?
MB: That was my next question. The best approach is to find companies where the Chinese government or government entities have already invested. I think serious investors who want to participate in mining—especially in Australia, Africa and China—need to understand the Chinese philosophy of resource investing.
When a company gets money from a Chinese bank, it gets far more than funds. It gets exposure to the entire Chinese system. The banker will help the company find a market for its goods or find a Chinese engineering firm to provide technical expertise.
Chinese banks protect their investments. Once a Chinese bank is involved in a mining program, the company typically can get more cash without problems.
TGR: You often emphasize the importance of diversity within the mining company and within portfolios. Where do precious metals fit into a good portfolio mix?
MB: There is a spectrum of risk in precious metals. Bullion is fairly low risk; it is limited to the commodity risk.
With major mining companies, your risk of a 50% loss is pretty low. For investors with low tolerance for risk, a senior mining company is the best place to be.
Mid-cap growth gold miners all have risk. For older investors looking toward retirement, I do not recommend putting a large portion of your portfolio at risk. If 5% of your portfolio is higher risk, some percentage of that can be in mining.
Junior miners are just little bundles of risk. They are not safe; 90% of them bomb. When I write about junior mining companies, I advise investing only if you can afford to lose 50%.
TGR: What do you look for to downplay risk?
MB: The first thing I look for is management. Imagine two junior mining companies, both listed on the Canadian TSX Venture Exchange. Company A is run by a lawyer and a serial stock promoter. Company B is run by a mine executive who worked 25 years for one of the majors. To reduce risk, I would choose B.
Company A is most likely what I call a "lifestyle company." Its high-rise offices have a spectacular view; management wines and dines you, all on the company's dime.
Company B, my ideal investment, has offices in a building where the elevator barely works. There are rocks stacked in the lobby and geologic maps on the walls. These guys are working; this company offers opportunity.
TGR: What are some examples of Company B?
MB: ATAC Resources Ltd. (ATC:TSX.V) is a great example. I know the CEO and the principals. I knew the area and spent a lot of time there. In 2008, after the company put out a press release on a discovery, we wrote it up and made 597% on the trade.
Another is Riverside Resources Inc. (RRI:TSX), led by Dr. John-Mark Staude, who has years of experience as an exploration geologist. This company uses the prospect generation business model, which means it uses other people's money to find projects. Cliffs Natural Resources Inc. (CLF:NYSE) funds Riverside's exploration and gets a first look at whether its projects are worth anything. Choice Gold Corp. (CHF:CNSX) is Riverside's partner on the Sugarloaf Peak project, a low-grade gold resource.
Typically, only 1 in 3,000 exploration projects becomes a mine down the road. John-Mark and his crew have generated more than 11 projects, most of them with partners.
TGR: Riverside seems to have lots of technical knowledge, a great database and great partners, including Antofagasta Plc (ANTO:LSE). But its stock is at $0.86. What catalyst could take it higher?
MB: With a prospect generator like Riverside, you have multiple shots on goal. Even though Riverside does not own 100% of Sugarloaf, 30% of a major gold discovery will take an $0.86 stock to the moon.
(Continued)...
http://www.theaureport.com/pub/na/13188
Lawrence Roulston Spots Gold Juniors with Bright Futures
Source: Peter Byrne of The Gold Report (8/22/12)
The Gold Report: You recently observed that there's $9 trillion of gold stashed away worldwide. Does this mean that short-term gold traders are setting the market price for gold?
Lawrence Roulston: Most of the gold in the world is held for the long term. Only a small portion of total gold holdings is actively traded. Short-term price fluctuations are largely the result of traders reacting to news. A long-term chart of the gold price tells the real story. Gold is trending higher and there are short-term fluctuations, but the long-term direction is obvious.
The important message is that the long-term outlook for gold remains extremely bullish. The gold producers have an ongoing need to replace reserves, and they want to grow their businesses. That's the basis for viewing the exploration and development companies. You're going to beat yourself up trying to figure out what the next short-term move is going to be in the gold price, but if you take this long-term uptrend seriously and look at the companies developing deposits that are likely to be taken over by the larger companies, that's a much better way to play the gold market.
TGR: In February, you told The Gold Report that for gold shares, "the worst is over." Do you still feel that way? Are there signs that a bottom for equities has been reached?
LR: That call was premature. There was a brief rally. It turned around when the gold price dropped. The U.S. dollar replaced gold as a safe haven as people fled from the uncertainty in Europe. At that time, I differentiated between the resource markets overall and the higher-quality junior companies. The message still applies. Better-quality companies with good assets, cash on hand and strong management are building strong bases in their share prices at this time. Some of these companies have come down to the bottom and are trading at cash value. There is not a lot of downside once they're trading at cash value.
We are in the midst of the summer doldrums. People aren't really paying attention to the junior markets. That's going to change in September when people come back from holidays. Investors are going to recognize that companies with good assets are trading for cash value or near that level, and that there is more upside potential than there is downside risk.
"The long-term outlook for gold remains extremely bullish."
The big factor that is really going to drive the markets is takeovers. We're seeing it now. For instance, Avion Gold Corp. (AVR:TSX; AVGCF:OTCQX) just received a takeover offer that was a 70% premium to its 20-day trading price. There are going to be a lot more offers like that, and that's going to make savvy investors pay attention.
TGR: In terms of companies trading at or near their current cash value, are there any firms that you think are a good deal for investors right now?
LR: Keegan Resources Inc. (KGN:TSX; KGN:NYSE.A) has $200 million (M) in the bank, and its market value is not a lot more than that. It has a 5 million ounce (Moz) good quality gold deposit in Ghana. That's an example of how irrational the valuations are in this market now.
TGR: Speaking of rationality, what specific political and economic trends are affecting the price of bullion and the price of gold equities?
LR: Short-term prices are impacted by news headlines, but headlines are not all that accurate. We hear constantly about the slowdown in China. In reality, China is the largest consumer of metal and its economy is growing at better than 7% a year. That's less than the 8–9% growth of recent periods, but it's still a phenomenal pace of growth for the second largest economy in the world.
TGR: What about the so-called euro dilemma?
LR: The situation in Europe is the most significant element impacting investor sentiment. Markets have pretty much discounted a complete collapse of the euro. Personally, I don't think we're going to see a complete collapse of the euro. I think a more practical outlook is that the powers in Europe are moving ever closer toward a wide-open monetary easing in the same way that the Americans used monetary policy to overcome the 2008 global financial crisis. And it worked very effectively in the U.S. The American economy is not booming yet, but it has certainly rebounded from a recession to a period of slow growth.
TGR: What would be the effect of quantitative easing in Europe on gold investors?
LR: Over time, it will be very positive for hard assets in general, and especially for gold, but also positive for the whole range of commodities. Monetary easing depresses the value of currencies. It's inflationary. Hard assets like gold and other metals are going to effectively hold their value in real terms as the value of currencies decline. In the long term, the easing could be very bullish for commodities in general.
TGR: Given that now is a good time to bargain hunt for junior mining stocks, what standards should investors use when evaluating whether a particular junior has a solid chance at making it through the next year or so and emerging as a contender?
LR: The biggest payoff for a junior exploration company comes with a new discovery. We saw that recently with GoldQuest Mining Corp. (GQC:TSX.V). In a period of three months, its stock price went from $0.05/share to $1.50/share. But, unfortunately, discoveries like that are not very common. Investors must balance risk and potential reward by buying companies that have a solid asset combined with a realistic prospect of a takeover. The value of a quality asset increases as the owner expands and upgrades the resource by conducting engineering studies and moving toward production. Companies with solid mining assets and good management teams that are advancing toward production provide the best balance.
"Better-quality companies with good assets, with cash on hand and with strong management are building strong bases in their share prices at this time."
It's hard for companies to raise money. Financings can be dilutive to the point where a company may never recover. But enterprises with cash in hand are in strong positions. And companies with good assets and strong management can still raise money. Pretium Resources Inc. (PVG:TSX; PVG:NYSE), for instance, is presently raising $18M in a flow-through financing that's priced at a 25% premium to market. To be a winner, a project has to have size and it has to have grade. It has to be well located with regard to infrastructure and jurisdiction. Now, having said that, the number of good jurisdictions is shrinking. The most recent downgrade came as Bolivia announced the takeover of a project from South American Silver Corp. (SAC:TSX; SOHAF:OTCBB). It's getting harder and harder to find good-quality assets in favorable jurisdcitions.
TGR: Is that good or bad for the junior investor?
LR: Long term, it's good. The value of the good-quality assets will appreciate. In decades gone by, there was a surplus of good-quality metal deposits available for development. When metal prices rose, a lot of new deposits came onstream and knocked back the metal prices. We saw that cycle repeated several times over the last few decades. But the situation has dramatically changed; there is no longer a surplus of good-quality assets. Finding large, high-grade deposits is getting harder. That means that when a company makes a discovery, the discovery is more likely to yield a high value for shareholders.
TGR: Looking at the relative share prices of junior companies over a two-year window, we see some that are still holding value, despite some downturn in share price. For example, Newstrike Capital Inc. (NES:TSX.V) was $0.40/share in August 2010 and now it's $1.80/share despite having risen as high as $3.40/share in the interim. There are other firms with similar stories. Do you consider this type of comparison to be an indicator of company strength for the long term?
LR: Yes, those price ranges are good indicators of value in this market. There are several ways to explain undervaluation of high quality firms. Some individual investors are terrified and are selling across the board; they want out of all equities. Another huge component in the selling is investment funds, hedge funds and other institutional-type investors who came into the resource sector not really knowing what they were doing. Now they are looking to get whatever they can get for their positions. Consequently, sophisticated investors are picking up great bargains. That companies like Newstrike are still holding value indicates that they have tangible assets and solid management.
TGR: Are there other companies that you are looking at that are holding value comparable to Newstrike?
LR: GoldQuest is up from $0.05/share to $1.80/share in a period of months after a discovery. Where it will go from here, who knows? It will depend on the next drill results.
Pretium is up 2.5 times over the last couple of years.
Extorre Gold Mines Ltd. (XG:TSX; XG:NYSE.A; E1R:FSE) has doubled from two years ago; Sandstorm Gold Ltd. (SSL:TSX.V) has tripled.
These are all companies that have good management and solid assets, which are getting recognition from, in the case of Extorre, another mining company, and for the others, from investors who understand the sector.
TGR: Are some of these juniors with relatively low stock prices benefiting from joint ventures with seniors?
LR: Absolutely. I've always been a fan of the joint venture approach to exploration. It's a very high-risk business, and it's better to use other people's money for the early-stage exploration. For example, Millrock Resources Inc. (MRO:TSX.V) has held up better than some other companies because it benefits from senior companies that are funding the work on its projects. Another example of that synergy is Riverside Resources Inc. (RRI:TSX), which has held up well in a really tough market.
TGR: Can you be a little more specific about Riverside and what's going on there?
LR: Riverside is a prospect generator-type company that has initiated many exploration projects. A number of juniors and seniors are funding work on its projects. It's focused on North America, so it's in good political jurisdictions. It has two deals where it has entered into strategic alliances to conduct regional exploration programs, one in Mexico and another in British Columbia. That kind of business model is very effective, especially for a company like Riverside that is able to attract the big companies that can afford aggressive exploration programs.
(Cont...)
http://www.theaureport.com/pub/na/14178
Riverside Resources RRI / RVSDF Video presentation
The Gold Report
Riverside Resources Inc. is a junior exploration company with mineral deposits in British Columbia, Canada, Mexico and Arizona, USA. (6/12/12)
http://www.theaureport.com/pub/video/1186
4 Silver Juniors to Watch
Wednesday June 5, 2013, 4:15am PDT
By Charlotte McLeod - Exclusive to Silver Investing News
At last week’s World Resource Investment Conference, hosted by Cambridge House International in Vancouver, Canada, Rick Rule, chairman of Sprott Global Resource Investments, hosted a seminar titled Exploration: The Next Frontier. As the name suggests, he and panelists Brent Cook, John Kaiser, Lawrence Roulston and Jordan Roy-Byrne spent part of the allotted time discussing which junior resource companies they believe investors should keep an eye on.
Below, in no particular order, are four of the silver juniors mentioned by the panelists.
Reservoir Minerals (TSXV:RMC) is currently exploring in Cameroon and Gabon in Africa as well as at six sites in Serbia. While the majority of its properties center on gold, its Parlozi project, located in Serbia, contains high-grade silver mineralization that is associated with lead and zinc sulfides and is comparable to Trepca-type and Mexico-Peru cordilleran skarn/manto deposits, according to the company’s website. Its Bobija project, also in Serbia, may contain high-grade lead, zinc and silver mineralization as well.
Perhaps most significantly, Reservoir’s Timok gold-copper-molybdenum project in Eastern Serbia is a joint venture with Freeport-McMoRan Copper & Gold (NYSE:FCX), which is the project operator. Freeport has exercised its option to fund all exploration work at Timok until a bankable feasibility project is completed, according to Reservoir’s website. The company’s most recent news release states that it intersected 291.3 meters grading 7.17-percent copper equivalent at the project.
Based in Canada, Dolly Varden Silver (TSXV:DV) is focused on developing its Dolly Varden Silver Mines property, which is located in Northwest British Columbia and hosts four historical deposits. The company describes it as an advanced-stage property and notes on its website that a historic resource estimate completed in 1986 estimates that it holds 5.7 million proven and probable ounces of silver. It intends to confirm that estimate, reclassify it as current and “expand the resource to a target of 40 to 50 million ounces of silver.”
In April, Hecla Mining (NYSE:HL), a strategic investor in Dolly Varden, paid $2.7 million to maintain its 19.94-percent interest in the company. John King Burns, chairman of Dolly Varden, commented that Hecla’s continued investment “is a testament to … the prospects of [the] Dolly Varden property.” He also noted that the company’s plans for this spring and summer are to define a high-grade silver resource at the project’s four deposits and identify an “Eskay Creek-type VMS deposit” at the Red Point target, which is northwest of the existing mines.
Bear Creek Mining’s (TSXV:BCM) two main projects are Corani and Santa Ana, which are located in Peru and together contain over 500 million ounces of silver, 330 million of which are in reserves. Feasibility studies have been conducted for both projects; Corani’s shows that the deposit contains proven and probable mineral reserves of 270 million ounces of silver, 3.1 billion pounds of lead and 1.7 billion pounds of zinc, while Santa Ana’s shows that the deposit holds proven and probable mineral reserves of 63.2 million ounces of silver.
In June 2011, the Peruvian government reversed the decree that granted Bear Creek the mineral concessions that cover the Santa Ana project. While a judge dismissed that suit in February of this year, Peru’s Ministry of Energy and Mines has appealed that decision; the company hopes to reach a negotiated settlement regarding the project.
On a brighter note, Bear Creek reported in April the successful completion of a public hearing required for its Environmental and Social Impact Assessment (ESIA). That means that the surrounding community strongly supports the project and the company is on track to receive ESIA approval by the end of the year.
Also mentioned at the seminar was Riverside Resources (TSXV:RRI), a prospect generator with a number of gold, silver and copper projects. It is covered in 5 Gold Juniors to Watch, published last week on Gold Investing News.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
http://silverinvestingnews.com/17416/4-silver-juniors-to-watch.html
5 Gold Juniors to Watch
Wednesday May 29, 2013, 4:30am PDT
By Andrew Topf - Exclusive to Gold Investing News
Picking a gold junior that will find exploration success and grow your investment dollar is no easy task, especially in today’s markets, where the shine has come off of precious metals.
At the recent Cambridge House mining investment conference and trade show, which ran from May 26 to 27 in Vancouver, exploration pundits gathered for an informative seminar chaired by investment guru Rick Rule. While Rule conceded that there have not been many good exploration stories to talk about in the last year or so, he pointed to a few high-performing companies that have done well, such as GoldQuest (TSXV:GQC), which went from 6 cents to $1.60, Colorado Resources (TSXV:CXO), whose stock price rose seven-fold after a discovery hole yielded strong results, Reservoir Minerals (TSXV:RMC) (26 cents to $3.60), Africa Oil (TSXV:AOI) (80 cents to $10), Alpha Minerals (TSXV:AMW) and Fission Uranium (TSXV:FCU).
“There is nothing that can yield you speculative gains like anticipating exploration success,” Rule said before introducing the panelists, Brent Cook, John Kaiser, Lawrence Roulston and Jordan Roy-Byrne.
Below are five gold companies that were recommended by panelists. They appear in no particular order.
Asanko (formerly Keegan Resources) (TSX:AKG) Asanko’s flagship project is the Essase gold property in Ghana. It hosts 4.41 million ounces of gold in the measured and indicated categories averaging 1.45 grams per tonne. The company has completed over 278,000 meters of drilling to date and it plans to released a feasibility study in the fourth quarter of this year. A prefeasibility study published on May 13th shows annual production of 200,000 ounces and all-in cash costs of $990 per ounce. The project has a net present value of $355 million and a 23.2-percent internal rate of return, based on a gold price of $1,400/oz.
Riverside Resources (TSXV:RRI) Riverside Resources is a prospect generator with a number of gold, silver and copper projects. In April 2013 Riverside signed a $2.25 million exploration alliance with Hochschild Mining (LSE:HOC) for explore the Mega-shear gold belt in Western Sonora, Mexico. That adds to exploration partnerships with Cliffs Natural Resources (NYSE:CLF) to identify and acquire iron oxide copper gold projects on Mexico’s west coast, and Antofagasta Minerals (LSE:ANTO) to explore for copper in British Columbia. Riverside has 9 gold or gold-silver properties at various stages of exploration, with all except one in Mexico. It also has two option agreements, with Guerrero Exploration (TSXV:GEX) and Sierra Madre Developments (TSXV:SMG), on its Cerro Azul and Penoles targets.
Pilot Gold (TSX:PLG) Pilot Gold is the company spun off from Fronteer Gold, which was acquired by Newmont Mining (NYSE:NEM) in 2011. Pilot has identified 13 early-stage targets in Nevada and Turkey. Its latest news release in May 2013 reported the first 10 holes of a 13-hole campaign at TV Tower’s KCD target. Highlights included 93 grams per tonnes silver over 122 .7 meters at the silver zone and 1.63 g/t over 40.7 meters in the gold zone. Step-out drilling is currently underway.
Premier Gold Mines (TSX:PG) Premier Gold Mines owns gold properties in central Canada, Nevada and Mexico, including the Rahill-Bonanza joint venture that is the last piece of the Red Lake trend not 100-percent owned by Goldcorp. (TSX:G, NYSE:GG) Premier’s Cove project in Nevada is within the Eureka-Battle Mountain trend that hosts multi-million producing and past-producing mines, and according to the company, is “one of the most under-explored projects in Nevada.” On Tuesday Nevada’s Bureau of Land Management approved a Plan of Operation for the Cove-Helen Underground Mine which allows Premier to do exploration drilling through its subsidiary Au-Reka Gold.
Corvus Gold (TSX:KOR) has precious metals properties in Nevada, Alaska and Quebec. Its flagship North Bullfrog project in Nevada hosts 1.6 million ounces of gold. According to a preliminary economic assessment released in December 2012, the mine would produce an annual 78,400 ounces of gold over 10 years at average cash operating costs of $816/oz. Corvus initiated a 20,000-meter drill program this month.
Securities Disclosure: I, Andrew Topf, own stock in Goldcorp.
http://goldinvestingnews.com/35411/5-gold-juniors-to-watch.html
Metals & Mining Analysts' Ratings & Estimates - Juniors
By Bill Matlack
Jun 10 2013 2:32PM
www.scarsdale-equities.com
Junior Producers, Development/Advanced Exploration Stage
Iron Ore, Base Metals, Gold, Silver, Pt-Group Metals, Specialty Metals, Uranium, Coal, Fertilizers[/b]
http://www.kitco.com/ind/Matlack/06102013R.html
4 Silver Juniors to Watch
Wednesday June 5, 2013, 4:15am PDT
By Charlotte McLeod - Exclusive to Silver Investing News
At last week’s World Resource Investment Conference, hosted by Cambridge House International in Vancouver, Canada, Rick Rule, chairman of Sprott Global Resource Investments, hosted a seminar titled Exploration: The Next Frontier. As the name suggests, he and panelists Brent Cook, John Kaiser, Lawrence Roulston and Jordan Roy-Byrne spent part of the allotted time discussing which junior resource companies they believe investors should keep an eye on.
Below, in no particular order, are four of the silver juniors mentioned by the panelists.
Reservoir Minerals (TSXV:RMC) is currently exploring in Cameroon and Gabon in Africa as well as at six sites in Serbia. While the majority of its properties center on gold, its Parlozi project, located in Serbia, contains high-grade silver mineralization that is associated with lead and zinc sulfides and is comparable to Trepca-type and Mexico-Peru cordilleran skarn/manto deposits, according to the company’s website. Its Bobija project, also in Serbia, may contain high-grade lead, zinc and silver mineralization as well.
Perhaps most significantly, Reservoir’s Timok gold-copper-molybdenum project in Eastern Serbia is a joint venture with Freeport-McMoRan Copper & Gold (NYSE:FCX), which is the project operator. Freeport has exercised its option to fund all exploration work at Timok until a bankable feasibility project is completed, according to Reservoir’s website. The company’s most recent news release states that it intersected 291.3 meters grading 7.17-percent copper equivalent at the project.
Based in Canada, Dolly Varden Silver (TSXV:DV) is focused on developing its Dolly Varden Silver Mines property, which is located in Northwest British Columbia and hosts four historical deposits. The company describes it as an advanced-stage property and notes on its website that a historic resource estimate completed in 1986 estimates that it holds 5.7 million proven and probable ounces of silver. It intends to confirm that estimate, reclassify it as current and “expand the resource to a target of 40 to 50 million ounces of silver.”
In April, Hecla Mining (NYSE:HL), a strategic investor in Dolly Varden, paid $2.7 million to maintain its 19.94-percent interest in the company. John King Burns, chairman of Dolly Varden, commented that Hecla’s continued investment “is a testament to … the prospects of [the] Dolly Varden property.” He also noted that the company’s plans for this spring and summer are to define a high-grade silver resource at the project’s four deposits and identify an “Eskay Creek-type VMS deposit” at the Red Point target, which is northwest of the existing mines.
Bear Creek Mining’s (TSXV:BCM) two main projects are Corani and Santa Ana, which are located in Peru and together contain over 500 million ounces of silver, 330 million of which are in reserves. Feasibility studies have been conducted for both projects; Corani’s shows that the deposit contains proven and probable mineral reserves of 270 million ounces of silver, 3.1 billion pounds of lead and 1.7 billion pounds of zinc, while Santa Ana’s shows that the deposit holds proven and probable mineral reserves of 63.2 million ounces of silver.
In June 2011, the Peruvian government reversed the decree that granted Bear Creek the mineral concessions that cover the Santa Ana project. While a judge dismissed that suit in February of this year, Peru’s Ministry of Energy and Mines has appealed that decision; the company hopes to reach a negotiated settlement regarding the project.
On a brighter note, Bear Creek reported in April the successful completion of a public hearing required for its Environmental and Social Impact Assessment (ESIA). That means that the surrounding community strongly supports the project and the company is on track to receive ESIA approval by the end of the year.
Also mentioned at the seminar was Riverside Resources (TSXV:RRI), a prospect generator with a number of gold, silver and copper projects. It is covered in 5 Gold Juniors to Watch, published last week on Gold Investing News.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
http://silverinvestingnews.com/17416/4-silver-juniors-to-watch.html
Dolly Varden Silver Commences 2013 Drilling Program
VANCOUVER, BRITISH COLUMBIA–(Marketwired – June 14, 2013) - Dolly Varden Silver Corp. (TSX VENTURE:DV)(OTCBB:DOLLF) (“Dolly Varden” or the “Company”) is pleased to announce that crews have been mobilized and are working on site to prepare for the 2013 surface drill program at the Dolly Varden Property, located 26km by road from the tidewater at the village of Alice Arm, British Columbia. The drill program is expected to commence near the end of June and operate through the months of July and August.
This year’s program is being funded by the recent $4.5 million equity financing and the ongoing participation from Hecla Mining, our strategic investor, who elected to maintain its 19.9% equity interest in Dolly Varden Mining.
The goal of our drill program is to 1) start to confirm historic resources, which total 14.5 million oz silver at approximately 10oz/ton(1); 2) find new silver resources at the existing deposits; and 3) identify an extensive silver and gold rich target, located just northwest of the Torbrit deposit which is thought to be associated with the Red Point zone, which is geologically analogous to Eskay Creek.
The 2013 program is leveraging the significant work accomplished over the past two years, which includes over 6,300 meters of diamond drilling, VTEM, and ZTEM airborne geophysical surveys, and the extensive surface and underground mapping and sampling. In 2012, underground mapping, sampling and surveying began on the 1025 foot level at the Torbrit deposit, part of the 7km of usable underground workings & tunnels. This has proven invaluable for increasing our understanding of the local controls to the high grade silver mineralization as well as the structural and stratigraphic setting of the deposits. This data combined with the extensive historic exploration, drilling and mining information has given the geological team, led by Paul McGuigan, P.Geo, a strong understanding of the VMS system’s relation to the existing silver deposits.
The geological interpretation indicates that the volcanic unit that hosts the historical Torbrit mine forms an extensive sheet, that can be traced on strike from the Dolly Varden target, through the North Star target to the Torbrit target over a strike distance of 1,500 meters. The model indicates that this unit continues to the northwest through Musketeer and further on under the Red point area. Drilling northwest, towards Red Point, is expected to provide an increasing likelihood of discovering Eskay Creek-type mineralization.
The Red Point area is interpreted to represent a large alteration – feeder system similar to the feeder system associated with the Eskay Creek precious metal rich VMS deposit, but on a much larger scale. The extent of the alteration at Red Point appears to be at least 10x as large as the alteration zone at Eskay Creek, indicating potentially a massive and long-lived VMS feeder zone.
The 2013 program will begin to systematically drill to follow the horizon from Torbrit towards Red Point. Torbrit is the launching pad for the step out drill program that will march toward the source/feeder system believed to be at Red Point. Mineralization is expected to be continuous but variable along the Torbrit horizon towards Red Point. Grades, widths and other structural information can now only be determined by drilling.
2012 Sampling Results
The following summary of the sampling results from the 2012 program indicates an increase in the silver volume contained around Torbrit. This provides additional geological support for the unified view of the entire Dolly Varden system.
DRIFT NAME INTERVAL RESULTS Length (m)* Ag (gpt) Ag (oz/ short ton) Pb (%) Zn (%)
10 – E – 6: North Wall 10E6 Weighted Average 1 56.5 266.5 7.77 0.51 0.24
Including 41.5 314.6 9.18 0.51 0.25
10 – 1 – A: West Wall 101A Weighted Average 1 1.8 327.5 9.55 0.17 0.03
10 – 1 – A: East Wall 101A Weighted Average 2 3.9 359.9 10.50 0.21 0.04
Including 1.1 772.0 22.52 0.45 0.03
10 – 1 – F: South Wall 101F Weighted Average 1 3.8 718.0 20.94 0.77 0.21
10 – 1 – F: North Wall 101F Weighted Average 2 12.6 310.5 9.06 1.91 0.16
Including 3.8 814.0 23.74 2.71 0.15
10 – 1 – F: North West Wall 101F Weighted Average 3 77.6 246.8 7.20 0.84 0.06
Including 1 10 580.6 16.93 1.09 0.10
Including 2 14.7 308.3 8.99 1.10 0.03
10 – 1 – F: North East Wall 101F Weighted Average 4 68.55 237.3 6.92 0.79 0.03
Including 9.7 371.3 10.83 0.56 0.03
10 – 1 – F: West Wall 101F Weighted Average 5 22.2 220.0 6.42 0.29 0.05
Including 8.6 414.9 12.10 0.18 0.08
* Lengths are sampled length along drift wall and stopes and do not represent true thicknesses
“Weighted Average” is a length-weighted average of abutting horizontal chip samples taken at 1m height from drift floor.
John King Burns, Chairman, comments that, “2012's silver sampling, drilling and surveying data, combined with the geophysics and other geochemical and structural data allowed our team to create the conceptual, unified geological model of the target and to identify two potentially continuous, massive, and variously mineralized horizons. The second horizon has been identified by our drilling in 2011, and is associated with the Wolf deposit, located higher in the stratigraphy. This identification was only possible as a result of our comprehensive work that formed a strong understanding of the geology and the structural setting. In the last two years our dedicated team has been able to define Torbrit as a target with an expandable resource and as the “launching pad” from which we can verify and develop Torbrit’s silver resources and begin to systematically attack the VMS feeder at Red Point. At Red Point we hope to drill indicate an Eskay Creek size and type prize. Our drilling model allows us to define the silver mineralization as we work north through the Torbrit target to identify the VMS feeder zone which has indications of adding high grade lead, zinc, silver, copper and gold. Gentlemen Start your Drills.”
The Company’s common shares are listed and traded on the TSX-V under the symbol DV and in the U.S. under the symbol DOLLF.
Qualified Person
The scientific and technical information in this release has been reviewed and approved by Ron Nichols, P.Eng., President and CEO, a Qualified Person under the terms of National Instrument 43-101. The Company has prepared a NI 43-101 compliant technical report for the Dolly Varden Property, entitled “Technical Report Geology and Mineral Exploration of the Dolly Varden Property, British Columbia, Canada,” dated September 5, 2011, as revised. Information with respect to the 2012 sampling results, including without limitation the location, azimuth, and dip of the drill holes, can be found in the Company’s press release dated February 8, 2013, entitled “Significant Silver Grades Intersected During Surface and Underground Exploration at the Torbrit and Dolly Varden Mines”. Each of the technical report and press release are available under the Company’s SEDAR profile at www.sedar.com.
FORWARD-LOOKING STATEMENTS:
Certain of the statements and information in this press release constitute “forward-looking statements” or “forward-looking information” Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “believes”, “plans”, “estimates”, “intends”, “targets”, “goals”, “forecasts”, “objectives”, “potential” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements or information. Forward looking statements or information relates to, among other things, the Company’s exploration plans for the Dolly Varden silver property.
Forward-looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, need for additional capital by the Company through financings, and the risk that such funds may not be raised; the speculative nature of exploration and the stages of the Company’s properties; that the Company may not confirm historical resources to a level sufficient to declaring Mineral Resources or Mineral Reserves; and that expected geological, mineral or metallurgical expectations or models may not prove to be correct. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements or information. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.
The Company’s forward-looking statements and information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management’s assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking statements and information.
(1) A Qualified Person has not done sufficient work to classify the historical estimates as current Mineral Resources and the Company is not treating such estimates as current Mineral Resources. A discussion of the material assumptions, parameters and methods relating to the historical resource estimate, as well as a discussion of relevance, reliability and other information regarding the estimate, is included in the Technical Report Geology and Mineral Exploration of the Dolly Varden Property, British Columbia, Canada, dated September 5, 2011, as revised, which is available under the Company’s SEDAR profile at www.sedar.com.
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 news release.
Contact Information: Vanguard Shareholder Solutions Martin Gagel, MBA, CFA Vice President 604-608-0824 or 877-608-0829
Strata Star Gary Lindsey Investor Relations 1-720-273-6224 gary@strata-star.com
Dolly Varden Silver Corporation Ron Nichols, P. Eng. CEO and President 1-778-383-3083 or Toll Free: 1-855-381-3530 www.dollyvardensilver.com
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Dolly Varden Silver Corporation Announces an Additional Strategic Investment from Hecla Mining Company
April 18, 2013 –
Vancouver, BC: Dolly Varden Silver Corporation (TSX.V: DV | U.S.: DOLLF) (“Dolly Varden” or the “Company”) is pleased to announce that its strategic investor Hecla Mining Company (“Hecla”), through a wholly-owned subsidiary, has exercised its pre-emptive right to maintain its 19.94% interest in Dolly Varden and acquired 15,064,700 shares of the Company at a price of $0.18 per share, for gross proceeds of $2,711,646.
This financing, in part, replaces the 10,000,000 shares traded in the transaction announced on February 27, 2013. Subsequent to this financing, Hecla owns 26,202,919 shares of Dolly Varden for a 19.94% interest in the Company. All of the securities issued pursuant to the private placement are subject to a four month hold period expiring on August 18, 2013.
No additional finder’s fees were paid for this final tranche of the financing, announced on February 12, 2012. Any finder’s fees associated with this tranche were paid in advance, on the closing of the first tranche, announced on March 20, 2013.
Mr. John King Burns, Chairman of the Company, states that “We are very pleased to see Hecla Mining Company, our strategic partner and investor, continue its support of Dolly Varden Silver Corporation. Their substantial ongoing investment in Dolly Varden and their strategic assistance is a testament to the experienced team we’ve assembled and the prospects of our Dolly Varden property. We look forward to advancing our drilling and infrastructure program this spring and summer with the goal of defining a high-grade silver resource on our existing four deposits, and identifying an Eskay Creek-type VMS deposit at our Red Point target, just northwest of our existing mines.”
About Dolly Varden
Dolly Varden Silver Corporation is a Canadian-based mineral exploration company focused on the exploration and development of the 100% owned, historic Dolly Varden silver and gold property located in northwestern British Columbia. The Dolly Varden silver property consists of 9,400 hectares which includes four well-defined high grade silver deposits, two of which have seen historic production totaling 20 million ounces of silver. All four deposits have remaining historic mineral resources and are situated in the same geologic setting as the past-producing Eskay Creek gold-silver-rich VMS deposit. The Company has two strategies for creating value at the Dolly Varden silver project: to confirm the historic silver resources with the goal to re-start the mining of historic deposits and to explore a major, untested Eskay Creek-type gold and silver rich VMS target, located northwest of the past producing mines.
The Company’s common shares are listed and traded on the TSX-V under the symbol DV and in the U.S. under the symbol DOLLF.
FOR FURTHER INFORMATION PLEASE CONTACT:
Vanguard Shareholder Solutions
Martin Gagel, MBA, CFA
Vice President
604-608-0824
877-608-0829
Strata Star
Gary Lindsey
Investor Relations
1-720-273-6224
gary@strata-star.com
Dolly Varden Silver Corporation
Ron Nichols, P. Eng.,
CEO and President
1-778-383-3083 Telephone
1-855-381-3530 Toll Free
www.dollyvardensilver.com
Riverside Resources and Partner Sierra Madre Report High-Grade Silver in Trench and Drill Results from Jesus Maria Vein, Penoles District, Durango, Mexico
VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 10, 2013) - Riverside Resources Inc. ("Riverside" or the "Company") (TSX VENTURE:RRI)(RVSDF)(R99.F) and its partner, Sierra Madre Developments Inc. ("Sierra Madre"), are pleased to provide new trench and drill results from the Jesus Maria Mine area at the Peñoles Project in Durango, Mexico. Highlighted results included Trench 11, which returned 15.4 metres (m) averaging 420.8 g/t silver (including a 2 m interval that assayed 2,152.2 g/t silver), and diamond drill hole JM DDH 13-06, which returned 11.85 m averaging 320.3 g/t silver including a 0.9 m interval that assayed 3,409.1 g/t silver. Diamond drill hole JM DDH 13-07 intersected a 2.1 m interval that returned 279.5 g/t silver and a 4.0 m interval that returned 532.9 g/t silver. The highlighted results are from a series of four new trenches and eight shallow drill holes that were completed during the most recent campaign to test the new exploration area east of the old workings along the Jesus Maria vein system.
Trenching on the Jesus Maria zone discovered that there is a much wider zone of mineralization than previously recognized, and revealed that there are two vein types. The first vein type is the previously known main silver-gold-zinc-lead, silica-rich Jesus Maria vein. The second, newly recognized, vein type lies structurally above the Jesus Maria vein exhibiting significant silver values with abundant carbonate in a wide vein zone. This increases the potential for a bulk mineable open pit mine, and provided new drill targets. Drilling intercepted this wider semi-parallel sequence of upper silver-carbonate veining as well as the main quartz-rich Ag-Zu-Pb-Zn Jesus Maria vein zone. Underground exploration and sampling of the old workings also found silver bearing carbonate veins, which prior to this recent work was not known to Riverside and demonstrates larger potential for the Jesus Maria vein system than previously recognized.
Riverside's President and CEO, John-Mark Staude stated, "Riverside is very pleased with the discovery of a wider vein system at Jesus Maria and looks forward to much more extensive drilling down dip and along the additional kilometer strike length. Every drill hole thus far has successfully hit silver-gold mineralization. With several other exposed vein targets with old workings, but no modern drill definition, we feel positive about the exploration potential of the system. The next round of drilling could include further holes at Jesus Maria, as well as drilling the semi-parallel vein system at San Rafael. In addition to all of the vein targets, Riverside and its partner have drilled at roughly 100-m spacing to prove up a consistent gold body at the still open gold zone at El Capitan. Overall the Peñoles District continues to be a high-quality exploration project progressing with multiple gold and silver bodies and is one of Riverside's core assets."
2013 Trench Program Details:
The Jesus Maria mineralized zone is not well exposed on surface and the historic underground mine workings have only recently been made accessible. The objectives of the trenching program were to assess the grade and continuity of mineralization around the old Jesus Maria shaft, as exploration work aims to expand on the known near-surface, high-grade mineralized zone. Previous trench results by Riverside announced May 5, 2011 from Jesus Maria included 8.3 metres averaging 1.68 g/t gold, 144 g/t silver, 2.4% lead, and 2.2% zinc and a second trench with 22 metres averaging 1.08 g/t gold, 224 g/t silver, 2.5% lead, and 1.7% zinc. Results of six additional trenches announced by Sierra Madre on November 16, 2011 identified high-grade mineralized intervals up to 13.4 metres in width (Trench 4) averaging 1.7 g/t gold, 309 g/t silver, 2.4% lead, and 0.6% zinc; this included a 6.9-meter interval that averaged 3.1 g/t gold, 552 g/t silver, 4.6% lead, and 0.6% zinc. These trench results indicate that surface exposures are much wider than the historic underground workings, as the historic work focused on only the highest grades in the main Jesus Maria silica vein.
The new trenching program undertaken in March and April 2013, consisted of four trenches, which have extended the Jesus Maria mineralized zone approximately 100 metres to the east of the previously reported Trench SMG No.1. The easternmost trench, SMG No.11, returned 15.4 metres averaging 0.15 g/t gold, 420.8 g/t silver, 0.42% lead, and 0.29% zinc, and included a 2.2-meter interval that returned 2,152.2 g/t silver. Significant trench results from the recently completed program are listed in the table below. The results indicate that there is much more potential for further exploration along the Jesus Maria vein system, which remains open to the west and at depth.
Table 1: Trench Results
Trench Length (m) Au (g/t) Ag (g/t) Pb (%) Zn (%)
8 15.8 0.16 129.8 0.07 0.18
9 8 0.31 294.6 0.19 0.29
10 6 0.13 152.9 0.24 0.29
2 0.49 288.6 0.08 0.07
11 15.4 0.15 420.8 0.42 0.29
2013 Drill Program Details:
The objective of the recent drill program was to systematically test the down-dip extent of the Jesus Maria mineralized zone below the trench results immediately around the historic mine workings. A total of eight drill holes were completed at inclinations between -45 and -90 degrees at approximately 50-meter intervals over a strike length of 330 metres. The drill holes encountered multiple mineralized zones, including the previously unrecognized high-grade silver-carbonate vein zone identified by the trenching program.
Highlights of the program included JM DDH 13-03, which encountered 7.85 metres averaging 0.04 g/t gold, 184.87 g/t silver, 0.9% lead, and 1.7% zinc; JM DDH 13-06, which intersected 11.85 metres averaging 0.17 g/t gold, 320.27 g/t silver, 1.2% lead, and 2.1% zinc; JM DDH 13-07, which intersected 4.0 metres averaging 0.16 g/t gold, 532.9 g/t silver, 0.25% lead, and 0.36% zinc; and JM DDH 13-09, which intersected a near-surface, 2.2-meter-wide interval averaging 0.44 g/t gold, 516.1 g/t silver, 0.12% lead, and 0.09% zinc within one of four mineralized zones ranging from 5.90 to 19.52 metres in thickness that returned silver grades ranging from 65.5 to 144.0 g/t. Significant drill results are listed in the table below.
Table 2: Drill Results
Drill hole
Inclination
From / To (m) Interval
(m) Au
(g/t) Ag
(g/t) Pb
(%) Zn
(%)
JM_DDH_13_02 -45 79.00-91.25 12.25 0.16 70.1 0.25 0.41
JM_DDH_13_03 -89 152.95-172.40 13.9 0.04 121.2 0.59 1.09
Including 164.55-172.40 7.85 0.04 184.9 0.95 1.73
Including 168.40-170.15 1.75 0.01 364.8 1.87 4.16
JM_DDH_13_04 -45 29.65-30.60 0.95 0.73 260.5 0.14 0.13
49.20-51.10 1.90 0.20 120.9 0.04 0.08
71.90-79.00 7.10 0.11 47.6 0.38 0.62
JM_DDH_13_05 -45 26.70-30.95 4.25 0.14 131.9 0.14 0.20
62.60-68.30 5.70 0.37 75.1 0.98 1.10
JM_DDH_13_06 -65 20.35-30.80 10.45 0.14 85.3 0.05 0.21
68.45-80.30 11.85 0.17 320.3 1.30 2.26
Including 79.40-80.30 0.90 0.36 3409.1 3.42 7.12
JM_DDH_13_07 -89 100.70-102.80 2.10 0.21 279.5 4.09 7.57
114.70-118.70 4.00 0.16 533.0 0.25 0.36
JM_DDH_13_08 -90 22.30-28.30 6.00 0.39 74.4 0.06 0.10
42.30-43.40 1.10 0.05 138.7 0.02 0.05
62.45-68.65 6.20 0.06 50.8 0.07 0.10
70.20-79.70 9.50 0.79 40.5 0.70 1.35
JM_DDH_13_09 -90 10.25-19.60 9.35 0.16 144.0 0.07 0.14
Including 10.25-12.45 2.20 0.44 516.1 0.07 0.09
True widths of the mineralized zones have not yet been determined. Reported core lengths of mineralization represent approximately 70 to 95% of the true widths depending on the inclination of each hole. A map showing the location of each of the 2013 trenches and drill holes will be available on the company's website, www.rivres.com.
About the Peñoles Project:
The Peñoles Project is a significant historic silver mining district in the Durango Silver Belt that has had relatively little modern exploration. Published historical accounts indicate that Compania Minera Industrias Peñoles operated several vein-type, underground silver mines at Peñoles from 1887 to 1908, however production records are limited and potential extensions of the mines have never been properly tested. The only other landholder in the Peñoles District is Minera La Parrena, a wholly owned subsidiary of the original mining company, Minera Industrias Peñoles.
The Riverside controlled Peñoles Project covers over 360 km² thus giving extensive upside area for exploration. The project includes the two largest historic mines (Jesus Maria and San Rafael), a partially defined, bulk tonnage oxide gold prospect (referred to as El Capitan, or "Capitan"), and numerous exploration targets.
Riverside's Peñoles Project is currently under option to Sierra Madre Developments Inc. Sierra Madre can earn an initial 51% (and up to 65%) interest in the Project by completing further exploration work expenditures and cash and share payments as outlined in a press release dated March 4, 2013.
Qualified Person and QA/QC:
The scientific and technical data contained in this news release pertaining to the Peñoles Project was reviewed by Riverside's Chief Geologist, David S. Smith, MS, MBA, CPG, a non-independent qualified person to Riverside Resources who is responsible for ensuring that the geologic information provided in this news release is accurate and acts as a "qualified person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects.
According to Sierra Madre, all trench and drill samples were sealed in numbered plastic bags and transported to Inspectorate Assay labs facility in Durango City, a laboratory certified for the provision of assays and geochemical analysis (ISO:9001-2008). All drill cores were placed in numbered boxes and transported to Sierra Madre's secure core facilities by the drill contractor. Following detailed core logging all core was split using a diamond bladed core saw under the direct supervision of Sierra Madre's Geologic staff with half of the core kept on site in the original core boxes. Samples were transported to Inspectorate's facilities in Durango, Mexico for prep work and analyzed at their facilities in Reno, Nevada. All samples were prepared using standard industry prep methods followed by fire assay analysis and aqua regia digest for trace elements. All samples with greater than 10 g/t Au or 100 g/t silver were additionally tested by fire assay with a gravimetric finish. Sierra Madre has included appropriate industry certified standards and blanks within the drill core sample stream, in addition to standards and duplicates as part of the Inspectorate QA/QC program.
About Riverside Resources Inc.:
Riverside is a well-funded prospect generation team of focused, proactive gold discoverers with the breadth of knowledge to dig much deeper. The Company currently has approximately $6,000,000 in the treasury and 37,000,000 shares outstanding. The Company's model of growth through partnerships and exploration looks to use the prospect generation business approach to own resources, while partners share in de-risking projects on route to discovery. Riverside has additional properties available for option with more information available on the Company's website at www.rivres.com.
ON BEHALF OF RIVERSIDE RESOURCES INC.
Dr. John-Mark Staude, President & CEO
Contact:
Riverside Resources Inc.
John-Mark Staude
President & CEO
(778) 327-6675
(778) 327-6671
info@rivres.com
www.rivres.com
Riverside Resources Inc.
Joness Lang
Manager, Corporate Development
(778) 327-6675
(800) RIV-RES1
jlang@rivres.com
www.rivres.com
http://finance.yahoo.com/news/riverside-resources-partner-sierra-madre-121500272.html
Riverside Resources Signs $2.25m Three Year Strategic Alliance With Hochschild Mining for Gold-Silver Exploration in Western Sonora, Mexico
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 15, 2013) - Riverside Resources Inc. ("Riverside" or the "Company") (TSX VENTURE:RRI)(RVSDF)(R99.F) is pleased to announce the signing of a three year, C$2.25M strategic exploration alliance (the "Alliance") with Hochschild Mining Holdings Limited ("Hochschild"), for generative exploration throughout the prolific Mega-shear Gold Belt in western Sonora, Mexico. The Alliance will focus on identifying potential new large precious metal deposits using Riverside's extensive technical knowledge and experience in Sonora. Hochschild will fund C$750,000 on an annual basis (C$2.25M over three years) for generative exploration and Riverside will be the operator for all exploration activities of the Alliance, while all decisions relating to the Alliance will be made jointly through a Technical Committee ("TC") comprising two (2) representatives from each of Riverside and Hochschild similar in structure to other exploration alliances that Riverside is currently operating in Canada and Mexico.
Properties that are identified and deemed to be of interest will become Designated Properties whereby Hochschild will have the opportunity to earn a 65% interest by completing a four year, C$5,000,000 work program per property. As per the Agreement, once earn-in on a Designated Property is completed, Hochschild would make a one-time payment to Riverside of C$3,000,000 and the property would then be advanced under a joint venture agreement.
Riverside's President and CEO, John-Mark Staude, stated, "Riverside has tremendous exploration and technical strength in Sonora, and this strategic partnership brings capital and operating experience to further strengthen and accelerate exploration efforts in the region." Staude added, "We are excited to get going with Hochschild and already have a number of high priority targets to pursue immediately. We look forward to building a solid relationship with Hochschild and are confident this partnership will add significant value to both organizations."
Hochschild's CEO, Ignacio Bustamante, commented, "'We are looking forward to working with Riverside and are confident that the significant exploration and technical knowledge and experience their team brings to this strategic alliance will prove beneficial for both Companies."
Key Alliance Terms:
The Alliance will focus on gold deposits but will include deposits that may have elements ancillary and in addition to gold, including but not limited to silver, copper, and molybdenum. Unless otherwise specified, Riverside will be the designated operator for all exploration activities of the Alliance. All property acquisitions will be in the name of Riverside until earn-in is completed.
Projects designated for further advancement will enter the earn-in phase of the Agreement. To complete the earn-in, Hochschild must spend a minimum of $5,000,000 in exploration expenses with respect to the property within four (4) years from the date the property becomes a Designated Project, with a minimum expenditure of $1,000,000 in each of the first year and the second year (collectively the "Milestone"). If Hochschild fails to meet the Milestone, Riverside would have the right but not the obligation to acquire 100% ownership of the Designated Project. At any time after the completion of the Milestone, Hochschild can elect to enter into a formal joint venture agreement with Riverside (incorporated or unincorporated), provided that it makes a one-time cash payment to Riverside of $3,000,000 and has completed the minimum work investment. If Riverside's interest in a Designated Project is reduced to 10% or less, its interest will be converted to a 2% NSR.
For further information on the Hochschild-Riverside Strategic Alliance, please contact our investor relations team at 778-327-6671 or toll-free in North America at 1-877-RIV-RES1. Further details on the Alliance can also be found on the Company website at www.rivres.com.
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has almost fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru and one in southern Argentina. Hochschild also has numerous long-term projects throughout the Americas.
About Riverside Resources Inc.:
Riverside is a well-funded prospect generation team of focused, proactive gold discoverers with the breadth of knowledge to dig much deeper. The Company currently has approximately $6,500,000 in the treasury and 37,000,000 shares outstanding. The Company's model of growth through partnerships and exploration looks to use the prospect generation business approach to own resources, while partners share in de-risking projects on route to discovery. Additional property information can be found on the Company's website at www.rivres.com.
ON BEHALF OF RIVERSIDE RESOURCES INC.
Dr. John-Mark Staude, President & CEO
Contact:
Riverside Resources Inc.
John-Mark Staude
President & CEO
(778) 327-6675
(778) 327-6671
info@rivres.com
Riverside Resources Inc.
Joness Lang
Manager, Corporate Development
(778) 327-6675
(800) RIV-RES1
jlang@rivres.com
www.rivres.com
http://finance.yahoo.com/news/riverside-resources-signs-2-25m-110000567.html
5 Gold Juniors to Watch
Wednesday May 29, 2013, 4:30am PDT
By Andrew Topf - Exclusive to Gold Investing News
Picking a gold junior that will find exploration success and grow your investment dollar is no easy task, especially in today’s markets, where the shine has come off of precious metals.
At the recent Cambridge House mining investment conference and trade show, which ran from May 26 to 27 in Vancouver, exploration pundits gathered for an informative seminar chaired by investment guru Rick Rule. While Rule conceded that there have not been many good exploration stories to talk about in the last year or so, he pointed to a few high-performing companies that have done well, such as GoldQuest (TSXV:GQC), which went from 6 cents to $1.60, Colorado Resources (TSXV:CXO), whose stock price rose seven-fold after a discovery hole yielded strong results, Reservoir Minerals (TSXV:RMC) (26 cents to $3.60), Africa Oil (TSXV:AOI) (80 cents to $10), Alpha Minerals (TSXV:AMW) and Fission Uranium (TSXV:FCU).
“There is nothing that can yield you speculative gains like anticipating exploration success,” Rule said before introducing the panelists, Brent Cook, John Kaiser, Lawrence Roulston and Jordan Roy-Byrne.
Below are five gold companies that were recommended by panelists. They appear in no particular order.
Asanko (formerly Keegan Resources) (TSX:AKG) Asanko’s flagship project is the Essase gold property in Ghana. It hosts 4.41 million ounces of gold in the measured and indicated categories averaging 1.45 grams per tonne. The company has completed over 278,000 meters of drilling to date and it plans to released a feasibility study in the fourth quarter of this year. A prefeasibility study published on May 13th shows annual production of 200,000 ounces and all-in cash costs of $990 per ounce. The project has a net present value of $355 million and a 23.2-percent internal rate of return, based on a gold price of $1,400/oz.
Riverside Resources (TSXV:RRI) Riverside Resources is a prospect generator with a number of gold, silver and copper projects. In April 2013 Riverside signed a $2.25 million exploration alliance with Hochschild Mining (LSE:HOC) for explore the Mega-shear gold belt in Western Sonora, Mexico. That adds to exploration partnerships with Cliffs Natural Resources (NYSE:CLF) to identify and acquire iron oxide copper gold projects on Mexico’s west coast, and Antofagasta Minerals (LSE:ANTO) to explore for copper in British Columbia. Riverside has 9 gold or gold-silver properties at various stages of exploration, with all except one in Mexico. It also has two option agreements, with Guerrero Exploration (TSXV:GEX) and Sierra Madre Developments (TSXV:SMG), on its Cerro Azul and Penoles targets.
Pilot Gold (TSX:PLG) Pilot Gold is the company spun off from Fronteer Gold, which was acquired by Newmont Mining (NYSE:NEM) in 2011. Pilot has identified 13 early-stage targets in Nevada and Turkey. Its latest news release in May 2013 reported the first 10 holes of a 13-hole campaign at TV Tower’s KCD target. Highlights included 93 grams per tonnes silver over 122 .7 meters at the silver zone and 1.63 g/t over 40.7 meters in the gold zone. Step-out drilling is currently underway.
Premier Gold Mines (TSX:PG) Premier Gold Mines owns gold properties in central Canada, Nevada and Mexico, including the Rahill-Bonanza joint venture that is the last piece of the Red Lake trend not 100-percent owned by Goldcorp. (TSX:G, NYSE:GG) Premier’s Cove project in Nevada is within the Eureka-Battle Mountain trend that hosts multi-million producing and past-producing mines, and according to the company, is “one of the most under-explored projects in Nevada.” On Tuesday Nevada’s Bureau of Land Management approved a Plan of Operation for the Cove-Helen Underground Mine which allows Premier to do exploration drilling through its subsidiary Au-Reka Gold.
Corvus Gold (TSX:KOR) has precious metals properties in Nevada, Alaska and Quebec. Its flagship North Bullfrog project in Nevada hosts 1.6 million ounces of gold. According to a preliminary economic assessment released in December 2012, the mine would produce an annual 78,400 ounces of gold over 10 years at average cash operating costs of $816/oz. Corvus initiated a 20,000-meter drill program this month.
http://goldinvestingnews.com/35411/5-gold-juniors-to-watch.html
5 Gold Juniors to Watch
Wednesday May 29, 2013
By Andrew Topf - Exclusive to Gold Investing News
Picking a gold junior that will find exploration success and grow your investment dollar is no easy task, especially in today’s markets, where the shine has come off of precious metals.
At the recent Cambridge House mining investment conference and trade show, which ran from May 26 to 27 in Vancouver, exploration pundits gathered for an informative seminar chaired by investment guru Rick Rule. While Rule conceded that there have not been many good exploration stories to talk about in the last year or so, he pointed to a few high-performing companies that have done well, such as GoldQuest (TSXV:GQC), which went from 6 cents to $1.60, Colorado Resources (TSXV:CXO), whose stock price rose seven-fold after a discovery hole yielded strong results, Reservoir Minerals (TSXV:RMC) (26 cents to $3.60), Africa Oil (TSXV:AOI) (80 cents to $10), Alpha Minerals (TSXV:AMW) and Fission Uranium (TSXV:FCU).
“There is nothing that can yield you speculative gains like anticipating exploration success,” Rule said before introducing the panelists, Brent Cook, John Kaiser, Lawrence Roulston and Jordan Roy-Byrne.
Below are five gold companies that were recommended by panelists. They appear in no particular order.
...
Riverside Resources (TSXV:RRI) Riverside Resources is a prospect generator with a number of gold, silver and copper projects. In April 2013 Riverside signed a $2.25 million exploration alliance with Hochschild Mining (LSE:HOC) for explore the Mega-shear gold belt in Western Sonora, Mexico. That adds to exploration partnerships with Cliffs Natural Resources (NYSE:CLF) to identify and acquire iron oxide copper gold projects on Mexico’s west coast, and Antofagasta Minerals (LSE:ANTO) to explore for copper in British Columbia. Riverside has 9 gold or gold-silver properties at various stages of exploration, with all except one in Mexico. It also has two option agreements, with Guerrero Exploration (TSXV:GEX) and Sierra Madre Developments (TSXV:SMG), on its Cerro Azul and Penoles targets.
(cont...)
http://goldinvestingnews.com/35411/5-gold-juniors-to-watch.html
Prepare! – Three MEGAS Coming & What to Do
13 June 2013
DEEPCASTER LLC
“The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”
Paul Volcker, Former Fed Chairman, June, 2013
Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.
A Wise Deepcaster Subscriber correctly noted regarding:
“…The St. Louis Federal Reserve Bank estimate of the total Quantity of US dollars in circulation and in banks as reserves…
“This number appears to me to be similar to the old M3, which the Fed stopped publishing in 2005. John Williams at www.shadowstats.com continues to estimate M3.
“The huge and sudden increase of money supply [M] – far in excess of goods and services being produced – in monetary inflation. If the public should catch on to this potential for devaluing the value of their dollars, they will start to spend very fast, while the money is still worth something.
“When the velocity of money changing hands [V] increases, we will see sudden price inflation. M x V = PRICES.”
And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.7%. Witness MEGA #1.
And if you are in a deeply indebted Country in the Developed or Developing World, there is now a probability that your Bank Deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?) Witness MEGA #2
“Japan to adopt ‘bail-ins’ force bank losses on investors if needed, Nikkei says Tue, Jun 11, 2013 2:19 PM EDT
“Japan’s Financial Services Agency will enact new rules that will force failed bank losses on investors, if needed, via a mechanism known as a ‘bail-in’ according to Nikkei. Mitsubishi UFJ (MTU), Mizuho Financial (MFG) and Sumitomo Mitsui (SMFG) are among those proposing amendments to allow them to issue the types of preferred shares or subordinated bonds that would be used in such cases, the report noted.”
“A Mission to Inform the Sleeping,” Jim Sinclair
jsmineset.com, 06/12/2013
Specifically through “Bail-ins” -- a Euphemism for Confiscation.
So what to do?
First do not rely on Official (often Bogus) Statistics. Do rely on the Best Estimates of Deepcaster, Shadowstats and other Independent Analysts. Robert McHugh explains
“On Friday, we got the latest phony Jobs report from the Bureau of Labor Statistics of the Labor Department. The BLS reported without blushing that the U.S. economy created 175,000 new jobs in May. This occurred while the unemployment rate did not change, remaining at 7.6 percent. How is this possible? The truth? According to the BLS’s own CESBD report, where they guess how many jobs were created by new businesses they think may have started that month, and then they add this estimated make believe figure to the count that gets reported to us as the new jobs number, huge fudge numbers were added to their count. In April, 2013, the BLS reported that 149,000 net new U.S. jobs were created. But, they also reported that 193,000 of these were a guess on their part of new jobs they hope were created by new business that probably started up in April. Which means the actual count showed the U.S. lost 44,000 net jobs in April (149,000 minus 193,000 fudged figure). For May, the actual count showed that the U.S. lost 30,000 net jobs (175,000 reported less 205,000 fudged figure). This helps explain why unemployment is not going down. The true new jobs created figures are vastly overstated by the BLS. The numbers they reported the past two months are pure hogwash.
“The U.S. stock market happily bought the lie.”
Robert McHugh’s Market Forecasting & Trading Report, 6/07/2013
The Market Manipulators, Bogus statistics Purveyors, and Mainstream Media Spinners were hard at work last Friday to convince Investors and the public that the (Bogus) Jobs number of 175,000 was “just right” to justify the Equities Rally (200 points per the Dow). “Not so high as to impel The Fed to taper QE and not so low as to signal ongoing Economic Weakness” was the Gist of the Spin.
Given the Intensifying scandals coming out of Washington these days – threatening reporters, using the IRS to target political enemies, surveillance of internet and phone users, hiding the $6.3 Trillion Net loss prospectively caused by the Immigration “Reform” Bill, Benghazi, Fast and Furious – it is a wonder anyone believes anything emanating from Washington, D.C. anymore. Indeed, the recent Equities and Bond Crash resulting from Japan’s (already) counterproductive QE, is Fair Warning.
And how does one explain the seemingly contradictory Sell-Off earlier this week in Stocks, Bonds, and Gold at the same time?!
However, Market and Data Manipulation “Games” can provide the Opportunity for Profit and Wealth Protection for cognoscenti as we indicate in our Forecasts and Notes below.
And important to consider is Another Honest Warning Sign
WTI Crude has chopped in the low to mid-90s for the last month or so. But in spite of adequate above ground supplies it ended last week higher. And as we write, WTI is bouncing around $96/bbl.
Key Point: Crude is telling us the Truth – Price Inflation is intensifying. Generally, one can expect the Crude Direction to track the direction in Equities… thus the Rally last Friday in both. As well, recent strength results in part from increasing Risks to supply in Iraq (possible Civil War) and Iran – possibly focus of an attack.
Recent $US strength (over 80 basis USDX) exists mainly because the $US is the least Dirty Shirt in the Major Fiat Currency laundry. As well, the perceived relative strength of the $US Economy and Markets has been helping to keep the $US above 80 as the US attracts capital flows.
Also WARNING is the recently begun Uptrend in the U.S. Interest Rates. The U.S. 10-year yield has moved up to near 2.25% – a 50ish basis point move in the past few weeks. Any Significant Equities Takedown should temporarily halt or reverse the Uptrend. But inflation is intensifying and the weakening Treasury Securities trend is in place nonetheless. The Bond Bubble is closer to Bursting. Witness MEGA #3.
Legendary Financial Writer, Richard Russell expresses justifiable concern
“Turning to Bernanke, he practically guarantees that the stock market will go up. Join him and make a guaranteed easy killing. Me, it’s all too much for me. I’m watching the show, and frankly, I’ve never seen anything like it. As for Obama – he has no respect for privacy rights, freedom of the press or due process of the law. The country is going a bit crazy, and the stock market reflects it. As my old friend, the late Eliot Janeway, put it, when the president is in trouble, the market is in trouble. And this president has a lot more troubles than he can handle.
“As for the US, I have the feeling that the wheels are coming off the limousine. The IRS turns out to be a political weapon. Our Attorney General is a liar. We’re being spied on via every e-mail and every telephone call we make.”
Richard Russell, Dow Theory Letters,
Dowtheoryletters.com, 06/11/2013”
And the Eurozone is no closer to reviving its Economy. Official Unemployment Rates in Spain and Greece are 26%.
Continuing QE, whether from The Fed, or Bank of Japan or European Central Bank, not only is a long-term negative (because of the Inflation it is already igniting) but also because it cannot last.
John Mauldin explains one of several reasons why:
“If interest rates on Japanese bonds rise to a mere 2.2%, 80% of tax revenues will go just to pay the interest on their debt. At a 245% debt-to-GDP ratio, they are in desperate straits, and they know it.”
John Mauldin, “Banzai! Banzai! Banzai!,” 6/09/2013
With over 100% Debt to GDP and with over $100 Trillion in downstream unfunded liabilities, and with rates increasing, the USA is not in much better shape. So much for the alleged U.S. Economic Recovery. Ditto the Eurozone.
But as our regular readers know the Mega-Banker Cartel continues to Try to suppress Prices of Gold and Silver – the Warning Signs of Impending Inflation and have succeeded in suppressing the Paper price.
Most recently, as JGBJ pointed out this past Monday, last Friday saw another Cartel Bear Raid. Trader Dan Norcini is quite likely right when he says that until Gold can convincingly clear $1420 (and 300 on the HUI), the specs will continue to sell rallies, thus becoming de facto allies of the Price Suppressing Cartel.
But there are catalysts for an Upside reversal. Physical Demand is still intensifying especially from India and China and that is the ultimate Catalyst for a launch. In addition, the dramatic ongoing increase in Treasury Yields may provide just that and in the next few weeks too. And that would be helped along by the Bullion (Cartel) Banks Massive Reduction of their Short Position, which they have already achieved. But the ROT has Spread Well beyond the Economy and Financial Markets.
“Most of you who have read this blog for any length of time are by now familiar with my common refrain that we are witnessing an America in decline. I believe the symptoms cut across the cultural, financial, political and educational aspects of the nation.
“Vice is encouraged, commended or praised by elitists as traditional standards of righteousness or morality are ridiculed or even mocked. The monetary system is hopelessly corrupted as it is addicted to cheap credit. Economic "growth" depends upon various forms of stimulus and the creation of revolving bubbles moving from one sector to the next now seems to be a permanent fixture. The public education system has produced a generation which seems to have little if any understanding of history and practically no ability to deeply think (witness the proliferation of one reality TV show after another where instead of living their own lives, the viewers live the lives of others).
“The thing that really troubles me however is the corruption of our political system, in particular the ever-increasing size and role of the federal government. I am watching in stunned disbelief that a government agency, the IRS, could target and harass American citizens merely because they happen to share an opposing view of government than the current administration. We watch reporters have their phones bugged and reporters doing their jobs to ferret out truth either being charged as criminals by the government or harassed in other manners. If that was not frightening enough, we now learn that phone calls and communications of our citizens are being monitored effectively destroying any privacy rights that we might have.
“Additionally we have American citizens killed in Benghazi because apparently an election was upcoming and news of that nature was not conducive to the re-election efforts. We have regulatory agencies such as the EPA answering to no one who are running roughshod over the property rights of many law-abiding citizens as further evidence that the Administrative State, the 4th branch of government, no longer seems to have any constraints on its power.”
”Further Signs of Internal Weakening in the US,”
Dan Norcini, traderdannorcini.blogspot.com, 06/09/2012
What to do? Deepcaster and other Independent commentators have been giving Specific Recommendations for Profit and Protection for Months now.
But respected Market Guru, Jim Sinclair, succinctly sums up certain (but not all) Key Elements of the Prescriptions:
“My Dear Extended Family
“But still you do nothing. Why?
“You do not diversify. Why?
“You do not direct register. Why?
“You still do not certificate. Why?
“You let ignorant brokers talk you out of protecting yourself. Why?
“You keep your shares in street name of CEDE and Company and do not even know it. Why?
“You trust computer based banks. Why?
“Everything you have done with computer based banks is in public record and this is not a problem for you. Why?
“I am on a mission to inform you, yet you look the other way as if asleep. Why?”
IBID, Jim Sinclair
jsmineset.com, 06/12/2013
Be Prepared for “Bail-Ins,” Bonds Bursting and Hyperinflation… Three MEGAS.
Best regards,
Deepcaster
June 14, 2013
Note 1: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, over 8.7% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.
One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.7% per year in the U.S. per Shadowstats.com).
To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%, 8%, 15.6%, 8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4% when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’
Note 2: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.
And there is an Extraordinary Buy Opportunity in One Key Sector.
To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s latest ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in the ‘Alerts Cache’ at deepcaster.com.
Note 3: Central Bank and Major Government Actions lately increasingly have the Odor of Desperation about them.
- Japan and the U.S. Central Banks are creating Fiat Money at all-time record levels. And Australia just joined the Fiat Currency weakening War. But Japan’s counterproductive QE is roiling the Markets.
- India has tripled the tax on and imposed restrictions on Gold Imports.
- Cyprus’s Gold and Bank “Deposits” have been confiscated.
- U.S. job and Inflation numbers are becoming increasingly unbelievable.
- And evidence of Central bank and Government Intervention continue to increase in a wide variety of Markets.
- Witness the mid-April Precious Metals Paper Price Takedown, which resulted in a rush for Physical world-wide and doubling of Premiums for Physical.
And the main reason for these Actions by the Powers of the Developed World is that the Market performance of Key Sectors has become farther and farther divorced from Economic Fundamentals and the US$ is becoming increasingly Vulnerable. And, ultimately, Fundamentals will prevail. All of this has led to the increasing likelihood of a Massacre in one Huge Sector, according to one very highly placed Financial System Insider. And Deepcaster agrees with him, and has been saying the same thing for weeks.
To consider how this Warning is justified and what Opportunities for Profit and Protection it provides, read our Alert, “Insider Warns Key Sector Mega-Crash Impending; Reco. Prep.; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in ‘Alerts Cache’ at deepcaster.com.
Note 4: All good Forecasts reflect probabilities not promises, guarantees, or certainties. We do not issue Forecasts unless our analyses reflect at least more-likely-than-not probabilities. But occasionally our Forecasts indicate, IMO, a higher, i.e. a much-more-likely-than-not probability for certain Key Sectors we cover.
And a short time ago, one of those weeks happened in which Key Fundamental, Technical, Interventional, and Political reflected not certainty (and certainly not a guarantee) but rather, a much-more-likely-than-not probability, for one Key Sector we cover.
To consider these Forecasts see our recent Alert “17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil,” posted in ‘Alerts Cache’ at www.deepcaster.com.
And to consider our recent “Blue Chip” Buy Recommendation recently yielding 17.97% when added to the Portfolio, and selling as we write for around $5/share, read that same Alert.
DEEPCASTER LLC
www.deepcaster.com
http://news.goldseek.com/GoldSeek/1371153600.php
U.S. Housing Market Potential for Catastrophic Losses for FHA
Jun 13, 2013 - 01:48 PM GMT
By: Money_Morning
Gary Gately writes: Five years after the financial crisis, just about everyone has had to clean up their act.
Consumers have less credit card debt. Banks are stuffed with capital, prodded by the Federal Reserve. Even the federal deficit is shrinking.
But one federal agency seems to have resisted long-overdue change. It's the Federal Housing Administration or FHA.
Findings by a congressional committee, released last week, show the giant government mortgage-insurance agency could face a $115 billion shortfall - at least, if the housing market tanksby 20% again.
The figure is so large the FHA has worked to keep it under wraps for as long it could.
This winter the Fed required the nation's 18 biggest banks to undergo the same sort of "stress test" scenario.
The FHA, though, excluded the results of its stress test from an independent actuarial review released in November - and hoped to release the results later when Congress and reporters weren't paying attention.
In an October e-mail to Integrated Financial Engineering Inc. of Rockville, Md., which conducted the review, an FHA official wrote, "We just do not want that analysis [the stress test results] to be in the actuarial review report."
The e-mail went on to say, "In congressional hearings, it is quite possible that we will be required to present this information on the record, but that will be well after the actuarial review is released and the initial media coverage takes place."
FHA: "Contempt for Congress and Taxpayers"
Edward J. Pinto, a senior research fellow at the American Enterprise Institute think tank, told Money Morning it's an "outrage" FHA didn't release the stress test results in November and that they became public only during the congressional committee's review.
"The employees of FHA hold a public trust," Pinto said. "To withhold this information from the FHA's regulator, Congress, shows contempt for Congress and taxpayers."
The FHA doesn't originate mortgages or lend money but provides government-backed insurance to lenders against mortgage borrowers defaulting, and has taken on a much bigger role after Fannie Mae and Freddie Mac had to bet taken over by the government.
Pinto says under generally accepted accounting principles, the FHA, which now insures over $1.1 trillion in mortgage loans, has a net worth of negative $27 billion.
Given its financial state - the FHA did present as part of the review an estimated shortfall of $65.4 billion based on a "protracted" economic "slump" - Pinto said the agency is one recession away from a disaster.
"The FHA is a mild to moderate recession away from catastrophic losses - losses that would need to be absorbed by taxpayers," Pinto said.
Such losses could total $50 billion, he said.
Pointing to the Great Recession, Pinto said, "FHA's role as the leverage leader was instrumental in promoting the rush to loose lending standards that figured so prominently in the collapse of the housing market and the tanking of our economy."
No Cash Reserves
The FHA, he says, has "no cash reserves to fall back on to protect the taxpayers, and that is the problem."
Pinto, a former chief credit officer for Fannie Mae, says he's not predicting a housing crash right away, but says it's conceivable interest rates could climb to 6% within a year or two - and that would greatly increase the odds of a crash.
And the FHA is making the potential catastrophe bigger and bigger - by easing lending standards and by making too many loans to people outside its original mission of supporting low- and middle-income and first-time buyers, Pinto says.
He says the FHA needs to change underwriting standards to bring down foreclosure rates, which he says have been about 12 percent over the past 37 years. That would require a lower debt-to-income ratio among homebuyers and weighing expenses beyond debts, among other things.
Today, he says, FHA's market share is nearly 30%, compared with its historic level of 10%-15%.
The FHA has backed mortgages to borrowers making down payments of as little as 3.0%. Most private lenders wouldn't offer these borrowers loans without a government guarantee.
Pinto's concerns are shared with those of our own Shah Gilani.
In November last year, the Capital Wave Strategist warned, "The FHA is now saddled with over a trillion dollars' worth of mortgages it insured for a lot less than prime borrowers, and is itself in need of a bailout."
"It's just another example of our government kicking yet another can down the road," Shah said, "only, this is another turkey that isn't going to make it across the road."
Source :http://moneymorning.com/2013/06/12/fha-potential-for-catastrophic-losses-could-lead-to-a-115-billion-shortfall/
Prepare! – Three MEGAS Coming & What to Do
13 June 2013
DEEPCASTER LLC
“The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”
Paul Volcker, Former Fed Chairman, June, 2013
Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.
A Wise Deepcaster Subscriber correctly noted regarding:
“…The St. Louis Federal Reserve Bank estimate of the total Quantity of US dollars in circulation and in banks as reserves…
“This number appears to me to be similar to the old M3, which the Fed stopped publishing in 2005. John Williams at www.shadowstats.com continues to estimate M3.
“The huge and sudden increase of money supply [M] – far in excess of goods and services being produced – in monetary inflation. If the public should catch on to this potential for devaluing the value of their dollars, they will start to spend very fast, while the money is still worth something.
“When the velocity of money changing hands [V] increases, we will see sudden price inflation. M x V = PRICES.”
And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.7%. Witness MEGA #1.
And if you are in a deeply indebted Country in the Developed or Developing World, there is now a probability that your Bank Deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?) Witness MEGA #2
“Japan to adopt ‘bail-ins’ force bank losses on investors if needed, Nikkei says Tue, Jun 11, 2013 2:19 PM EDT
“Japan’s Financial Services Agency will enact new rules that will force failed bank losses on investors, if needed, via a mechanism known as a ‘bail-in’ according to Nikkei. Mitsubishi UFJ (MTU), Mizuho Financial (MFG) and Sumitomo Mitsui (SMFG) are among those proposing amendments to allow them to issue the types of preferred shares or subordinated bonds that would be used in such cases, the report noted.”
“A Mission to Inform the Sleeping,” Jim Sinclair
jsmineset.com, 06/12/2013
Specifically through “Bail-ins” -- a Euphemism for Confiscation.
So what to do?
First do not rely on Official (often Bogus) Statistics. Do rely on the Best Estimates of Deepcaster, Shadowstats and other Independent Analysts. Robert McHugh explains
“On Friday, we got the latest phony Jobs report from the Bureau of Labor Statistics of the Labor Department. The BLS reported without blushing that the U.S. economy created 175,000 new jobs in May. This occurred while the unemployment rate did not change, remaining at 7.6 percent. How is this possible? The truth? According to the BLS’s own CESBD report, where they guess how many jobs were created by new businesses they think may have started that month, and then they add this estimated make believe figure to the count that gets reported to us as the new jobs number, huge fudge numbers were added to their count. In April, 2013, the BLS reported that 149,000 net new U.S. jobs were created. But, they also reported that 193,000 of these were a guess on their part of new jobs they hope were created by new business that probably started up in April. Which means the actual count showed the U.S. lost 44,000 net jobs in April (149,000 minus 193,000 fudged figure). For May, the actual count showed that the U.S. lost 30,000 net jobs (175,000 reported less 205,000 fudged figure). This helps explain why unemployment is not going down. The true new jobs created figures are vastly overstated by the BLS. The numbers they reported the past two months are pure hogwash.
“The U.S. stock market happily bought the lie.”
Robert McHugh’s Market Forecasting & Trading Report, 6/07/2013
The Market Manipulators, Bogus statistics Purveyors, and Mainstream Media Spinners were hard at work last Friday to convince Investors and the public that the (Bogus) Jobs number of 175,000 was “just right” to justify the Equities Rally (200 points per the Dow). “Not so high as to impel The Fed to taper QE and not so low as to signal ongoing Economic Weakness” was the Gist of the Spin.
Given the Intensifying scandals coming out of Washington these days – threatening reporters, using the IRS to target political enemies, surveillance of internet and phone users, hiding the $6.3 Trillion Net loss prospectively caused by the Immigration “Reform” Bill, Benghazi, Fast and Furious – it is a wonder anyone believes anything emanating from Washington, D.C. anymore. Indeed, the recent Equities and Bond Crash resulting from Japan’s (already) counterproductive QE, is Fair Warning.
And how does one explain the seemingly contradictory Sell-Off earlier this week in Stocks, Bonds, and Gold at the same time?!
However, Market and Data Manipulation “Games” can provide the Opportunity for Profit and Wealth Protection for cognoscenti as we indicate in our Forecasts and Notes below.
And important to consider is Another Honest Warning Sign
WTI Crude has chopped in the low to mid-90s for the last month or so. But in spite of adequate above ground supplies it ended last week higher. And as we write, WTI is bouncing around $96/bbl.
Key Point: Crude is telling us the Truth – Price Inflation is intensifying. Generally, one can expect the Crude Direction to track the direction in Equities… thus the Rally last Friday in both. As well, recent strength results in part from increasing Risks to supply in Iraq (possible Civil War) and Iran – possibly focus of an attack.
Recent $US strength (over 80 basis USDX) exists mainly because the $US is the least Dirty Shirt in the Major Fiat Currency laundry. As well, the perceived relative strength of the $US Economy and Markets has been helping to keep the $US above 80 as the US attracts capital flows.
Also WARNING is the recently begun Uptrend in the U.S. Interest Rates. The U.S. 10-year yield has moved up to near 2.25% – a 50ish basis point move in the past few weeks. Any Significant Equities Takedown should temporarily halt or reverse the Uptrend. But inflation is intensifying and the weakening Treasury Securities trend is in place nonetheless. The Bond Bubble is closer to Bursting. Witness MEGA #3.
Legendary Financial Writer, Richard Russell expresses justifiable concern
“Turning to Bernanke, he practically guarantees that the stock market will go up. Join him and make a guaranteed easy killing. Me, it’s all too much for me. I’m watching the show, and frankly, I’ve never seen anything like it. As for Obama – he has no respect for privacy rights, freedom of the press or due process of the law. The country is going a bit crazy, and the stock market reflects it. As my old friend, the late Eliot Janeway, put it, when the president is in trouble, the market is in trouble. And this president has a lot more troubles than he can handle.
“As for the US, I have the feeling that the wheels are coming off the limousine. The IRS turns out to be a political weapon. Our Attorney General is a liar. We’re being spied on via every e-mail and every telephone call we make.”
Richard Russell, Dow Theory Letters,
Dowtheoryletters.com, 06/11/2013”
And the Eurozone is no closer to reviving its Economy. Official Unemployment Rates in Spain and Greece are 26%.
Continuing QE, whether from The Fed, or Bank of Japan or European Central Bank, not only is a long-term negative (because of the Inflation it is already igniting) but also because it cannot last.
John Mauldin explains one of several reasons why:
“If interest rates on Japanese bonds rise to a mere 2.2%, 80% of tax revenues will go just to pay the interest on their debt. At a 245% debt-to-GDP ratio, they are in desperate straits, and they know it.”
John Mauldin, “Banzai! Banzai! Banzai!,” 6/09/2013
With over 100% Debt to GDP and with over $100 Trillion in downstream unfunded liabilities, and with rates increasing, the USA is not in much better shape. So much for the alleged U.S. Economic Recovery. Ditto the Eurozone.
But as our regular readers know the Mega-Banker Cartel continues to Try to suppress Prices of Gold and Silver – the Warning Signs of Impending Inflation and have succeeded in suppressing the Paper price.
Most recently, as JGBJ pointed out this past Monday, last Friday saw another Cartel Bear Raid. Trader Dan Norcini is quite likely right when he says that until Gold can convincingly clear $1420 (and 300 on the HUI), the specs will continue to sell rallies, thus becoming de facto allies of the Price Suppressing Cartel.
But there are catalysts for an Upside reversal. Physical Demand is still intensifying especially from India and China and that is the ultimate Catalyst for a launch. In addition, the dramatic ongoing increase in Treasury Yields may provide just that and in the next few weeks too. And that would be helped along by the Bullion (Cartel) Banks Massive Reduction of their Short Position, which they have already achieved. But the ROT has Spread Well beyond the Economy and Financial Markets.
“Most of you who have read this blog for any length of time are by now familiar with my common refrain that we are witnessing an America in decline. I believe the symptoms cut across the cultural, financial, political and educational aspects of the nation.
“Vice is encouraged, commended or praised by elitists as traditional standards of righteousness or morality are ridiculed or even mocked. The monetary system is hopelessly corrupted as it is addicted to cheap credit. Economic "growth" depends upon various forms of stimulus and the creation of revolving bubbles moving from one sector to the next now seems to be a permanent fixture. The public education system has produced a generation which seems to have little if any understanding of history and practically no ability to deeply think (witness the proliferation of one reality TV show after another where instead of living their own lives, the viewers live the lives of others).
“The thing that really troubles me however is the corruption of our political system, in particular the ever-increasing size and role of the federal government. I am watching in stunned disbelief that a government agency, the IRS, could target and harass American citizens merely because they happen to share an opposing view of government than the current administration. We watch reporters have their phones bugged and reporters doing their jobs to ferret out truth either being charged as criminals by the government or harassed in other manners. If that was not frightening enough, we now learn that phone calls and communications of our citizens are being monitored effectively destroying any privacy rights that we might have.
“Additionally we have American citizens killed in Benghazi because apparently an election was upcoming and news of that nature was not conducive to the re-election efforts. We have regulatory agencies such as the EPA answering to no one who are running roughshod over the property rights of many law-abiding citizens as further evidence that the Administrative State, the 4th branch of government, no longer seems to have any constraints on its power.”
”Further Signs of Internal Weakening in the US,”
Dan Norcini, traderdannorcini.blogspot.com, 06/09/2012
What to do? Deepcaster and other Independent commentators have been giving Specific Recommendations for Profit and Protection for Months now.
But respected Market Guru, Jim Sinclair, succinctly sums up certain (but not all) Key Elements of the Prescriptions:
“My Dear Extended Family
“But still you do nothing. Why?
“You do not diversify. Why?
“You do not direct register. Why?
“You still do not certificate. Why?
“You let ignorant brokers talk you out of protecting yourself. Why?
“You keep your shares in street name of CEDE and Company and do not even know it. Why?
“You trust computer based banks. Why?
“Everything you have done with computer based banks is in public record and this is not a problem for you. Why?
“I am on a mission to inform you, yet you look the other way as if asleep. Why?”
IBID, Jim Sinclair
jsmineset.com, 06/12/2013
Be Prepared for “Bail-Ins,” Bonds Bursting and Hyperinflation… Three MEGAS.
Best regards,
Deepcaster
June 14, 2013
Note 1: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, over 8.7% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.
One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.7% per year in the U.S. per Shadowstats.com).
To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%, 8%, 15.6%, 8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4% when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’
Note 2: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.
And there is an Extraordinary Buy Opportunity in One Key Sector.
To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s latest ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in the ‘Alerts Cache’ at deepcaster.com.
Note 3: Central Bank and Major Government Actions lately increasingly have the Odor of Desperation about them.
- Japan and the U.S. Central Banks are creating Fiat Money at all-time record levels. And Australia just joined the Fiat Currency weakening War. But Japan’s counterproductive QE is roiling the Markets.
- India has tripled the tax on and imposed restrictions on Gold Imports.
- Cyprus’s Gold and Bank “Deposits” have been confiscated.
- U.S. job and Inflation numbers are becoming increasingly unbelievable.
- And evidence of Central bank and Government Intervention continue to increase in a wide variety of Markets.
- Witness the mid-April Precious Metals Paper Price Takedown, which resulted in a rush for Physical world-wide and doubling of Premiums for Physical.
And the main reason for these Actions by the Powers of the Developed World is that the Market performance of Key Sectors has become farther and farther divorced from Economic Fundamentals and the US$ is becoming increasingly Vulnerable. And, ultimately, Fundamentals will prevail. All of this has led to the increasing likelihood of a Massacre in one Huge Sector, according to one very highly placed Financial System Insider. And Deepcaster agrees with him, and has been saying the same thing for weeks.
To consider how this Warning is justified and what Opportunities for Profit and Protection it provides, read our Alert, “Insider Warns Key Sector Mega-Crash Impending; Reco. Prep.; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in ‘Alerts Cache’ at deepcaster.com.
Note 4: All good Forecasts reflect probabilities not promises, guarantees, or certainties. We do not issue Forecasts unless our analyses reflect at least more-likely-than-not probabilities. But occasionally our Forecasts indicate, IMO, a higher, i.e. a much-more-likely-than-not probability for certain Key Sectors we cover.
And a short time ago, one of those weeks happened in which Key Fundamental, Technical, Interventional, and Political reflected not certainty (and certainly not a guarantee) but rather, a much-more-likely-than-not probability, for one Key Sector we cover.
To consider these Forecasts see our recent Alert “17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil,” posted in ‘Alerts Cache’ at www.deepcaster.com.
And to consider our recent “Blue Chip” Buy Recommendation recently yielding 17.97% when added to the Portfolio, and selling as we write for around $5/share, read that same Alert.
DEEPCASTER LLC
www.deepcaster.com
http://news.goldseek.com/GoldSeek/1371153600.php
Some Thoughts on the Forex Rigging Scandal and Market Manipulation
Posted by Jesse
at 12:38 PM 12 June 2013
(special thanks to basserdan)
The foreign exchange rigging scandal that is coming to light is very interesting, even in this time of financial scandals and corruption.
Here is the original Bloomberg story ( http://tinyurl.com/pxrblok ) on it and you may wish to read it in its entirety.
The corruption in the enormous global foreign exchange market is coming to light not because of any surveillance by regulatory bodies. The multi-trillion dollar market is a genuine 'spot market' and is not considered a financial assets market, and is therefore lightly regulated.
As you may recall, a certain liberal economic columnist ( http://tinyurl.com/59ckka ) asserted some years ago that it was not possible to rig the price of commodities using the futures market because the price is set in the spot market. Well, he was wrong about that, since in those cases the spot price is a derivative of the front month in the futures.
But with forex we do have an actual spot market, and apparently that principle does not hold even where there is an actual spot market, and of a size that most would assert that price fixing was not possible. They forget that prices are set at the margins.
Efficient market theory dies hard because it is such a nice neat model and so attractive to the abstract mind. That it is a mere fantasy is another matter.
The story came to light because very large customers went to the regulatory body in London and complained that they were tired of being cheated. The authority was forced to respond.
There is quite a bit of talk that nothing that was done was 'illegal.'
While that may be technically true from a regulatory perspective, there is sufficient evidence that traders from different companies were acting in concert to fix global benchmarks knowing with the intent to steal from their customers. If that is not the very definition of a criminal conspiracy I am not sure what would be.
And finally, despite its enormous size, the foreign exchange market was able to be rigged against customers because of the concentration of market power in a few hands, and the manner in which trades are placed, taken and executed.
From the Bloomberg story:
"While hundreds of firms participate in the foreign-exchange market, four banks dominate, with a combined share of more than 50 percent, according to a May survey by Euromoney Institutional Investor Plc.
Deutsche Bank AG (DBK), based in Frankfurt, is No. 1, with a 15.2 percent share, followed by New York-based Citigroup Inc. (C) with 14.9 percent, London-based Barclays Plc (BARC) with 10.2 percent and Zurich-based UBS AG (UBSN) with 10.1 percent."
We do not know what entities have been named in these revelations. These are merely the largest. We may never know depending on how the London regulators choose to dispose of it.
But it does shoot a gaping hole in the efficient markets theory. Here is a huge, widely dispersed market with literally millions of transactions affecting almost every economically involved individual in the world, and it became a chronically rigged market in a corruption scheme that went on for many, many years.
Put that in your free market neo-liberal pipe and smoke it.
I see where Singapore's regulator was threatening to reprimand the guilty parties. I submit that given the wide range of abuses and scandals that have been revealed and which are still ongoing, that there needs to be some serious action and soul-searching done about how markets are set up, what secrecies are permitted to the major players, the asymmetric distribution of information, and the invariable and pernicious, official sanctioned secrecy that marks every single financial fraud which we have seen over the past twenty years.
Secrecy is a privilege that has a limited place in markets that are honest, efficient and effective.
And I am sorry but if you still choose to believe that the markets, even very large and significant ones, are not being routinely rigged to the disadvantage of the public, then you are probably a fool, or a tool, or an obtuse, purblind ideologue.
And that goes in spades for the precious metals and equity markets that are saturated with outsized position shoving, event driven price rigging, collusion, and high frequency front running as a normal order of business.
Posted by Jesse at 12:38 PM
http://jessescrossroadscafe.blogspot.com/2013/06/some-thoughts-on-forex-rigging-scandal.html
Fierce Selloff in Emerging Market Currencies; India Panic Intervention to Stop Rupee Crash...
Jun 12, 2013 - 10:28 PM GMT
By: Mike_Shedlock
... Brazil Steps Up Real Intervention; Root Cause of Crisis
It's hard not to laugh at the irony of recent central bank currency actions.
* After complaining for years about the strength of the Real, the Brazilian central bank stepped up intervention actions hoping to stop a plunge in the currency.
* Turkey now attempts to attract capital after taking measures for the past four years to stop the flow of money into the country.
* In India, the central bank seeks to stop a plunge in the Rupee which is at a record low of 58.95 to the dollar.
The Wall Street Journal reports Emerging-Market Currencies See Turnaround After Hefty Losses
The South African rand and other emerging-market currencies reversed course to gain against the dollar Tuesday after suffering heavy losses earlier in the session.
These currencies have plummeted rapidly in June, dragged down by expectations the Federal Reserve will taper its bond-buying program later this year. Ultra-accommodative U.S. monetary policy had helped drive investors to seek higher yields in emerging markets in recent years, analysts say.
India's central bank dove into foreign exchange markets Tuesday to stop the rupee's slide at a record low of INR58.95 to the dollar. Pressured to attract capital to the country, a top Indian economic official promised a new round of measures to allow foreign investment in currently restricted parts of the economy. The rupee pared losses against the dollar but still fell 0.3% on the day to trade at INR58.34 per dollar.
Turkey's central bank on Tuesday announced new measures to attract capital after spending much of the past four years trying to stop too much money from flooding into its economy. That helped to stem the lira's fall to near a multi-year low against the dollar as police moved in on protesters in Istanbul. Turkey's capital measures echoed Brazil's move earlier this month to eliminate a 6% tax on foreigners' bond investments.
Brazil's central bank stepped up intervention in the face of the rapid currency depreciation that began on May 28, with a series of foreign exchange swap auctions, including two on Tuesday.
Emerging Market Assets Suffer in Fierce Sell-Off
The Financial Times reports Emerging market assets suffer in fierce sell-off.
Emerging market currencies, stocks and bonds suffered a fierce sell-off on Tuesday on rising investor concerns over the prospect of the US Federal Reserve reining in its programme of bond-buying to drive down long-term interest rates.
The South African rand and the Brazilian real touched four-year lows against the US dollar on Tuesday, and the Indian rupee fell to a record low. Even relatively robust countries like the Philippines and Mexico - long favourites of investors - have been hit by a spate of selling.
The FTSE Emerging Markets index fell 1.7 per cent on Tuesday, taking its decline since its May peak to more than 10 per cent. Shares in Brazil - one of the four big emerging markets - closed 3 per cent in São Paulo on Tuesday. That pulled Brazilian shares into bear market territory - a drop of more than 20 per cent from a peak this year.
Both international and local currency emerging market bonds have been pummelled, sending borrowing costs higher.
Benoit Anne, a senior strategist at Société Générale, said central bank money had arguably inflated a bubble in emerging markets, which was now unravelling as investors priced in a change in Fed policy. "This will not be a short-lived sell-off," he predicted.
Emerging market fund managers have also been hit by investor redemptions. Asset managers that focus on international bonds last week suffered the biggest investor withdrawal since mid-2007, according to EPFR. Emerging market equity funds were hit with the biggest redemptions since 2011.
Cause of the Selloff
Both the Financial Times and the Wall Street Journal pinned the blame on the possibility the Fed would stop its QE programs later this year.
I rather doubt that is the cause, and I also doubt the Fed is going to stop QE any time soon.
Instead, I propose this is what happens when bubbles burst. And a huge part of numerous bubbles was widespread belief the growth in China and India will last forever. Hot money plowed into emerging market countries and also commodity producing countries.
Australia is another casualty of the coming bust of China. For details please see Australian Dollar Plunges as Home Loans Dive; Australia Insolvencies Hit Record; Worst is Yet to Come.
To be sure insane amounts of liquidity fueled various bubbles in stocks, in bonds, in emerging markets, but with the global economy rapidly slowing, and with much of Europe in an outright economic depression, the Fed is not that likely to curtail QE soon.
If the Fed does slow QE, it will not be because the US economy is strengthening, but rather realization by the Fed (not admitted of course) that various stock and bond market bubbles pose serious economic risks if allowed to grow bigger.
Root Cause of Crisis
By the way, all this extremely volatile currency action, as well as various equity and bond market bubbles, can be pinned entirely on central banks, fractional reserve lending, and lack of a gold standard.
By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.
I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.
http://www.marketoracle.co.uk/Article40882.html
INFOGRAPHIC: Market intelligence for June 2013
http://www.mining.com/infographic-market-intelligence-for-june-2013-44193/
Summarizing The Known Rigged Markets
Submitted by Tyler Durden on 06/12/2013 09:35 -0400
Following last night's revelation that FX trading is the latest addition to the "rigged" column, here is a summary of the known market manipulation scandals (because it can be problematic keeping track of all by now):
Libor - interest rates (link)
ISDAfix - swaps (link)
Platts - oil prices (link)
WM/Reuters - FX (link)
High-Frequency Trading - equities (link)
We also know that the Fed and world central banks are engaged in a full blown (and unprecedented) Treasury curve modeling exercise courtesy of both ZIRP (short-end) and QE (long-end), and that courtesy of some $12 trillion in extra liquidity in the past 5 years, stocks are at an artificial "weath effect" sugar high.
We can therefore deduce that, following the process of elimination, gold and silver are the only markets that are unmanipulated and where transparent price discovery is allowed to take place without intervention from key players.
Sarcasm off.
http://www.zerohedge.com/news/2013-06-12/summarizing-known-rigged-markets
Summarizing The Known Rigged Markets
Submitted by Tyler Durden on 06/12/2013 09:35 -0400
Following last night's revelation that FX trading is the latest addition to the "rigged" column, here is a summary of the known market manipulation scandals (because it can be problematic keeping track of all by now):
Libor - interest rates (link)
ISDAfix - swaps (link)
Platts - oil prices (link)
WM/Reuters - FX (link)
High-Frequency Trading - equities (link)
We also know that the Fed and world central banks are engaged in a full blown (and unprecedented) Treasury curve modeling exercise courtesy of both ZIRP (short-end) and QE (long-end), and that courtesy of some $12 trillion in extra liquidity in the past 5 years, stocks are at an artificial "weath effect" sugar high.
We can therefore deduce that, following the process of elimination, gold and silver are the only markets that are unmanipulated and where transparent price discovery is allowed to take place without intervention from key players.
Sarcasm off.
http://www.zerohedge.com/news/2013-06-12/summarizing-known-rigged-markets
Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets
Jun 12, 2013 - 08:04 AM GMT
By: Jesse
Are there any markets that have not been corrupted by lax regulation and Banks who have been emboldened in their insatiable greed by the lack of effective enforcement of the rules and equal justice for all?
It is somewhat ironic that this news comes on the revelation that Obama is replacing Gary Gensler, Chairman of the CFTC, for being too aggressive in seeking to regulate the Swaps markets and angering some foreign banks (read London trading operations of the big multinational banks). London has become a favored haven for corrupt financial practices.
I will suggest to you that this is still just the tip of the iceberg. And for anyone who thinks that there is no manipulation in the precious metals markets, despite all the odd price action and blatantly predatory selling raids, I would suggest that they are obviously lacking in something, exactly what I cannot say.
There will be no sustainable recovery until the impediments to honest price discovery and the tax of corruption is eliminated through greater transparency, enforcement of existing laws, and serious reform.
And one can seriously wonder how confident the people are that the governments of the US and the UK, and of Europe as well, are seriously committed to performing the basic function of maintaining honest markets for their constituents. If market confidence breaks, there will be hell to pay.
Markets have a significant role to play in the economy, and that function has been allowed to become warped and perverted through corrupt practices, with serious real world consequences, that accumulate and worsen over time, which we have yet to discover.
Breaking News from Bloomberg:
"Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.
The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter..."
By Jesse
http://jessescrossroadscafe.blogspot.com
Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In plewis
roviding information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.
http://www.marketoracle.co.uk/Article40866.html
Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets
Jun 12, 2013 - 08:04 AM GMT
By: Jesse
Are there any markets that have not been corrupted by lax regulation and Banks who have been emboldened in their insatiable greed by the lack of effective enforcement of the rules and equal justice for all?
It is somewhat ironic that this news comes on the revelation that Obama is replacing Gary Gensler, Chairman of the CFTC, for being too aggressive in seeking to regulate the Swaps markets and angering some foreign banks (read London trading operations of the big multinational banks). London has become a favored haven for corrupt financial practices.
I will suggest to you that this is still just the tip of the iceberg. And for anyone who thinks that there is no manipulation in the precious metals markets, despite all the odd price action and blatantly predatory selling raids, I would suggest that they are obviously lacking in something, exactly what I cannot say.
There will be no sustainable recovery until the impediments to honest price discovery and the tax of corruption is eliminated through greater transparency, enforcement of existing laws, and serious reform.
And one can seriously wonder how confident the people are that the governments of the US and the UK, and of Europe as well, are seriously committed to performing the basic function of maintaining honest markets for their constituents. If market confidence breaks, there will be hell to pay.
Markets have a significant role to play in the economy, and that function has been allowed to become warped and perverted through corrupt practices, with serious real world consequences, that accumulate and worsen over time, which we have yet to discover.
Breaking News from Bloomberg:
"Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.
The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter..."
By Jesse
http://jessescrossroadscafe.blogspot.com
Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In plewis
roviding information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.
http://www.marketoracle.co.uk/Article40866.html
Nice article basserdan! You bet he was right. Here's someone else who was spot on:
Ron Paul Warns Of Electronic Surveillance Back In... 1984
Submitted by Tyler Durden on 06/11/2013 22:29 -0400
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
There are three words that come to mind when I think of Ron Paul; principles, credibility and consistency. Not only is the video below great because we get to see Dr. Paul speak on the Congressional floor thirty years younger, but also because he was adamantly criticizing civil liberties threats in the context of a Republican President, Ronald Reagan. He warned us about what the NSA and other intelligence agencies are currently doing well before the internet became widespread. The man is a statesman of the highest order. Definitely take the time to watch this short video.
( 1 min video)
http://www.zerohedge.com/news/2013-06-11/ron-paul-warns-electronic-surveillance-back-1984
Mali to Ban Native Gold Mining ... Was Jim Willie Right About French Gold Seizures?
By Staff Pick – YouTube
Tuesday, June 11, 2013
(special thanks to basserdan)
With France in the middle of a troop withdrawal from Mali and UN peacekeeping forces still deployed there - the country is facing growing uncertainty. And it's not just security that's on people's minds. Many fear that international involvement might not be limited to military operations - with one of the country's few thriving industries apparently being eyed by foreign corporations. RT's Maria Finoshina digs into the story. – YouTube/RT
Dominant Social Theme: France invades Mali to support peace and prosperity. Gold mining is to be banned for locals because it is dangerous. Bring in the Swiss.
Free-Market Analysis: French leaders seem to have returned to their ways as second-rate bullies of third-rate countries. Not so long ago, former French President Nicolas Sarkozy invaded The Ivory Coast and deposed a legally elected president, Laurent Gbagbo, in favor of a former IMF crony, Alassane Ouattara. We've written a good deal about that.
The putative reason for The Ivory Coast invasion was to return that country to the "rule of law," though the law – tended to by the French and the UN – has suffered a good deal since its emplacement.
Similarly, the French not so long ago invaded the impoverished African country of Mali. This invasion was said to have been caused by French concern that Al Qaeda mercenaries from Libya (also destabilized by the French, Americans, NATO, etc.) were finding sanctuary and beginning a further destabilization.
Well-known hard-money commentator Jim Willie, among others, believed the invasion had different motives. In a March 2013 interview he laid out his suspicions in an interview with Silverdoctors.com. You can listen to it here:
http://silverdoctors.com/jim-willie-france-us-liberating-mali-gold-to-meet-bundesbank-repatriation-request/
The Golden Jackass Jim Willie sat down with The Doc for a MUST LISTEN interview regarding the markets, gold & silver, and a coming European banking collapse.
Willie made explosive allegations regarding the banking cartel, stating that the US & France launched an invasion of Mali in order to utilize Mali's gold production to meet the Bundesbank's 300 ton gold repatriation request.
Wille states that there is a huge shortage of the metal, and that a massive gold rush will soon be ignited, resulting in an epic short covering rally and a 50% explosion in the price of gold.
Okay. If this report by RT is correct, Willie's suspicions look to have been confirmed. Under guise of concern about local mining and lack of taxes, the Mali government (such as it is) has decided to shut down the industry in favor of broad, outside prospecting.
Swiss surveyors and other representatives of international mining firms are arriving in Mali to take over from the locals, thus retarding or eliminating one of only a few profitable businesses available. As many as a thousand miners can work a single lucrative mine, splitting meager proceeds.
The dominant social theme is always the same: Look out for the locals and ensure they're not exploited. In this case, France is doing the exploiting.
Here's another thought ... if the French are willing to invade another country and change its laws in order to find and obtain gold to pay back its lawful debts, then why are we being told over and over that gold is neither desirable to obtain, nor profitable to hold?
Conclusion: Gold prices may be on the way down, but the French seem to covet the yellow metal nonetheless ...
(Video from CompleteNews's YouTube user channel.)
http://www.thedailybell.com/29222/Mali-to-Ban-Native-Gold-Mining--Was-Jim-Willie-Right-About-French-Gold-Seizures
Traders Said to Rig Currency Rates to Profit Off Clients
By Liam Vaughan
Gavin Finch & Ambereen Choudhury
Jun 11, 2013 7:00 PM ET
(special thanks to basserdan)
Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.
The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.
“The FX market is like the Wild West,” said James McGeehan, who spent 12 years at banks before co-founding Framingham, Massachusetts-based FX Transparency LLC, which advises companies on foreign-exchange trading, in 2009. “It’s buyer beware.”
The $4.7-trillion-a-day currency market, the biggest in the financial system, is one of the least regulated. The inherent conflict banks face between executing client orders and profiting from their own trades is exacerbated because most currency trading takes place away from exchanges.
Benchmark Investigations
The WM/Reuters rates are used by fund managers to compute the day-to-day value of their holdings and by index providers such as FTSE Group and MSCI Inc. that track stocks and bonds in multiple countries. While the rates aren’t followed by most investors, even small movements can affect the value of what Morningstar Inc. (MORN) estimates is $3.6 trillion in funds including pension and savings accounts that track global indexes.
One of Europe’s largest money managers has complained about possible manipulation to British regulators within the past 12 months, according to a person with knowledge of the matter who asked that neither he nor the firm be identified because he wasn’t authorized to speak publicly.
The FCA already is working with regulators worldwide to review the integrity of benchmarks, including those used in valuing derivatives and commodities, after three lenders were fined about $2.5 billion for rigging the London interbank offered rate, or Libor. Regulators also are investigating benchmarks for the crude-oil and swaps markets.
“The FCA is aware of these allegations and has been speaking to the relevant parties,” Chris Hamilton, a spokesman for the agency, said of the WM/Reuters rates.
World Markets
It may be difficult to prosecute traders for market manipulation, as spot foreign exchange, the trading of one currency with another at the current price for delivery within two days, isn’t classified as a financial instrument by regulators, said Arun Srivastava, a partner at law firm Baker & McKenzie LLP in London.
The WM/Reuters rates data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp. (STT), and Thomson Reuters Corp. (TRI) Bloomberg LP, the parent company of Bloomberg News, competes with New York-based Thomson Reuters in providing news and information, as well as currency-trading systems and pricing data. Bloomberg LP also distributes the WM/Reuters rates on Bloomberg terminals.
State Street hasn’t been alerted to any allegations of wrongdoing involving the rate, said a person with knowledge of the matter.
Automated, Anonymous
“The process for capturing this information and calculating the spot fixings is automated and anonymous, and the rates are monitored for quality and accuracy,” State Street said in an e-mailed statement. The data are derived from “multiple execution venues through a streaming rather than solicitation process,” it said.
World Markets states in the methodology posted online that it doesn’t guarantee the accuracy of its rates.
State Street hired London-based Freshfields Bruckhaus Deringer LLP to ensure that the rates comply with the set of draft principles for financial benchmarks published in April by global regulators following the Libor scandal, according to a person briefed on the matter.
Nick Parker, a spokesman for Freshfields, declined to comment. Thomson Reuters referred inquiries to State Street.
‘Extremely Costly’
Introduced in 1994, the WM/Reuters rates provide standardized benchmarks allowing fund managers to value holdings and assess performance. The rates also are used in forwards and other contracts that require an exchange rate at settlement.
“The price mechanism is the anchor of our entire economic system,” said Tom Kirchmaier, a fellow in the financial-markets group at the London School of Economics. “Any rigging of the price mechanism leads to a misallocation of capital and is extremely costly to society.”
The rates are published hourly for 160 currencies and half-hourly for 21 of them. For the 21 -- major currencies from the British pound to the South African rand -- the benchmarks are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour.
If there aren’t enough transactions between a pair of currencies during the reference period, the rate is based on the median of traders’ orders, which are offers to sell or bids to buy. Rates for the other, less-widely traded currencies are calculated using quotes during a two-minute window.
Big Four
The benchmarks are based on actual trades or quotes, rather than the bank estimates used to calculate Libor. Still, they’re susceptible to rigging, according to the five traders, who said they had engaged in or witnessed the practice.
While hundreds of firms participate in the foreign-exchange market, four banks dominate, with a combined share of more than 50 percent, according to a May survey by Euromoney Institutional Investor Plc. Deutsche Bank AG (DBK), based in Frankfurt, is No. 1, with a 15.2 percent share, followed by New York-based Citigroup Inc. (C) with 14.9 percent, London-based Barclays Plc (BARC) with 10.2 percent and Zurich-based UBS AG (UBSN) with 10.1 percent.
The traders interviewed by Bloomberg News declined to identify which banks engaged in manipulative practices and didn’t specifically allege that any of the top four firms were involved. Spokesmen for Deutsche Bank, Citigroup, Barclays and UBS declined to comment.
Trading Window
As market-makers, banks execute orders to buy and sell for clients as well as trade on their own accounts.
Companies and asset managers typically ask banks to buy or sell currencies at a specified WM/Reuters fix later in the day, most commonly the 4 p.m. London close. That arrangement is open to abuse, as it gives traders a window in which they can adjust their own positions and try to move the benchmark to boost their profit, three of the dealers said.
Customers often wait until the hour before the 4 p.m. close to place large orders to minimize the opportunity for banks to trade against them, one investor and a trader said.
Index funds, which track baskets of securities from around the world each day, are particularly vulnerable because they need to place hundreds of foreign-exchange trades with banks using WM/Reuters rates, according to two money managers. The funds buy securities to match their holdings to the indexes they are required to track. The issue is most acute at the end of the month, when index-tracker funds invest new money from clients.
Concentrating Orders
By concentrating orders in the moments before and during the 60-second window, traders can push the rate up or down, a process known as “banging the close,” four dealers said.
Three said that when they received a large order they would adjust their own positions knowing that their client’s trade could move the market. If they didn’t do so, they said, they risked losing money for their banks.
One trader with more than a decade of experience said that if he received an order at 3:30 p.m. to sell 1 billion euros ($1.3 billion) in exchange for Swiss francs at the 4 p.m. fix, he would have two objectives: to sell his own euros at the highest price and also to move the rate lower so that at 4 p.m. he could buy the currency from his client at a lower price.
He would profit from the difference between the reference rate and the higher price at which he sold his own euros, he said. A move in the benchmark of 2 basis points, or 0.02 percent, would be worth 200,000 francs ($216,000), he said.
Risky Strategy
To maximize profit, dealers would buy or sell client orders in installments during the 60-second window to exert the most pressure possible on the published rate, three traders said. Because the benchmark is based on the median of transactions during the period, placing a number of smaller trades could have a greater impact than one big deal, one dealer said.
Traders would share details of orders with brokers and counterparts at banks through instant messages to align their strategies, two of them said. They also would seek to glean information about impending trades to improve their chances of getting the desired move in the benchmark, they said.
The tactic is most effective with less-widely traded currencies, the traders said. It could still backfire if another dealer with a larger position bets in the other direction or if market-moving news breaks during the 60-second window, one of them said.
A former dealer characterized it as a risky strategy that he only attempted when he had a high degree of knowledge of other banks’ positions and a particularly large client order. Typically, that would need to exceed 200 million euros to have a chance of moving the rate, two of the traders estimated.
‘Massive Size’
Because the market is so large and competitive, it would be difficult for traders to influence rates, said Andy Naranjo, a finance professor at the University of Florida in Gainesville who specializes in foreign-exchange markets.
“I’m skeptical of the ability of traders to manipulate the major currencies in a meaningful way given the massive size of this market,” Naranjo said. “Governments themselves often have a difficult time moving foreign-exchange markets through their interventions, yet they have the additional ability to create fiat money and alter both monetary and fiscal policies.”
Some fund managers say they prefer to use the WM/Reuters rates even if they can be rigged because it’s more convenient and often cheaper than seeking quotes from individual banks, according to two investors. Dealers who agree to trade at the benchmark rate offer a service by taking on the risk that the market moves against them between the time the order is placed and the fix, they said.
ISDAfix Probe
Bloomberg News contacted foreign-exchange traders and investors after some market participants expressed concern that the WM/Reuters rates were vulnerable to manipulation. The traders and investors said they expected their market would be the next to be scrutinized.
In attempting to rig Libor, traders at Barclays, Royal Bank of Scotland Group Plc and UBS misstated their firms’ cost of borrowing and colluded with counterparts at other banks to profit from bets on derivatives, regulators found.
Libor is one of at least three benchmarks under investigation. The European Commission is probing companies including Royal Dutch Shell Plc, BP Plc and Platts, an oil-pricing and news agency, for potential manipulation of the $3.4 trillion-a-year crude-oil market. The firms have said they are cooperating with the probe. U.S. regulators are investigating the ISDAfix rate, the benchmark used for the swaps market.
No Rules
While U.K. regulators require dealers to act with integrity and avoid conflicts, there are no specific rules or agencies governing spot foreign-exchange trading in Britain or the U.S. That may make it harder to bring prosecutions for market abuse, according to Srivastava, the Baker & McKenzie partner.
Spot foreign-exchange transactions aren’t considered financial instruments in the same way as stocks and bonds. They fall outside the European Union’s Markets in Financial Instruments Directive, or Mifid, which requires dealers to take all reasonable steps to ensure the best possible results for their clients. They’re also exempt from the Dodd-Frank Act, which seeks to regulate over-the-counter derivatives in the U.S.
“Just because Mifid doesn’t apply, the spot FX market shouldn’t be a free-for-all for banks,” said Ash Saluja, a partner at CMS Cameron McKenna LLP in London. “Whenever you have a client relationship, there is a duty there.”
Sixteen of the largest banks, including Barclays, JPMorgan Chase & Co. (JPM) and Deutsche Bank (DBK), signed a voluntary code of conduct for foreign-exchange and money-market dealers in 2001 that was later included as an annex to guidelines issued by the Bank of England in November 2011.
The BOE’s Non-Investment Products Code, which some banks use in contracts with clients, states “caution should be taken so that customers’ interests are not exploited when financial intermediaries trade for their own accounts.” It also says that “manipulative practices by banks with each other or with clients constitute unacceptable trading behavior.”
That only goes so far, according to Saluja.
“The thing about the code is it is a voluntary code,” the lawyer said. “It may be that compliance with that has almost been seen as optional.”
http://www.bloomberg.com/news/2013-06-11/traders-said-to-rig-currency-rates-to-profit-off-clients.html
Ron Paul Warns Of Electronic Surveillance Back In... 1984
Submitted by Tyler Durden on 06/11/2013 22:29 -0400
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
There are three words that come to mind when I think of Ron Paul; principles, credibility and consistency. Not only is the video below great because we get to see Dr. Paul speak on the Congressional floor thirty years younger, but also because he was adamantly criticizing civil liberties threats in the context of a Republican President, Ronald Reagan. He warned us about what the NSA and other intelligence agencies are currently doing well before the internet became widespread. The man is a statesman of the highest order. Definitely take the time to watch this short video.
( 1 min video)
http://www.zerohedge.com/news/2013-06-11/ron-paul-warns-electronic-surveillance-back-1984
Sales Of George Orwell's 1984 Have Surged 6884% In The Last 24 Hours
Submitted by Tyler Durden on 06/11/2013
In the last 24 hours, sales of the 'big brother' book 1984 on Amazon.com have soared by almost 7000% as the reality of the surveillance state come to the public's attention. As Liberty Blitzkrieg's Mike Krieger notes, we suppose it makes sense that people would want to get up to speed on the dystopian world being constructed rapidly and secretly around them. 1984 is now the 4th fastest rising sales book and 184th most popular on Amazon!
The Centennial Edition 1984 book...
http://www.zerohedge.com/news/2013-06-11/sales-george-orwells-1984-have-surged-6884-last-24-hours
Thanks for the link basserdan.
(special thanks to basserdan):
H.R.684 - Marketplace Fairness Act of 2013
To restore States' sovereign rights to enforce State and local sales and use tax laws, and for other purposes.
The following letters were written by OpenCongress.org users and sent to their elected representatives. You can start a letter of your own by clicking the links to the right.
H.R.684 Marketplace Fairness Act of 2013
snowcat2012 June 09, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
Sincerely,
Wendy Cox
H.R.684 Marketplace Fairness Act of 2013
Jdellamura June 07, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
This bill does not represent "fairness" to the consumer and the small businesses trying to have a presence on the internet which is dominated by companies like Amazon. The only ones that will benefit are those companies thatbalready have a monopoly online. The smaller mom and pop type internet companies will suffer as ...
H.R.684 Marketplace Fairness Act of 2013
Quist33 June 06, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
91% of users on OpenCongress.org, a free, non-partisan resource, oppose H.R.684.
Sincerely,
Donald Bergquist
H.R.684 Marketplace Fairness Act of 2013
frank4052 June 05, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
H.R.684 Marketplace Fairness Act of 2013 is an OUTRAGE.
JayHost June 05, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
This bill has been assigned to the House Judiciary - Regulatory Reform, Commercial And Antitrust Law committee.
93% of users on OpenCongress.org, a free, non-partisan resource, oppose H.R.684.
H.R.684 has been viewed 4,377 times on OpenCongress.org, a free, non-partisan resource.
I know the most recent action for ...
H.R.684 Marketplace Fairness Act of 2013
jrlawman June 02, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
Sincerely,
Jared Beagley
H.R.684 Marketplace Fairness Act of 2013
sparky01961 June 02, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
Sincerely,
Karen Sparks
H.R.684 Marketplace Fairness Act of 2013
Nichy May 31, 2013
I oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org, the free public resource website for government transparency and accountability.
Sincerely,
Nydia Deans
H.R.684 Marketplace Fairness Act of 2013
starostina May 30, 2013
To the honorable Senator Sherrod Brown,
I strongly oppose H.R.684 - Marketplace Fairness Act of 2013, and am tracking it using OpenCongress.org. After reading the MFA, I can't believe the word "Fairness" is actually in the name. As written, is it, clearly, not fair to small business or consumers. No surprises there... What we need is simplicity and this bill threatens to complicate the current market, drive up prices, and demonstrates consumer privacy threats. Clearly, No, No and No way! I ...
more at:
http://www.opencongress.org/bill/113-h684/letters
Citigroup Facing $7 Billion Currency Hit on Dollar, Peabody Says
By Donal Griffin - Jun 11, 2013 12:00 AM ET
Bloomberg
Citigroup(C)could lose as much as $7 billion on currency swings if Charles Peabody is right, putting the analyst at odds with peers who say the stock will be the best performer among big U.S. banks in the year ahead.
Peabody, who leads research at Portales Partners LLC, is among only four analysts out of 34 tracked by Bloomberg who recommend investors sell Citigroup shares. He estimates the bank may lose $5 billion to $7 billion in regulatory capital this year if the dollar gains against the yen, euro and currencies in emerging markets, which provide about half the firm’s profit. That would be its worst translation loss in five years, exceeding the $3.5 billion deficit in 2011.
Former Chief Executive Officer Vikram Pandit expanded Citigroup’s overseas businesses to help it recover from 2008’s U.S. credit crisis. Peabody, who predicted the mortgage market’s plunge as early as January 2005, said the firm’s reliance on revenue from abroad is now driving his concern that a global economic slowdown will hurt the bank more than U.S. rivals.
“Those currency risks are worth taking if the high-growth prospects are there,” said Peabody, 57. “But if global growth falters, then those risks get magnified and growth doesn’t offset the currency risks.”
Citigroup’s stock will climb about 7 percent to $55.67 within the next year, according to the average of 26 analyst estimates compiled by Bloomberg. While Peabody doesn’t disclose his price targets, he said the shares could fall 50 percent. The lender has been the best performer in the 24-company KBW Bank Index (BKX), jumping 87 percent in the 12 months through yesterday.
The other five largest U.S. banks will collectively gain 0.1 percent, led by JPMorgan Chase & Co.’s 4.7 percent advance, according to the analysts.
Citigroup’s Hedges
“Citi appropriately hedges its regulatory capital ratios to mitigate the impact of foreign-exchange rates,” said Mark Costiglio, a spokesman for the New York-based firm, which he said expects to end 2013 with a Tier 1 common ratio of at least 10 percent under international standards. “It is worth noting that Mr. Peabody made similar predictions around this time last year which later proved to be far off the mark as Citi grew its book value and increased capital ratios in the second quarter of 2012 despite significant currency volatility in the quarter.”
Last June, Peabody said Citigroup’s currency losses could reach $3 billion to $5 billion as the Mexican peso and the Brazilian real slumped against the dollar. The bank posted a $1.6 billion currency loss instead.
“I was wrong in magnitude but not direction,” he says now.
Renewed Debate
The debate was rekindled as currencies in emerging markets tumbled against the dollar amid speculation that the U.S. economy is improving. The dollar was buoyed anew on June 7 when the U.S. reported May payrolls rose 175,000, with broad-based job gains in industries from retailing and construction to education and health services.
Federal Reserve Chairman Ben S. Bernanke has said the central bank could reduce its monthly purchases of bonds if the U.S. employment outlook shows “sustainable improvement.” Investors have speculated that would lead to higher interest rates and a stronger dollar.
The Fed’s buying held down rates and encouraged investors to seek riskier assets with higher yields, such as those in emerging markets. The potential for a shift caused investors to sell currencies such as the Mexican peso and the South Korean won, according to Benoit Anne, a Societe Generale SA (GLE) strategist for developing economies in London.
Peso Slides
The peso has declined 6 percent against the greenback since May while the won has slid 2.3 percent. The Brazilian real and the Indian rupee have both slumped more than 6 percent. The Turkish lira is down 5.7 percent while the Singaporean dollar has slid 2.1 percent.
“The pain at this point is brutal for most emerging-market currencies,” Anne said. “I wouldn’t differentiate. There are laggards and front-runners but ultimately the whole market backdrop is quite negative.”
This could also hurt Citigroup, which has operations in more than 100 countries, according to Peabody. The bank had accumulated losses on currencies of $10.6 billion at the end of March after losing $711 million in the first quarter because of swings in the peso, won, yen and British pound, according to a quarterly filing. If his prediction pans out, the lender’s cumulative losses including this year would balloon to almost $18 billion.
Accounting Impact
Because of accounting rules, currency losses don’t necessarily reduce Citigroup’s reported net income. Instead, they erode book value, a measure of the bank’s worth in a theoretical liquidation after liabilities are subtracted from assets.
The losses or gains on foreign exchange appear in “comprehensive income,” a calculation that’s usually explained in the footnotes of a company’s quarterly reports to regulators that firms often file weeks after the more publicized earnings news release.
The impact may be felt in capital levels. The lender includes gains or losses on foreign exchange in Tier 1 capital, which is a key measure for regulators of a bank’s cushion against losses. A multibillion-dollar translation loss could reduce capital buffers just as Michael Corbat, who succeeded Pandit as CEO in October, is trying to build them to comply with new rules, according to Peabody and David Knutson, a credit analyst with Legal & General Investment Management America Inc. in Chicago.
Eroding Capital
“In a period of time in which capital is dear and capital growth is vital due to new regulations and prior losses, this lowers the trajectory of their capital-build intentions,” Knutson said.
Some events could turn a currency loss into one that reduces net income, such as a devaluation or the sale of a unit overseas. In February, then-Venezuelan President Hugo Chavez ordered his government to weaken the exchange rate by 32 percent to 6.3 bolivars per dollar. Citigroup lost $100 million before taxes as a result, the bank said in a quarterly filing. That followed a $170 million loss in 2010 when Chavez, who died in March, devalued the bolivar by as much as 50 percent.
In 2012, the company lost about $1.1 billion before tax when it sold some of its stake in Turkish lender Akbank TAS (AKBNK). The impairment resulted in part from losses tied to the Turkish lira that had previously been counted in comprehensive income, Citigroup said in a filing.
Worst Currency
The bank lost more than $2 billion when Argentina devalued its currency in 2002. Now, 11 years later, the Argentine peso threatens to become the world’s worst-performing currency this year, according to analysts surveyed by Bloomberg.
The lender’s investment in the country is subject to “substantial uncertainty,” including the possibility that President Cristina Fernandez de Kirchner could devalue the peso again, the company said in an annual filing in March.
Citigroup seeks to reduce or hedge currency losses by buying forwards and futures. These are agreements with counterparties to buy and sell assets such as currencies at a set price and date. The bank held such agreements with a notional value of $88 billion at the end of March, according to a quarterly filing.
Foreign-exchange losses are among the complexities that Corbat, 53, has inherited as CEO of Citigroup, which got about 36 percent of its $255.6 billion in revenue since 2010 from Latin America and Asia. Currencies that have had a significant impact during that period include the Mexican peso, Polish zloty, Brazilian real, Indian rupee, Russian ruble and Chilean peso, filings show.
Corbat Retrenches
Where his predecessors expanded, Corbat has pulled back. He announced in December that the lender would sell or scale back consumer operations in five nations including Turkey and Pakistan as part of a cost-cutting plan that will eliminate 11,000 jobs. In March, Corbat told attendees at a New York conference he might exit businesses in 21 more countries, which he didn’t identify.
Peabody’s take on Citigroup is part of a thesis he crafted late last year that asserts efforts by central banks to stimulate economic recovery will fail and that a recession is coming. The boom in fixed-income products will suffer a “grinding halt” as investors flee and revenue at many of the lender’s businesses will face pressure, he has written.
The gloomy scenario echoes another broad call he made in a note to clients on Jan. 17, 2005, days after Citigroup shares closed at the equivalent of $475.10 (C).
Credit Cycle
“We are on the cusp of a potentially deleterious credit deterioration cycle” in housing and residential mortgages, Peabody wrote. “Lack of vigilance suggests to us that this credit cycle is likely to catch many unaware and is likely to prove to be more detrimental than currently anticipated.”
Corbat’s replacement of Pandit in October failed to persuade Peabody to change his sell rating on Citigroup, which he’s held since March 14, 2012, according to data compiled by Bloomberg. The stock has climbed 47 percent since then.
Peabody’s outlook for the dollar is more bullish than foreign-exchange analysts. The Dollar Index, which measures the greenback’s strength against six of the U.S.’s biggest trading partners, will climb about 5 percent to 86.1 by the end of the year, according to the median estimate of economists and strategists surveyed by Bloomberg. Peabody said the index, which hasn’t exceeded 90 since 2006, could rise to between 89 and 92.
He’s also an outlier in his focus on currencies. Bloomberg News asked 11 of his counterparts at other firms for an estimate for the bank’s currency results. None provided one.
“I wouldn’t waste my time on it because I don’t think it’s a significant issue,” said Chris Kotowski, an analyst with Oppenheimer & Co., who has a buy rating on the shares. “Why would you care about any given year’s currency fluctuations? It’s an accounting fluctuation, not an economic or regulatory one.”
To contact the reporter on this story: Donal Griffin in New York at dgriffin10@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net
http://www.bloomberg.com/news/2013-06-11/citigroup-facing-7-billion-currency-hit-on-dollar-peabody-says.html
HR 684: a disaster for gold/silver investors
CMI Gold & Silver
Bill Haynes
May 22, 2013
Gold and silver investors will face a real-life nightmare if a bill that recently passed the Senate becomes law. The bill would tax commerce between the states, something that has been exempt (except for certain circumstances) since the Constitution was ratified. Now, the bill is in the House, where it is known as HR 684 “Marketplace Fairness Act of 2013.”
The bill’s supporters say that it would “level the playing field” between “bricks and mortar” stores, which collect local sales taxes, and sellers that deliver across state lines without collecting sales taxes. In reality, it would be a massive tax increase and would burden businesses, large and small alike, with huge compliance costs.
There is nothing “fair” about the act, and certainly not for gold and silver investors. The bill would, for residents of many states, immediately impose taxes on gold and silver purchases while such investments as stocks and bonds remain exempt. This, of course, would not be a “level playing field.” There is no doubt about it, HR 684 would take the luster off investing in gold and silver.
HR 684 can be stopped in the House–if enough Americans let their Representatives know that they should oppose the bill. Members of the House, because they serve only two years between elections, DO LISTEN to their constituents.
Contacting members of Congress is not that difficult. It can be done via emails, letters, faxes and phone calls. Visiting your Congressperson’s office is not necessary but could yield tremendous results if you personally know your Representative. To find out who your Representative is and to learn the various ways to contact him/her, go to Find Your Representative and type in your ZIP.
The really important thing is the number of messages, regardless of the manner of delivery, that our Reps receive in opposition to this bill.
To see the text of HR 684 and to learn where your Rep stands on this bill, go to Marketplace Fairness Act Bill. If your Rep co-sponsored the bill, ask him/her to reverse course. Even if you can’t get him/her to reverse course, you can reduce his/her willingness to fight for the bill as other members of the House oppose it.
My favorite way to contact my Rep on important issues, such as HR 684, is to type and print two copies of a letter and fax it to my Rep’s local office and her DC office. Then I mail a copy to both offices. Faxes are not easy to ignore, and letters, while they take a little time to reach my Rep’s offices, show a strong interest in the matter.
All readers are urged to take action on HR 684 as soon as possible. The sooner members of the House recognize that there is strong opposition, the better. If HR 684 becomes law, it will be a disaster for gold and silver investors.
http://www.cmi-gold-silver.com/blog/hr-684-disaster-gold-silver-investors/
Nice Limerick you posted today basserdan.
HR 684: a disaster for gold/silver investors
CMI Gold & Silver
Bill Haynes
May 22, 2013
Gold and silver investors will face a real-life nightmare if a bill that recently passed the Senate becomes law. The bill would tax commerce between the states, something that has been exempt (except for certain circumstances) since the Constitution was ratified. Now, the bill is in the House, where it is known as HR 684 “Marketplace Fairness Act of 2013.”
The bill’s supporters say that it would “level the playing field” between “bricks and mortar” stores, which collect local sales taxes, and sellers that deliver across state lines without collecting sales taxes. In reality, it would be a massive tax increase and would burden businesses, large and small alike, with huge compliance costs.
There is nothing “fair” about the act, and certainly not for gold and silver investors. The bill would, for residents of many states, immediately impose taxes on gold and silver purchases while such investments as stocks and bonds remain exempt. This, of course, would not be a “level playing field.” There is no doubt about it, HR 684 would take the luster off investing in gold and silver.
HR 684 can be stopped in the House–if enough Americans let their Representatives know that they should oppose the bill. Members of the House, because they serve only two years between elections, DO LISTEN to their constituents.
Contacting members of Congress is not that difficult. It can be done via emails, letters, faxes and phone calls. Visiting your Congressperson’s office is not necessary but could yield tremendous results if you personally know your Representative. To find out who your Representative is and to learn the various ways to contact him/her, go to [color=blueFind Your Representative [/color]and type in your ZIP.
The really important thing is the number of messages, regardless of the manner of delivery, that our Reps receive in opposition to this bill.
To see the text of HR 684 and to learn where your Rep stands on this bill, go to Marketplace Fairness Act Bill. If your Rep co-sponsored the bill, ask him/her to reverse course. Even if you can’t get him/her to reverse course, you can reduce his/her willingness to fight for the bill as other members of the House oppose it.
My favorite way to contact my Rep on important issues, such as HR 684, is to type and print two copies of a letter and fax it to my Rep’s local office and her DC office. Then I mail a copy to both offices. Faxes are not easy to ignore, and letters, while they take a little time to reach my Rep’s offices, show a strong interest in the matter.
All readers are urged to take action on HR 684 as soon as possible. The sooner members of the House recognize that there is strong opposition, the better. If HR 684 becomes law, it will be a disaster for gold and silver investors.
http://www.cmi-gold-silver.com/blog/hr-684-disaster-gold-silver-investors/
Will Fortuna Translate Into Fortunes?
Jun 10 2013, 08:55
by Itinerant
Disclosure: I am long AG, EXK, SVLC. (More...)
First news of outstanding drill results at Fortuna Silver's (FSM) Mexican silver and gold San Jose mine went with little notice when they were published in February. However, when further releases of equal or even better quality kept coming in April and then again in late May the new discovery called Trinidad North started to prick some ears. In an interview for kitco.com Fortuna silver CEO Jorge Ganoza stated that
"Over the course of this first half year what has emerged in Trinidad is a new zone with grades and thicknesses that are comparable to some of the best silver deposits in the world."
Now, that is a big call to go on record with for a man that usually comes across as a rather subdued and differentiated speaker. We had been paying attention and had duly noted the drill results when they were published, especially from the core zone of this discovery: 19m true thickness of 736g/ silver plus 4.76g/t gold for example is certainly nothing to sneeze at. And there were several holes with similarly impressive results. What seems to be appearing is a continuous zone with high grades that still remains open to the North and to depth.
(click to enlarge)
(San Jose mine - all photos taken from company website)
Jorge Ganoza further stated that these results could have a significant impact on Fortuna Silver's future production. How far in the future one is tempted to ask? In the interview Jorge Ganoza comments that Fortuna Silver "… can easily integrate this new zone into the production infrastructure. We believe that within 18 months we can be in the zone and have it prepared for future production." Now, that is another big call to make. Exploration and infill drilling is still ongoing with the aim to have a resource estimation by October. Reserves can be expected late in 2014 in time for this new zone to be incorporated into production plans by early 2015. No time wasted here, it appears.
The market has finally cottoned on and since the last of the three referenced releases at the end of May the share price has gone from $2.80 to $3.50 in a sector that could be fairly described as passionately unloved. The chart below shows the silver price as expressed by the iShares Silver Trust ETF (SLV), the Global X Silver Miners ETF (SIL) representing the silver mining sector and Fortuna's share price since mid-April. The jolt northwards upon the release of the latest set of drill results on May 22 cannot be missed.
SLV data by YCharts
The San Jose mine is Fortuna Silver's growth driver. The mine has been working at 1000 tpd with an expansion program to 1500 tpd currently under way. Through some optimization in the engineering and acquisition for this expansion the final target has been lifted to 1800 tpd to be commissioned in the third 2013 quarter. Production is projected to go from 2M ounces of silver in 2012 to 3M in 2014; with gold by-products rising from 18,000 ounces to 23,000 ounces during the same period of time. Due to the high gold content of the ore cash cost guidance for San Jose on a by-product basis for 2013 has been given at $2.70 per ounce of silver.
(Caylloma mine)
Fortuna Silver has a second operating mine in the South of Peru called the Caylloma mine. This mine is a historic asset in a district with 500+ years of silver mining history. The company acquired Caylloma from Hochschild Mining (HCHDF.PK) in 2005 and by that time it had been abandoned for several years. Fortuna Silver refurbished the seemingly old and broken asset and took it from a historic capacity of 450 tpd to a throughput rate of 1300 tpd, with reserves to support eight years of mine life and a habit of turning up more economically mineable ore to replace production. The mine is running at a steady state of 2M silver-equivalent ounces per year at a by-product cash cost of $7.70 per ounce. The mine produces 65% of revenue in silver with the remaining portion earned from zinc and lead.
With a market capitalization of $444M Fortuna silver is still very much a junior silver miner with all the associated risks. The fact that the company has two operating assets and both assets are located in established and mining-friendly jurisdictions mitigates some risk exposure. There has been some unrest surrounding the San Jose mine early in 2012 which has kept us cautious about Fortuna Silver in the past. Fortuna Silver provides work and investment in an under-privileged part of Mexico, but not everyone is supporting the San Jose silver mine in the Taviche district of Oaxaca, Mexico. Several people opposing the mine have been gunned down losing their lives; however, opposition against the mine is still ongoing. Anti-mine activists claim that local politics and also the police force are too closely connected with the mine and fear of more violence during local elections at the end of 2013 seems justified. Fortuna Silver asserts that the violence and polarization is the result of social divisions that had existed before the company arrived.
(San Jose flotation cells)
The company maintains listings on the Lima Stock Exchange, the Toronto stock exchange and since September 2011 also on the NYSE under the ticker FSM. At the end of the first 2013 quarter Fortuna silver had $68M in cash and no debt and no hedging but an un-tapped debt facility of $40M. In 2012 revenues totaled $181M resulting in $0.21 earnings per share and a profit margin of 16.8%. Fortuna Silver is not paying dividends at present, but surely has a strong balance sheet.
Analysts have been giving favourable price targets throughout the recent difficult times for silver miners. The median price target of seven brokers dropped only insignificantly from $5.48 to $5.29 during the past three months. The company has 125M outstanding shares (131M fully diluted), 35% of which are held by institutions. Van Eck is notably absent from the share registry even though this institution is the largest institutional investor in just about every larger US-listed silver miner. Speculators might wonder if the share price will receive a shot in the arm once Van Eck decides to come on board of the share registry.
With silver being sold directly to the spot market as a standardized product, competition in the sector is mainly for investment dollars. In that sense Fortuna Silver is competing against the likes of Endeavour Silver (EXK), First Majestic Silver (AG), Great Panther Silver (GPL) or SilverCrest Mines (SVLC).
The chart below compares share price movements of Fortuna Silver, the Market Vectors Junior Gold Miners ETF (GDXJ) and SIL since the start of 2010. Despite a relative drop right at the start of this period Fortuna Silver has outperformed peers represented by these ETFs.
SIL data by YCharts
Our thesis: Fortuna Silver seems to have made a major discovery at the San Jose mine that has the potential to act as a significant catalyst for share price appreciation in coming months. The conflicts surrounding the mine can provide obstacles if they escalate during local elections later in the year. The company has exercised its growth plan very well and created long-term growth for share holders so far. Finances seem very solid and costs are under control.
The chart shown below is certainly looking very promising at the moment. A double bottom has formed at $2.61 and has been confirmed when the share price broke trough $3.26, a level that has also acted as support for the 2012 summer lows. A very strong down trend is in place which the share price is about to tackle. If this down trend is broken on good volume we will consider entering the stock.
Should the down trend prove too strong for now, then we will remain on the side line and continue to monitor the development, assuming that there will be another opportunity towards the end of the summer doldrums (possibly coinciding with another run of the underlying metal).
http://seekingalpha.com/article/1490892-will-fortuna-translate-into-fortunes
Deutsche Bank Starts Gold Vault for 200 Tons in Singapore
By Chanyaporn Chanjaroen - Jun 10, 2013 3:03 AM ET
Bloomberg
Deutsche Bank AG started a gold storage facility at the Singapore FreePort with a capacity to hold as much as 200 metric tons, its largest vault outside London, the bank said.
Other locations are Zurich and Hong Kong, according to the bank, Germany’s top lender. The Singapore vault caters primarily for investors wanting to store bullion under the bank’s custody, said Mark Smallwood, head of wealth planning at the asset and wealth management unit in the Asia-Pacific region.
Gold sank into a bear market in April, after rallying for 12 years, as an improving U.S. economy spurred a rally in equities amid speculation the Federal Reserve may taper stimulus. While investors have withdrawn assets from exchange-traded products at a record pace this year, the 17 percent slump in prices has prompted a buying frenzy for coins, bars and jewelry from Hong Kong to Mumbai.
“We have strong demand from existing clients who are looking to diversify their physical gold assets to Singapore” from traditional locations such as London, Zurich and New York, Smallwood said today in a phone interview. Clients can also use the holdings as collateral against loans, he said.
JPMorgan Chase & Co. also opened a bullion vault at the Singapore FreePort in 2010. The country is seeking to establish itself as a regional gold trading hub and removed sales taxes from investment-grade precious metals last year. Metalor Technologies SA, the Neuchatel, Switzerland-based refiner, is starting a facility on the island.
Buying Frenzy
While the 14 percent plunge in the two days to April 15 triggered a surge in demand in the Asia-Pacific region and pushed up premiums over London prices, holdings in exchange-traded products plunged 496 metric tons in 2013, more than the combined inflows in the past two years.
“We’re going through a corrective trend after 12 years of a bull run,” said Smallwood. “In the short term prices may fall a little further, but in the long term now is a good time to be phasing in.”
Gold tumbled to $1,321.95 an ounce on April 16, the lowest level in more than two years, and traded at $1,382.96 today. The price is still 28 percent below the record $1,921.15 in 2011.
Deutsche Bank is one of the six clearing members of the London Bullion Market Association, which includes JPMorgan and UBS AG, according to the LBMA website. The Frankfurt-based bank also has exchange-traded funds backed by gold, which totaled 1.51 million ounces as of June 6.
To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net
http://www.bloomberg.com/news/2013-06-10/deutsche-bank-opens-singapore-gold-vault-that-can-hold-200-tons.html
Probe Mines Announces Closing of $15.0 Million Bought Deal Brokered Private Placement and Strategic Investment by Agnico Eagle Mines Limited
Press Release: FINANCING AGREEMENTS – Tue, May 28, 2013 10:16 AM
TORONTO, ONTARIO--(Marketwired - May 28, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
Probe Mines Limited (TSX VENTURE:PRB) ("Probe" or the "Company") is pleased to announce, further to its press releases dated May 10, 2013 and May 23, 2013, that it has completed its previously announced bought deal private placement consisting of the sale and issue of 7,500,000 units of the Company ("FT Units") at a price of $2.00 per FT Unit for aggregate gross proceeds of $15,000,000 (the "Offering"). Each FT Unit consisted of one common share, issued on a flow-through basis, and three-quarters of one common share purchase warrant (each whole such warrant, a "Warrant"). Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $2.10 until May 28, 2015.
The Offering was completed by a syndicate of underwriters (the "Underwriters") co-led by Cormark Securities Inc. ("Cormark") and BMO Nesbitt Burns Inc., who also acted as joint bookrunners. A cash commission of $600,000 was paid to the Underwriters in connection with the Offering.
In the event that all Warrants are exercised, the Company will raise an additional $11,812,500. All securities issued pursuant to the Offering are subject to a hold period ending on September 29, 2013.
The gross proceeds from the sale of the FT Units will be used for "Canadian exploration expenses" (within the meaning of the Income Tax Act (Canada)) ("CEE") on the Company's exploration properties, and the Company will ensure that such CEE qualifies as "flow-through mining expenditures", for purposes of the Income Tax Act (Canada). The Company will renounce such CEE with an effective date of no later than December 31, 2013.
The Company is also pleased to announce that following completion of the Offering, Agnico Eagle Mines Limited ("Agnico Eagle") purchased from Cormark 7,500,000 units of the Company (the "Units") at a price of $1.50 per Unit, each such Unit consisting of one common share and three-quarters of one Warrant. Agnico Eagle now owns approximately 9.94% of Probe's issued and outstanding common shares on a non-diluted basis. The common shares and Warrants purchased by Agnico Eagle are subject to a hold period ending on September 29, 2013. Agnico Eagle has the right to participate in any future equity offerings by Probe in order to maintain its pro rata investment in the Company.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
About Probe Mines:
Probe Mines Limited is a Canadian precious metals exploration company whose key asset is the Borden Gold Zone in Ontario, Canada. As of January 31, 2013, the Company had approximately $32 million in treasury and a portfolio of highly prospective mineral properties. The Company is actively exploring a significant new gold resource on its Borden Gold Zone near Chapleau, Ontario and has a 100% interest in the Black Creek chromite deposit located in Northern Ontario. The Company's shares trade on the TSX Venture Exchange under the symbol PRB.
David Palmer, Ph.D., P.Geo., is the qualified person for all technical information in this release. To find out more about Probe Mines Limited, visit our website at www.probemines.com.
On behalf of Probe Mines Limited,
Dr. David Palmer, President & Chief Executive Officer
Forward-Looking Statements
These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, project development, reclamation and capital costs of the Company's mineral properties, and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.
Shares Issued: 75,433,127
Contact:
Probe Mines Limited
Karen Willoughby
Director of Corporate Communications
(866) 936-6766
info@probemines.com
Probe Mines Limited
Patrick Langlois
Vice President, Corporate Development
(416) 777-6703
patrick@probemines.com
www.probemines.com
http://finance.yahoo.com/news/probe-mines-announces-closing-15-141600017.html
Buy Probe Mines Limited The Best Gold Value Today
May 30th, 2013 | By Larry Cyna
CymorStockPicks
Cymor Fund
...(Section from article)
The Demand for Gold is Fairly Constant, but the Supply is Shrinking. The big resource companies have bought up most large gold deposits known today, and these deposits are being slowly mined out. Remaining known deposits around the world are smaller, with lower grades, and in ever more difficult jurisdictions. Have a look at Barrick’s difficulties in Chile which is getting ever more expensive and difficult.
All of which brings us to our current stock pick. There is a rich gold deposit that is dramatically expanding as drilling continues, and it is in a very safe jurisdiction (Ontario), in a existing gold producing belt, and is the largest independent deposit known today that also has remarkable expansion potential. That deposit is owned by Probe Mines, a junior company listed on the TSXV and trading at $1.40 -$1.50.
Probe Mines Ltd is A Target of the Big Guys
Our investment newsletter stock pick is one of the largest remaining known deposits of gold in a safe jurisdiction, and the majors are drooling over the prospect of grabbing this company. One of the majors just put $11,250,000 in Probe Mines, with the right to put another $11,812,500 in to exercise warrants. The press release follows:
Agnico Eagle Mines Limited (“Agnico Eagle”) has agreed to purchase ……. 7,500,000 units of the Company (the “Units”) at a price of $1.50 per Unit, each such Unit to consist of one common share and three-quarters of one Warrant following completion of the Offering. On closing of the Investment, Agnico Eagle will own approximately 9.94% of Probe’s issued and outstanding common shares on a non-diluted basis. ….., Agnico Eagle will have the right to participate in any future equity offerings by Probe in order to maintain its pro rata investment in the Company Closing of the Offering is expected to occur on or about May 28, 2013 n the event that all Warrants are exercised, the Company will raise an additional $11,812,500.
If the major gold companies are investing large sums in this down market, you had better pay attention.
Will the Price of Gold Rise Again?
There are some encouraging signs for the price of gold, primarily the support offered by physical buyers. The ETF’s and the Hedge Funds are selling paper gold to raise cash to meet the demand from investors who wish to sell their units. The opposite is happening for physical possession of gold. The US Mint has just again started selling gold coins (there was a lack of supply to meet the demand), India has been importing 50% more gold this year than last, China is buying record amounts of gold, and the Banks worldwide are buying and adding to their holdings.
May 28/13 As UBS says, “Headlines this week reveal continued appetite from central banks in April… Buying from these central banks highlights the trend for increasing gold reserves, especially among EM central banks, which we expect to remain in place this year. While news of central bank buying does not have an impact on price, it does help overall sentiment on the margins.”
Gold & Silver Physical demand reached the point last week where it was overwhelming the New York markets slowly but surely. In summary, the gold market is seeing sales from the SPDR gold ETF which have persisted for nearly three months now. The total held in the SPDR fund is expected to fall below 1,000 tonnes this week if the sales continue as before. We do believe there is a core of holders keeping their gold for the very long term, such as Paulson’s funds. What proportion of the fund these comprise is not certain, but we must be getting close to the point where the selling stops. When it does the robust demand, particularly from China, will quickly absorb all available gold. The timing of that event is impossible to say.
Probe Mines Ltd TSXV-PRB
The company’s projects are near Chapleau Ontario, and include two major multi-million ounce gold deposits, with over 4.3 million ozs/Au and growing. What is more exciting is that recent drilling has revealed ever increasing grades of gold with the company being optimistic of a larger and richer deposit, as drilling is showing the deposit still open in both directions along strike.
Probe now has a rich cash balance which is allowing it to explore further and to be secure against market conditions. There are 75 million shares outstanding, (fully diluted 88 million), with a $104 million market cap. The average target price for 1 year is $3.66 in Yahoo Finance, which is a bit less than many local brokerages have projected.
Investment Letter Stock Pick
Buy Probe Mines Ltd (PRB-TSXV $1.47)
http://cymorfund.com/2013/05/gold-stock-investment-letter-stock-picks-probe-mines-limited-best-gold-value/
We may or may not have positions in securities we name. In making an investment decision consider numerous factors such as portfolio balancing, timing, cash and capital reserves, asset allocation and other. Do your own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.
Views expressed are opinions and not investment advice. You should retain a licensed professional to guide you and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.