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Clearly, based on the volume numbers lately, it is time to join a Canadian brokerage. The more expensive commissions appear to be well worth the exchange in volume. I am ashamed to say I have been buying this stock solely on the U.S. exchange. It is far too thin.
I have no problem with CPM Group. I have found their contributions useful.
As expected, supply increases appear to be negligible this year. Nevertheless, I will be watching forecasts for 2014 and 2015 closely. I saw one report indicating that supply will increase until 2017.
The negligible increase makes me more bullish on gold/silver stocks.
From Kitco:
News Release Link
"Rohit Savant, a senior commodities analyst with the consultancy CPM Group, said he sees gold-mine supply rising 4.3% from 80.5 million ounces to 83.9 million ounces in 2013."
"Bart Melek, director of commodity strategy with TD Securities, also forecast rising gold-mine supply in 2013. Melek said believes supply will grow by roughly 1.5% this year mainly from projects in Ontario, Indonesia and the Dominican Republic, coupled with miners trying to control cash costs."
"'I factor it in (South Africa),' Melek said. 'You can’t predict natural disasters or labor strikes when and where but there is a fairly decent rate of these events that happen randomly. Out of a huge sample, you can always distinguish a rate.'"
Very interesting spike in volume. I am now beginning to regret shrinking my position. Hmmm....
Good comments. I appreciate these.
Regarding the increase in supply, I cannot be sure without clearly stated numbers. A trend I am noticing is everywhere I look I see a mine that is increasing production. Some of these mines are set to double production in 2-3 years.
I would guess that the impact will not be enormous. However, it would be excellent to see the definitive numbers to be certain. I could probably spend 1-2 hours and find 10+ mines that will double production in 3-5 years or less. 10+ mines are not very many, but one must wonder how many there are planning to do this overall, especially if I can find 10 so quickly.
Now, of course, planning is one thing and execution is another, but still, this seems to be a concerning trend. I am probably overly concerned, and in the end, I will probably throw together some numbers to satisfy my nerves.
Perhaps, this weekend, I will take my challenge and try to find 10 mines in 1 hour. If so, I will post them here along with their anticipated increase in production. That, in comparison with the last few years' production numbers should give a good idea of whether there is any further worthwhile pursuit. Do not hold your breath, of course. I may decide to do other things.
I am not so sure that rising interest rates will help gold outright. Rising interest rates will certainly help the dollar. A stronger dollar means weaker gold, right?
It is a curious thought exercise due to our government's cannibalistic tendencies. To be more specific, we finance a good chunk of our operations through debt. If interest rates rise, our economy could reach a crisis point because we cannot afford to operate at the same level.
I suppose it also depends on the dollar's status. If it is possible to have a weak dollar with high interest rates, well, that seems like gold could work. At some point though, interest rates would rise high enough to eliminate the weakness. That would be the tipping point to try to analyze and understand.
To state this in another way, imagine a scale. On one side of the scale, it reads "Debt Burden." On the other side of the scale, it reads "Gold Price." As interest rates rise, the debt burden becomes heavier, and the gold price increases. This is primarily due to fear and whatever drastic measures the government may take to keep things under control.
Now imagine another scale, on one side it reads, "Dollar Weakness," and the other, "Gold Price." As the dollar grows stronger, the gold price decreases.
It is hard to say which of the two scales is weightier on the matter. My guess is the debt burden scale is much weightier. However, I suspect that the government will do whatever is possible to prevent that scale from tipping out of control, no matter the cost. It is hard to say what that would mean, but in light of some of the ideas floating around Cypress, it is easy to postulate.
I suppose it is time to finally read the book Dying of Money. Perhaps, the answers lie within?
At least gold is back up over 1600. That is a start. The Cypress bank holidays made for an interesting reminder of how harsh the financial system can be, an interesting development. If headlines like this develop elsewhere, it could do wonders for gold until things calm down. Needless to say, it is very difficult to determine where the gold market is headed right now... My expectation is higher, but I am concerned about added production supply, as formerly stated. Until I see numbers, I cannot expect it to be anything but negligible.
If anyone can point out any 2013 supply-side studies on gold, please mention them. They need to be comprehensive and forward looking. From what I understand, this was a topic of discussion, somewhat, on a recent Puplava podcast, and they were positive on the price. I will begin there.
If production supply remains the same or decreases over the next few years, we can expect the gold market to get better. On the other hand, if we see it go up 1.5x, it may put quite a bit of pressure on the price. Consider what you would do if you were a gold or silver miner in recent years. I would have fought tooth and nail to get as much supply to the market as possible, while these prices are high. So, the question looms. Is that supply inevitable? Has it already happened for the most part? Or are we about to see it happen over the next couple of years?
Maybe this is partially why the sector is hard-pressed.
My general take on things.
Pros for sticking with the company:
- Drilling two properties
- One incredible drill hit can radically change things
- 43-101 eventually due, with rising resources expected
- At TPW, we have found a lot of smoke, but no fire. This raises the possibility, in an unclear way, that we will find the fire.
- We will likely increase our resources further with the current drilling at TPW. Maybe we get to 2M oz. or close to it, with this wave of drilling. (This seems iffy to me, but I suppose it is possible.)
- Incredible infrastructure near TPW makes a take-out highly likely if we get an incredible hit while drilling.
Cons to avoid the company:
- The entire junior mining market is under extreme pressure. This will probably make any good news moot. It will not make incredible news moot, however.
- The updated 43-101 will likely not be incredible news. It will probably only be good news.
- An incredible drill hit is as likely as finding a needle in a haystack - extremely unlikely.
- We only have a few million dollars. In about 6-8 months or less we will probably be out of money. After that, we will have to sell more stock. This probably means much lower prices (price cut in half?).
- TPW seems to have a lot of their resources at depth, which is expensive to drill. We need a mega hit, similar to LSG, to make it worthwhile. A mega hit would be high or good grade over 25m.
- It appears there is a lot of gold/silver supply coming onto the market over the next few years due to increased production/development to meet the increased gold/silver prices. I need to research this further, but it may mean the gold/silver price may not move up much over the next few years. It is hard to say, but if there is significant supply coming onto the market, it will put pressure on the gold/silver price. Sustained pressure may reduce further interest in the sector.
FWIW. I'll stick with the wild gamble of finding the fire at TPW or making a lucky hit at KC. That's what makes investing in these kinds of stocks fun. They are wild gambles and can be an incredible roller coaster ride if risk is managed correctly.
It is fine that you are not happy. You have made that very clear in past posts. Just to inform you, we do not care to hear you repeat this over and over again. I hope you understand.
If there were no hope in this company, it would make sense to give up. Your comments imply you feel there is no hope. You use the analogy of the band playing on the Titanic. This clearly indicates you believe this is a sinking ship, and there is nothing left that can be done, as was the case for the Titanic.
We are drilling. There is hope. To pretend there is not hope is ridiculous. Comparing this company to the Titanic is ridiculous at this stage. The rest of us do realize that we are drilling, and in case you have forgotten, perhaps this post will help you remember. It only takes one fine drill hit, and everything changes.
There is still the potential to make a good hit with the drilling at TPW. Also, there is a chance for a good hit with the drilling at KC.
This is hardly the Titanic yet. Give it 6-8 months, and then you might be able to call it that. This fact alone makes this an incredibly risky investment.
I appreciate this post. It is an excellent post. This is why I continue to watch the board and use iHub in general, because of posts like this.
However, I still do not agree with the Chester property purchase. Yes, it is an excellent purchase at rock bottom prices, and this is obviously an excellent time to make such purchases, when one considers that the entire market is under excessive pressure. I do not dispute that at all.
Nevertheless, my thought, which I would never pretend to think holds much weight here, is that you save money for rainy days. Typically, it is a good idea to have some cash lying around for purchases in unforeseen extreme circumstances, such as the current market state. My perspective is that we have no such cash cushion and that we are barely getting by with our future plans. If I felt we did have excess cash lying around to bottom feed, I would greatly applaud the purchase.
What I see is market conditions that will put extreme pressure on our stock in the next year. We have another round of drilling, which is great. If we hit something, which is certainly plausible considering all of the great hits we already have, buying the Chester property will turn out to be a great thing.
On the other hand, if we do not hit anything extraordinary, another private placement will be required, and we will be sub 0.05 in probably 6 months or less.
To be more blunt, the brilliancy of buying Chester hinges on an extremely risky outcome. That is the problem I have with the decision. Consequently, it increases my risk, and I have to scale back my position to accommodate the risk.
I do hope for the brilliant outcome, of course.
Here is an excerpt from one of my recent posts on another board. It covers some of my thoughts on interest rates.
---------------------------
My perspective is that gold is elevated due to negative real interest rates. Depending on your view of CPI, whether you roll with the current government number or still calculate it as we did in the 70s and 80s, real interest rates are either slightly negative or VERY negative.
If you stick with the negative real interest rate perspective, the question is, "When will real interest rates move into positive territory?" From what I gather, Japan chose the route of low interest rates to combat their economic issues in the late 80s and early 90s, and interest rates there have remained low for over 20 years. Perhaps, we are following in their footsteps. If so, we could see low interest rates and consequently negative real interest rates for decades.
I look at it slightly differently. It seems much more realistic to just consider what would happen if interest rates rose here in the U.S. Perhaps, our economy would buckle. The government would have to pay higher interest to fund its activities, and they would either have to cut spending in certain areas (I doubt they go this route) or create money out of thin air to pay the bills. Both of those scenarios are counterproductive to GDP. If spending is cut, this will shrink the economy, and if the USD is debased to pay for an ever-growing and out of control interest expense, that seems like the end-game. Therefore, the point is, I highly doubt we see much higher interest rates any time soon. However, if we do, silver and gold would skyrocket if the economy comes under extreme pressure.
On the other hand, if the government can find some way to increase interest rates to the point that holding gold or real assets is no longer worthwhile, the gold/silver market would collapse. I just do not see this as very likely. I need to better understand what Volcker did in the 70s/80s.
The curious thought that comes to mind is what were gold/silver prices in the JPY during the last 20 years. Oddly enough, real interest rates did not seem to cause gold to obscenely skyrocket there. This appears to have been a development over the last 10-12 years. This is food for thought, certainly... perhaps the only reason people are buying gold and silver is fear. However, another possibility is that the Japanese merely bought more U.S. dollars rather than gold, because it was available and certainly more liquid than gold or silver. I will side with this theory.
My guess? Inflation is working its way into energy and stocks right now. Everyone seems to think that bonds are on the verge of a major trend change. If everyone begins to see $$$ in stocks, perhaps they will kick their bonds to the curb, and if that happens, does that mean higher interest rates? I cannot answer this. I need to study more history surrounding government bond collapses. It seems to me the government has a resilient ability to buy its own bonds and keep rates low. I do not see the final red line to be crossed.
I would guess inflation will jack up stocks and energy, and we will get back into a stagflation state where energy costs are counterproductive to growth. We will probably hover at the breaking point for a while, and then government policies will probably mess everything up and send the markets into a sharp retracement.
The fear factor will wane, initially, while everything seems to be peachy (i.e. before exhaustive energy costs). Therefore, gold and silver may not do well initially, but eventually, when everyone is exasperated with high energy costs (etc.), the economy will reverse, and fear will reenter in prevalence. This will likely cause gold and silver to jump much higher, in the end.
------------------
Curious if anyone has comments. I enjoy dialoging on these topics.
Perhaps the depth is the issue, but CD is drilling shallow at TPW. If he hits gold at those levels, depth will be less of an issue, or not an issue at all. I suppose we will know in the next 3-6 months.
In light of LSG and their depth, which certainly is applicable here in comparison, I suppose the difference is the grade. They hit massive amounts of gold at depth. We have had good hits, but nothing massive (30+ meters of decent grade gold for instance). Therefore, we cannot really compare ourselves legitimately to their exploration effort, at least as of now we cannot.
Hard to say where Ag will end up.
Of course, everyone knows that silver tends to float with the gold price's direction. My perspective is that gold is elevated due to negative real interest rates. Depending on your view of CPI, whether you roll with the current government number or still calculate it as we did in the 70s and 80s, real interest rates are either slightly negative or VERY negative.
If you stick with the negative real interest rate perspective, the question is, "When will real interest rates move into positive territory?" From what I gather, Japan chose the route of low interest rates to combat their economic issues in the late 80s and early 90s, and interest rates there have remained low for over 20 years. Perhaps, we are following in their footsteps. If so, we could see low interest rates and consequently negative real interest rates for decades.
I look at it slightly differently. It seems much more realistic to just consider what would happen if interest rates rose here in the U.S. Perhaps, our economy would buckle. The government would have to pay higher interest to fund its activities, and they would either have to cut spending in certain areas (I doubt they go this route) or create money out of thin air to pay the bills. Both of those scenarios are counterproductive to GDP. If spending is cut, this will shrink the economy, and if the USD is debased to pay for an ever-growing and out of control interest expense, that seems like the end-game. Therefore, the point is, I highly doubt we see much higher interest rates any time soon. However, if we do, silver and gold would skyrocket if the economy comes under extreme pressure.
On the other hand, if the government can find some way to increase interest rates to the point that holding gold or real assets is no longer worthwhile, the gold/silver market would collapse. I just do not see this as very likely. I need to better understand what Volcker did in the 70s/80s.
The curious thought that comes to mind is what were gold/silver prices in the JPY during the last 20 years. Oddly enough, real interest rates did not seem to cause gold to obscenely skyrocket there. This appears to have been a development over the last 10-12 years. This is food for thought, certainly... perhaps the only reason people are buying gold and silver is fear. However, another possibility is that the Japanese merely bought more U.S. dollars rather than gold, because it was available and certainly more liquid than gold or silver. I will side with this theory.
My guess? Inflation is working its way into energy and stocks right now. Everyone seems to think that bonds are on the verge of a major trend change. If everyone begins to see $$$ in stocks, perhaps they will kick their bonds to the curb, and if that happens, does that mean higher interest rates? I cannot answer this. I need to study more history surrounding government bond collapses. It seems to me the government has a resilient ability to buy its own bonds and keep rates low. I do not see the final red line to be crossed.
I would guess inflation will jack up stocks and energy, and we will get back into a stagflation state where energy costs are counterproductive to growth. We will probably hover at the breaking point for a while, and then government policies will probably mess everything up and send the markets into a sharp retracement.
The fear factor will wane, initially, while everything seems to be peachy (i.e. before exhaustive energy costs). Therefore, gold and silver may not do well initially, but eventually, when everyone is exasperated with high energy costs (etc.), the economy will reverse, and fear will reenter in prevalence. This will likely cause gold and silver to jump much higher, in the end.
It is really hard to say, but I welcome any thoughts or feedback on the above. The primary reason I am here is because I enjoy thinking about these kinds of things, and they directly effect EXK, which I now own as of last Friday. It was either this or FSM, and I liked the growth prospects of EXK more. I own FSM too (and have for years), but a recent write-up on EXK in Morgan Report sold me. It took some time to set in (fairly certain that write-up was from Q3 of last year). The prices right now are very hard to pass up.
Here is a video about the mining industry that pertains to this stock or any other exploration company. The first 15 minutes of the video are probably the most pertinent, but I enjoyed watching the entire thing.
Mining Video
The fascinating thing about the story is how so many people had mined the area previously and come up empty handed. This video proves that mining is like trying to find a needle in a haystack, and that everything can turn around after 1 good drill hole. It took them 75+ holes to find it in the story and that was after a highway had been built over the site and many others had drilled there.
The point is that we are finding a TON of smoke. The question is... will we find the fire? If not, someone will eventually. Something to ponder and watch as TPW develops.
I have cut back my position. I am still in. However, I have dramatically reduced my risk. There just seem to be better opportunities elsewhere.
This is fairly straight forward to me. Why invest in a new property when you can barely afford to drill those on hand?
I have an idea CD will surprise us yet, and that is why I remain with my relatively small position in place. If he hits pay dirt, I will not be super rich, but I will be quite pleased.
Fortunately, there are many other great opportunities in the world today!
The stock market is on fire.
New all-time low posted this morning, 0.899. Hmm...
While the GDXJ may rise, it is a foolish investment. The blind shotgun approach does not work very well in the junior mining industry. The well-aimed shotgun or sniper rifle approach does.
Investing in the entire sector is unwise. There are better ways to spend your money. As popularly known, most junior mining companies (80-90%+) fail. It is much wiser to invest in the top 5% or 1% in the industry. Why would you invest in an overall sector that has an incredibly high failure rate? The only reasons I can determine are laziness and ignorance.
I do not dismiss Richard Russell's research. Nevertheless, I will not invest in the GDXJ. It may double. However, if you invest in the right junior and the GDXJ doubles, that junior is likely to go up much, much higher, probably 5-10x in growth or more.
One final thought. You speak of the strategy of buying in an uptrend. Trend buying ("the trend is your friend") does not seem to be very amenable to exploration stocks. I am sure it would work to some degree, but I would never buy an exploration stock solely just because it appears to be in an uptrend.
It may do well to reference the following graphic:
Can you imagine buying at the peak of the speculation "trend?"
That graphic is from this link.
Mr. Hite's remark was not a theory. It was just an observation based on experience.
Considering the GDXJ is practically 50% down from its highs, the sector has obviously lost significant interest. The anomaly you point out is not specific to our stock. This speaks volumes about opportunity. Currently, there is significant amount of money to be made by investing in the sweet spots of this sector.
Reading this in retrospect is quite interesting... Just goes to show you how foolish it is to invest in anything without legitimate financials...
From this article in October 2007 (before DR):
Fundamentals analyzed by the EIA seem to line up with the technical analysis. This is despite expectations for production to increase slightly over the next year.
http://www.eia.gov/forecasts/steo/report/natgas.cfm
Perhaps, stability in the price will turn around many of the O&G trusts, such as WHX.
I almost forgot to address one last remark.
No problem. I will address your concerns below. One moment though, before I begin, I would like to set straight an incorrect assumption of yours. I have traded in and out of EXS over the past 4 years. I have been around for quite some time, apparently longer than you.
1. Leeks by management that sent misleading information to the market. (sic)
This is hearsay and cannot be proven.
2. Insider selling prior to sub par NR
This is the benefit of being an insider. That is typical of all companies. Someone who has never invested in a stock on their own would probably be surprised by this.
3. Failure to find the hinge point after 2 years of drilling and millions of dollars spent.
This is an extremely difficult and risky business. To expect someone to find a needle in a haystack is a stretch as it is. To bet unreasonable sums of money on it is foolhardy. Since most exploration stocks fail, this is typical behavior. To be upset with it is a waste of time. You should have expected this and managed your risk accordingly.
4. The resignation of the only board member who owned stock and who held credibility in the light of a major coming in.
That person was not the only board member that owned or currently owns stock. You cannot prove that, and without any proof, there is no reason to base any decisions on that information. Furthermore, majors are still interested in mine-worthy gold deposits over 1M oz, especially deposits in areas with extensive infrastructure. The resignation of a board member does not change that.
5. Failure to negotiate an agreement with a major.
Again, this is typical of most exploration companies. To be surprised by this displays inexperience, and to bet a large amount of money on it, displays recklessness. The real question is whether there is possibility to negotiate an agreement with a major down the road, not in the past. There is a possibility. We have discussed this at length on the board.
6. No results at KC, EL PG 101.
Again, this is typical of most exploration companies. Furthermore, to expect big results after such little work is unrealistic.
7. A poor share structure.
Once again, this is typical of most exploration companies. To be surprised by this displays inexperience, and to bet a large amount of money on the idea that an exploration company would not need to dilute, displays recklessness.
8. 90% drop in stock price.
See answer to #7. It applies.
9. 100's of corporate presentations that have failed to bring in a significant institutional investor
See answer to #5. It applies.
10. 2 News letter writers that have highly touted the company and have since dropped coverage.
In general, newsletter writers are newsletter writers because they cannot make enough money picking stocks or investing. To base your decisions entirely on them is up to you, but I will trust my own judgement over others.
Kindest regards,
Gregory_
You are obviously very angry. It is okay that you are angry. From what I gather, you have lost an incredible amount of money on an extremely risky stock. I suppose, if anyone had thrown large amounts of their retirement into an extremely risky endeavor, they would be angry about the decision. This decision would call into question their own judgement, and when faced with the realization of making a gigantic mistake on a risky investment, it is preferred to point the finger elsewhere, especially if one can somehow justify it. However, usually, the healthiest thing to do is to own your mistakes. Owning our mistakes helps us learn from them, alter our behaviors, and reduce our stress.
Anger Clouds the Mind
We understand. You are mad. You want the leadership changed in EXS. However, understand that the rest of us, who are not angry, do not see a change in leadership as a worthwhile endeavor. Turning the reigns over to another group of individuals with close to 200M shares diluted will not prevent further dilution. Regardless of a change in management, dilution is required, and dilution would have been required even if we changed management 1 year ago, when you were pumping up this stock. Selling stock is how exploration companies fund their operations, which do not produce any revenue.
We understand that exploration companies do not produce revenue and require dilution to fund operations. We accept it as a lay of the land, and when a company fails, we move on. It is expected that an exploration company will fail. Most of them do. That is why we only invest "play" money.
Being mad changes nothing. Changing leadership would change nothing in regards to share price. Potentially, it would make things worse because we would have less experienced eyes working for us, in terms of our properties. CD has been with us for years.
Lastly, there was a vote to change leadership. Those with the most invested (millions of dollars) voted to keep with the current leadership. This is significant, and one should carefully consider why the richest shareholders, also the most likely informed shareholders, would vote to keep the existing leadership.
Kindest regards,
Gregory_
For those unsure of all of the "private CD conversations," realize that the people announcing these conversations could be lying. Some of the characters, possibly all of them, have no impetus to tell you the truth. Taking their private conversation with CD as genuine is potentially dangerous.
Consider following only press releases, the EXS website, and existing mining knowledge. Private conversations with CD are hearsay, probably never happened, and could be planted to affect your behavior.
Watch whether the poster is appealing to your emotions or to logic. Most often, those appealing to emotions are distorted, or the poster is looking through a fogged lens.
One of your posts last year predicted a very high price within a short time frame, and I quote (see post to which I replied):
"$1.50 by May 31st."
You seemed a little too confident in your opinions.
Here is another one talking about how important another VMS find would be:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=60939789
Not that it matters, but I will pass on your advice. Your $1.50 projection was overly exuberant, and you seem to have completely flip-flopped on the importance of a VMS find, considering all you can do is trash this company with your posts of late.
I would recommend he invest his money in more prosperous endeavors.
Anger clouds the mind.
These are good thoughts, and I agree that at a quick glance LNG is likely an excellent candidate for continued gains considering the new highs and the underlying strength in economic indicators.
My primary reason in understanding the state of the oil economy is because I see that it can act as an excellent economic indicator. Knowing that oil will trade at the lower side of the price spectrum is an excellent insight into whether one should be investing in high risk or looking elsewhere.
I am not sure if the Keystone XL pipeline will be built yet, as it seems to be receiving high opposition. It is still too early to tell, for me. Nevertheless, if it is built, I do expect WTI to trade at a lower price, simply because the Canadian oil will be more accessible to WTI markets.
The real question is how the equilibrium between the WTI and Brent markets will be altered. Will it be altered at all? It seems unlikely at first glance. From what I understand about oil, Brent is more costly to refine due to impurities. Adding a Canadian pipeline does nothing to change that. If anything, it will weaken demand for refined Brent crude (minutely).
A very interesting chart would be to see the refined supply available to various areas. One could then possibly predict whether 700,000 of additional barrels of oil in southern refineries will really make a difference. From what I read about Canada, they expect to send the oil to our refineries, and then expect some of it to be shipped back through other means.
I can see that oil prices and refined oil (gasoline) prices will drop nearest to those refineries, as that seems to be common sense. I suppose, in a way, the cost of gasoline will be lowered in Canada as well, but to a lesser degree.
This is all good news for our economy, if it happens, especially the economies near the refineries.
The 7 Ps of investing are too simple. Generalizing and simplifying trading and investing into 7 Ps is too algorithmic. If the secrets to investing were knowing 7 Ps, they would teach it in grade school, and everyone would be rich.
Investing and trading are very complicated. The right decisions are not always obvious. Often, they are very difficult to perceive, especially when using a cookie cutter approach to examining the markets and stock.
I have already stated that I fully expect this stock to drop much lower than its current level. Nevertheless, I hold for reasons aforementioned. I have not posted much here. Therefore, if you would like a refresher of my reasons for holding, view my recent posts.
New information is most important. If you have something new, please share it. To avoid sounding overly robotic, it is best to avoid repeating the same thoughts to the group.
Kindest regards,
Gregory_
Using the 1980s calculation for CPI, we are at 9-10% inflation as of 11/2012. Stimulus is everywhere, it seems, and energy will be slightly cheaper for the next 3-4+ years.
I suspect inflation, using the 1980s CPI calculation, will increase. Since we are still at negative real interest rates, this means gold will rise. Once we break $1900 on gold, I expect the masses to begin buying again, as they appear to prefer to buy at the elevated levels. This will likely draw new money into the gold stocks as well. Although, I have no clear way to determine estimates. Perhaps, this is what you are seeing in the posted chart.
The stock market will probably hit new highs as well. The comprehensive, fundamental economic indicators in the US are showing strength across the board. They have been showing strength for months.
With all of that said, the only negative things I can think of would involve war with Iran, a collapse of the Japanese economy, or Europe severely unraveling again. However, European interest rates on government bonds are way down from their highs. This suggests strengthening there. The DAX was up almost 25% last year.
Overall, the bias seems to lean bullish.
Any thoughts?
If one could predict the eventual collapse of the bond market, they could position investments well. This seems difficult considering Japan has been playing a similar government bond buying game for multiple decades without collapse.
I heard somewhere (Puplava's radio show?) that 70% of our treasuries are purchased by our government. How would one confirm this?
If the government is buying most of the bonds, this would explain low interest rates.
It seems these are the sources of treasury buying:
-=1.) Our government <-- 70%?
-=2.) Banks (borrow from the Fed and then carry trade off of the treasuries for an easy buck)
-=3.) Foreign entities/governments (slowing down?)
-=4.) Private individuals
I suppose 1 and 2 are the largest source. It seems highly unlikely that 1 will diminish any time soon, and this seems to have carried Japan for multiple decades. Therefore, one could expect low interest rates to continue for multiple decades here. This would mean shorting the bond market is a BAD idea. However, Jim Rogers is doing it as of a couple of weeks ago (listen to latest Puplava interview with him).
#2 will not diminish as long as they can make easy money (as long as they can borrow for less than the treasuries pay).
#3 and #4, I contend, simply do not matter in the face of the immense buying from #1 and #2.
Any thoughts?
If one could predict the eventual collapse of the bond market, they could position investments well. This seems difficult considering Japan has been playing a similar government bond buying game for multiple decades without collapse.
I heard somewhere (Puplava's radio show?) that 70% of our treasuries are purchased by our government. How would one confirm this?
If the government is buying most of the bonds, this would explain low interest rates.
It seems these are the sources of treasury buying:
-=1.) Our government <-- 70%?
-=2.) Banks (borrow from the Fed and then carry trade off of the treasuries for an easy buck)
-=3.) Foreign entities/governments (slowing down?)
-=4.) Private individuals
I suppose 1 and 2 are the largest source. It seems highly unlikely that 1 will diminish any time soon, and this seems to have carried Japan for multiple decades. Therefore, one could expect low interest rates to continue for multiple decades here. This would mean shorting the bond market is a BAD idea. However, Jim Rogers is doing it as of a couple of weeks ago (listen to latest Puplava interview with him).
#2 will not diminish as long as they can make easy money (as long as they can borrow for less than the treasuries pay).
#3 and #4, I contend, simply do not matter in the face of the immense buying from #1 and #2.
Any thoughts?
Last I heard, water freezes at 0 degrees Celsius, AKA 32 degrees Fahrenheit.
EPA head resigns. Some are saying it is due to headway with the Keystone XL pipeline.
Story covering the resignation
Will the Keystone XL pipeline be approved and built? It seems that way.
I can see how this will bring Canadian oil into Cushing. That would mean more oil distributed in America (700,000+ barrels per day). However, many people seem to think that this will allow more access to send the oil overseas. I am not sure how much it costs to send Canadian oil through the (eventual?) pipeline and then on a tanker to sell in the Brent market, but what do you think about the feasibility? If Keystone XL is built, will WTI go lower or creep closer to Brent?
Which others should we consider?
I expect we will never know if we have a deposit of 30M oz. It will be long gone before that happens, but from a major's standpoint, the choice is obvious.
You cannot determine exact numbers here. It is all speculation. The only thing that you can really determine is that 0.11 / share is low, and the market cap (not necessarily share price) will likely move higher as we prove out the resource.
The only other possibilities I can think of are wildly outlandish, such as bogus financials or mining resources. That seems more unlikely than proving out our resource at this stage.
Consider this:
• Scoping study - +/- 30-40% margin of error
• Pre-feasibility study - +/- 25-30% margin of error
• Feasibility study - +/- 15% margin of error
Seems all of my numbers have a high possibility for margin of error to the positive side and the negative side.
Here is a weak attempt at some numbers for TPW:
LSG's cost is less than $800 / oz in 2013 (based on prior posts).
Gold is about $1,700 right now, leaving about $900 / oz potential profit. Let's presume it stays there and does not drop to $1,000 again or skyrocket to $2,500. (I would bet on the latter.)
I cannot recall the cost of infrastructure at LSG's mine, but I believe it was $250,000,000. I really cannot recall for sure. That is VERY relevant, whatever it is. I would not expect EXS to build a mine, but it is relevant in terms of how interested a major would be.
1M oz (what we have now)
----------------------------
1M oz - $900,000,000 in profit (based on $800 cost at $1,700 Au)
10 year LOM (life of mine) - $90M profit a year
20 year LOM - $45M profit a year
1.5M oz (what we soon hope to have)
----------------------------
1.5M oz - $1,350,000,000 in profit
10 year LOM - $135M profit a year
20 year LOM - $67.5M profit a year
3M oz (what we hope to have by the end of 2013)
----------------------------
3M oz - $2,700,000,000 in profit
10 year LOM - $270M profit a year
20 year LOM - $135M profit a year
30M oz (believed to be the potential for the deposit)
----------------------------
30M oz - $27,000,000,000 in profit
10 year LOM - $2.7B profit a year
20 year LOM - $1.35B profit a year
So, with all of that (mostly) utter nonsense said, if CD is right, and we are sitting on top of a 30M oz deposit, what do you think a major would pay for it?
Even $2 seems cheap. $2 * 180M shares = $360M market cap
From a recent interview with Rick Rule, he stated investments in the current market need a 3 year payback to interest him.
"We would rather see you do something that generated a 30% IRR with reasonable amounts of capital where you pay back the capital in three years." - Rick Rule, http://www.theaureport.com/pub/na/14773
Let us be modest then and consider a few things. If we look at a 1.5M deposit at approximately $135M in profit a year, that would mean they could possibly pay 3 years of that less the cost to develop the mine. 3 * 135M = $405M. If the mine costs $500M to create, well... that does not paint a rosy picture here. If we are looking at a $250M mine cost, it may be worthwhile. This is why the cost of the LSG mine is very important. (Can anyone help here?)
$405M profit in 3 years - $250M mine cost = $155M purchase
$155M purchase / 180M shares fully diluted = 0.8611 / share
$0.8611 / 0.11 (today's closing price) = 782% gain
If we bump it up to a 3M deposit:
$270M profit a year * 3 years = $810M
$810M - $250M mine cost = $560M purchase
$560M / 180M shares = $3.11 / share
$3.11 / 0.11 (today's closing price) = 2,827% gain
This is all exclusive of something happening at Kidd Creek, which is what I am really watching. My expectation is that Kidd Creek will steal the show, in the end, but that is all completely speculation.