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Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
Message: Juicy bits from MIDAS
LeMetroploe Cafe tonight.
Bill,
From Adrian Douglas, GATA Bureau Chief in Jakarta
I flew from Kuala Lumpur to Jakarta this weekend. I was completely gob-smacked by the flotilla of tankers and cargo ships lining up to get into the Singapore port. I took this photograph from the plane. For as far as the eye can see there are ships and you can hardly put a pin between them. It was a phenomenal sight. I think we can surmise that that the Asian economy is NOT on the verge of recession!
The front page of the FT was covering the crisis in rice supplies in the Philippines. Many countries have banned exports in response to a 30% price increase in the last few weeks.
The economist has a special report on the thirst for commodities of China. They note that China imports 50% of the total world cement production and one third of total world steel production! They are expected to be the world’s biggest energy consumer by 2015; they are currently in second place behind the US. Their growth and consumption of raw materials is astonishing.
It is an easy extrapolation to know that their purchasing of precious metals is also in line with their economic growth because there is a cultural affinity for precious metals and the wealth effect drives the Asians to buy precious metals just like the wealth effect in the US during the 1990’s made US consumers by any old garbage in the shopping malls.
The PPT, CPRMG, and gold Cartel have been hard at work trying to deter investors from coming to buy futures on the COMEX but this is a fleeting victory. The diversification out of dollars is accelerating. Crude oil and copper continue to challenge record highs despite talk of recession in the West. The trend is clear. The economic powerhouses in the East need raw materials and they need to get rid of depreciating dollars. Recession in the west is but a mere sideshow in this dynamic.
I have warned that volatility will be a challenge for the under-capitalized but the signs are that the precious metals volcano is rumbling and for those who are not leveraged and stay the course the rewards will be truly epic.
Cheers
Adrian
Mexico Mike:
Hi Bill!
Take a look at the historical copper charts:
http://www.kitcometals.com/cha.....rical.html
In particular, note the 5-yr price chart, and the 1-yr inventory numbers. When copper prices broke down a few weeks ago, analysts pointed to the triple top and suggested that the failure to breach that level meant that a long term top had been put in place. Well, now we know that commentary was pure bullshit, since that breakdown turned out to be a short term whipsaw. Copper prices are now sitting less than a penny below the $4 mark, and I am sure part of the rebound was a short covering rally which is also partly an explanation of why the recovery happened so quickly.
Now look at the inventory numbers, and the slope of the chart as the inventories plunge. My guess is that we are going to see a new low for inventories. How can this happen, when the US housing market is in a slump, and in fact it is likely that the entire US economy is in recession. The answer lies in the demographic changes taken place in the two largest and fastest growing countries in the world: China and India.
Unlike the US, in China and India the average citizen is growing richer. Personal savings are growing. Incomes are rising. Standards of living are rising. There is a monumental demographic shift underway, as millions of people leave the low-consumption lifestyle of the rural economy and migrate to cities. Domestic demand within these countries is rising for consumer goods. This has led to rising consumption of metals, like copper.
Demographic trends are slow to change. You cannot convince people to go back to living poor lifestyles once they have begun to enjoy a better life. The flow of people into cities will probably continue for decades.
So that sucking sound you hear that is draining copper inventory levels is unlikely to go away. New copper supply is not coming online fast enough to meet the demands. Prices rise...
When copper breaks above the $4 level, you will probably see a rush of short covering and capitulation from the bears that believed the entire world economy would catch a cold because the US has been sneezing. There will be a great uptick in copper as hedge fund managers come to Jesus in a hurry, and unwind losing positions in a hot market.
I believe the breakout for copper will ignite the entire sector of mining companies with leverage to copper, and the growing producers will see a flood of capital from speculators. Many of these junior mining stocks are also heavily shorted right now, and therefore we will get a rapid climb in prices similar to copper itself, for the same reasons. This could be the last chance to buy up high quality copper producers before we see an explosive move higher.
Like every other metal, copper is manipulated to the hilt in an effort to keep prices lower. However, there are no central banks holding copper to dump in the market. The myth of hedge funds accumulating physical copper supplies can lie at rest with the stories of the unicorn, cold fusion, and Nigerian millionaires looking for help to sneak money out of the country. There will be nothing to throw into the copper market to ease the shortage except the balance of much higher prices.
I continue to expect Capstone Mining (T.CS), Dia Bras Exploration (V.DIB), and Aurcana (V.AUN), to be ideal beneficiaries of this coming explosive move higher, and I have been buying shares of each, but there are quite a few other undervalued copper producers with expanding mineral inventories and growing production to consider.
cheers!
MexicoMike
http://www.smartinvestment.ca/
Some future good news for the shares:
AIG eyes gold rush, launches global fund
7 Apr, 2008, 1801 hrs IST, INDIATIMES NEWS NETWORK
MUMBAI: AIG Investments on Monday announced the launch of AIG World Gold Fund, an open ended fund of funds scheme which will invest in companies engaged in extracting, processing and marketing of gold…
-END-
Just how undervalued many of the shares are compared to the prices of gold and silver…
Bill,
I don't pretend to be an "expert" chartist, but I don't think I'm a neophyte either. I've spent a lot of time this morning just staring at the attached chart (out of "disbelief" mostly). From my reasoning, the CDNX would be a better representation of the status of the junior market than would the other indexes that are so often quoted (especially XAU or HUI). The attached chart shows how HISTORICALLY and TOTALLY mis-priced either the juniors, or gold is at the moment. I keep looking at this chart and recalling what Rick Rule likes to say about this business - "you are either a contrarian, or you are a victim." Either the gold move is over, or, the juniors in fact ARE the historic "buy of a lifetime."
EZ Livin
Yep, the historic "buy of a lifetime."
The TSX V is the Toronto Venture Exchange Index. The Venture Exchange consists of small/micro cap jr and exploration resource companies. Here are two charts showing the TSX-V Index compared a TSX-V/Gold ratio and the TSX-V index compared to a TSX-V/XAU ratio. On both counts the TSX-V is as undervalued (relative to Gold and the XAU) as it was in 2002/2003 at the beginning of a 400% move in small cap resource stocks.
Allen Greenspan had his interest rate conundrum, which—for precious metals investors—is now matched by the junior mining share valuation puzzle. How can companies with millions, even billions, of dollars in assets be so cheaply valued in the stock market? While I have little doubt that short selling is a contributor to this situation, a significant piece to this puzzle seems to be the lending drought of 2007-08. Exploration companies, by definition, are at a stage in their development where they require new money to progress. This money has been very hard to find, of late. For example, I recently read a letter from an employee of one mining company with proved up assets that can’t borrow a dime, right now.
All market conditions, however, will correct themselves eventually — revert to the mean — if they are not interfered with by outside forces. I am convinced this undervaluation of junior miners is destined to end, soon perhaps, courtesy of the Fed.
If anyone had any doubt, it should be dispelled by now that the Fed will do anything necessary to prevent the banking system from freezing up. Regardless of the wisdom, or folly, of their actions this is a fact. It is therefore reasonable to believe that sometime in the not too distant future—and in spite of all the marked-to-fantasy paper still sitting on their books—the banking system will find itself flush with newly minted credit and cash.
What then? Banks don’t make money if they don’t lend, but to whom can they lend in the current circumstances? The average consumer is out (poor credit risk), as are many corporations, so who does that leave? It seems to me there is a likelihood that the banks are about to become better acquainted with commodity-oriented companies, including the precious metals variety. These are potential borrowers who collectively hold billions of dollars of assets that are both appreciating and easy to value. Companies that are advanced enough to have pre-feasibility and feasibility reports complete should be the bank’s AAA+++ credit risks in this environment. As the credit spigots are re-opened to the miners, their laggard shares will take off and squeeze certain short sellers to pulps.
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