Thanks a lot, Silverbull. An excellent article with a lot of in-depth analysis.

I share the analysis of the writer, but tend to differ on his outlook. What we now have is a sector almost destroyed by an articifial price setting mechanism. The artificially depressed gold and silver prices have led to extremely tight margins for producers, which subsequently have led to the also extremely negative perception of future prices and margins, and which has allowed the algo predators to enter and suck liquidity from the market of both producers and explorers.

Just imagine, how this situation may change over the next 2-3 years, if the price of gold goes to $3500 and that of silver to $150. Tight margins disappear, the majors will become very profitable and start investing in explorers, the future price perception of the brokers and financiers will change dramatically, first on the producers, later also on the explorers, the market will jump into the suddenly profitable sector, first the smart money, later the retail investors, and the criminal algo traders/liquidity suckers will go elsewhere.

In my opinion, it is all about precious metal prices making steps to (at least partially) return towards free market prices, driven by the physical being bought up by the Chinese. This can easily happen over the next two years. No need for new market valuation models.

There is one thing that I do not understand in the present situation. As the analysis correctly states, most problems originate from market perception. The perception of expected PM prices is extremely negative in the financial circles in the US and Canada. However, that same future price perception is very positive in China and other Asian countries. How come that money from Asia does not (yet) flow in large quantities to the North American PM producers and exploration companies? That is a market inefficiency that I cannot understand nor explain.