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Christopher Wallace  

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  • A Review Of The Correlation Between Natural Gas And Coal Stocks [View article]
    Just for interest sake, I updated the two charts that begin this article, from the beginning of 2013 to date, to see to what extent any positive correlation developed in the three and a half years subsequent to publishing this article. Gas up 10% and coal stocks down 85%.
    Jul 27, 2015. 02:42 PM | Likes Like |Link to Comment
  • Today's Fundamentally-Absurd Gold Stock Levels Aren't Sustainable [View article]
    I think this article raises some good points, mostly stating (and frankly, re-stating) that gold sentiment has reached a bearish extreme. But a generally sound point turns into hyperbole when it is repeated too often. I would like to point out that I believe an excessively bullish inference is being drawn from the $HUI to gold price ratio. The numbers presented, while correct, when combined with the writer's hyperbole, distort the actual value of gold miners at this point in time. The author fails to provide any detail about the enormous increase in AISC as well as operating costs for most miners since 2003. Even though gold is up nearly 4 x since 2003, gold miners, have been on the whole, less profitable, due to rising costs. That trend is now starting to change and we should see a trend of continuing AISC reductions. For how long, who knows? Average grade mined has exceeded average reserve grade for years, so once all the high grade ore is mined, AISC will probably resume its up-trend.

    While I think the author is correct in his statements that pessimism among the gold miners is at an extreme, and that valuations are low, the inference that $HUI might return to its historical relation to gold in value, simply ignores the very important variable of rising AISC. A more toned-down presentation might have been less entertaining, but probably more valuable.
    Jul 26, 2015. 01:00 PM | 4 Likes Like |Link to Comment
  • The Latest Commitment Of Traders Report Shows Record Speculative Short Positions [View article]
    Lots of things have changed, but I don't think human nature has. We still love to pile in at tops and pile out at bottoms. Once that changes, being contrarian will cease to work. I have yet to see evidence of that aspect of human nature changing.
    Jul 25, 2015. 08:07 PM | 3 Likes Like |Link to Comment
  • The Latest Commitment Of Traders Report Shows Record Speculative Short Positions [View article]
    Incorrect. 52% short is a record. Ordinarily the longs outnumber the shorts by a wide margin. True with gold as with all things. Longs always outnumber shorts, except at extremely bearish times.
    Jul 25, 2015. 08:04 PM | 2 Likes Like |Link to Comment
  • The Latest Commitment Of Traders Report Shows Record Speculative Short Positions [View article]
    Agreed. Contrarianism at extremes is an excellent investment strategy. These extremes are very rare. Other asset class extremes that I can remember are gold peak in 1981, stock bottom in 1982, stock bottom in 1987, internet stock top in 2000, real estate lending bubble in 2007, oil bottom in 2008. While I am sure there are others, my point is they don't roll along every day. But as the author has demonstrated in this article, we have reached an extreme in the gold market now. Based upon the past asset class extremes I have seen, this contrarian thesis makes for a strong investment case, one you are not likely to see again for years.
    Jul 25, 2015. 10:57 AM | 7 Likes Like |Link to Comment
  • Platinum Group Metals: WBJV Project 1 Is 90% Complete With Planned Production In Q4'15 [View article]
    Goldman Sachs just came out with a forecast for copper of a price decline of 44% to 2018. http://bit.ly/1KmzaIO Keep in mind these were the same guys who called for $20 oil. But if that forecast is correct, that says something pretty negative about the global economy, China in particular. Which cannot be good for auto sales and therefore platinum and palladium too. These doom and gloom forecasts are much more prevalent near bottoms of markets so I take it with more than a grain of salt. But I too will wait to see a turn up in commodities generally and in platinum and palladium specifically before putting my toes in the water. If the commodities do turn up, PLG has so much upside that I certainly don't need to catch the exact bottom.
    Jul 23, 2015. 10:08 AM | Likes Like |Link to Comment
  • Gold: 3 Key Signs Needed For An Actionable Short-Term Bottom [View article]
    FWIW, I actually thought the capitulation moment had already occurred on Sunday night in Asia when gold dropped $50 in a matter of minutes. I went long at the open in North America on Monday morning based upon that event coupled with the generally pervasive bearishness, particularly as indicated in the record short position among specs in the last 2 weeks COT reports. Is this the bottom for gold? You would have to ask someone much smarter than me. But a tradable rally? I think so.
    Jul 21, 2015. 10:40 AM | 4 Likes Like |Link to Comment
  • With Gold At 10-Year Lows And Government Debt Shaky, Reversal Is Nigh [View article]
    While I do believe the short gold trade is excessively crowded here and that the contrarian bullish thesis is likely to produce near term results, let's get the facts straight: gold is nowhere close to a 10 year low. Gold traded under $500 in 2005; it is currently a double of the value it traded at 10 years ago.
    Jul 21, 2015. 02:57 AM | 2 Likes Like |Link to Comment
  • Platinum Group Metals: WBJV Project 1 Is 90% Complete With Planned Production In Q4'15 [View article]
    Looks like capitulation in the gold markets today. Given the correlation between PGMs generally I would expect an across the board rally any time. That will make your PLG investment look very good.
    Jul 20, 2015. 02:21 PM | Likes Like |Link to Comment
  • Platinum Group Metals: WBJV Project 1 Is 90% Complete With Planned Production In Q4'15 [View article]
    I got the $850 number from a GMP Securities research note. I cannot understand the discrepancy.
    Jul 19, 2015. 02:46 PM | Likes Like |Link to Comment
  • Platinum Group Metals: WBJV Project 1 Is 90% Complete With Planned Production In Q4'15 [View article]
    Fun Trading, I have done a little more work and I think the driving issue with their share price has been their costs. In 2016 they appear to be heading towards ~ $850 C1 costs. I have not done an AISC calc but my guess is that would be something over the current Pt price (about $1,000). So this story, with AISC quite near the Pt price, has massive leverage to the price of platinum. Once the Pt price turns, this would be a good stock to own. Until then, I would not expect much action.
    Jul 19, 2015. 01:10 PM | Likes Like |Link to Comment
  • Klondex Mines Will Continue To Outperform Other Gold Miners [View article]
    Klondex as a company, probably will outperform other gold miners in terms of operating metrics. It has performed superbly over the last 3 years as a company and as a stock as well. I have been a shareholder until recently. Significant shareholder and insider K2 Principal Fund has been a seller and I see their block as an overhang on the market, at least for now. But as a stock, I am not so convinced that it will out perform the majority of other gold miners. This is because so many companies have been so beaten down, that when gold starts to rally and the shorts begin to cover, I think there will be rapid appreciation in heavily beaten names such as KGC, ABX, and AUY, to name a few. Each of these has their problems, for sure, but those problems seem to be fully discounted in their current share price. I plan on doing a screen of gold miners with high short interest and see what that reveals.
    Jul 18, 2015. 08:41 PM | 1 Like Like |Link to Comment
  • Platinum Group Metals: WBJV Project 1 Is 90% Complete With Planned Production In Q4'15 [View article]
    Fun Trading, a very interesting thesis, thanks for publishing. It certainly is difficult to explain the large drop this year in their stock price. Seems like an opportunity.
    Jul 17, 2015. 09:21 AM | Likes Like |Link to Comment
  • Extraordinary Skew - How Reward Outweighs Risk At Laredo Oil [View article]
    Thanks Fredonia, that would certainly be some good information!
    Jul 15, 2015. 08:35 AM | Likes Like |Link to Comment
  • Golden Reign Resources: An Undervalued Compounding Machine [View article]
    I agree that that the larger production rate would be beneficial. I don't think that management has ruled that out, if I recall our conversations correctly. I think it will depend on how the other costs of construction actually come in. Keep in mind these guys own a lot of stock and they are better served by having their stock go up than prolonging salaries.
    Jul 14, 2015. 02:47 PM | Likes Like |Link to Comment
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