Hyperinflation

Bargains Still Abound in a Few Gold Miners

Clint007,
I agree that Rubicon has a very bright future indeed, but I think it is more likely it will be part of another miners future as I can see multiple bids coming in 2010. In my opinion, the only way to stay independent is for Rubicon's shareholders to reject whatever bid is made ( though it will likely be at a 200-400% premium to the current market price, which is hard to have > 50% reject).


On Nov 23 11:15 AM Clint007 wrote:

> For me, the best "FUTURE" Gold producer is Rubicon Minerals.
> On its way to over 5 Million Onces and this is only in a tiny part
> of Rubicon Claims (F2 Zone). Plus a possible target from Goldcorp;
> and the more RMX/RBY found more Gold, more higher the buying price
> it will be!

Bargains Still Abound in a Few Gold Miners

Franco-Nevada, Silver Wheaton & Royal Gold are mining companies ( well royalty companies to be precise) that will have extremely high FCF yields as the bull market in precious metals kicks into full gear. They require no ongoing capital requirements (Except Silver Wheaton due to the Pascua-Lama purchase from Barrick earlier this year). Silver Wheaton has already talked about paying out a dividend in the near future while Franco and Royal Gold have increased their dividends for the coming year. I have written about these dynamic companies several times:
Franco-Nevada:
seekingalpha.com/artic...
Silver Wheaton:
seekingalpha.com/artic...


On Nov 23 01:32 PM Genesis wrote:

> Why not research it yourself?

Bargains Still Abound in a Few Gold Miners

I am aware of San Gold's impressive drilling results, especially considering it is their 3rd high grade discovery in 18 months. The only concern I have is if they can continue this trend. I like their production growth profile from the company and consensus estimates of 109k oz in 2010, 178k in 2011 and reaching peak production by 2010, producing an estimated 210k oz. I'm keeping my eye on San Gold and would consider accumulating shares should they find a more viable long term growth strategy.


On Nov 23 07:55 PM sweetspot wrote:

> Check out San Gold (SGR). They are primed for a big run. Just drilled
> 1,785 g/t gold over the weekend. The Rice Lake zone is looking like
> it has the geology to give the neighboring world class Red Lake zone
> a run for it's money. San Gold has mucho acreage in Rice Lake and
> their mill is right in the middle of it. They continue to drill
> very high grade gold. They're already producing out of 2 mines in
> the area. The recently discovered Hinge deposit is huge and is close
> to the surface. Friendly Canadian mining district in Manitoba.
> And, an excellent and experienced mining team to efficiently find
> the gold.

GDXJ: Who Belongs, Who Should Be Replaced

Apologies, I could have made this much more clear. I was thinking about what I would really remove and replace if it were up to me. The following is the current composition of the GDXJ can be seen here in a previous article:
seekingalpha.com/artic...
and given the disappointing news out of New Gold mentioned above, this is how I would re-arrange/ replace some of the components:
Jaguar Mining 6.60%
Coeur d'Alene mines 6.20%
Kirkland Lake Gold 6.06%
Silver Wheaton 5.95%
Red Back Mining 5.20%
Silver Standard Resources 5.10%
Hochschild 5.00%
First Majestic 4.90%
Franco-Nevada 4.88%
Aurizon Mines 4.66%
Silvercorp 4.20%
Royal Gold 4.09%
Endeavor Silver 3.95%
Great Basin Gold 3.88%
Yamana Gold 3.77%
Andean 3.20%
Kingsgate Consolidated 3.13%
Rubicon 3.10%
EL-Dorado 3.09%
New Gold 2.40%
Hecla 2.20%
ECU Silver 1.80%
Fortuna Silver 1.81%
Semafo 1.31%
Detour Gold 1.22%
Ventana 1.05%
Mag Silver 0.80%
Colossus Minerals 0.25%
CGA Mining 0.20%

This is not a small/ mini cap ETF but would be composes of 15% of royalty companies ( to reduce some volatility), 44% gold miners, 41% silver miners. 52% small/ emerging juniors, 10% exploration and 38% mid-cap ( though 15% of those are royalty companies). There are a slightly smaller number of companies than a typical ETF, but many like Hochschild is a play both on the parent company, and 40% of lake shore gold of which it owns.
Just my two cents

I'm interested in how other people would compose of gold and silver mining ETF, if anyone wants to give it a shot.


On Nov 20 07:28 AM Jabalong wrote:

> Interesting article, though I wish it was clearer which were the
> additions and deletions. Five clearly say they are deletions (Alamos,
> Gammon, Golden-Star, Northgate, San Gold) - is there a sixth? And
> which are the additions?

GDXJ: Who Belongs, Who Should Be Replaced

I will definitely take a look into that. I like Van Eck in general and was rather impressed at GDXJ at first glance, but there are numerous components I would take out and replace. The alternative mentioned above is just to show it is not to difficult to improve on GDXJ. If I were really to make an ETF I would have spent much longer choosing all the components. I imagine there will be several more gold and silver mining etfs coming out over the next several years, so maybe someone will develop one taking a sizable position in.


On Nov 18 11:20 PM User 13464 wrote:

> As a large shareholder in the Van Eck Worldwide Hard Assets Fund,
> I am amazed these guys neglected to include Apollo Gold (AGT) in
> their fund. The company is Jay Taylor's "favorite gold stock."
> The world class Black Fox mine is rumored to hold over 7-8 million
> ounces of gold while their Huizopa mine in resource rich Mexico is
> next to Minefinders' Dolores project. With a veteran management
> that has worked tirelessly to bring Black Fox into production, Apollo
> Gold is currently working its way into mid-tier status as it is projected
> to produce 120,000 ounces gold in 2010! AND THE STOCK IS ONLY 51
> CENTS!!!!!

GDXJ: Who Belongs, Who Should Be Replaced

Your spot on saying " smaller miners are more strongly correlated to fluctuations in the price of gold " as the % increase/decrease in underlying profit, free cash flow and Net Asset Value tend to be greater, but we have yet to see that reflected in the market prices. The Senior and Mid-tier producers have outperformed the exploration and junior miners ( relatively speaking ), but I think the junior miners ( at least the higher quality miners are due for a violent move upward), assuming the gold price remains over $1,000/oz. The same scenario was present during the inflationary days of the 70's and several juniors produced 0000's % return. That being said, I expect GDXJ to outperform GDX by a wide margin if you measured their performance 3 and 5 years from now. But as I indirectly mention in the article, I think the best returns will come by taking a combination of mid-tier , Junior and exploration companies. Off the top of my head I have 0% in senior producers, 50% in Mid-tier ( mostly Silver Wheaton, Franco Nevada, Royal Gold, Yamana, Lihir ) 35% or so in Junior miners ( Red Back, Jaguar, Coeur d'Alene, Kirkland Lake Gold, Silver Standard, First Majestic and others) , and equally split as a % in explorations companies, and GDX puts as a hedge against volatility. My best performer has been Jaguar, Yamana, Silver Wheaton, Redback, Coeur d'Alene and First Majestic so it has been pretty evenly split for me among the different classes. Though I have calculated the difference my combination of mid tier and Juniors has outperformed the seniors by a large margin. I will keep track of the performance of the etf created above, GDXJ, and GDX to compare volatility, return and the best combination as GDX is Senior/Mid tier, GDXJ is Junior/exploration and mine is Junior/Mid-tier.

Franco-Nevada: Building Up a Royalty War Chest

Yeh I am long the 2012 warrants as well as the common stock for franco nevada. I split it about 75% CS and 25% Warrants. As Franco increased their dividend 33%, I expect that to happen again in the coming year due to weakning of the USD, Strength in Gold, Oil and given the fact they already have a very ample cash balance. As for Silver Wheaton, I initiated the majority of my position from last Nov- Jan, making it unnecessary to increase what is already my largest holding. But that is a great strategy if you got into at higher prices or are looking to get in it now. I have been fairly active with warrants in First Majestic, ECU Silver, Great Basin Gold and others.
-Cheers


On Nov 16 08:01 PM dlweld wrote:

> Good article! I'm sure you know, but readers might not, that Franco
> Nevada has warrents available on the Toronto Stock exchange. One
> is the right to buy the stock for $32 CDN until Mar 13 2012 (2 yrs
> 4 mo) and the other is the right to buy at $75 CDN until Jun 16 2017
> (8 yrs 6mo). The stock right now is about $30, and the first warrent
> is 5.90 (all time value). If the stock gets to $45 (up 40%) anytime
> in the next 2 years the warrent will have a base value of $13 and
> probably some time value too. Seems like a dead cert double as a
> minimum and maybe a lot more. Any thoughts on this? Long FNV.wt and
> SLW.wt.b

Franco-Nevada: Building Up a Royalty War Chest

I have only one concern about Royal Gold, which is the potential hurdles they may face at Andacallo as its account for approx 25% of their NAV going forward. I'm sure it will be resolved, but any news regarding this stream could bring some volatility back into Royal Gold.


On Nov 16 08:52 AM MILESCFA wrote:

> RGLD is creeping up; however, the great thing for me is it does so
> slowly. You can sell 2+ mn straddles on it and collect a LOT in time
> premium! (Sh Don't tell anybody though)

Three Metal Miners: Three Dynamic Business Models, Three Great Quarters

Go listen to the Q3 conference call if you haven't already, they go rather in depth regarding their 1-2 year strategy.


On Nov 11 03:00 PM tripleblack wrote:

> I am long silver and getting longer all the time. I own SLW, and
> intend to keep it long term as well. The more I learn about their
> business plan, the more I like what I see.

Three Metal Miners: Three Dynamic Business Models, Three Great Quarters

I'm in the same boat to a degree, I own a many junior miners i.e Jaguar, Red back, Kirkland Lake, Great Basin Gold, Aurizon, First Majestic etc but they constitute about 30% of my mining equities, while the mid-tier group i.e Lihir, Yamana, Newcrest, Coeur d'Alene, Silver Standard, ECU silver make up another 30% and the rest is comprised of the three mentioned above.
-Franco-Nevada is already generating $50 of Free Cash Flow per every $1000 invested. This hold many implications as they have no capital requirements, have growing record attributable gold ounces, higher annual gold prices and higher annual oil prices. Just taking into account Palmarejo, Gold Strike and $1000 annual gold prices, FCF should rise dramatically. Looking out to 2011-2012, Free cash flow per $1000 invested should rise 4 fold or $220 or 22%.


On Nov 11 01:21 PM Jeff Nielson wrote:

> I've been sticking with the smaller miners because of the superior
> growth potential (although I have held SLW in the past).
>
> The author's point about these being ideal means of getting exposure
> to precious metals for novices to this sector is a good one.
>
> That said, if my "juniors" continue to prosper I'll certainly look
> to funnel some of those profits into (at least) one of these companies
> - as they are essentially "blue chip" companies (for this sector).

Get Royalty Treatment with Royal Gold

The title was edited by SA, it was supposed to be about royal gold not silver wheaton

Economic Outlook, Current Conditions and Investment Strategy

Yeh wasn't expecting the rally to continue, but my strategy isn't one that incorporates day trading. I was actually pleased with today's action as my largest position >22% reached a 52-week high, and is up over 4 fold in 12 months. After the Dow crossed 12k on the way down after a brief rally, I took the same approach (selling calls and going short the market indices, which worked out well).

-I'd rather make 80 cents on the dollar if the market continues to rally than lose 1 for 1.


On Nov 09 07:42 PM Kimball Corson wrote:

> Have you heard the maxim the trend is your friend. Fight it and die.
> You must have been clubbed today.

Invest in Silver Over Gold

Credit isn't counted in the money supply and isn;t inflationary unless a bank lacks the funds / retained earnings to cover the loan losses. This is due to fractional reserve banking or where 90% of loans originated are done using phantom money ( that which the FED prints and under normal circumstances destroys that amount created from thin air, via electronic means). In other words, FRB isn;t inherently inflationary, but reckless governments have made sure that it becomes so.
As for loan losses that will default over the next 1-3 years, it will take a significant portion of the excess reserves the FED has pumped into the system to cover these. The amount used to cover loan losses is 100% inflationary. When you add in increasing amounts of deficit spending, potential healthcare legislation that increases our unfunded liabilities past the 80 trillion (NPV of future liabilities), accumulated debt ( which will destroy the budget even further when rates rise once again as interest payments grow to well over 1 trillion a year). Not to mention the money the government has been pouring down a black hold (bailouts), which is somewhere in the ballpark of 13-15 trillion. There is just to much money been created to starve off inflation more than a few more quarters.
- My 2 cents


On Nov 04 11:20 PM svosavvy wrote:

> I was driving at your silver/gold relationship. I am actually bullish
> on silver, and have had and continue a long term position in it.
> As far as inflation goes to merely talk about monetary expansion
> is like getting the sports report but only getting one teams score
> and not the others. Fractional reserve banking and the "hot" (external
> inflows) money issue I agree are of extreme importance imho when
> considering prospects for inflation, however, I find it highly disconcerting
> that credit contraction is hardly brought up. Seems we only talk
> supply and not demand. How can we inflate when the consumer who
> is supposedly 70% of gdp has had their credit dry up. Sure the banks
> have been liquified via the gov't but the spenders are broke. I
> am a big believer in needs based inflation in time (couple of years'ish
> imho), I see food and energy inflating on demand, and consumer crap
> hitting the skids.

Precious Metal Miners: Post Earnings Season Analysis, Part 1

Yeh I have a few shares, but am more heavily weighted in ECU Silver and First Majestic with regards to my total allocation in the small cap silver miners. I have been doing research on Bear Creek and Mag Silver, and like what I see so far. I think MAG will get bought rather soon, hopefully at a much higher premium than the bid for mag last year.


On Nov 04 08:46 AM tripleblack wrote:

> I just looked into Great Panther (GPRLF.PK or GPR.TO). It is at .71
> per share. They are a strong silver play, but also have a good bit
> of gold and base metal action going on. Since the first quarter of
> 2009 they have been cash flow positive, which is a milestone for
> young mining companies. One thing I noted was the large number of
> options (7.3 million) set aside for the principal players, but that
> is not necessarily a bad thing since that will act as a strong incentive
> for them to get the stock price up.
>
> They have an excellent recent record of improving efficiency (particularly
> in the key concentration area) and cutting costs, and their position
> with their 2 existing Mexican mines and their drill program mapping
> future expansion is solid.
>
> They have just issued a $10m equity offering, which dilution is,
> I think, already factored into their stock price by the market. They
> are also looking to acquire another mine in the same region where
> they operate, which would explain the offering imo.
>
> finance.yahoo.com/news...
>
> www.reuters.com/articl...

Precious Metal Miners: Post Earnings Season Analysis, Part 1

True, GLD has outperformed some of the miners but this will likely be short lived in my opinion. I'm writing GLD calls and buying miners with them so if gold goes up, the miners should go up a multiple of the underlying asset and if it goes down then you just got shares for free ( from recieving the premium up front)


On Nov 04 08:32 AM rrobin wrote:

> What do you think about the performance of GLD vs. the miners at
> this point? It seems GLD might be outperforming miners if the market
> goes down as it has in the past few days. Miners could be subject
> to higher input costs due to inflation?