By Patrick Watson

Investment success often lies in timing. Van Eck Global may have hit the nail on the head with today’s introduction of Market Vectors Junior Gold Miners ETF (GDXJ). With gold bullion breaking above $1,100 earlier this week, gold stocks are flying.

Van Eck’s Market Vector Junior Miners ETF is set for trading to begin on Wednesday, November 11, 2009 under the ticker symbol (GDXJ). The arrival of this ETF couldn’t come at a better time as gold continues to reach new all time highs. Investors looking to get into the gold craze have found it to be worth investing in gold miners as the current Market Vectors Gold Miners ETF (GDX) has outperformed the SPDR Gold ETF (GLD) by a substantial amount. See the chart below:

Q3 2009 Earnings Call

November 5, 2009 1:00 PM ET

Don’t get me wrong. I love silver. As a very long term investment, you cannot find anything better. If you ignore short and medium term volatility, and simply hold your metal for a long term of years, you will probably do okay. The world is running out of silver. The painful part of this "buy and hold" strategy, however, is in watching prices get periodically clobbered.

Another strategy is to keep a “core” long term portfolio, while, at the same time, keeping a non-core or speculative portfolio. In the speculative portfolio you attempt to profit by buying and selling on the price swings. In both cases, you will buy on the lows, but, instead of just holding for years, you buy low and sell high on a regular basis.

That’s right. It’s not a typo. We are indeed talking about gold, not silver.

At that forum, Bolivian President Evo Morales made some clear statements about his vision of the lithium industry. Specifically, he warned that lithium will not become a “new chapter” in his country’s “history of pillage and poverty.” And Morales admonished future foreign investors to become “partners—not owners—of the lithium industry.”

Silver is often thought to be a metal and little else. It is often assumed that silver is rather cheap due to the lack of scarcity. But both of these assumptions don't reflect the true underlying dynamics.

1) Silver Wheaton (SLW) - I have talked multiple times about this extremely dynamic business model and the transformational year 2009 has been for the future of this company. Management continues to execute deals and acquire a diversified group of royalty streams at bargain basement prices. Not only will they be the lowest cost producer (under $4.00/oz) but they will also become one of the world's largest producers (peak production of 50m oz per annum assuming 2 development projects come online within the next 5 years or another acquisition which they have made crystal clear in the most recent conference call). This is the best inflationary hedge in my opinion as they pay no income tax (has made arrangements with the Canadian government to either reinvest all excess profits or pay them out as dividends). That being said in one or two more years, these royalty streams will sell for a much bigger premium relative to today. This means a payout ratio of 75-85% will likely be in place by 2015 or so.

This has been more noticeable in much more popular industries, such as financial services, oil service, etc. as much of the money that flew the market during the most recent crash was mainly a combination of forced liquidation by hedge funds and other various investment institutions. The selling of individual equity ETF positions in turn caused a lot of selling or downward price pressure.

As far as the gold and silver shares, I was curious as to the consensus analyst rating, 2010 earnings growth forecast and price target. In the graph below, I show the current analyst rating on the stock, the consensus forecast for 2010 earnings growth and how far above the current price, the mean price target is. Remember that analysts rate stocks 1.0 (strong buy) to 5.0 (strong sell). A 3.0 means hold, while a 2.0 means buy or accumulate. Since Wall Street is naturally optimistic, a 3.0 basically means “sell” and a 2.0 means “hold”.

As for the gold miners (which I'm slightly more bullish on for earnings season, as opposed to the silver miners), they have averaged a record 3 month (quarterly) market price. This, combined with many miners scrambling to ramp up production on new projects, will easily surpass past revenue records among the miners. Augmenting this fact, are the very low cash costs (and all in costs for that matter), which will undoubtedly help to set record net profits, cash flows and operating margins.

The FHA now controls over a trillion in existing / recently originated mortgages.

I watch with subsumed glee as Yahoo Finance includes a price quote for gold in the Market Summary section on their home page. After all the financial turmoil that we've been through since the introduction of the internet, when did Yahoo Finance realize that a gold quote was necessary? The obvious answer is, "When the public demands it."

Well, when the public finally demands the price quote of gold on their finance homepage, it is probably too late to participate in gold on a level that could be considered meaningful. After all, at nearly $1000 an ounce, there isn't going to be a stock split in the price of gold. Or is there? (I've been pondering this possibility lately) In any event, gold is fast becoming an expensive asset in a world full of correspondingly deflating alternative "assets." What to do? What to do? Get out there and do your research on silver!

It was business as usual for the most part excluding non-recurring/extra-ordinary charges or gains. I would have to say the best news came from Goldcorp (GG), and their sucess thus far with Penasquito and lack of start up issues as seen through Newmont (NEM) and the world class Boddington Mine. This, however, is immaterial in the big scheme of things as Boddington is basically just a replacement for the production that will be lost by some of Newmont's soon-to-be depleted mines. I've always liked Kinross (KGC) but that little voice in my head has convinced me to stay away, barring a multitude of small aquisitions or one sizable enough to make the Russian operations far less significant relative to their total output. Barrick (ABX): not much to say here as I believe they will face an even bigger hurdle replacing depleted reserves in the near future.

Q2 2009 Earnings Call

August 6, 2009 1:00 pm ET

Bullish Calls:

First Merit (FMER): "Listen...they've done everything right...to the victor goes the spoils."

It is well established that gold and the US dollar are inversely correlated. This rule of thumb is not often broken and traders who hold their free funds in foreign currencies can benefit from that. The dollar has been trending down for months now and last week we saw some gains in the dollar index. Gold, consequently, was down. What if you could benefit from the fall in gold and from the rise in the dollar (compared to other major currencies) at the same time? Well, for non-US traders it's actually quite simple.

I am not a resident of the US, therefore, I don't keep a large amount of my portfolio in dollars to limit my losses from a possible fall in the dollar compared to the euro (which the Estonian kroon is pegged to). When I see a possible trade, I first buy dollars and then buy the stocks. For me and other traders who use the same strategy, the combination of a rising dollar and falling gold prices is very lucrative, because it allows us to benefit from a rise in one asset and a fall in a currency at the same time.

Coeur d'Alene Mines (CDE) is a US-based mining company focused on silver. The company operates three silver mines (USA, Argentina, and Bolivia) and receives silver output from two lead-zinc mines in Australia. Attributable 2008 silver production was 12 million ounces (and minor gold). Coeur has two mines under construction in Mexico (silver-gold), and Alaska (gold). (Source: RBC Capital Markets.)

Coeur d’Alene’s production growth profile is driven mainly by the ramp up at San Bartolome, the start-up at Palmarejo (H1/09), and contributions from Kensington (late 2010). The Company has been actively carrying out debt-to-equity exchanges to de-leverage its balance sheet, which has been a major concern for investors. Although a large portion of the convertible debt remains to be addressed, Coeur is showing that it is being proactive. I believe that the Company will generate cash from operations in 2009 and our estimates remain conservative during the Palmarejo commissioning and start-up period.

I have a new sector, a new weapon in my arsenal, an area of the market that I’ve ignored for over 10 years due to the lack of quality pure-plays. I’ve been trading and investing in various gold ideas forever, but a lot has changed with the white metal, and now I’m happy to report that Daddy’s become a Silver Surfer.