lance sjogren

U.S. Treasuries in a Bubble, Not Commodities

I agree there is a bond bubble. However, so long as the US is committed to artificially depressed interest rates I see no reason why bonds will collapse in nominal value.

The bond bubble will burst GRADUALLY, the mechanism being that an annual devaluation of the dollar of 10-15% over the next 4-5 years will cause the inflation-adjusted value of bonds to drop by about 70-80%.

Enlightened-American Portfolio: Up 34% YTD, But Cautious Going Forward

"I am pleased with the 34% return for the year "


Pretty pisspoor performance if you ask me.

Why Silver Beats Gold as a Precious Metals Play

Forgot to mention.

Sabina has embarked on an extensive exploration program this year- they very well may be able to rack up expansions of their silver/base metals and gold deposits.

Also they acquired a large amount of additional property in the region as part of the acquisition of the gold deposit, rendering them the dominant property owner in the area, one which very well could prove to be a major mining region in the long term.

Why Silver Beats Gold as a Precious Metals Play

Long term I do expect silver to far exceed gold, although they have had a recent run so don't discount the possibility of short term correction.

In my view you don't necessarily need to make a choice. In my estimation, the biggest bargain in silver is Sabina Silver which has a deposit in northern Canada containing 230 million ounces.

With zinc and other base metals along with the silver, it is pretty decent grade for a deposit that will largely be open-pittable. (a little over 3 ounces silver per ton plus a comparable value in the base metals)

Oh, and by the way they recently acquired a 2 million ounce high grade gold deposit in the same geographic area.

All their minerals add up to an in-situ value of $9-10 billion.

The fully diluted market cap is about $130-140 million. They have about $30-35 mil cash, so fully diluted enterprise value (not including the cash they would get from warrants, etc being exercised) is about 100 mil.

So you have close to a 100 to 1 in-situ value to enterprise value ratio.

That means you are paying $10 per ounce of gold equivalent or $0.15 per ounce of silver equivalent.


Why so cheap? It is in a remote area of Nunavut province and there is a need for a port to be constructed at Bathurst inlet and a road built to the properties.

However, with their recent acquisition of the gold deposits, they are building a larger resource base on which to support the capital costs.

(although I hope that when the time comes they sell the properties to a large mining company rather than engaging in a "do it yourself" operation)

There are some other mineral deposits in the area owned by others that could help provide a broader resource base to fund infrastructure- e.g. the Chinese acquired two base metals deposits in the region from Oz minerals earlier this year.


It's the cheapest silver I know of, and you get some high grade gold and base metals thrown into the bargain.

Finding the Right Junior Miners for Maximum Upside Potential

Another thing to think about right now is Uranium.

Uranium miners have been in a big slump.

Consequently, Uranium is one of the few super bargains out there right now in the commodity space.

I have been stocking up on Hathor, a little bit of Terra, and a little Denison.

Hathor has the biggest recent discovery by a junior of high grade U in the Athabasca region. Terra has a 10% carried interest in that deposit so it is another way to play that resource, although with Terra you don't get a stake in Hathor's other promising properties.

Uranium Sees Signs of Strength, M&A

Uranium resource companies have been in a slump in recent months, in contrast to most commodities.

For a value investor, that spells opportunity.

The primary uranium stock I have been accumulating is Hathor. They are the world's premier junior Uranium exploration company, with a high grade deposit in the Athabasca region. We don't know how many pounds they have though. I believe the stock right now is priced for a worst case scenario- a bear market in Uranium and their Uranium resource coming out at the bottom of the range of expectations. Downside should therefore be small relative to current stock price, while upside is substantial.

Prepare Yourself for the Inflation Invasion

The $64000 question:

When the stock market makes its coming correction, you are going to have a massive amount of cash sloshing around looking for a home.

Whoever can figure out where it is going to go will be the next George Soros.

(for conservatives who are offended, I should point out that I think George Soros' politics stink to high heaven, but the fact is he is the best example of someone who made a killing by predicting markets.)

Prepare Yourself for the Inflation Invasion

Old trader: I agree, TIPS are risky because of the way the government manipulates inflation statistics.

And it is certainly in the interest of the govt to do so. If one believes as I do that the standard of living in the US (and probably many other developed nations) got unsustainably high and will have to go down, how do we get there from here?

One way is to devalue the dollar and see that people's incomes get inflated away to lower levels that may be sustainable into the future.

If we have 10% annual inflation but the official govt statistic is 5%, then the government can lower benefits in its programs like social security in a hidden manner that won't generate public outrage.

There will not be public outrage, because those affected will be like the frog in a pot of water that is being heated up too slowly to notice)

Private companies can give their employees cost of living raises in the 5% range, and they also will thus be administering inflation-adjusted pay cuts, but again the frogs won't notice.

Prepare Yourself for the Inflation Invasion

"Those who say there's no inflation must not buy groceries, pay ever-rising property taxes, or shop for shoes, or pharmacy products."


There has been a lot of price inflation in recent years, but I don't believe there has been for the last year or so.

Unfortunately, the brief lull in inflation won't last long. And the worst of it is, the new round of inflation may be of the stagflation variety- in other words, inflation in parallel with an economy that is shrinking.

Prepare Yourself for the Inflation Invasion

Inthemoney: I agree the stock market rise the last several months is probably largely due to monetary expansion.

In my view, stocks have become severely overvalued due to too much money sloshing around looking for a home.

What I wonder is when will that stop. Stocks represent companies that operate in the REAL economy (aside from fiancials, of course). The REAL economy sucks.

Stocks are way overvalued considering the horrendous state of the real economy.

But still, the money printing goes on, and all that new money has to go somewhere.

The smart investor is one that can figure out where people are going to shift all that money once they realize that stocks are overvalued and due for a major correction.

I wish I knew.

I think at some point it will be commodities, especially precious metals, but that may still be 2-3 years down the road.

Prepare Yourself for the Inflation Invasion

Sethbru, I agree that the money supply increase the Fed has been doing up to now is largely just to fill back up the black hole of collapsed debt, and thus will not create inflation.

However, the US is running a structural deficit of at least 1 trillion per year, and I believe that is not going to be reduced in coming years, the pressures to further INCREASE the deficit are far too powerful.

And, I sincerely doubt there is going to be a market for that annual 1+ trillion in Treasury Bonds that will be issued to fund that debt. So I believe the Fed is going to print new money to buy them up.

And that will be extremely inflationary.

Merrill McHenry on Uranium: Looking at the Big Picture

In answer to road runner, the world is not running out of Uranium any time soon.

The cost of the Uranium itself is a vastly smaller fraction of the cost of producing power than for something like coal. In other words, the price of Uranium could skyrocket and it wouldn't have a big impact on the economics of nuclear power.

And, if it did skyrocket, the supply would greatly increase due to marginal deposits becoming economic.


I am more concerned about a glut of Uranium rather than a scarcity. When Cigar Lake finally comes online, that will add quite a bit of supply.

Still, I do own some Uranium stocks, namely Terra Resources and Hathor.

The Truth About Fossil Fuels and Renewable Energy

sethmcs:

Hubbert predicted peak oil for the US, and his prediction, universally considered the rantings of a lunatic at the time, proved to be dead on accurate.

By using the same methodology, peak oil has been predicted on a global level, but of course the precise date is subject to some dispute, some say it occurred in 2005 while others contend it has yet to occur; extreme optimistst predict it will be 10-20 years before it occurs.

Real bell curves don't tend to be perfectly smooth mathematical functions so the actual date of peak oil could vary by a few years depending on glitches in the oil supply curve.

Anyone like you who does not believe in peak oil is today's version of a flat earther.

What's CNBC's Problem with Gold?

"I would worry if CNBC suddenly becomes wildly bullish on gold and start featuring a gold-stock IPO a day..."

If we have a precious metals bubble, which I believe is going to happen a couple years down the road, CNBC will jump on the bandwagon at some point. Yes that will be a sign that you are getting to the latter stages of the bubble.

What's CNBC's Problem with Gold?

You have to remember that CNBC is part of the financial establishment.

Just like the idiot politicians, these guys agree with JM Keynes that the way out of a recession is for the government to pay people to dig holes and then pay them a second time to fill them back up.