lance sjogren's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/205035/comments http://seekingalpha.com/article/174005-u-s-treasuries-in-a-bubble-not-commodities?source=feed#comment-765312 765312 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%.]]> Wed, 18 Nov 2009 09:59:01 -0500 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%.]]> http://seekingalpha.com/article/165290-enlightened-american-portfolio-up-34-ytd-but-cautious-going-forward?source=feed#comment-723911 723911

Pretty pisspoor performance if you ask me.]]> Wed, 21 Oct 2009 14:56:23 -0400

Pretty pisspoor performance if you ask me.]]> http://seekingalpha.com/article/160342-why-silver-beats-gold-as-a-precious-metals-play?source=feed#comment-670334 670334
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.]]> Thu, 10 Sep 2009 11:16:06 -0400
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.]]> http://seekingalpha.com/article/160342-why-silver-beats-gold-as-a-precious-metals-play?source=feed#comment-670323 670323 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.]]> Thu, 10 Sep 2009 11:10:35 -0400 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.]]> http://seekingalpha.com/article/152047-finding-the-right-junior-miners-for-maximum-upside-potential?source=feed#comment-660386 660386
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.]]> Thu, 03 Sep 2009 11:49:34 -0400
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.]]> http://seekingalpha.com/article/154241-uranium-sees-signs-of-strength-m-a?source=feed#comment-650990 650990
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.]]> Fri, 28 Aug 2009 12:03:04 -0400
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.]]> http://seekingalpha.com/article/157709-prepare-yourself-for-the-inflation-invasion?source=feed#comment-642748 642748
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.)]]> Mon, 24 Aug 2009 01:06:46 -0400
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.)]]> http://seekingalpha.com/article/157709-prepare-yourself-for-the-inflation-invasion?source=feed#comment-642746 642746
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.]]> Mon, 24 Aug 2009 01:04:02 -0400
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.]]> http://seekingalpha.com/article/157709-prepare-yourself-for-the-inflation-invasion?source=feed#comment-642740 642740

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.]]> Mon, 24 Aug 2009 00:56:41 -0400

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.]]> http://seekingalpha.com/article/157709-prepare-yourself-for-the-inflation-invasion?source=feed#comment-642737 642737
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.]]> Mon, 24 Aug 2009 00:53:12 -0400
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.]]> http://seekingalpha.com/article/157709-prepare-yourself-for-the-inflation-invasion?source=feed#comment-642732 642732
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.]]> Mon, 24 Aug 2009 00:45:47 -0400
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.]]> http://seekingalpha.com/article/156123-merrill-mchenry-on-uranium-looking-at-the-big-picture?source=feed#comment-638343 638343
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.]]> Thu, 20 Aug 2009 13:28:50 -0400
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.]]> http://seekingalpha.com/article/154615-the-truth-about-fossil-fuels-and-renewable-energy?source=feed#comment-621162 621162
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.]]> Sat, 08 Aug 2009 14:41:49 -0400
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.]]> http://seekingalpha.com/article/153548-what-s-cnbc-s-problem-with-gold?source=feed#comment-614631 614631
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.]]> Tue, 04 Aug 2009 11:13:06 -0400
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.]]> http://seekingalpha.com/article/153548-what-s-cnbc-s-problem-with-gold?source=feed#comment-614626 614626
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.]]> Tue, 04 Aug 2009 11:10:13 -0400
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.]]> http://seekingalpha.com/article/152047-finding-the-right-junior-miners-for-maximum-upside-potential?source=feed#comment-609921 609921
I am constantly questioning my own investment decisions.

By motivating me to come up with a pitch for my top two holdings, I found that I was able to make what appears to me a pretty compelling case.

So, I am happy with my two main holdings.

I know there are a lot of opportunities out there that I will probably regret not having, but that is life. I like Silvercorp and have had it off and on, but since it's more liquid than my larger holdings it is a tempting one to trade in and out of to try to take advantage of the volatility in silver prices.

I also like First Majestic and Endeavor, and I recently noticed another one that looked interesting, Alexco I believe it is called (I really should remember the name since I bought a few shares)

But, what I like best is exploration-only plays (nothing can go wrong with your gold and silver when it is just sitting in the ground, except for things like being confiscated by Kleptocrats like Hugo Chavez or killed by enviro obstacles.

(Environmental obstacles are one reason I think the big blockbuster deposits of low grade such as those of Novagold, Seabridge, etc., are pretty risky. First of all if the price of oil goes sky high then they are liable to not be economic even if PM prices are strong. Secondly, mining hundreds of millions of tons of ore in pristine areas like the mountains of BC seems like something highly vulnerable to being killed by regulatory obstacles. Case in point, Northgate Minerals' Kemess North deposit.]]> Fri, 31 Jul 2009 13:06:43 -0400
I am constantly questioning my own investment decisions.

By motivating me to come up with a pitch for my top two holdings, I found that I was able to make what appears to me a pretty compelling case.

So, I am happy with my two main holdings.

I know there are a lot of opportunities out there that I will probably regret not having, but that is life. I like Silvercorp and have had it off and on, but since it's more liquid than my larger holdings it is a tempting one to trade in and out of to try to take advantage of the volatility in silver prices.

I also like First Majestic and Endeavor, and I recently noticed another one that looked interesting, Alexco I believe it is called (I really should remember the name since I bought a few shares)

But, what I like best is exploration-only plays (nothing can go wrong with your gold and silver when it is just sitting in the ground, except for things like being confiscated by Kleptocrats like Hugo Chavez or killed by enviro obstacles.

(Environmental obstacles are one reason I think the big blockbuster deposits of low grade such as those of Novagold, Seabridge, etc., are pretty risky. First of all if the price of oil goes sky high then they are liable to not be economic even if PM prices are strong. Secondly, mining hundreds of millions of tons of ore in pristine areas like the mountains of BC seems like something highly vulnerable to being killed by regulatory obstacles. Case in point, Northgate Minerals' Kemess North deposit.]]> http://seekingalpha.com/article/152047-finding-the-right-junior-miners-for-maximum-upside-potential?source=feed#comment-609893 609893
Anyone in the US who wants to invest in junior mineral companies should get used to buying pink sheet.

The vast majority of juniors listed on the Canadian exchanges have a US version but only in pink sheet form.

I have traded these for a number of years and by trial and error I found how to trade them with very little penalty for the fact that I am not trading the native Canadian version of the stock.

First of all, I found the best vehicle for trading them to be TD Ameritrade. I have long had a hunch that because of TD being Canadian, when I buy pink sheet I suspect that it is actually the Canadian stock they are trading and that somehow in their administrative system they are able to convert it into pink sheet.

However that works, it seems to work fairly well. I used to have an international account with another broker to check the real time price of the Canadian stock, but nowadays I just check the time delayed price on Yahoo, then I translate to USD, then put in a limit order on TD Ameritrade. Sometimes I'll just order a fraction of what I want to buy and if it doesn't trade I will jack up the price a half cent at a time until I get an execute, that way I get "price discovery" and then decide whether I want to buy more.

Most of the time I seem to be able to buy at the ask price or sell at the bid price or very close to it.

Some investing guides I read a couple years ago advised against these because of the propensity to wind up having to pay large penalties due to the illiquidity. I found this is not the case, with one caveat.

The one caveat being that the bid-ask spreads are often substantial. That is not a symptom of buying pink sheet but simply an inherent characteristic of many small companies that trade on the Canadian exchanges. So I often find I have to wait to trade a particular stock until it happens to be trading a little more than usual and its bid ask spread shrinks to a reasonable level.]]> Fri, 31 Jul 2009 12:46:55 -0400
Anyone in the US who wants to invest in junior mineral companies should get used to buying pink sheet.

The vast majority of juniors listed on the Canadian exchanges have a US version but only in pink sheet form.

I have traded these for a number of years and by trial and error I found how to trade them with very little penalty for the fact that I am not trading the native Canadian version of the stock.

First of all, I found the best vehicle for trading them to be TD Ameritrade. I have long had a hunch that because of TD being Canadian, when I buy pink sheet I suspect that it is actually the Canadian stock they are trading and that somehow in their administrative system they are able to convert it into pink sheet.

However that works, it seems to work fairly well. I used to have an international account with another broker to check the real time price of the Canadian stock, but nowadays I just check the time delayed price on Yahoo, then I translate to USD, then put in a limit order on TD Ameritrade. Sometimes I'll just order a fraction of what I want to buy and if it doesn't trade I will jack up the price a half cent at a time until I get an execute, that way I get "price discovery" and then decide whether I want to buy more.

Most of the time I seem to be able to buy at the ask price or sell at the bid price or very close to it.

Some investing guides I read a couple years ago advised against these because of the propensity to wind up having to pay large penalties due to the illiquidity. I found this is not the case, with one caveat.

The one caveat being that the bid-ask spreads are often substantial. That is not a symptom of buying pink sheet but simply an inherent characteristic of many small companies that trade on the Canadian exchanges. So I often find I have to wait to trade a particular stock until it happens to be trading a little more than usual and its bid ask spread shrinks to a reasonable level.]]> http://seekingalpha.com/article/152047-finding-the-right-junior-miners-for-maximum-upside-potential?source=feed#comment-609862 609862
Back River: 2.3 million ounces gold at 10 gpt

Hackett River: 230 million ounces silver at 4 opt + base metals with in-situ value about equal to the silver. Most of the deposit is open-pittable.

Aggressive drilling programs are in the works.

If you convert everything into gold equivalent (assume a 60:1 gold to silver ratio) these guys have about 10 million ounces of good grade gold equivalent, and you are getting it for about $10 per ounce. In terms of silver equivalent it is about 600 million ounces or $0.16 per ounce of silver. And these are GOOD deposits too.

Main drawback is that their deposits are in a remote area in Nunavut, to develop a port needs to be built at Bathurst Inlet, estimated cost $100 million, plus a road to the deposits. Since they recently acquired the Back River deposit they have a bigger resource base to spread the capital costs over. Other players in the area may help spread the costs as well- e.g. the Chinese recentlly acquired the Izok Lake and High Lake base metals deposits from Oz Minerals. I would think there is also a possibility that Canada govt might chip in some for a port as part of their goal of solidifying their claims to the far north in competition with Russia, but that is pure speculation on my part.

2). Eastmain Resources. 1.2 million ounces high grade gold in northern Quebec. The primary deposit, Clearwater, is close to Goldcorp's Eleonore deposit. Goldcorp owns about 10% of Eastmain. If you just count their main deposit, Clearwater, they have 1 million ounces. At a fully diluted market cap of about $100 million US, you are paying about $100 per ounce of gold, which is not cheap, however, this deposit should be able to leverage Goldcorp's infrastructure at Eleonore, so it is almost equivalent to gold at at an active mine where all infrastructure is already in place. Furthermore, there is a widespread view that drill results in the last couple years could well lead to a substantial expansion of the resource when the new 43-101 comes out.

Those are my primary 2 holdings in the PMs. A couple of others I have a much lesser amount of are Golden Goose Resources (Quebec gold deposit) and Terra (10% carried interest in Hathor's high grade Uranium deposit in Athabaska)


Note: Note that I count all resource ounces whether they are measured, indicated, or inferred.]]> Fri, 31 Jul 2009 12:31:38 -0400
Back River: 2.3 million ounces gold at 10 gpt

Hackett River: 230 million ounces silver at 4 opt + base metals with in-situ value about equal to the silver. Most of the deposit is open-pittable.

Aggressive drilling programs are in the works.

If you convert everything into gold equivalent (assume a 60:1 gold to silver ratio) these guys have about 10 million ounces of good grade gold equivalent, and you are getting it for about $10 per ounce. In terms of silver equivalent it is about 600 million ounces or $0.16 per ounce of silver. And these are GOOD deposits too.

Main drawback is that their deposits are in a remote area in Nunavut, to develop a port needs to be built at Bathurst Inlet, estimated cost $100 million, plus a road to the deposits. Since they recently acquired the Back River deposit they have a bigger resource base to spread the capital costs over. Other players in the area may help spread the costs as well- e.g. the Chinese recentlly acquired the Izok Lake and High Lake base metals deposits from Oz Minerals. I would think there is also a possibility that Canada govt might chip in some for a port as part of their goal of solidifying their claims to the far north in competition with Russia, but that is pure speculation on my part.

2). Eastmain Resources. 1.2 million ounces high grade gold in northern Quebec. The primary deposit, Clearwater, is close to Goldcorp's Eleonore deposit. Goldcorp owns about 10% of Eastmain. If you just count their main deposit, Clearwater, they have 1 million ounces. At a fully diluted market cap of about $100 million US, you are paying about $100 per ounce of gold, which is not cheap, however, this deposit should be able to leverage Goldcorp's infrastructure at Eleonore, so it is almost equivalent to gold at at an active mine where all infrastructure is already in place. Furthermore, there is a widespread view that drill results in the last couple years could well lead to a substantial expansion of the resource when the new 43-101 comes out.

Those are my primary 2 holdings in the PMs. A couple of others I have a much lesser amount of are Golden Goose Resources (Quebec gold deposit) and Terra (10% carried interest in Hathor's high grade Uranium deposit in Athabaska)


Note: Note that I count all resource ounces whether they are measured, indicated, or inferred.]]> http://seekingalpha.com/article/149919-invest-in-gold-to-hedge-against-hyperinflation?source=feed#comment-596821 596821

The thing about inflation, you have to figure that in many key sectors of the economy, price inflation is going to take quite a while to kick in.

The government will be printing money like crazy, but it is hard to see wages go up for at least 2-3 years. People are losing their jobs, and those who are working are getting pay cuts.

So if you look at price inflation from a supply and demand perspective, it is hard for example to see how there is going to be price inflation in housing anytime soon. Who is going to be able to afford higher prices on homes? People will be LESS able to afford homes.

Now, sooner or later I do believe monetary inflation will start affecting the labor market and we will start seeing wage increases to help mitigate the devaluation of the dollar caused by our deficit spending binge. But I think that will occur over time.


The toughest question in my mind is: If we are going to be printing trillions of dollars of new currency, where is it going to go?

Well, the deflationists say, it will simply start filling up the black hole of debt that is dematerializing.

And I think it is true that is the first effect. But in my mind it is clear that the government/Fed will not be inclined to slam on the brakes once the black hole is filled back up, because the real economy is still going to be in a shambles.

So at some point the black hole gets filled up with US dollars and they start spilling out.

What will they spill into? My hunch is the first thing will be commodities, especially precious metals. To some degree maybe also stocks, but I can't see stocks going up much any time soon because they are pretty high priced compared to anticipated earnings.

Eventually, I would think stocks will go up, then wages, and then real estate.

Sooner or later all prices are going to go up, but I believe different sectors of the economy will see price inflation at different points in the new inflationary bubble period we are entering.]]> Tue, 21 Jul 2009 14:06:36 -0400

The thing about inflation, you have to figure that in many key sectors of the economy, price inflation is going to take quite a while to kick in.

The government will be printing money like crazy, but it is hard to see wages go up for at least 2-3 years. People are losing their jobs, and those who are working are getting pay cuts.

So if you look at price inflation from a supply and demand perspective, it is hard for example to see how there is going to be price inflation in housing anytime soon. Who is going to be able to afford higher prices on homes? People will be LESS able to afford homes.

Now, sooner or later I do believe monetary inflation will start affecting the labor market and we will start seeing wage increases to help mitigate the devaluation of the dollar caused by our deficit spending binge. But I think that will occur over time.


The toughest question in my mind is: If we are going to be printing trillions of dollars of new currency, where is it going to go?

Well, the deflationists say, it will simply start filling up the black hole of debt that is dematerializing.

And I think it is true that is the first effect. But in my mind it is clear that the government/Fed will not be inclined to slam on the brakes once the black hole is filled back up, because the real economy is still going to be in a shambles.

So at some point the black hole gets filled up with US dollars and they start spilling out.

What will they spill into? My hunch is the first thing will be commodities, especially precious metals. To some degree maybe also stocks, but I can't see stocks going up much any time soon because they are pretty high priced compared to anticipated earnings.

Eventually, I would think stocks will go up, then wages, and then real estate.

Sooner or later all prices are going to go up, but I believe different sectors of the economy will see price inflation at different points in the new inflationary bubble period we are entering.]]> http://seekingalpha.com/article/149919-invest-in-gold-to-hedge-against-hyperinflation?source=feed#comment-596809 596809

I like that.]]> Tue, 21 Jul 2009 13:58:04 -0400

I like that.]]> http://seekingalpha.com/article/149112-california-s-troubles-are-america-s?source=feed#comment-590321 590321
The one possible difference is: As the federal government prints money it creates (with some time lag) inflation. In the economic downturn, wages are not going up. Even if we adopt banana republic style union elections (card check) I doubt wages will go up, and certainly unemployment will go up.

So, the standard of living will go down due to Fed-generated inflation.

Note that this is a sort of corrective feedback loop: Our economy, especially government, has been living beyond its means, and inflation will be reducing the standard of living, i.e. reducing our unsustainable overconsumption.

This contrasts with California where there is no self-corrective mechanism since the state cannot create inflation, thus the only solution to California's woes is to wield the budget meatax.


Now, here's a cheery one for Californians: Not only will you be seeing massive budget cuts, but the federal government will be creating inflation which causes those state and local tax dollars to lose a substantial fraction of their value.


Thus, reckless states like California are going to see a double whammy.]]> Thu, 16 Jul 2009 09:50:43 -0400
The one possible difference is: As the federal government prints money it creates (with some time lag) inflation. In the economic downturn, wages are not going up. Even if we adopt banana republic style union elections (card check) I doubt wages will go up, and certainly unemployment will go up.

So, the standard of living will go down due to Fed-generated inflation.

Note that this is a sort of corrective feedback loop: Our economy, especially government, has been living beyond its means, and inflation will be reducing the standard of living, i.e. reducing our unsustainable overconsumption.

This contrasts with California where there is no self-corrective mechanism since the state cannot create inflation, thus the only solution to California's woes is to wield the budget meatax.


Now, here's a cheery one for Californians: Not only will you be seeing massive budget cuts, but the federal government will be creating inflation which causes those state and local tax dollars to lose a substantial fraction of their value.


Thus, reckless states like California are going to see a double whammy.]]> http://seekingalpha.com/article/146423-predicting-the-next-great-bubble?source=feed#comment-569810 569810 Those predicting inflation point to the massive expansion of money and credit.

Those skeptical about inflation point to the fact that in assets like real estate, demand far outstrips supply and will for the forseeable future.

So who's right? Both, I believe. Money supply growth will fuel inflation in some assets. For other asset types, a glut of supply relative to demand will preclude price increases.

Precious metals will go way up, same with other commodities like oil and agricultural products. On the other hand, real estate is going nowhere for at least the next 3-5 years.

]]> Wed, 01 Jul 2009 09:56:57 -0400 Those predicting inflation point to the massive expansion of money and credit.

Those skeptical about inflation point to the fact that in assets like real estate, demand far outstrips supply and will for the forseeable future.

So who's right? Both, I believe. Money supply growth will fuel inflation in some assets. For other asset types, a glut of supply relative to demand will preclude price increases.

Precious metals will go way up, same with other commodities like oil and agricultural products. On the other hand, real estate is going nowhere for at least the next 3-5 years.

]]> http://seekingalpha.com/article/137324-jim-rogers-u-s-about-to-have-a-currency-crisis?source=feed#comment-502091 502091
Also, we don't know what the Fed will do when inflation starts heating up.

Will they tighten the screws, even though that would cause interest rates to skyrocket and deal a deathblow to the housing market?

Or will the only politically palatable approach be to sit on the sidelines as inflation rages?

And also I strongly believe the inflation will be very uneven in where it shows up.

I can't see it causing real estate prices going up, although it might help them to stabilize in dollar value. (not adjusted for inflation)

Certainly, gold will go up. Predictions of $7000 per ounce are considered the rants of deranged crackpots. However, there have been so many outlandish things we have already witnessed in this economic downturn- who's to say a 10x rise in the exchange rate between the US dollar and gold might not also occur?]]> Wed, 13 May 2009 11:14:20 -0400
Also, we don't know what the Fed will do when inflation starts heating up.

Will they tighten the screws, even though that would cause interest rates to skyrocket and deal a deathblow to the housing market?

Or will the only politically palatable approach be to sit on the sidelines as inflation rages?

And also I strongly believe the inflation will be very uneven in where it shows up.

I can't see it causing real estate prices going up, although it might help them to stabilize in dollar value. (not adjusted for inflation)

Certainly, gold will go up. Predictions of $7000 per ounce are considered the rants of deranged crackpots. However, there have been so many outlandish things we have already witnessed in this economic downturn- who's to say a 10x rise in the exchange rate between the US dollar and gold might not also occur?]]> http://seekingalpha.com/article/129068-stick-with-gold-and-the-oil-stocks?source=feed#comment-449567 449567
Investing in small Canadian precious metals companies is a little more difficult than buying stocks listed on mainstream US exchanges.

Virtually all Canadian stocks have pink sheet versions that you can trade in a US account.

It is a little trickier to trade them because the pink sheet versions do not trade enough to have accurate bid and ask prices so you have to look at the bid and ask on the Canadian version of the stock, then convert that from CAD to USD, and then you can decide what limit price to buy or sell the pink sheet version (which trades in USD) at.

Another thing is that I found with some OLBs that the pink sheet stocks do not trade well, you sometimes wind up having to pay a premium, and sometimes the number of shares is so large you wind up paying higher commissions. I had these problems with Schwab and Fidelity but I have had great success trading these with TD Ameritrade, I think it is probably the Canadian connection of TD that allows them to smoothly trade these. In fact, I have always wondered whether when I trade the pink sheet versions with TD they may perhaps actually be trading the native Canadian version of the stock and then doing the translation to show it on my account as the pink sheet version.

At any rate, analysts sometimes caution about small precious metals stocks on pink sheets because of the lack of liquidity. I have found, however, that if you do it the right way you can trade these pretty close to as efficiently as you could the Canadian stocks themselves. Of course, you can also just trade the Canadian stocks on an Interactive Brokers or Etrade international account, although when I had an IB account I found it was so confusing to figure out buy and sell prices in USD to put on my tax forms that I wound up closing the account.]]> Thu, 02 Apr 2009 13:28:04 -0400
Investing in small Canadian precious metals companies is a little more difficult than buying stocks listed on mainstream US exchanges.

Virtually all Canadian stocks have pink sheet versions that you can trade in a US account.

It is a little trickier to trade them because the pink sheet versions do not trade enough to have accurate bid and ask prices so you have to look at the bid and ask on the Canadian version of the stock, then convert that from CAD to USD, and then you can decide what limit price to buy or sell the pink sheet version (which trades in USD) at.

Another thing is that I found with some OLBs that the pink sheet stocks do not trade well, you sometimes wind up having to pay a premium, and sometimes the number of shares is so large you wind up paying higher commissions. I had these problems with Schwab and Fidelity but I have had great success trading these with TD Ameritrade, I think it is probably the Canadian connection of TD that allows them to smoothly trade these. In fact, I have always wondered whether when I trade the pink sheet versions with TD they may perhaps actually be trading the native Canadian version of the stock and then doing the translation to show it on my account as the pink sheet version.

At any rate, analysts sometimes caution about small precious metals stocks on pink sheets because of the lack of liquidity. I have found, however, that if you do it the right way you can trade these pretty close to as efficiently as you could the Canadian stocks themselves. Of course, you can also just trade the Canadian stocks on an Interactive Brokers or Etrade international account, although when I had an IB account I found it was so confusing to figure out buy and sell prices in USD to put on my tax forms that I wound up closing the account.]]> http://seekingalpha.com/article/129068-stick-with-gold-and-the-oil-stocks?source=feed#comment-449546 449546
If you decide to go into junior gold stocks, here are some suggestions:

1). Eastmain Resources. A long-time favorite of mine. They have a > 1 million ounce deposit (known as "Eau Claire" or "Clearwater") of high grade gold in the vicinity of Goldcorp's Eleonore gold camp that is being developed. Recent drill results suggest that the resource may expand considerably. Market cap is about $80 million US and they have about $20 million CAD in cash which will last them at least 5 years.

2). Sabina Silver. They have a 200+ million ounce silver deposit, which also has zinc and copper. In total metals content it is pretty high grade ore and most can be open pit mined. The main drawback is that it is far north in Nunavut, Canada, and will require construction of a road and port. However, they just announced a deal to buy a gold project from Dundee Capital which is near Sabina's deposit. The gold project contains > 2 million ounces at about 10gpt. (that includes inferred resource). After this deal is completed I believe Sabina will have something like 125 million shares (including some shares to Dundee contingent on future developments), putting them at a market cap that I believe to be something like $80 million US. They paid some cash to Dundee but should still have about $25-30 million Canadian left in their coffers.

3). Comaplex minerals. They have around 2.5-3 million ounces of good grade gold in Nunavut, it is a remote area but should be able to leverage much of the infrastructure that Agnico Eagle develops for its Meadowbank gold project, Comamplex's Meliadine project is just a bit off the path from the port to Meadowbank. Comaplex's market cap is something like $120 million US or so.

Smaller juniors I like are Ontex, Rolling Rock, Golden Goose.

The one stock I own in a precious metals producer is Silvercorp, which has a low-cost silver mine in China.


Bottom line is my bets on precious metals are on companies (except for Silvercorp) that:

1). Are exploration-only companies, and appear to have the intent to sell their property when the time is right rather than trying to develop their own mine.

2). Have their precious metals deposits in Canada, about the most politically safe country for such assets.

3). Are selling at a value price per ounce of precious metals considering grade, size of deposit, and degree of proximity to infrastructure.]]> Thu, 02 Apr 2009 13:18:17 -0400
If you decide to go into junior gold stocks, here are some suggestions:

1). Eastmain Resources. A long-time favorite of mine. They have a > 1 million ounce deposit (known as "Eau Claire" or "Clearwater") of high grade gold in the vicinity of Goldcorp's Eleonore gold camp that is being developed. Recent drill results suggest that the resource may expand considerably. Market cap is about $80 million US and they have about $20 million CAD in cash which will last them at least 5 years.

2). Sabina Silver. They have a 200+ million ounce silver deposit, which also has zinc and copper. In total metals content it is pretty high grade ore and most can be open pit mined. The main drawback is that it is far north in Nunavut, Canada, and will require construction of a road and port. However, they just announced a deal to buy a gold project from Dundee Capital which is near Sabina's deposit. The gold project contains > 2 million ounces at about 10gpt. (that includes inferred resource). After this deal is completed I believe Sabina will have something like 125 million shares (including some shares to Dundee contingent on future developments), putting them at a market cap that I believe to be something like $80 million US. They paid some cash to Dundee but should still have about $25-30 million Canadian left in their coffers.

3). Comaplex minerals. They have around 2.5-3 million ounces of good grade gold in Nunavut, it is a remote area but should be able to leverage much of the infrastructure that Agnico Eagle develops for its Meadowbank gold project, Comamplex's Meliadine project is just a bit off the path from the port to Meadowbank. Comaplex's market cap is something like $120 million US or so.

Smaller juniors I like are Ontex, Rolling Rock, Golden Goose.

The one stock I own in a precious metals producer is Silvercorp, which has a low-cost silver mine in China.


Bottom line is my bets on precious metals are on companies (except for Silvercorp) that:

1). Are exploration-only companies, and appear to have the intent to sell their property when the time is right rather than trying to develop their own mine.

2). Have their precious metals deposits in Canada, about the most politically safe country for such assets.

3). Are selling at a value price per ounce of precious metals considering grade, size of deposit, and degree of proximity to infrastructure.]]> http://seekingalpha.com/article/129068-stick-with-gold-and-the-oil-stocks?source=feed#comment-449513 449513

I doubt they will do anything to them. Roosevelt confiscated gold, but didn't confiscate gold stocks.

It is one thing to confiscate a commodity, it is a far bigger step to start confiscating people's stock. A couple of restraining factors in my view: 1). how do they decide what is and what is not a precious metals stock 2). Confiscating precious metals stocks would create huge ill in countries like Canada. We can't afford to alienate Canada, we are going to need their oil. (and when gas reaches $10 per gallon, you will no longer hear the Democrats thumbing their nose at environmentally dirty oil from tar sands)


]]> Thu, 02 Apr 2009 13:01:03 -0400

I doubt they will do anything to them. Roosevelt confiscated gold, but didn't confiscate gold stocks.

It is one thing to confiscate a commodity, it is a far bigger step to start confiscating people's stock. A couple of restraining factors in my view: 1). how do they decide what is and what is not a precious metals stock 2). Confiscating precious metals stocks would create huge ill in countries like Canada. We can't afford to alienate Canada, we are going to need their oil. (and when gas reaches $10 per gallon, you will no longer hear the Democrats thumbing their nose at environmentally dirty oil from tar sands)


]]> http://seekingalpha.com/article/127512-keeping-our-confidence-in-strong-energy-stocks?source=feed#comment-438070 438070

How about the broader issue of the plans for the Obama administration to levy trillions of dollars of new taxes on the industry, which I believe will demolish the US oil and gas industry and guarantee that no company ever makes another dime producing oil or natural gas in the United States.

You think that might have something to do with it?


What lunatic would invest in US oil or gas companies when the federal government has expressed its determination to levy astronomically large new taxes on the industr?

Are investors counting on the Republicans taking over in 2010?]]> Tue, 24 Mar 2009 10:21:12 -0400

How about the broader issue of the plans for the Obama administration to levy trillions of dollars of new taxes on the industry, which I believe will demolish the US oil and gas industry and guarantee that no company ever makes another dime producing oil or natural gas in the United States.

You think that might have something to do with it?


What lunatic would invest in US oil or gas companies when the federal government has expressed its determination to levy astronomically large new taxes on the industr?

Are investors counting on the Republicans taking over in 2010?]]> http://seekingalpha.com/article/126743-short-squeeze-in-silver-how-to-profit?source=feed#comment-436656 436656
In my view they are the best choice if you prefer to invest in an exploration-only company that is sitting on a known deposit.

Their net cash position is a large portion of their market cap, if you back out the cash you are getting silver in the ground in a large deposit with a good grade of silver and other marketable minerals for something like $0.10 per ounce of silver equivalent. Plus, the deposit is in politically-safe Canada. It is in a remote area, however, so whoever eventually develops the deposit will have to incur major capital cost. But the deposit is big enough to be able to support such capital expenditures.]]> Mon, 23 Mar 2009 11:36:19 -0400
In my view they are the best choice if you prefer to invest in an exploration-only company that is sitting on a known deposit.

Their net cash position is a large portion of their market cap, if you back out the cash you are getting silver in the ground in a large deposit with a good grade of silver and other marketable minerals for something like $0.10 per ounce of silver equivalent. Plus, the deposit is in politically-safe Canada. It is in a remote area, however, so whoever eventually develops the deposit will have to incur major capital cost. But the deposit is big enough to be able to support such capital expenditures.]]> http://seekingalpha.com/article/125538-gld-adds-9-6-tonnes-watch-out-switzerland?source=feed#comment-423229 423229
True. I was a bit overly glib regarding my comment about Treasuries.

There will always be a buyer for Treasuries, because the Fed can print an infinite amount of paper money and buy up US Treasuries with it.

By the way, if anyone's interested in Eastmain here's a recent interview:

www.resourceschannel.c...


Dr. Don didn't get around to mentioning their 3rd property, Eastmain Mine/Ruby Hill, which also has a lot of potential.]]> Thu, 12 Mar 2009 11:42:37 -0400
True. I was a bit overly glib regarding my comment about Treasuries.

There will always be a buyer for Treasuries, because the Fed can print an infinite amount of paper money and buy up US Treasuries with it.

By the way, if anyone's interested in Eastmain here's a recent interview:

www.resourceschannel.c...


Dr. Don didn't get around to mentioning their 3rd property, Eastmain Mine/Ruby Hill, which also has a lot of potential.]]> http://seekingalpha.com/article/125538-gld-adds-9-6-tonnes-watch-out-switzerland?source=feed#comment-423145 423145

Brilliant. If demand for gold goes down, the price goes down. Thank you for explaining that difficult economic concept.

Now, try this one:

"If we look out into the future, what would happen if we started to get redemptions on US Treasury Bonds. Who will they sell it to? Seems like the price of US Treasury Bonds will fall faster than a sub-prime backed mortgage security."
]]> Thu, 12 Mar 2009 10:56:49 -0400

Brilliant. If demand for gold goes down, the price goes down. Thank you for explaining that difficult economic concept.

Now, try this one:

"If we look out into the future, what would happen if we started to get redemptions on US Treasury Bonds. Who will they sell it to? Seems like the price of US Treasury Bonds will fall faster than a sub-prime backed mortgage security."
]]>