Tag Archives: silver

Weekend Charting 5 Oct 2014 – NST, DRM, TGZ

Gold and silver price (USD) continue to have a terrible time. Time for an update:

Gold (USD)

Gold currently sitting on a significant support line at $1190. The last two occasions the price hit this area in June 2013 and Dec 2013, the price rebounded back to $1250 in a matter of a few weeks (and then onto $1420). Should $1190 fail, then I’d expect at least $1065 to be hit.
XAUUSDO_scottreevecom_6oct2014

Silver (USD)

Silver recently broke support at $18.62 and hit below $16.92 support. Silver last consolidated strongly between these two levels between Sep 2009 – Aug 2010 and between Feb and Aug 2008, so there may be a bottom at current levels and some more sideways action? If not, then I’d expect at least $14.65 to hit next support level – a major support level that goes back to April 2006.
XAGUSDO_scottreevecom_6oct2014

NST (Weekly):

NST has some buying support in the $1.20s. Should this area fail, a test of $1.09 is likely. Next couple of days will determine next direction (see short term candlesticks with wedge formed).
NST_scottreevecom_5oct2014

Close up of Daily candlestick chart:
NST_daily_scottreevecom_5oct2014

DRM (Weekly)

DRM now fallen 11 of last 12 weeks, breaking some key support lines. Technically the only real potential support area on the chart is around 40 cents when DRM last hit the area in June 2013. Hard to see on my small chart, but the last two weeks have shown some “tails” to the weekly candles indicating current buying support below 50 cents.
DRM_scottreevecom_4oct2014

TGZ (Weekly)

TGZ is a fairly illiquid gold stock. Nonetheless, weekly candlesticks create a more clear view on the areas of resistance and support. The 80 cent region has been a dominant area of resistance, whereas 55 cent has been a strong support level, and the place to watch if the current trending support line is broken.
TGZ_scottreevecom_4oct2014

Cheers
Scott

Must Watch: Michael Maloney’s Hidden Secrets of Money

Compulsary viewing for anyone interested in where the global debt crisis is likely to head next and why researching more about gold and silver is vitally important. This is what your financial advisor and Superannuation Fund managers probably don’t want you to know about…

Highly recommend checking Mike’s best selling book on gold and silver and subscribing to his Youtube channel. The first 4 episodes of Hidden Secrets of Money have been released.

~ Scott

Gold Shares Bloodbath

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  • UPDATE: Post now includes charts for NCM, OGC, PIR, TGZ (as of 10 June 2013)
    =======================
    On Friday 12 April 2013, the US dollar gold price plummeted 5.6 per cent and silver fell 6.0 per cent. At time of writing on 15 April, both continue to slide with gold price in Australian dollars at A$1340 and silver at A$22. Major support lines have now been broken and the heavy falls are likely going to continue for a while yet.

    The bloodbath on the ASX today can be seen in the watch list below:

    gold_asx_15.04.2013

    As is clear above, the one gold major on the ASX, Newcrest Mining fell over 8 per cent in the session. Even the low cost producers got smashed as much as the marginal gold producers… (more on that later)

    As I posted at the end of 2012, Newcrest (and gold shares generally) have been underperforming for over two years now.
    ncm_2013_shoker_goldmarketscentral

    With today’s losses, NCM is currently down 20.8 per cent for 2013.

    In all seriousness who would want to touch gold and silver right now?

    I don’t blame anyone if they are leaving the gold or silver markets right now. Like trading anything, it’s all in the timing and the charts are showing that both gold and silver price will get cheaper (unless there is a major bounce in the next couple of days…unlikely).

    Gold and silver’s fundamentals today are better than they have been for decades. Yet again there is now a large disconnect between what’s happening in the physical market and what the gold price and gold shares are indicating. We have tens of thousands of paper gold and silver contracts flooding the market, yet we have the likes of central banks trying to repatriate their gold reserves, but being told the gold likely doesn’t exist yet. Take the German Bundesbank being told it would take 7 years for nearly 700 tonnes of its gold bullion reserves to be flown back to der Fatherland from Paris and New York (yet this amount of gold could fit on a couple of airliners tomorrow if the gold existed…).

    Most years since the gold/silver secular bull market started 12 years ago, gold and silver always had at least one savage sell off each year. This is why many investors always warn about investing in gold/silver with leverage – it’s easy to get caught out. See this chart I did back in Sept 2011, which shows these severe pull backs. This current sell off is just another example of volatility in gold and silver markets. In the past these sell off periods have all been fantastic buying opportunities. In a debt laden Western World, in a world where Japan is destroying its currency, and China has printed more credit than the entire US financial system since 2009 …. then I’m pretty confident to say that gold and silver will remain being a desired currency to store wealth and maintain purchasing power.

    Back in 2008, the gold price fell 34% from peak to trough before returning to its bull market
    . Silver when from around US$20 to about US$7.50 – when I first became awake to gold and silver’s fundamentals.

    By the time Lehmann Brothers went under, and like.. half the world’s financial industry on 15 September 2008, gold and silver had already been falling for 6-7 months and bottomed soon after the GFC panic started in that September. Perhaps gold and silver is yet again being a leading indicator of things to come later this year?

    The best part about the current sell off is that the lowest cost producers, which high-grade gold near surface are getting sold off just as heavily as the marginal gold stocks. When the dust settles, there will be some big bargains.

    In my opinion (no buy recommendations or advise here… just my opinion), these are some of the gold stocks worth watching. Who knows when they will bottom.

    (Click to enlarge)
    scottreeve_gold_stocks_april2013
    Disclosure: I currently have a small parcel in TGZ.

    My observations are based on gold resource, production, cost… the “economics”. Political/management risks can change the desirable attributes of these stocks rather quickly!
    I would also say that there are few gold stocks in Australia worth touching these days because the cost structure is getting out of control. The last few years there have been too many mid-tier and major gold companies that have put $100s millions into growth and expansion, and are paying for it in their cost structure. Now is the time to find the best of the best in terms of high-grade gold and low cost. Right now South America looks good and as always gold deposits that are very high grade and shallow to get to!.

    ** Important note: Not all gold companies report complete total cash costs. Some companies excludes taxes, exploration, depreciation, depletion expenses, financing etc from their calculation. This can make it difficult to compare companies cost structure – the difference can be large. For example, in January 2013, one Australian analyst found that

    “the average total production cost was $1,170 an ounce, compared with an average reported cash cost of $773 an ounce.”


    Quick background on these companies mentioned above:

    Two weeks ago I charted BDR and DRM and their support lines are clear to see. In the coming days I will update this post with technical analysis of the other stocks. They will also be posted at www.goldmarketscentral.com

    Newcrest Mining
    Newcrest is on my list as it is the only gold major on the ASX. NCM has had consecutive years of underperforming, but when the gold market bottoms, NCM should bounce. Following the stockmarket lows in 2008 NCM rebounded around 90 percent in 6 months (from $21 to $40 p/share). Yes, dogs can turn into market darlings quickly. I suspect one day soon NCM will resolve its expansion issues at Lihir and Cadia and solid returns should result.

    NCM_scottreevecom_10june2013

    Oceanagold
    The Didipio Mine (Philippines) is estimated to be one of the lower cost gold mines (net of by-product credits) globally. Didipio Mine estimated cash costs of FY2013 at negative $370 to negative $50 per ounce, due to net by-product credits from 15,000 – 18,000 tonnes of copper.

    OGC_scottreevecom_10june2013

    Beadell Resources
    Beadell has just commissioned a new gold mine in northern Brazil. One of the starter pits has arguably the highest grade gold deposits in the world with grades at 30.9g/t au (almost 100,000 ounces). Another start pit contains veins of iron ore between the veins of gold bearing ore. BDR is soon to commission an iron ore concenerate plant to sell it as a by-product. This will lower BDR’s total cash cost to the lowest quartile of around US$425 per ounce.

    BDR_scottreeve.com_31.03.2013

    Papillon Resources
    Papillon raised $52.9 million in March 2013 to complete a 100,000 metre drilling program at its project in western Mali. The company already has over 4 million ounces resource from shallow drilling completed to date. There is potential for many millions of ounces to be defined in the coming months.

    PIR_scottreevecom_10june2013

    Teranga Gold
    Teranga has a proven gold mine in eastern Senegal. The company made significant inroads in 2012 by reducing its operating costs by expanding its plant; found a new gold deposit nearby (at grades of 5.3/gt au), and will soon eliminate its hedge book in the coming months.

    tgz_ax_price_weekly.10dec10_to_25jul13

    Doray Mining
    Currently developing one of the highest grade gold projects in Australia at Andy Well. The main pit at Andy Well has a resource grade of 15.1g/t au. First gold production is expected in September 2013 at an annual rate of 74,000 oz per annum. Total cash costs expected to be around A$868 per ounce.

    DRM_scottreeve.com_31.03.2013

    Cheers
    ~ Scott

  • The new frontier – extracting gold and silver from the sea floor

    We often hear of gold and silver being mined from open pits and underground mines… but more recently there has been some bold entrepreneurs that are going to extra lengths to get gold and silver form the sea floor.

    Here’s a few cool TV series on mining/exploring for gold and silver… if you can get hands on a copy.

    Silver Rush

    A three-part series narrated by Mike Rowe, tells the story of one of the greatest deep-sea treasure quests of all time. The series will take viewers on board Odyssey’s flagship, the Odyssey Explorer, as it launches its most audacious operation ever — locate and excavate three shipwrecks worth as much as a billion dollars all in one season. But will they be able to complete the entire recovery effort in just 90 days before punishing storms roll in?


    silver bullion brought up from one of the shipwrecks (4kms under the surface):
    Silver Rush

    For more info visit Odyssey Marine Exploration

    Bering Sea Gold

    In Nome, Alaska, the gold rush is on. Meet the dredgers, driven by gold fever and sometimes desperate need, who pilot their ragtag dredges and dive with hoses to suck up gold from the bottom of the frigid, unpredictable Bering Sea.

    Bering Sea Gold (Under the Ice)

    The summer season over, 3 teams of miners dive under the ice to dredge gold on the floor of the Bering Sea. Two dredge teams struggle to winterize their operations, train their crews, and get the gold. But one new, scrappy crew of friends hits pay dirt.

    more on these vids at: GMC

    In the not too distant future, mining gold and silver from the seafloor with heavy machinery? It’s not far away..

    Nautilus Minerals

    is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver.

    Nautilus Minerals
    For more info visit Nautilus Minerals

    As Ron Paul puts it… If you had two ships sink to the bottom of the Ocean A) one with gold and silver on it B) the other with US dollars. Which would the diver go back for? One is real money with intrinsic value, the other can be printed in unlimited quantities.

    Cheers
    Scott

    Stocks and Precious Metals at opposite turning points?

    I feel we are at a major turning point for the major world sharemarkets and full gold and silver. Below is my interpretation of the chart technicals.

    S&P500

    Australian All Ords

    AUD/USD

    AUD/EUR

    Gold (US$)

    Silver (US$)

    Cheers
    Scott

    2011 Annual Tipping Results

    1st_2011_shares_com_au_annual_tipping_comp

    Each year, for about seven years now, I have participated in the Annual Shares.com.au Tipping Comp. These are the three stocks I selected for 2011, with the reasoning (the comp used 31/12/10 for opening prices):

    posted: 2 January 2011

    Always struggle to pick three.. narrowed it down to four, so DRM will have to miss out.

    Three gold picks:

    NST – Northern Star. NST bought the Paulson’s gold mine from IAU in mid-2010. The mine is performing above expectations. NST should be revalued. Currently has a low market cap of $116 million.

    KRM – Kingrose Mining. A small gold producer in Indonesia which is has very low production costs (US$147 p/ounce). KRM should make significant profits throughout 2011 and has good exploration ground.

    PIR – Papillon Resources. Small gold explorer in West Africa. Had a good run in 2010, should continue with more exploration success.

    The results:
    NST: + 101.3%

    NST - Northern Star

    KRM: - 0.7%

    KRM - Kingrose Mining

    PIR: - 0.9%

    Papillion Resources

    Overall I finished 1st out of 23 entrants, whereby I made an average gain for the three stock selections of + 33.3%.

    Only one other entrant had a positive result from the three selections. This is how the group of 23 compared to the All Ords.

    2011 Shares.com.au Annual Tipping Results

    Interestingly, the forth pick I couldn’t include:
    DRM was down only - 1.1%

    In comparison:
    * the Australian All Ords Index fell - 15.4% in 2011;
    * physical gold (US/oz) increased by + 10.0% in 2011; and
    * physical silver (US/oz) increased by - 10.4% in 2011.

    The overall theme for stocks in 2011 was major volatility, a trend I expect to continue for many years to come. The Australian market, and most world stockmarkets are in a secular bear market which may last for another 10 to 15 years.

    Money can be made in any market though, if you trade with discipline, by using trailing stop losses on the gains, and keeping the losses small.

    Cheers
    Scott

    Recent videos by Mike Maloney

    Gold recently hit US$1470, silver about to hit US$40. Below are some interesting videos and articles I have come across. Enjoy.

    Use the Dollar or Else

    Article published on Mises.org 6 April 2011, by Llewellyn H. Rockwell Jr.

    Look up the phrase “a unique form of domestic terrorism” on a search engine and you will turn up a story about a man whom the US government is trying to cage from now until the time of his death.

    And his crime? His unique form of terrorism?
    He minted silver and copper coins and sold them. In other words, he did what innumerable entrepreneurs from the beginning of time have done. He attempted to provide consumers with a store of value. No one was forced to buy. He met a market demand, and that’s it.

    Whom did he hurt? No one. Unlike illegal drugs, which the government bans on grounds that it doesn’t want us to hurt ourselves, these silver coins did not endanger their users. They only gave people an option on what to do with their money. Did the proprietor attempt to claim that these were legal tender for monetary exchange? No, he sold them for what they are.

    Could people use them for money? Yes, but people can use anything for money: shoes, shells, flash drives, or books. Whether something is money or not depends on the intentions behind the exchange. Do you acquire something to consume it? It is not money. Do you acquire something in order to trade it for something else? In that case, it takes on money-like properties.

    It is wholly understandable that people have doubts about the future of the paper dollar. Many people are seeking alternatives, in their own financial interest. What this proprietor did was provide something that turned out to be a possible alternative to the dollar. And for that, and that alone, he is being hounded and destroyed.

    His name is Bernard von NotHaus and he is 67 years old. In the course of the proceedings, he was called every name imaginable. He was called a crook, a terrorist, a crank, and a crazy man. What he actually did, however, should be fully legal and encouraged in any nation, in all times and all places.

    A nation that is confident about its money’s future would not fear currency competition. A nation with a dying money uses every possible means to crush the competition. That is precisely what is happening in the case of the so-called Liberty Dollar.

    What’s striking here is that no one believes there is any reason to argue the point. It is obvious to his persecutors that he is a criminal. “He’s playing on a core idea of the radical right, that evil bankers in the Federal Reserve are ripping you off by controlling the money supply,” said Mark Potok of the Southern Poverty Law Center. “He very much exists in the world of the anti-government patriot movement, whatever he may say. That’s who his customers are.”

    And what is the interest of the SLPC in this case? This is a group that claims to be about stopping hate and racism — and this has something to do with opposing poverty. And yet here they are intervening in a case in which a man is actually trying to prevent people from being impoverished. As for the Fed, it is not exactly an act of hate to point out that the Fed controls the money supply. Bernanke himself admits this!

    The government has made no bones about the foundation of its case. Citing a Civil War–era law, prosecutors say that it is a crime to compete with the official dollar. Note that they are not citing the US Constitution, which nowhere prevents such a thing.In fact, private coinage has a rich history in the United States. It was essential when the West was being settled. Providing coinage services was as common as any other trade.

    But since 1971, when the dollar became all paper, there has been a sense that its viability needs the backing of federal guns in order to thrive. This attitude is inconsistent with freedom. The right of private coinage is an essential part of free enterprise. Currency competition, especially in a digital age, is something that every country needs.

    As Seth Lipsky wrote in the Wall Street Journal, “Certainly it’s a loser’s game to suppress private money that is sound in order to protect government-issued money that is unsound.”

    Precisely. As Lipsky points out, NotHaus operated very close to the line in terms of legality. He put the dollar sign on his coins, for example, and sold them with numbers. I can’t comment on his business dealings or the integrity of his operations. But this much is clear: the grounds on which he is being hounded are egregious and tyrannical.

    Allowing for alternative currencies is not terrorism. It is a path to monetary reform, merely an application of the principle of free enterprise to a sector that should have never fallen so completely to government control. The people who are working to provide alternatives should not be jailed; they should be celebrated in every country that values freedom.

    Couldn’t agree more with the last sentence!

    All paper currencies fall in value against gold and silver in 2010

    gold_bars_image

    gold_yoy_1jan2011_i

    gold_yoy_1jan2011_ii

    In 2010, all paper currencies lost value to gold. ie. All currencies have lost purchasing power to gold.

    That’s 76 currencies which have expanded their money supply and which means you needed more pieces of paper to buy the same amount of gold 12 months ago.

    The interesting ones:
    Gold in US Dollars (reserve currency) up 29.60%
    Gold in Euros up 38.60%
    Gold in Australia Dollars up 13.60%

    13.60% was the second worst performance for gold, with Australian Dollar gold price narrowly increasing more than the Japanese Yen (13.00% increase).

    In other words if you had invested US$10,000 in gold one year ago you could buy 9.1 ounces. A year later you can buy 7.0 ounces. In July 1999, US$10,000 could buy 39.5 ounces of gold.

    This is a rather large disparage between the two main “saving” assets. All paper “fiat” currencies continue to buy you less gold, silver and essentials such as food. If you expand your money supply, inflation is always inevitable. It is clear from these numbers that governments worldwide continue to use inflation (money expansion) as a means to destroy your every day purchasing power.

    Meanwhile most economists are saying Australians, in particular, are richer cause the AUD is over parity with the USD. I think this is artificial wealth.

    Silver vs Paper currencies?

    All currencies have lost purchasing power to silver.

    silver_yoy_1jan2011_i
    silver_yoy_1jan2011_ii

    Silver in US Dollars (reserve currency) up 83.00%
    Silver in Euros up 95.90%
    Silver in Australia Dollars up 60.50%

    The worst performance for silver was against the Japanese Yen (still a 59.60% yearly gain). Clearly silver easily outperformed all paper “fiat” currencies.

    In other words if you had invested US$10,000 in silver one year ago you could buy about 592 ounces of silver. A year later you can only buy 323 ounces of silver. ie. You need more and more Dollars to buy the same amount of silver. All currencies are inflating (loosing purchasing power) every year.

    Where will your savings be parked this year?Precious metals or in un-backed paper currency?
    Cheers
    Scott

    Mike Maloney’s bold prediction on Deflation

    I recently came across this interesting video by Mike Maloney of goldsilver.com. (Let me know what you think)


    I previously read Mike’s book, Guide to Investing in Gold and Silver. If I’m not mistaken Maloney believes with a breakdown of the current US-Reserve monetary system there will first be a deflationary period, which will trigger central banks and governments’ to resort to extreme paper printing which will lead to ultimate hyperinflation and fiat currency collapse. So essentially a total market crash in both directions, but hyperinflation will end fiat currencies.

    While I do believe the current US Dollar reserve system will definitely not last for too much longer (in the form that it has more or less had since 1971), and that all fiat currencies are pointing towards ultimate failure, I am not a all-out deflationist. By design, the monetary system is designed to inflate — fraction reserve banking, income taxes, derivatives etc. Debt provides leverage for further spates of debt (inflation). My deflation argument is centered around overpriced debt-leveraged assets – housing, sharemarket (and derivatives), and other financial assets. With the opposite main asset class (Commodities), I believe long term, deflation of commodities is not possible, as people will merely increase the % of income to get food supplies and other needs of economic security (gold and silver?). eg. In the lead up to the Global Financial Crisis (GFC) many middle-income families in the Philippines were paying close to 100% of their income for rice!

    Anyway, I believe central banks and governments’ would love to see gold and silver deflate. A higher gold and silver price makes more people question the purchasing power of paper money. It gets to an obvious point that gold is better in the hand than pieces of paper. The GFC period saw gold and particularly silver deflate significantly along with all other commodities – not totally surprising, but the key is PRICE was collapsing, but demand for physical gold and silver went even more crazy. This is a vital point to the future price and value (two different things) of gold and silver. I’m more than happy to see a huge dip in Gold and Silver price. Perfect buying opportunity to convert paper money while businesses still want and accept it.

    Getting back to the main point, Maloney’s view of deflation of the overall money supply indicates that the US and International community has had their hands burnt with US Dollars. There is not enough inflation yet to plug existing debts from the GFC period. The money is limited in means to re-enter the US housing market (some US$7 trillion along needs to be fill the gap) because the US citizens aren’t looking to get larger and larger mortgages again – there is just is no confidence. They don’t want new cars, or new houses, they want economic security. This lack of confidence (in the world’s largest economy, which has the world reserve currency), and consumer borrowing is the main catalyst for deflation to spread from debt-leveraged assets to the price of goods common goods traded worldwide ( commodities!). Unfortunately big Government and central bank control of money will not be the solution next time around. So yes, big deflation, followed by hyperinflation over the long run entirely possible. I say this with a $100 trillion dollar note in front of me! (if the note was denominated in $US (rather than Zim Dollars) it would almost be twice the current world GDP!)

    Scott