Tag Archives: Silver

A Money Problem

1964-money-problem2

We Don’t Have a Wage Problem; We Have a Money Problem

FYI: GAAP Acccounting gatech_finlab_lifo_42216

Can the Piotroski F Score Improve Your Investment Strategy?

Bar

We will be looking at accounting metrics to screen out value traps, so I thought some may wish to read: Can-the-piotroski-f-score-also-improve-your-investment-strategy

As an example, if you want to invest with more (RELATIVE) safety in the cyclical oil service business, you would want a company like this: RPC Inc (RES)

Note balance sheet and good operating metrics.  It doesn’t mean that RPC, Inc. can’t go materially lower in price, just that the company has a high probability of surviving through this down cycle compared to competitors.

 Market Psychology

Silver-to-$60 (video during 2011 Silver Mania)

Dollar to Euro Parity (video during 2015 Dollar Mania/Panic)

Beware of “experts.”

Buy What is on Sale! CEF Discounts

PITSelling today in the pits-gold and silver

CEF BIG

Above is a chart of CEF, Canadien Gold (60%) and Silver (40%) bullion closed-end fund trading at a 6.5% discount today. ON SALE!  I have no clue if tomorrow the price will be higher or lower.

http://www.cefconnect.com/Details/Summary.aspx?Ticker=CEF

Note the premiums as high as 10% and currently 6.5% discount.

4-Gold-sentiment-data

Learn more about interpretating sentiment indicators: www.acting-man.com

Long term sentiment

gold Sent 1

Silver Sent 1

HYGI Sent

A Great blog, Down the Rabbit Hole: http://biiwii.com/wordpress/2014/09/10/sentiment-shifting-gold-bugs/

Though, I like miners more, but now is a good time to pick up tangible money at a discount. Pay 94 cents and get a dollar of gold and silver today–I will take it.  SOLD!  Miners make money on the arbitrage between their input costs and output prices. You don’t need a rising nominal gold price; you need a rising REAL gold price.

gold.cci_-600x264 (2)

Gold commodities

Now is the time for me to post on Yamana (by this weekend, I pray) because it is at a price $7.33 that I have purchased in the past and it may be a reasonable choice for a BASKET of miners.

Also, you want to see analysts pile-on negatively AFTER price has fully dicounted the news. I am not being contrarian or cynical, it is just how markets work–they DISCOUNT.

Yamana Gold suffers rash of stock price target cuts • 12:58 PM

Carl Surran, SA News Editor
  • Yamana Gold (AUY -1.2%) is lower after Morgan Stanley, Credit Suisse and Raymond James cut their price targets on the stock to $10.70, $10.50, and $10, respectively.
  • In the case of Morgan Stanley, the lower target still implies upside of more than 40%; AUY has said the Pilar mine in Brazil has shown improvements with output increasing M/M, but the ramp up is tracking modestly below expectations, thus the firm’s tempered outlook.
  • An update on Canadian Malartic and meeting quarterly expectations are potential catalysts expected over the next 6-8 weeks.

Read comments

Read the link below and the link within it to gain more understanding on gold and miners.

http://www.acting-man.com/?p=32809 

Templeton’s 16 Rules; Go Where the Outlook is MOST Miserable; Young Investors

TempletonSir John Templeton Quotes

“Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria.

  • The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
  • “An investor who has all the answers doesn’t even understand the questions.”
  • “Diversify. In stocks and bonds, as in much else, there is safety in numbers.”
  • “…success is a process of continually seeking answers to new questions.”
  • “People are always asking me where is the outlook good, but that’s the wrong question…. The right question is: Where is the outlook the most miserable?”
  • “Focus on value because most investors focus on outlooks and trends.”
  • “Sell when you find a much better bargain to replace what you are selling.”

Sixteen Rules: Sixteen Rules for Investment Success_Templeton

Where is the outlook the most miserable?jan2edgoldstbears

Gold and silver stocks (as well as gold/silver) certainly fit John M. Templeton’s criteria of a hated asset class. The current 2011 to 2014 bear is near the average in duration and price decline. The worst decline in gold stock history was the 1980 bear market with a 72% decline. So, one sign post is the past. (Gold index used: Barrons’ Gold Mining Index or BGMI)

But charts like the the gold index only tell you the past.BIG HUI

Gold-Silver-Technicals

As you would expect, sentiment follows price. Note the huge decline in Rydex precious metals assets compared to all other financial asset sectors of the market–5%. Even the 2008/09 crisis period had triple the percentage. Of course, public opinion is at near all-time lows.

jan2edrydexpms

Silver-Sentiment

As price quietly stops declining (for now?)

jan2edstocks

Another sign of bearish Western investor sentiment was the draining of gold from ETFs. Also, there were discounts of up to 8% to 10% in closed end funds such as CEF and GTU that hold gold and silver bullion–an asset with no credit liability! The gold mostly went to Asia.  Physical demand is high at these prices. I simply view gold as money that can’t be debased in a world of fiat currency wars.  That doesn’t mean the price of gold in US dollars can’t go lower in the near term–three to eighteen months. GLD history chart 010214

goldetf

Rising demand for physical gold but declining price, video:

 

http://news.goldseek.com/GoldSeek/1388758285.php

http://www.bloomberg.com/news/2013-12-31/gold-with-silver-heading-for-worst-decline-in-three-decades.html

http://jimrickards.blogspot.com/

SEARCH STRATEGY
All of the above, is one part of a search strategy–look for the biggest price declines with the highest negative (or lowest positive) sentiment. Study the past hundred or so years of the industry (Google: Mark J. Lundeen and gold shares). If you are going to buy precious metals equities or gold/silver 5% to 20% as part of a portfolio, I suggest a high-quality mutual fund like Tocqueville Gold fund (TGLDX) or an ETF like GDX, GDXJ. You are nicked 1% or more in annual fees with a mutual fund but you get the diversification. GDX and GDXJ include companies that may be financially over leveraged or of poorer quality, but you have a lower cost and wide diversification. If gold and silver rise significantly, then highly leveraged–operationally and financially–leveraged companies will vastly outperform higher quality large cap miners like Agnico-Eagle (AEM) for example. I prefer a basket of 15 or so hand-picked gold and silver miners with 1. management with skin in the game, 2. decent balance sheets, and 3. well-defined projects with low cash and capex costs (no explorers unless a prospect generator). My goal is to hold through the beginning of the NEXT bear market–perhaps two-to-five years away?

Finding a hated asset class and then finding financially strong companies is relatively easy with some diligence. The HARD PART is holding on through the wild gyrations of price and sentiment. Stomach and character over brains.

Teaching the Young About Investing

http://sprottglobal.com/thoughts/articles/who-is-teaching-the-young-about-investing/

John Del Vecchio and Tom Jacobs, the authors of What’s Behind the Numbers?,
are giving a presentation at the New York Society of Analysts. Attendees will learn:
How companies hide poor earnings quality
Repeatable methods for uncovering what companies don’t tell you about their numbers
Reliable formulas for determining when a stock will get hit
Whether you’re a number cruncher or just curious, you’ll greatly benefit from this seminar, given by two people who combine investment chops with crowd-pleasing stories. So what are you waiting for?

Date: January 13, 2014
Time: 6:30 – 8 pm
Place: NYSSA Conference Center
1540 Broadway, Suite 1010
(entrance on 45th Street)
New York, NY 10036
Price: Nonmember $55
($10 surcharge for walk-ins)

Advance registration is encouraged in order to avoid the additional charge for walk-ins. Also, space is limited by the size of the room.

You may not be able to keep your resolutions about losing weight or going to the gym, but with a successful portfolio, no one will really care. So start the new year right by attending the above seminar.

Thank you for your interest in What’s Behind the Numbers?. Please feel free to share this with your networks!

Case for Owning Gold Has Collapsed; A Perspective in Silver; Reader’s Question;

GOLD CoinsMoney transmits value, Mises taught, but money does not measure value. This distinction is fundamental in Mises’s theory of money. “Money is neither an abstract numeraire nor a standard of value or prices. It is necessarily an economic good and as such it is valued and appraised on its own merits, i.e., the services which a man/woman expects from holding cash. (Human Action, pp. 414-415). Gary North, Mises on Money

Read more on the value of money: http://www.mises.org/daily/6380/The-Value-of-Money

What is, then, the best monetary policy? He argues that in light of his previous considerations “the state should at least refrain from exerting any sort of influence on the value of money. A metallic money, the augmentation or diminution of the quantity of metal available for which is independent of deliberate human intervention, is becoming the modern monetary ideal.”[17] He adds: “The significance of adherence to a metallic-money system lies in the freedom of the value of money from state influence that such a system guarantees.”[18]

The Case for Owning Gold Has Collapsed; Yellow metal could be headed much, much lower http://is.gd/h5KW6v. Gold could be headed not much lower, but much much lower.  This was written on April 18, when the value assigned to the monetary relic (AKA its nominal price) resided at $1391 per ounce.  So be warned, Mr. Gold advises that gold could go much much lower.  Gold bugs take heed; Mr. Gold himself has put the double ‘much’ whammy on you!

The article: The Gold Dilemma. The article is riddled with logical fallacies. Using CPI and GDP to measure anything meaningful is a fantasy–even forgetting that those indexes are politically constructed by bureaucrats.

Another view of gold’s history: 99816519-Special-Report-Gold-2012-In-GOLD-We-TRUST.

Why I own gold bullion–as a hedge against monetary chaos. Own what the government can’t print.

All the Silver Ever MinedAll the Silver Ever Mined

A reader’s question from the prior post: Am I 100% in cash?  No, I have cash, gold bullion, selected precious metals mining companies, a few other companies, and a tiny short position in certain stocks like GE and CRM.  If you think holding on through thick and thin after buying at the highs EVEN with UNSUSTAINABLE Fed manipulation of money and credit is a good plan, then view page 8 here: A Lesson in Financial History by Mish. Also, for more perspective on the unsustainability of current corporate mean-reverting profit margins see: An Unsustainable Equilibrium_Hussman. View the video presentations here and consider a donation to cure ALS: http://www.winecountryconference.com/2013-speaker-presentations/ People love to follow the crowd and momentum while mal-investment increases, so expect more S&P 500 movement to the upside until–unexpectedly–a surprise hits and people need to sell their “hot potato.”

But if you own great franchises at good prices then you have few worries. I wish I could find them now.

big-money-poll-2Short the SPY and Long PHYS for fun (not for real) at the highest offer for PHYS ($10,000 at $12.30 for PHYS) and lowest bid for SPY ($10,000 shorted at $158.10) on April 25 and lets see where we are in 12 months.

Update on April 29, 2013:bigSPY

Big sm spy

phys

spy