Tuesday, November 30, 2010

Flashes said to buy Almaden (AAU, AMM.to), & Atac Resources (ATC.to, ATADF)

Samples of my email gibberish   good info:

=================================================
Goombarh 10, Dec 1, 2010
Good Day,
The markets are looking buoyant today.
Gold is up and off to the races: Gold @ $1386 and Silver @ $28.40 as I type.
Did you watch the antics this morning on ATAC Resources.  Here is my take on what happened:
A group of traders executed a take down to hit the stop losses and get shares on the cheap, since they knew the big boys would be coming to bring the prices back up.  They executed this perfectly taking the price down $2+ and shook out a lot of investors hitting their stop losses.  Then they will distribute them through the next few days for some serious gains.  They do not care to hold stock as they are traders only.
I expect the serious buyers to start buying mid-morning just about now, and I can see the prices coming back up.
I haven't listened to the conference call, yet, but understand that these guys are serious geos and will not commit to anything until proven.  This means that claims of Carlin trend are pretty well proven and bodes well for the longer term.  As I remarked to a reader, this of all my stocks, I would consider as the best long term hold.  WHY?.....I trust the management to consider shareholders and the potential of the land they have is huge.  Not just 1 mine, but think maybe 10 mines as they prove up further potentials.
Almaden, just keeps climbing.  They have more holes 7, 8, 9 coming.  I expect the best ones 10, and 11 will come mid January and will blow everyone's socks off, if they find the dense rich grades.
Vitoria Gold is inching back up.
A new and very prospective company for your consideration, Caerus Resouces (CA.v CAEUF), they have optioned some old gold mines in Columbia.  This is not my usual find through searching but a tip, from a colleague.  There are some legal concerns about specific property ownerships, but the indications are  that the stock is moving.  Here is their website for your own DD:
Therefore, I can not say, that this is a longer term hold at all, but maybe a trader to catch some of the move.
I believe the Seasonal Rush is now upon us, as the year end sales are drying up and funds now positioning for the new year.
Also, note that Silvermex SLX, has just completed their financing (in 2 days - quick), so the lid on prices is now off.
Regards,
Marco G.


====================================================
Goombarh Notes # 7, sent Nov 26th, 2010

Good Day,
Well, another one of them unsettled days in the markets this morning.
Jeb Handweger, one of the tech analysts that I look at is calling for Gold to drop if the dollar strength continues:
http://www.kitco.com/ind/Handwerger/nov242010.html
I think the Euro crisis is pretty well settled and that means the recent flight to USD will now abate.  I wish more tech traders look at the world macro pictures more often, but I suppose that is a trait that has to be developed.  Most tech traders only rely on charts, and the charts really do not more than indicate what has already happened. 
My thoughts are that macro trends and world events are more important than charts.  The events are fundamental drivers of the markets, whereas the charts only give short term technicals.  Understanding the macro picture helps you sleep at night.  Looking at the charts serve to reinforce the macro picture and helps tactics in trading.
So, my outlook forward shows no signs of change.  A glance at Shanghai charts shows it was up overnight.  Unfortunately, the mainstream media such as Bloomberg do not show the Shanghai, and concentrate on Japan, Hong Kong and Singapore, the older traditional indicators, and their headline says " Asia Stocks, Won Drops as North Korea Warns of War; Euro Drops on Debt Risk"  seems they might be backwards looking as opposed to forwards looking needed by investors. 
Don't you think that China, more than other countries would know about Korea's intentions?
http://noir.bloomberg.com/?b=0
The above is my editorial for this week.
Specifics about Stocks.
Great Basin has pulled back due to the OHSUA, putting them on safety violations watch.  Look at this as a buying opportunity for the most safe stock, that I can find on the market recently.
Almaden Minerals (AAU, AMM.to), 2nd press release indicates the target has grown larger.  But we already knew that; in understanding that their discovery is shaped like a funnel.  Of course the lower grades and wider areas are at the top of funnel.  Let the others look for deposit expansion.  We are looking for the high grades!  It will take some time and more holes to find the source, ie: the base of the funnel, which should be of very high grades. 
Note that I am more aggressive and raunchier in these informal notes; that is the name of the game; quick and dirty!
Disclosure:  I have sold some Darnley bay at a loss to take advantage of other opps.  I still hold a core position for spring.
Another Yukon play, that I have taken a position in is ATAC Resources (ATADF, ATC.v).  Their last release indicates that they may have found a huge trend similar to Carlin in Nevada.  They have 3 hits in 3 separate unrelated zones on their huge trend, that they have locked up with claims.  I have met and spoken to Graham Downes their CEO.  He strikes me as a very straight up kind of guy, with ambition and ethics.  I mentioned the possibility of private placement, and he indicates not at this time.  What this tells me is that he expects a lot higher than now @ $8.00.  Note that drill holes releases are due in next few days or weeks.  So, this is another potential monster stock.
Victoria Gold (VITFF, VIT.v)is still churning around a dollar.  I expect a move up with Gold.  I also expect a take out offer from either Kinross(KGC) (who hold 20%) or Newmont (NEM).
That's it for today.
Marco G.
======================================================================
Goombarh Flash #3, Sent November 29, 2010

Good Morning again,
Just did more puzzling over their drill language on Almaden's Web site:
Read their section on epithermal gold deposits.  This explains what this Ixtaca prospect is.
They just finished hole assays for #6.
Pending are assays for holes #7, 8, 9 which are guiding their search for base of funnel.
Holes #10, and #11 are presently underway.
The way I interpret this is that 7, 8 and 9 holes gave them more info about where base may be.  These holes may not be very good results.
Holes #10 and #11 are collared at the same location with slightly different dips and have a good chance of long hits and high grades of being very close to base of funnel; see their alignment on their drill plan. 
Therefore, I am buying more AAU, AMM.to
Marco G.

Sunday, November 28, 2010

Why I bought Victoria Gold (VITFF) after the Drop - Newmont(NEM) and Kinross (KGC)


Why I bought Victoria Gold (VITFF) after the Drop - Newmont(NEM) and Kinross (KGC)
November 28, 2010
By: Marco G.

I was browsing the internet and I found a reason that explains why I intuitively bought Victoria Gold after they declared an error on November 23rd, 2010 in their April, 2010 43-101 assessment of their Cove gold project in Nevada. Adam Hamilton of Zeal, was writing zealously about the market's typical over reaction to bad news. See the chart following depicting the sudden drop in VITFF's share price after the news of the error: (Click to enlarge)

That is reason number one, the market typically over reacts, and the price should stabilize and regain some of the loss. I intuitively, knew, that something was wrong in such a large drop, and thanks to Hamilton, he provided an article that details the market psychology that typically over reacts to the down side on any bad news.

Reason number two, is that I had been researching recently, about Reserve Recognition Accounting (RRA) and the rationale of reasonable certainty, that is expressed in the security regulations about the reserves and resources of oil and gas development firms. This is very similar to the reserves and resources definitions used by the Canadian NI-43.101 standards, used by most mining companies. So that morning, Victoria Gold had declared an error, that may invalidate the Upper Zone of their mineral resources in their Cove project as given in their March 5, 2010 NI 43-101 technical report.

Upon reading further in the release, the error was to do with four historical drill holes done by their predecessor explorer Echo Bay Mines. The impact was that the calculations for the inferred resources would have to be re-done, and possibly the resources would not meet the guidelines for inclusion as a resource. Oh horrors, the inferred resources, which in itself is the most uncertain of the resource categories, may be invalidated and may not meet the guidelines for inclusion. As to this layman's interpretation of the importance of this revelation, I believe, it matters not one iota. The mineral resources did not disappear off the face of this planet. They may merely not meet the NI-43.101 guidelines for inclusion in the stated resources, which to me, is no big deal, since it was an uncertain category to start with. Victoria gold only needs to just poke further drill holes in there for more certainty, and they will come back into the definitions.This estimation error in the NI-43.101 technical report for Victoria's Cove project in Nevada does not merit slashing 20% off the market valuation of Victoria Gold, and so I bought some shares after the decline.

Reason number three was that I knew Kinross Gold Corp (KGC) holds 20% interest in Victoria Gold. In fact Kinross was so diligent, that they actively participated in the August 24, 2010 private placement, maintaining their 20% share of Victoria. Also, I knew that Newmont Mining (NEM) holds rights of backing into this Cove project should Victoria meet some progress criteria.Victoria having two large gold miners invested in and interested in their projects does provide a measure of support for my own evaluation of value in this company. The kicker came when I listened to Victoria Gold's hastily convened conference call that morning. They disclosed that the error was discovered by a third party performing due diligence upon their reserve and resources information for another party that is in the mining business. Well, did I just hear the "ka-ching" of the gains coming, in the buy-out offer to come?

Disclosure: The author is long Victoria Gold (VITFF, TSX:VIT).

Important Disclaimer
The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

Tuesday, November 9, 2010

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look
November 9th, 2010

Great Basin announced the highest "Bonanza Grades" of Gold found, 2560 ounces per ton,  that the author has ever encountered this morning:
VANCOUVER, Nov. 9 /CNW/ - Great Basin Gold Ltd. ("Great Basin" or the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces that trial mining in the Blanket Zone above the Main Clementine vein (number sign)18 at its Hollister project in Nevada has encountered bonanza grades of gold and silver. The Company cautions investors and readers that we are making this announcement out of an abundance of concern over interpretation of this information and, as the information may be known locally in the region of the mine site, the Company felt obligated to make it public.
Channel sampling carried out in conjunction with trial mining in the Blanket Zone has encountered the bonanza grades over a strike distance of 170 feet (57 meters).Channel samples taken every 10 feet (3 meters) gave values ranging from a low of 1.5 oz/ton(52.0g/t) Au and 3.2 oz/ton(111.9 g/t) Ag to a high of 2,560.4 oz/ton (88,845.9 g/t) Au and 1,829.8 oz/ton (63,494.1 g/t) Ag over channel widths from 0.3 to 2 feet wide. The current stope is continuously mineralized along its 180-foot (60-meter) length. Diluted over 3.5 feet (the width of the stope development), the average sample values were 66.4 oz/ton (2,404 g/t) Au and 78.5oz/ton (2,723.9 g/t) Ag. Muck piles have also been sampled; grabs are taken over the pile to collect as representative a sample as possible (between 10-15 lb. are collected every 10 feet). The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.
The Blanket style mineralization at Hollister is typified by very fine grained disseminated gold hosted by tuffaceous horizons in the Tertiary (10-15 million years old) volcanics that lie unconformably on the basement Ordovician (~430 million year old) metasediments. These zones of mineralization are thought to be "mineralization plumes" directly related to the activity of fluid which has focused in structures that control the underlying epithermal quartz - adularia veins, and propagated into the Tertiary volcanic pile.
Blanket mineralization was previously exploited by opencast methods during 1990-1992 by the Touchstone - Galactic Joint Venture. According to historic records, 115,000 ounces of gold were produced by a heap leach operation that treated low grade ore (~0.003 oz/ton or 1 g/t Au). Great Basin modeled all 46 drill intersections above the Tertiary unconformity, and +1 g/t grade shells generally locate above known mineralized quartz - adularia veins. In general, this style has been located in the first ~30 feet (10 meters) above the unconformity, and may have dimensions in excess of 150 feet (50 meters) long and 60 feet (20 meters) wide. Grades from these 46 drill intersections average 0.45 oz/ton Au (15.4 g/t) and 1.7 oz/ton Ag (59 g/t).
Extrapolation of stope 3000N 1E to surface (approximately 200 feet or 67 meters vertically above), places this zone 300 feet (100 meters) west of the historical Clementine mercury mine. It supports the near surface working metal zonation and gold deposition model for the Hollister mine, and indicates additional exploration potential.
Ferdi Dippenaar, President and CEO, commented: "In the past, we have identified the Blanket Zone as a target area worth exploring, and trial mining at the top of vein (number sign)18 has turned out to be a great way to test the prospective nature of this style of mineralization. Although we have encountered a limited amount of this high grade material through trial stoping, drilling is underway to determine the full extent of mineralization. More information will be made available as and when it becomes available. Based on our experience in the Main Clementine vein (number sign)18, we are evaluating the possibility of returning to previously stoped out areas above the Gwenivere high grade veins."
Great Basin Gold's Hollister Mine in Nevada is already one of the highest grade Gold producing mines in the world, with 1.64 million ounces of Gold estimated at an average grade of measured and indicated resources at 1.3 ounces of Gold per ton.   This morning's news of such bonanza grades certainly bears some examination.
From previous background knowledge and from researching the terms within the news release, the author pieces together what this is may mean.  For help in understanding the basic geology, the author had his assistant "My Right Hand With Mouse" put together a rough diagram displayed following:
Figure 1:  Model of Great Basin Gold's bonanza gold grades found above their Clementine Vein.
With reference to the above diagram, Great Basin's Hollister mine is constructed to mine the underground Gold veins.  These veins are in the basement sedimentary rocks, which refers to the lower layer of rock geology, the "Ordovician" which are 439 million years old.  This basement is covered with a more recent geological layer of volcanic rocks named the "Tertiary", which are only 10 - 15 million years old.  The meeting point of these two rock layers is termed the "Unconformity", or joining between the two rock types. 
The Gold veins that Great Basin are mining are formed from magmatic fluids that originated deep in the Earth's crust and flowed through faults and fissures in the basement rocks coming up to the surface.  There are two main types of deposits formed from these magma fluids, high sulphidation and low sulphidation deposits. 
Great Basin's geologists believe that Hollister is an example of low sulphidation deposits.  As the fluids left the Unconformity and entered the Tertiary volcanics, the fluids encountered groundwater.  The magma fluids then interacted with the ground water causing violent boiling and depositing of the metals and minerals.  The act of depositing minerals seals off the fault and so the magma fluids seek another way to surface.  Again, more groundwater is encountered and more furious boiling occurs.  The boiling drops the minerals and seals the fissure again.  These cycles of furious action results in more and more of the minerals being deposited in the fissures within this area of volcanics above the Unconformity. 
Eventually the magmatic fluids reach near surface and dissipates and mixes thoroughly with the surface rocks.  This results in a broad disseminated layer of mineral deposits that is termed the "Blanket Zone" at Great Basin's Hollister mine.
In this style of low sulphidation depositing at Hollister, the minerals deposited by the repeated action of the magma encountering ground water has resulted in very high Bonanza grades of Gold and Silver that Great Basin has just announced.  These high grades appear to be concentrated above the existing Hollister Gold veins, between the existing mine tunnels and the surface Blanket Zone.  These high grades positioned where they are gives Great Basin a large amount of  bonanza mineralization in a location where it will be easy to mine. 

Another way of looking at this is the average grade of their "muck".  Muck is the broken rock ore, that will be refined in the mill circuit.  Their average muck grade is spectacular at:
The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.
Compare this grade of 22 ounces of Gold per ton with anything else, you read about gold miners anywhere.  Compare this with the grade at their Burnstone mine in South Africa, which has an average grade of 5 grams (.15 oz) Gold per ton, which is considered high grade.  This grade is at least two orders of magnitude or 100 times higher.
Great Basin are understating in saying, that this model, " indicates additional exploration potential".
Disclosure: The author holds shares of Great Basin Gold (GBG).
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

Saturday, November 6, 2010

Mining Business Environmental Changes

Mining Business Environmental Changes
November 5, 2010
By:  Marco G.

Introduction

Production mining is a difficult endeavour, and there are no shortcuts to success.  In the modern business world, there is a sea of change that is happening in how the public perceives mining companies and their environmental practices.  Investors are advised to monitor this trend.

Taseko "Prosperity" Cancelled

The Canadian government delivered a rounding blow to Taseko Mines (TGB) on November 1, 2010.  In a scathing rebuke to the Canadian miner about their proposed  copper and gold "Prosperity" project in British Columbia, Environment Minister Prentice denied their operating permit. 

This observer was appalled at Taseko's proposed actions of filling in the area Native's ancestral grounds on "Fish Lake" with mine tailings.  "Oh, don't worry, it will be all right, we will dig you another lake".  In 2010, for a supposed modern miner to behave in such a fashion, was astounding, and I do not know how the markets could not see this?  Franco-Nevada (FNNVF.PK) even had signed a royalty agreement in May 2010 of $350 million with Taseko for future off take of the Gold production. 

Both Taseko and Franco-Nevada management must have been wearing blinders for them to not understand the enormity of this environmental issue.

China Closing Smaller Coal Mines

Does the reader remember the incident of the 100 kilometer long traffic jam in Northern China this summer?  Well, is the reader aware of the cause of the traffic jam?   China has been closing and consolidating smaller environmentally unsound and unsafe coal mines. 
China relies on coal for around 70 per cent of its energy needs. About half of this is local coal, a large proportion coming from the small and inefficient mines that litter inland China. For many years, thousands of small and illegal coal mines in Shanxi province (west of Beijing) supplied the capital and surrounding towns with cheap coal. Given the lack of investment by mine owners in safety, compounded by the poor implementation of standards by local authorities, these mines are the most dangerous in the world.
The main cause of the traffic jam was the flood of coal trucks bringing coal from further away areas to the Beijing capital region. 

Even with electrical shortages looming, due to the coal shortage, the Chinese government is acting to revamp the mining landscape in China.  Smaller coal mines with unsafe and unsound practices are being forced to close.  Larger miners are designated as consolidators and they have the option of purchasing and revamping the smaller closed mines.  This is being enacted upon thousands of small coal mines in China

Gold Miners in Latin America

There has been a spate of environmental issues that have cropped up for large Gold miners in Latin America this year.  Investors in New Gold (NGD) were surprised earlier this year when the Mexican authorities cancelled their Environmental Impact Statement with  their Mexican Cerro San Pedro mine.  Similarly Barrick (ABX) and Gold Corp (GG) denied any possible sulphide leakage from their Pueblo Viejo mine in the Dominican Republic.   Most recently in October, the Guatemala government is charging  Gold Corp (GG) with pollution at their Marlin Mine in Guatemala.

Summary

These are examples of governmental responses to unpopular, unsound and unsafe mining practices.  There is a sea of change in environmental business practices that are impacting miners around the globe.  Investors are well advised to monitor this trend and take resulting action for their investments.


Disclosure: The author has no stake in the miners mentioned but is long junior mining equities.
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

China buying Silver

This video is from January of 2010, but coupled with the selling of paper certificates from the ICBC bank, the world's largest bank, this is very significant for Silver.  Especially in a country, where Silver has a long history of Silver currency usage.

Friday, November 5, 2010

November Outlook For Action

November Outlook For Action
November 5, 2010
By:  Marco G.

Introduction

After the passage of All Saints day, and All Soul's day, early in November  where one pauses to  remember and reflect on our past heritage, we now need to look forward and seek illumination as to where the markets are headed.  The two remarkable events of the mid-term elections and the FOMC pronouncements will serve as starting blocks for this scrutiny.

US Mid-Term Election     

As quite expected, the Republicans surged into the house, and gave a rebuke to our sitting President Obama as obviously, the electorate are unhappy with the state of the economy.  

Naturally with these results, most observers are saying that the split houses will now be deadlocked and uncertainty will reign forthwith.  This uncertainty will be bad for the markets, they say, as the markets will not move on uncertainty.

The author, has an opposing interpretation, in as this deadlock is actually good for the economy, only the markets will take a while to recognize this.  The deadlock serves to ensure no surprises to be sprung on the electorate, and as such will allow the private sector to get on and do their usual good work in the business of making money.  This election result will be a boon for the economy, as it is now just poised to embark upon another financially inspired revival.

FOMC Offerings

The FOMC made a statement offering to purchase $600 billion of Treasuries over the next 8 months on November 3, 2010.  They are back stopping the Federal government's budget deficit on a monthly basis only moving in as required.

As Mr. Grannis, the Calafia Beach Pundit says:

the FOMC has not only indicated that it is willing to undertake a substantial QE2 program if the need arises, but it is also giving itself some time to make sure that nothing gets greatly out of hand.

This FOMC statement is bound to be miss-interpreted by the masses as inflationary, and sure enough, immediately in the day following, November 4, 2010, the precious metals enjoy a raucous up day. 

That is the way with the markets, it moves with perception and not hard facts.

Broad Markets

The broad markets are in a continuation of the up move since September 1, 2010.  Both the S & P 500 and the Wiltshire 5000 indices have exhibited a broad based movement upwards, with no serious pull backs since.  In fact, in mid-October, both indices displayed a "Golden Cross", where the 50 day moving average crossed over the 200 day moving average.
The leading index, the Toronto Canada based TSX composite is displaying the same exuberance only earlier.  The TSX started this up trend on August 25, 2010, and the "Golden Cross" for Toronto came one month earlier in September.
In this time of year for the markets, investors both large and small take stock of their stocks and prune and purchase for the year ahead.  The author surmises, that with the help of the FOMC and the deadlocked government, that there will be no major pullbacks this year and that there are blue skies ahead in the year following.
Santa will come early this fall, and he will keep on giving to the believers invested in the markets.

Investor Stock Action

The author is a believer in the commodities boom driven by the infrastructure builds in emerging economies and is therefore presently specialized in Commodities and Mining equities.  One only needs to examine the price charts of Copper and the Commodities Research Bureau (CRB)Index to see that both charts are showing remarkable up trends since June 2010. 

In addition to the commodities trend, the precious metals have been streaking higher since summer of this year.  As I am typing, Gold is hitting new highs of $1382 USD and Silver is at $25.98.  The author ardently follows this sector and has postulated that Silver will outperform Gold in this trend. 

The author's outlook for the general stock market is bullish.  The bullish general markets will make gains in the Commodities and Precious Metals sectors easier and higher.  The author's specific stock action is reflected in his "Six Silver Stocks" second article.

Disclosure: The author is long mining equities.
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

China Moves & Implications for Commodities & Metals

China Moves & Implications for Commodities & Metals
November 5, 2010
By:  Marco G.

On November 3, 2010, Bloomberg had this title "China to Sell 50,000 Tons of Zinc From Reserves as Power Cuts Lift Prices".  From that report, we get a glimpse of what China has been stockpiling:

China bought 235,000 tons of copper, 590,000 tons of aluminum, 159,000 tons of zinc, 30 tons of indium and 5,000 tons of titanium for reserves, Caijing magazine reported in June last year,
In hindsight, it was in plain sight and obvious, China was using their US currency reserves and exchanging them in return for goods with hard value, the metals, for their strategic stockpiles.  They are definitely growing for the foreseeable future and these materials will be needed for their infrastructure building.  This information of China releasing a portion of their Zinc stocks into their marketplace, indicates a possible forthcoming shortage (a secondary reason is in the above article - power cutbacks will reduce production).  Take a look at Kitco's six month Zinc price chart.  Since June of this year, Zinc has moved from 70 cents USD a pound to the price of $1.13 today.  Zinc's main usage is in industry as an anti-corrosion coating for steel.  For Zinc prices to move like that and the stated Chinese anticipating a shortage coming, means that construction and infrastructure building is increasing.  This Chinese positioning tells us that economic revival is at hand, never mind the noisy pundits that are still distracting us and calling for caution, double dip is ahead.

Precious Metals Bull

In the midst of the commodities and metal prices up swing, the precious metals are enjoying their own boom.

Last week, the Commodities Futures Trade Commission (CFTC) alleged market manipulation in silver markets:

Oct 26 (Reuters) - There have been repeated attempts to influence prices in silver markets, Bart Chilton, a commissioner at the U.S. futures regulator, said on Tuesday.

The precious metals markets responded brightly as the news was disseminated and investors felt that the scrutiny would cause the perpetrators to refrain and the markets would move higher. 

Recently there is much speculation in the precious metals blogs about large Asian players buying into the precious metals.  This adds further to the raucous behaviour of the precious metals prices.

Irfan Chaudhry, another Seeking Alpha contributor, recently presented good research about Central Banks buying back into Gold:

·         Central banks will keep diversifying their reserve holdings into gold without trying to convey any price information to the market.
·         US dollar part of reserves has seen most of diversification as dollar reserves have declined more than euros and other currency reserves. Expectation of further weakness of dollars may exacerbate this trend (a positive feedback)
·         China, Middle Eastern countries, Russia and India will stay as most aggressive diversifiers of their reserves into gold.
These reported Central Bank actions would explain some of the price supports for the precious metals overseas.

Mining Juniors

The China moves with Zinc and the precious metals boom make for an interesting time in the markets.  "Interesting" in this context means exuberant, especially for small metals miners. 

The author has stated his preferences in small metals miners as in mining Juniors in his previous articles on Seeking Alpha. 

For selection of companies to invest in, the author uses one attribute as paramount for success - the quality of management of the company.  All other company attributes such as projects, locations, grades, etc. fall by the wayside in importance, relative to the perseverance, integrity and intelligence of the small company management.  It all comes down to whether the management's goal is to create sustaining value for the shareholder.

Mining Environmental Side Note

As a counter example, the Canadian government recently delivered a rounding blow to Taseko Mines (TGB) on November 1, 2010.  In a scathing rebuke to the Canadian miner about their proposed  copper and gold "Prosperity" project in British Columbia, Environment Minister Prentice denied their operating permit. 

Though the mine was supported by the  provincial government, there was concerted first nations opposition to the project.  The opposition was centered around lack of consultation and the proposed filling in of a lake with mine tailings.

Franco-Nevada (FNNVF.PK) is also affected by this development as they had signed a royalty agreement in May 2010 of $350 million with Taseko for future off take of the Gold production from Prosperity. 

Due to the inability of Taseko's management to handle the environmental impacts, Taseko's stock price dropped 30% on the government denial.

Investor Action

The author sees much upside ahead for commodities, metals and junior miners in the markets.  Investors are advised to be selective in their choices of mining equities, for the possible gains to be sustainable.  The author is participating in the metals, gold and silver bull markets and has invested in junior metals and precious metals mining equities.

Disclosure: The author is long junior mining equities.
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

Silver Strides Shrilly

Silver Strides Shrilly
November 5, 2010
By:  Marco G.

The markets have certainly responded well to the FOMC statement on Wednesday November 3rd afternoon.  As reported by Seeking Alpha's Jason Kelly - Markets Climb to 2-Year High:

"Wednesday's long-awaited QE2 announcement sent the stock market to a two-year high yesterday. The Dow soared 2% to 11,435 and the S&P 500 jumped 1.9% to 1221. The price of gold for December delivery rose to a high of $1,384.80 per ounce as the U.S. Dollar Index slipped 0.6% to $75.84. In after-hours trading, gold rallied to $1,393.40, its highest price ever. Analysts say the Fed gave the "green light" to buy gold and that "gold and non-dollar investments should benefit.""

Silver Affections

 Though the mainstream focuses upon Gold, the author has determined previously that the Silver metal seems to have more opportunities than others at the present time.  Turning to examine the chart of the SLV silver fund, displayed following,  (the author is using this as a proxy for the actual silver prices) we see the chart story: 

True to form, Silver prices popped in the opening hour (circled in yellow on the chart above) on Thursday November 4th, 2010.

Silver Activities Overseas

The pop of Silver during the opening hour on November 4th, 2010, indicates that there has been activity overseas, that is driving the prices up.
In the precious metals investing internet vapours, there is much speculation in the precious metals blogs about large Asian players buying into the precious metals.  This adds further to the raucous behaviour of the precious metals prices.

Irfan Chaudhry, another Seeking Alpha contributor, recently presented good research about Central Banks buying back into Gold:
·         Central banks will keep diversifying their reserve holdings into gold without trying to convey any price information to the market.
·         US dollar part of reserves has seen most of diversification as dollar reserves have declined more than euros and other currency reserves. Expectation of further weakness of dollars may exacerbate this trend (a positive feedback)
·         China, Middle Eastern countries, Russia and India will stay as most aggressive diversifiers of their reserves into gold.
These reported Central Bank actions would explain some of the price supports for the precious metals overseas.
Searching further, the author finds that a new Silver trading service has just launched in China, on September 7th, 2010:

"As related, ICBC silver trading for personal account is similar to that of trading gold. Two types of silver trading categories: account silver (ounce) against USD and account silver (gram) against RMB. Once individual customers open precious metal trading account in ICBC, they can trade precious metals during business hours through the counter at the designated outlets, or through electronic banking right at home to trade 24 hours a day non-stop from 7:00 am every Monday to 4:00 am Saturday (except National and public holidays), and place order from the shortest validity of 24 hours to 120 hours longest. ICBC prices on account silver are quoted in real-time and go along with the international market price, highly transparent. No delivery of physical metals after the transaction, eliminating the steps of warehousing, transportation or authentication. The new trading service is very convenient for retail investors."

Who is the Industrial and Construction Bank of China (ICBC)? 
 The Wall Street Journal…
Well much surprise, the largest bank in the world has just opened up a convenient way for the investors in the largest country in the World to buy Silver. 

Impact on World Silver Markets



Source:  http://www.goldprice.com/silver.asp, November 5, 2010, 11:10 EST.

Investing in The Silver Market

As described previously, the author has a preference for Junior Silver Stocks.

Disclosure: The author is long junior mining equities.
Important Disclaimer
The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.