Thursday, May 26, 2011

Gold, Metal, Commodities Exploration Juniors to Keep Eye Upon

Goombarh 63 - May 26, 2011
Good day,

Well, the time for the summer break has come, whether the Gold market takes a rest or not.  Gold appears headed for a further high before summer, but the Juniors are not following along.  Some top Gold and Silver names may tag along for a ride, but that is not my market.  I am out of the Goldcorp warrants now, as the time for expiration on June 9th draws nigh.  I will be cherry picking a few exploration juniors over the next 3 months, as I selectively re-deploy cash levels.

The Venture Index is heading back higher (after dropping to Oct 2010 levels), but I suspect that to be a head fake, as the commodities have all sold off.  The main TSX is back to Feb 2011 levels.  The Shanghai index has fallen back to Oct 2010 and Feb 2010 levels, so I suspect, there needs to be a major driver to restart the commodities metals push, and that will not happen until late summer.

The main S&P appears to chug along, and may continue to move higher, contrary to the pundits calling for a top.  Again, that is not my market.

I repeat from my last note, here is what I will be looking at:
·         select exploration juniors
·         good stocks at good prices (GBG & SLX)
·         best of the best gold stocks (RLGD, FNV, & GG), through warrants possibly
·         Agriculture ETFs - DAG, CORN, JO,

Here is a listing of stocks that I hold and will be keeping an eye upon, in no particular order:

Ethiopian Potash
Zaruma Resources
Primary Petroleum
Avnel Gold Mining
Southern Hemisphere
Belvedere Resources
Westernzagros Resources
Vast Resources
Tarsis Resources
Compliance Energy
Selwyn Resources
Argex Mining
US Silver
Canadian Zinc
Great Basin Gold
Franco Nevada
Victoria Gold
Excellon Resources
Crazy Horse Resources
Atac Resources
Adex Mining

In summary, my postings for the next while will be sparse.  May the sun shine on you and bring good fortune to you all in all your endeavours

Until next time,
Marco G.

Friday, May 20, 2011

Gold Breaks out over Trend on high volume!

Goombarh Flash 26,  May 20th, 2011
Something's up folks...GLD ETF is recovering and is up above trend line on strong volume, see following chart:
Note the double bottoms, and the higher volume on push upwards.  Also GLD is now above my drawn white trend line. 

GLD is leading the GDX and HUI this morning, as the SPX is down.  Gold equities need a good general market to move higher.

For myself, I am holding  Goldcorp warrants that I hope to exit from next week. 

Also, May 25th next week is gold options expiry so expect volatility.

Until next time,
Marco G.

Tuesday, May 17, 2011

Triple Bottom for Gold Stocks

Goombarh 62 - May 17, 2011
Good day,

Will someone please tell me what is going on?

Gold is down yet the HUI index and the GDX index of large gold stocks are bottoming and showing strength in possibly moving up. 


Can it be that all the bearishness is already priced into the markets?  Are the big funds accumulating Gold stocks now?  How can I make use of this information?  Is the bottom in for now?  Or is this the sell in May and go away until fall?

Disclosure:  I am holding only a select few juniors and Goldcorp warrants.

I can not make any good trading strategy, other than as previous:
·         select exploration juniors
·         good stocks at good prices (GBG & SLX)
·         best of the best gold stocks (RLGD, FNV, & GG)
·         Aggies - DAG

Until next time,
Marco G.

Monday, May 9, 2011

Hunt for Silver - Canadian Zinc

Hunt for Silver - Canadian Zinc
April 24, 2010

The first "Hunt" in the Hunt for Silver refers to the Hunt brothers family led by Nelson Bunker Hunt, the many children of the Texan oil billionaire who were notorious in being the prime factor in the  1980's Silver price rise to $50 (Eichenwald, 1989):
Silver prices rose from $11 an ounce in September 1979 to a peak of about $50 an ounce in January 1980. The price of silver then collapsed, falling below $11 an ounce in about two months.
Nelson Bunker had formed the idea of investing in the Silver commodity in 1970, when it was still only $1.50 an ounce (Swanson, 2009).  By 1974, he had over 9% of the world's free supply, with Silver priced then at $3 USD (Tillberg, 2011), of 55 million ounces in futures contracts under the Hunt family umbrella.  For $175 million dollars the Hunts took delivery, which was considered unusual for speculators.  Then under the guard of a dozen armed Texas cowboy marksmen (LaBorde, 2011), the Hunts secretly transported a portion of their bullion using unmarked Boeing jets from New York to storage in 6 Switzerland vaults (Hurt III, 1980).
Later, on July 1, 1979, in Bermuda, the Hunts formed the International Metals Investment Company together with two affluent Arabs, Sheikh Ali bin Mussalam and Sheikh Mohammed Aboud al- Amoudi (Markham, 2002) as partners for Silver investment.  This company bought 43 million ounces of Silver.  Another associated investor Naji Robert Nahas, an Egyptian born Brazilian, in partnership with Norton Waltuch, bought 42 million ounces of Silver (Tillberg, 2011).  There were other unidentified Middle Eastern traders that were Silver buyers in the fall of 1979.   
On October 3, 1979 when Silver had risen to $17.88 USD (Hurt III, 1980), the Chicago Board of Trade (CBOT) changed the rules so that no traders could hold more than 3 million ounces of Silver futures (Maloney, 2011).  Those holding more were forced to liquidate.  Then on January 7, 1980, COMEX the other exchange, also changed the rules limiting investors to 10 million ounces of Silver futures and any overage had to be liquidated.  The January 21, 1980 peak of the Silver price rise was $49.45 USD based upon the London PM fix (Silver Institute, 2011), with Silver futures priced at $52.50 USD (Maloney, 2011).  It is estimated that the Hunts and their allies controlled 77% of the world's Silver at that time (Tillberg, 2011).  That same day , January 21, 1980, COMEX, with the backing of the Commodities Futures Trading Commission (CFTC) in Washington, announced liquidation orders only, no new buying (Maloney, 2011).  The Silver price began to plummet.  As some of the Hunt holdings were purchased on margin, with the dropping Silver price, the Hunts had to find more funds.  This they did, using their other investments until March, 1980.  On March 14, 1980, Volker, then head of the US Federal Reserve decreed that banks could not make loans for speculation in precious metals (Tillberg, 2011).  Now the bank sources of funding for the Hunts dried up.
The climax of the unravelling of the Silver prices came on "Silver Thursday" (Wikipedia, 2011), March 27, 1980, in a $100 million margin call for the Hunts.  They faced a $1 billion USD in losses on that one day.  The Hunts' Silver holdings were estimated to have been $10 billion at the peak and had dropped to around $3 billion earlier that Thursday  (Time Magazine, 1980).  Then the Silver price collapsed from $21.50 to $10.20 within 3 days (Time Magazine, 1980).
Following these wild Silver price gyrations, the CFTC in 1981 set speculative position limits in futures contracts to forestall future attempts to corner commodities (Stephenson, 2011).  The two Hunt brothers, Nelson Bunker Hunt and William Herbert Hunt  were charged by the CFTC in 1985 (CFTC, 2007) after an investigation that they had attempted to manipulate Silver prices in 1979 and 1980.  Because of these charges, legal proceedings and fines, the Hunts filed for bankruptcy protection in September, 1988 (Wikipedia, 2011).  In 1989, Nelson Bunker Hunt settled with the CFTC (Eichenwald, 1989).
William Bunker Hunt's reason for investing in Silver was stated as (Time Magazine, 1980):
"Silver looked safer than overseas oil concessions, the way things were going.  And precious metals were a good hedge against paper money."
Now in April, 2011 the second "Hunt" for Silver may just be occurring at the present time, not by a group of a few rich investors, but as the savings of choice of the new emerging market's middle classes as the Silver prices are closing in on the 1980's record price of $49.45 USD.  See the 10 year price for Silver following:
As of this writing on Easter weekend the Silver price has closed trading at $46.45 USD while the price overseas is flirting at over $47 USD.
One related investment that the Hunt's had during the last Silver price run was the Prairie Creek mine in northern Canada.  The mine infrastructure was 95% completed in 1982 when the property was placed into receivership.  This rich Silver, zinc, lead mine was to become a cornerstone in the Hunt's Silver empire, but due to the Silver price collapse, the property was unclaimed until purchased in 1992 by San Andreas Resources now renamed as Canadian Zinc (US:  CZICF, Cdn: CZN).
This mine is distinguished by their high grades of ore, with an average grade of 155g of Silver, 12% zinc, 10% lead and .3 % copper per ton of ore.  At today's prices, the ore is worth over $700 per ton.  There are 6 million tons of Measured and Indicated (M&I) Resources with a further 6 million tons of Inferred Resources from the 2007 technical report.  That gives a value of $4.2 billion USD of metals in the ground by counting only the M&I Resources (another $4.2 billion for the Inferred).  Using a rule of thumb for a market valuation scale of from 2% for a discovery to  24% for in production, if we apply a 12% of the in ground value for the M&I Resources over the 138 million share float, the stock value comes to over $3 USD per share.
The found strike length of the resources is over 16 kilometres long with the originally discovered vein mineralization.  Recently, stratabound mineralization has been found to be coincident with the vein structure.  This stratabound style of mineralization is much thicker and exploration is in progress for further discoveries along the veins.
In the author's opinion, Canadian Zinc is poised for upside with the rising metals prices, pending permit approvals and forthcoming exploration successes.
CFTC. (2007). Significant Dates in CFTC History - 1980s. Retrieved April 23, 2011, from
Eichenwald, K. (1989, December 21). New York Times - Business Day. Retrieved April 23, 2011, from New York Times:
Hurt III, H. (1980, September). Silver Finger. Retrieved April 23, 2011, from
LaBorde, L. (2011). H.L. Hunt and the Circle K Cowboys. Retrieved April 23, 2011, from
Maloney, M. (2011). How the Hunt Brothers Capped Gold...Yes, GOLD! Retrieved April 24, 2011, from
Markham, J. (2002). A financial history of the United States. New York: M. E. Sharpe Inc.
Silver Institute. (2011). Price History 1979 to 1980. Retrieved April 23, 2011, from
Stephenson, E. (2011, Mar 28). Timeline - US CFTC road to reform. Retrieved April 23, 2011, from
Swanson, D. J. (2009, March 22). Once world's richest man, Bunker Hunt has "no regrets" 29 years after silver collapse. Retrieved April 24, 2011, from
Tillberg, J. (2011, March 4). The hunt Borthers, How they Did It and What we Can Learn From it. Retrieved April 28, 2011, from
Time Magazine. (1980, April 14). Business: The Hunts Are on the Hunt. Time .
Time Magazine. (1980, April 7). Nation: He has a Passion for Silver. Time , p. 1980.
Wikipedia. (2011, April 22). Nelson Bunker Hunt. Retrieved April 23, 2011, from
Wikipedia. (2011, April 21). Silver Thursday. Retrieved April 23, 2011, from
Disclosure: The author is long Canadian Zinc.

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Thursday, May 5, 2011

Gold Bottom Now In!

by Marco G.

Goombarh 58 - May 5, 2011
Good Afternoon,

It has been a very trying two weeks for investors, as the previous gains are evaporating. 
The good news is that the Goombarh believes the bottom for Gold is now in:

From my readings anyways, there are two confirming analysis of this bottom.  The first is the 61.8% pullback from the GLD peak, which the Gold price has just declined to.  Will this go further down?  I don't think so due to the fundamental strength of the market; remember the Central Bank of Mexico just bought 100 tons of Gold.

The second confirmation comes from my Elliott wave analysis, since the last bottom in Jan 2011.  Wave 1 went up from 128 to 141 a rise of 13 units.  Wave 2 declined 6 units to 135.  Wave 3 went up  18 units to 153.  Wave 4 is the present decline which should be a 38% to 50% loss of Wave 3 which works out to 7 to 9 units from 153, which is the range of 144 to 146.  As GLD has just reached 144, I am of the opinion that the bottom is now in.

As for Silver, it has been badly beaten up with 4 separate margin increases in COMEX for futures trading in the last 2 weeks.

On the SLV chart above, Silver has declined to the 38.2% level with strong support here.  Also the volume sales is not increasing, so the bottom may also be in for Silver.  Note that Silver equities (such as SLW) and the SIL ETF have not declined as much as the Silver price.  Again an instance of the strong underlying strength of the Silver market.

Attached also, is a more detailed analysis of Shanghai Index correlation to Gold prices, which I am submitting to Seeking Alpha for posting.

I could be wrong in this analysis, but I am betting on being right, and I am buying more Goldcorp warrants.

Until next time,
Marco G.

Tuesday, May 3, 2011

Goombarh Says Markets recover starting next week

Goombarh 57 - May 3, 2011
Good Afternoon,

Looking for what's forward, I came across this battle of the narrowing triangle in Shanghai.  I believe how Shanghai behaves will indicate what is in store for us in the Western world for the next little while.  China is the consumer of the metals, commodities and sets the tone for the markets overall:

Note the bounces in July, 2010 and in February 2011.  Will the trace bounce off the bottom edge and then break out to the top? 

For the answer to that, I looked at a smaller time frame for this trace as in following:
From the closer look, one can clearly see that last bottoms in July 2010 and Feb 2011.  A bottom appears to be forming up presently.  Whether the move upwards is strong enough to break out, only time will tell.  Presently, China's markets are closed for the May 1st holidays and will open next week.

If I was a betting man, I would bet on a strong market push upwards starting next week.  This may be true for the precious metals also.  Therefore, have patience, the sell in May is not here yet, and the peak for precious metals is still ahead, in my humble opinion. 

I would still try to take some monies off the table in the next push upwards, and redeploy the cash later this summer for bargain opportunities.

I note that GBG released a operational report this morning:
Burnstone is ramping up, but only with low grade development ore, so therefore, nothing significant for earnings, only about 5000 oz, this past quarter.  The outlook is for about 16,000 ounces for the next quarter.  Therefore the gains for GBG will be later this summer.  However, I do not think the pricing of GBG stock will ever get lower than it is now.

Until next time,
Marco G.