On Sept. 29, I posted analysis that explained why I was confident that Aquiline Resources and ECU Silver are fundamentally "twin" companies and why both stocks are rediculously cheap to fundamental value.
Well, Aquiline just agreed to be acquired by Pan American Silver (PAAS), in a stock and warrant deal that effectively values Aquiline at $626 million (based on the current price of PAAS stock), or roughly 83 cents per ounce of silver Aquiline has indicated on its latest 43-101 resource filing. We will be taking some profits on our Aquiline position and plowing them into even more ECU stock.
Using this deal as a guideline to assess the relative value of ECU, applying 83 cents to ECU's measured, indicated and inferred resouce of 431 million, ECU stock would have a value of $1.25 vs. it's current trading level of $.77. HOWEVER, Micon International, the independent mining engineering firm which prepares ECU's highly regulated 43-101 Resource Estimate Report, has identified additional mineral potential that has been quantified at an additional 570 to 930 million silver equivalent ounces.
If we apply the 83 cents/per ounce in the ground to just the low end of Micon's assessment, that would give ECU 1 billion ounces, and an implied valuation of $830 million, or $2.91/share.
One more point to bear in mind. At one point in May 2006, the market was valuing silver in the ground, on average, at $2/ounce. If we apply THAT metric to ECU, the Company would be worth anywhere from from $860 billion to $2 billion, or $3-$7/share. Please note that back then the spot price of silver was around $13/ounce and had hit a brief peak of $15.35. Right now silver is $17.85/ounce on its way to at least $20. At some point, the market will value in-ground silver much higher than $2/oz. In other words, any way you want to value ECU's reserves, the stock is incredibly cheap.
I can say with complete confidence, and with money backing my statement, that I have rarely, if ever, seen an investment opportunity in the stock market with the low risk/high return potential of ECU. I say this because ECU, as per its latest press release, is now generating monthly cash flow from its milling operations that is much higher than anyone expected (except maybe CEO Michel Roy), it has demonstrated that the mineralization of its ore has a higher amount of gold than previously thought, and it has the certified potential to have at least a 1 billion ounce deposit. I might add that a huge benefit, though not well understood by most investors, from the Company's endeavor to generate revenues from processing its stockpiled ore is that it has demonstrated that is has a solid understanding of the metallurgy of its massive silver deposit. That issue is the golden (or silver) key to unlocking the value in a discovered mineral deposit.
Oh, and let's not forget about the Massive Sulphide Zone, which still needs to be explored. In conversations with people who have visited the mine-site, it is believed that this Zone could contain several hundred million additional ounces of silver. It is thought that this Zone is the ultimate source of ECU's already proved silver deposit. That potential is not factored into the above valuation analysis.
Please do your own due diligence. I have found COO Steve Altmann to be very responsive and user-friendly to any and all investor inquiry.
Wednesday, October 14, 2009
Tim Geithner's Treasury Dept Is A Veritable Viper's Nest Of Wall Street Thieves
Bloomberg News has posted a report which outlines just how corrupted by Wall Street that Obama's Treasury Department has become, populated with people on the taxpayer payroll serving as Geithner's closest "counselors," none of whom were subjected to the scrutiny of Senate confirmation:
"Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms. The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford."
One close aide to Geither, earned $3 million at a hedge fund last year and is due a big bonus this year, withdrew earlier this year from consideration to be the Treasury’s top domestic finance official because the job would have required Senate confirmation. He remains a close aide/counselor to Geithner.
If you read through the entire news release, you'll see that almost every one of Geithner's close advisors and staff "counselors" come from the very firms that have been beneificiaries of the trillion dollar Treasury programs initiated by Henry Paulson which are enabling the big Wall Street banks to hijack Taxpayer wealth. Here's the link: A Treasury Den of Thieves
Does anyone really think these people are working on behalf of the Taxpayer? Is this the Change that people expected Obama to bring to DC? Quite frankly it would appear that entire areas of Obama's Administration is being RUN by Wall Street. The people Geithner has hired to run Treasury are the eqivalent of a daycare business hiring pedophiles to oversee day to day operations.
Et tu, Barack?
"Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms. The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford."
One close aide to Geither, earned $3 million at a hedge fund last year and is due a big bonus this year, withdrew earlier this year from consideration to be the Treasury’s top domestic finance official because the job would have required Senate confirmation. He remains a close aide/counselor to Geithner.
If you read through the entire news release, you'll see that almost every one of Geithner's close advisors and staff "counselors" come from the very firms that have been beneificiaries of the trillion dollar Treasury programs initiated by Henry Paulson which are enabling the big Wall Street banks to hijack Taxpayer wealth. Here's the link: A Treasury Den of Thieves
Does anyone really think these people are working on behalf of the Taxpayer? Is this the Change that people expected Obama to bring to DC? Quite frankly it would appear that entire areas of Obama's Administration is being RUN by Wall Street. The people Geithner has hired to run Treasury are the eqivalent of a daycare business hiring pedophiles to oversee day to day operations.
Et tu, Barack?
Tuesday, October 13, 2009
American Barrick Issues $1.25 Billion In Debt To Further Reduce Gold Hedge
With the ink barely dry on its $4 billion stock deal, American Barrick (ABX) announced a surprise debt deal to raise another $1.25 billion in order to further reduce its gold hedge book. The stock deal was used to extinguish Barrick's $3 billion fixed-price hedges plus some of its floating-price hedge exposure, incurring 10% shareholder equity dilution and a $5.6 billion charge to earnings.
The bond deal announced tonight, curiously several hours after the stock market had closed for the day, will be used to eliminate part of the $2.7 billion in floating-rate hedges that remained after last month's mammoth stock deal.
The nature of this latest financing tells me two things. First, there is inexorable demand from big institutional investors for large, liquid precious metals mining company financing deals. It's one thing for the world's largest gold mining company to issue a $4 billion stock deal, but it's an entirely different matter for the same company to issue a large unsecured bond deal, with 1/3 of the deal maturing in 10 years and 2/3 of the deal maturing in 30 years. That tells me that big investors are now comfortable with the idea that the gold bull market will have longevity.
The second, the fact that Barrick is doing this large debt deal so soon after the stock deal in order to cut its remaining floating-rate hedge exposure in half sends a signal to the market that Barrick's management is concerned about the Company's large negative exposure to a big upside move in the price of gold. When you think about it, if Barrick managment thought that the price of gold were just as likely to go down as it would be to go up, it would be in the Company's best interest to wait a bit and try and buy back its hedge at lower prices. Raising more money like this, however, tells us that Barrick management sees the probability of an imminent and big move in the price of gold as being significantly skewed to the upside.
I hate to burst the egos of gold market analytic geniuses like Jon Nadler, Jeffrey Christian and Robert Prechter (note: sarcasm intended) - all three of whom believe the gold market has topped and likely to crash - but as a betting man I like the odds of placing my chips on the view of the people running the world's largest gold mining company rather than three stooges who provide useless investment advice and don't invest a nickel of their own money in the markets.
Please note, my endorsement of the outlook on gold's upside prospects by Barrick's management in no way reflects any interest on my part to invest in Barrick's stock. I still believe Barrick is a mediocre investment for many reasons. HOWEVER, we know from previous statements from management that Barrick is actively looking for acquisitions and has a subsidiary operation set up to monitor and evaluate junior mining companies. I am confident that there is a lot of money to be made building a portfolio of junior mining stocks ahead of the inevitable rush of huge money flows into the exploration segment of the mining stock sector.
Ultimately, based on actions being taken by Barrick, we can be highly confident that 1) the price of gold is going a lot higher; 2) there is substantial, and substantially growing, institutional investor demand for mining company assets; and 3) there is still a lot of money to be made from investing in the precious metals and mining stock sector.
The bond deal announced tonight, curiously several hours after the stock market had closed for the day, will be used to eliminate part of the $2.7 billion in floating-rate hedges that remained after last month's mammoth stock deal.
The nature of this latest financing tells me two things. First, there is inexorable demand from big institutional investors for large, liquid precious metals mining company financing deals. It's one thing for the world's largest gold mining company to issue a $4 billion stock deal, but it's an entirely different matter for the same company to issue a large unsecured bond deal, with 1/3 of the deal maturing in 10 years and 2/3 of the deal maturing in 30 years. That tells me that big investors are now comfortable with the idea that the gold bull market will have longevity.
The second, the fact that Barrick is doing this large debt deal so soon after the stock deal in order to cut its remaining floating-rate hedge exposure in half sends a signal to the market that Barrick's management is concerned about the Company's large negative exposure to a big upside move in the price of gold. When you think about it, if Barrick managment thought that the price of gold were just as likely to go down as it would be to go up, it would be in the Company's best interest to wait a bit and try and buy back its hedge at lower prices. Raising more money like this, however, tells us that Barrick management sees the probability of an imminent and big move in the price of gold as being significantly skewed to the upside.
I hate to burst the egos of gold market analytic geniuses like Jon Nadler, Jeffrey Christian and Robert Prechter (note: sarcasm intended) - all three of whom believe the gold market has topped and likely to crash - but as a betting man I like the odds of placing my chips on the view of the people running the world's largest gold mining company rather than three stooges who provide useless investment advice and don't invest a nickel of their own money in the markets.
Please note, my endorsement of the outlook on gold's upside prospects by Barrick's management in no way reflects any interest on my part to invest in Barrick's stock. I still believe Barrick is a mediocre investment for many reasons. HOWEVER, we know from previous statements from management that Barrick is actively looking for acquisitions and has a subsidiary operation set up to monitor and evaluate junior mining companies. I am confident that there is a lot of money to be made building a portfolio of junior mining stocks ahead of the inevitable rush of huge money flows into the exploration segment of the mining stock sector.
Ultimately, based on actions being taken by Barrick, we can be highly confident that 1) the price of gold is going a lot higher; 2) there is substantial, and substantially growing, institutional investor demand for mining company assets; and 3) there is still a lot of money to be made from investing in the precious metals and mining stock sector.
Monday, October 12, 2009
Demand For Physical Possession Of Gold Is Driving The Price Of Gold
Long-time gold market analyst James Turk was recently on CNBC Europe discussing how and why the scramble by investors and Central Banks for taking possession of physical gold (vs. owning derivative forms of gold like ETFs and leveraged gold investment accounts offered by the likes of Kitco and Monex) is now driving the price higher.
A perfect example of this, Turk points out, is that the demand for ETFs like GLD has gone sideways for several months (measured by GLD's reported inventory of bars) while the price of gold has gone from under $900 to new all-time of $1050. He also mentions the tightness in the physical market. In that regard, I have mentioned that, although the tightness is not apparent at this point in time in the bullion coin market, we have several accountings of delivery problems, including my own, reported by investors on the Comex and the LBMA (London Bullion Market Association), the two largest gold and silver bullion bar markets.
Turk also explains why gold preserves the purchasing power of your wealth against the devaluation of the U.S. dollar and he discusses why an investor can avoid counterparty risk when they own gold outright [without using debt]. I would add that even keeping your cash in a bank exposes you to the counterparty risks of your bank being closed down AND the possible defaulting of the FDIC. The possibility of the latter would have been completely dismissed even a year ago. Anyone who thinks now that it's not a possibility is whisling in the dark.
This video of Turk on CNBC Europe is a little over four minutes and worth every second of watching it:
James Turk On Gold
A perfect example of this, Turk points out, is that the demand for ETFs like GLD has gone sideways for several months (measured by GLD's reported inventory of bars) while the price of gold has gone from under $900 to new all-time of $1050. He also mentions the tightness in the physical market. In that regard, I have mentioned that, although the tightness is not apparent at this point in time in the bullion coin market, we have several accountings of delivery problems, including my own, reported by investors on the Comex and the LBMA (London Bullion Market Association), the two largest gold and silver bullion bar markets.
Turk also explains why gold preserves the purchasing power of your wealth against the devaluation of the U.S. dollar and he discusses why an investor can avoid counterparty risk when they own gold outright [without using debt]. I would add that even keeping your cash in a bank exposes you to the counterparty risks of your bank being closed down AND the possible defaulting of the FDIC. The possibility of the latter would have been completely dismissed even a year ago. Anyone who thinks now that it's not a possibility is whisling in the dark.
This video of Turk on CNBC Europe is a little over four minutes and worth every second of watching it:
James Turk On Gold
Central Banks Are Dumping Dollars
This should send fear into the hearts and minds of anyone who does not own physical gold and silver - and I don't mean GLD, which is nothing but a pure derivative of gold:
When you look at this statistic, and combine it with several recent public statements from China beating the drums for a new global reserve currency - plus the report that several large countries including Gulf Arab States are looking at dumping the dollar in oil trading - it is becoming increasingly apparent that the U.S. dollar is losing its status as the world's reserve currency.
Anyone who still has HOPE that the Obama Administration is implementing policies which support a strong dollar (i.e. reducing spending deficits, reducing Treasury debt levels, promoting real economic growth vs. just subsidizing more debt-fueled consumer spending), will be in for a very rude awakening when they wake up one day to discover that the dollars in their bank account are close to worthless. Actually, it will be more akin to being blind-sided in the head by a swinging two-by-four piece of wood.
The ONLY way to protect yourself from the rapidly growing fraud, corruption and massive wealth theft by the large Wall Street banks, and enabled by the Obama Administration - Bush was guilty too, but everything happening now is on Obama - is to move as much of your wealth as possible in to gold, silver and mining stocks. You only have yourself to blame if you don't.
“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.” (source: Bloomberg).Central Banks, in April, May and June, the latest quarter for which data is available, put only 37% of their new reserve funds into U.S. dolllars, an amount that has plunged from the 63% average level since 1999 (source: Bloomberg - here's the LINK).
When you look at this statistic, and combine it with several recent public statements from China beating the drums for a new global reserve currency - plus the report that several large countries including Gulf Arab States are looking at dumping the dollar in oil trading - it is becoming increasingly apparent that the U.S. dollar is losing its status as the world's reserve currency.
Anyone who still has HOPE that the Obama Administration is implementing policies which support a strong dollar (i.e. reducing spending deficits, reducing Treasury debt levels, promoting real economic growth vs. just subsidizing more debt-fueled consumer spending), will be in for a very rude awakening when they wake up one day to discover that the dollars in their bank account are close to worthless. Actually, it will be more akin to being blind-sided in the head by a swinging two-by-four piece of wood.
The ONLY way to protect yourself from the rapidly growing fraud, corruption and massive wealth theft by the large Wall Street banks, and enabled by the Obama Administration - Bush was guilty too, but everything happening now is on Obama - is to move as much of your wealth as possible in to gold, silver and mining stocks. You only have yourself to blame if you don't.
Sunday, October 11, 2009
Barney Frank Is GREAT For Gold!
Simply stunning, too-insane-to-be-believed, statements from Barney Frank concerning the Government's hopelessly futile attempt to stop the housing market collapse - i.e. override the LAWS of economics (sourced from http://www.calculatedriskblog.com/):
“I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That’s a policy.” Barney Frank, chairman of the House Financial Services Committee on recent FHA lending, quoted Oct 9th, 2009 in the NY Times..."I believe the intent of the FTHB [first time home buyer] credit (and any extensions) is to raise the floor on home prices to delay (and sometimes prevent) defaults, reducing the shock to the financial system."
Essentially, Barney Frank is saying that it's okay to make money-losing loans using taxpayer money in order to sustain the housing bubble. I'm not sure how Barney Frank manages to keep his Congressional seat. Do people in Massachusetts believe that its okay to toss bales of money into the water off of Chappaquiddick Island instead of bodies? I don't know if I should send Barney a thank-you note for supporting policies that make gold go a lot higher, or shudder with fear from the knowledge that complete idiots are running our Government.
“I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That’s a policy.” Barney Frank, chairman of the House Financial Services Committee on recent FHA lending, quoted Oct 9th, 2009 in the NY Times..."I believe the intent of the FTHB [first time home buyer] credit (and any extensions) is to raise the floor on home prices to delay (and sometimes prevent) defaults, reducing the shock to the financial system."
Essentially, Barney Frank is saying that it's okay to make money-losing loans using taxpayer money in order to sustain the housing bubble. I'm not sure how Barney Frank manages to keep his Congressional seat. Do people in Massachusetts believe that its okay to toss bales of money into the water off of Chappaquiddick Island instead of bodies? I don't know if I should send Barney a thank-you note for supporting policies that make gold go a lot higher, or shudder with fear from the knowledge that complete idiots are running our Government.
Friday, October 9, 2009
Still Waiting For Gold to Crash? Better Read Below...
Dow Theory Letters publisher Richard Russell has issued an uncharacteristically bullish statement on gold. Russell, who is perhaps that most famous and enduring market newsletter publisher, called the bottom of the 1972-1974 bear market. Russell uses some proprietary indicators to forecast market trends. He's probably been, over the last 50 years, the most consistently accurate market forecaster. Here's what he says about gold:
I will address all the reasons why gold is going much higher in future blog posts. But I would like to say that, based on evaluating a lot of evidence that has been brought to my attention from some people who are in a position to know the facts - plus my own recent experiences in dealing with gold and silver deliveries from the Comex - there is a rapidly growing problem with the ability of three or four big banks, who are short Comex and LMBA gold futures contracts in large quantities, to make good on the actual delivery of physical gold. I am now hearing accounts of some large investors being offered cash settlement of their futures contracts at spot plus substantial premiums over spot. In other words, there is a condition of "backwardation" in the gold market that is not evident to the casual participant. This alone, if I am correct, will drive the price of gold substantially higher (and of course, silver will go up even more in percentage terms).
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“Meanwhile, a great bull market starts, it's a bull market that mirrors the demise of the dollar. Gold is priced in dollars, and as the dollar weakens, it takes an increasing amount of fiat dollars to buy an ounce of gold…Beginning in 1999 gold started up in a primary bull market. In my personal opinion, this is fated to be one of the greatest bull markets in history. It will be a bull market built on not one, but two powerful human emotions -- both greed and fear. The speculative third phase lies ahead. Slowly but surely, the US public will finally realize that the US government is bankrupt both morally and monetarily. People will panic into gold…I believe that there will be a world panic to buy gold. This will set off one of the wildest and most explosive bull markets in history.”There are a several fundamental variables to support Russell's comment. Let me just say that all these bubblevision "experts," who get on t.v., or pen commentary in the Wall St. Journal, and cite declining jewelry demand or industrial demand as reasons why the price of gold is at a top and going lower, have absolutely no clue what they are talking about - in fact, they look like absolute idiots to those who do (see the recent article by Dave Kansas of the Wall Street Journal. I am in shock the WSJ published such sloppy, incompetent reporting).
I will address all the reasons why gold is going much higher in future blog posts. But I would like to say that, based on evaluating a lot of evidence that has been brought to my attention from some people who are in a position to know the facts - plus my own recent experiences in dealing with gold and silver deliveries from the Comex - there is a rapidly growing problem with the ability of three or four big banks, who are short Comex and LMBA gold futures contracts in large quantities, to make good on the actual delivery of physical gold. I am now hearing accounts of some large investors being offered cash settlement of their futures contracts at spot plus substantial premiums over spot. In other words, there is a condition of "backwardation" in the gold market that is not evident to the casual participant. This alone, if I am correct, will drive the price of gold substantially higher (and of course, silver will go up even more in percentage terms).
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