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2011 is the Year of the Precious Metals Junior Miners

December 31, 2010 by · Leave a Comment 

By James West, MidasLetter.com

With gold and silver both boiling ferociously into record territory repeatedly throughout the last half of 2010, the outlook for 2010 looks even more bullish for the monetary metals. Forget the perennially fallacious predictions of the financial mainstream. There’s nothing but higher prices for both these metals on the horizon.

The reason is elementary. With the United States firmly entrenched in its own death spiral financing, whereby it has no choice but to continuously prop up its crumbling economy with monthly injections of increasingly abundant and therefore declining in value paper dollars as the only means to generate big numbers in the stock market, gold and silver will rise.

Even if all of the gold ounces purchased, hoarded and fabricated into jewelry each year were replaced by new discoveries, both gold and silver would keep rising, simply in relative value to the U.S. greenback.

Gold is finishing up 2010 with its strongest year on year price increase since the decade-long bull market first picked up a head of steam in 2001 with a gain of 28.8 per cent.

Silver, however, was a brighter star, having finished the year up over 80% since its 2009 close of $17 an ounce. Closing 2010 at over $30 an ounce, it has been an even better performer over the last ten years, now up over 600% as compared with gold’s almost 500% increase in the same period.

The less well-known precious metals, which also qualify as both precious and money, palladium and platinum, are also both stellar performers in the last year, having risen by 95% and 15% respectively.

But even copper has set new records this year, and consensus estimates point to that trend continuing into 2011 and beyond. Gold Fields Mineral Services predicts copper will reach CA$11,040 per tonne by 2015.

Buying the physical metals is obviously a safe bet going into 2011. Since the United States leadership lacks both the intellectual capital and the moral fortitude to responsibly manage its currency and its economy, investors around the world will succeed handsomely just exchanging their U.S. paper money for precious metals.

But the real money in 2011 is going to be made in the junior mining companies who will be the source of replacement ounces for all of the major mining companies who need to pay a premium for advanced discoveries that are needed to their much larger valuations.

In the period from the beginning of 2010 to the end of 2010, there were no less than 520 stocks on the precious metals-heavy TSX Venture exchange that returned over 100% in value within the 12 month period. No other class of public company equity even comes close, with most other sectors performing as net losers in the same period. No other exchange can demonstrate anywhere near that number of stock doubles within a single sector.

The TSX Venture composite index shot up an incredible 48% in 2010, which makes it one of the world’s best performing stock exchanges for the year. Compare that performance to the measly 17.85% offered up by the Dow Jones Industrials or the paltry 12.6% delivered by the S&P 500.

Its not just the level of performance that is enriching investors. On December 17 the TMX Group announced that Toronto Stock Exchange and TSX Venture Exchange together established a new trading volume record yesterday, December 16, 2010. Year-to-date combined volume traded was 166,174,821,823 shares, which surpassed the previous record of 165,351,274,278 set on December 31, 2009.

So the increased liquidity in these exchanges demonstrates that the trend for 2011 is clearly for more investment in natural resources and commodities.

The surge in commodity performance has also been a boon to the Canadian dollar, which rose to an 8-month high on the back of commodities prices.

Possibly the best trades investors can make in 2011 is to take their declining in value U.S. dollar holdings, use those to buy equities in the surging precious metals exploration stocks, and then sell them in Canadian dollars in a year’s time. Investors will capture not just the leverage to the prices of gold and silver offered by successful Canadian juniors. They will also benefit from the strengthening Canadian dollar versus the U.S. dollar as that trend continues into 2011.

Even oil is set to rise through $100 a barrel in 2011, which will hurt consumers at the pump. The best hedge against higher fuel prices is owning shares in publicly traded energy exploration stocks that can deliver 100% gains or better in a single year if they discover new reservoirs of hydrocarbons.

There is a time coming when the global investing public will suddenly clue into what is right now a not well known fact: the best place to make money in 2011 will be on the Canadian TSX and TSX Venture exchanges.

James West is the publisher of the highly influential and widely respected Midas Letter at midasletter.com. Midas Letter Premium Edition features 5 stock picks on the first Sunday of each month on the TSX Venture Exchange. The 2009 model portfolio performance was 237%. Until December 31st, subscribers to Midas Letter Premium Edition will enjoy it at an annual rate of $39 per month in perpetuity, and be entered to win US$100,000 in gold bullion. After January 1, the price is $49 per month.

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The Last Angry Man’s Problem With IMF Gold Sales

December 31, 2010 by · Leave a Comment 

By The Mogambo Guru

Adrian Ash of BullionVault.com writes that “the International Monetary Fund said it has completed the gold bullion sales program begun in October 2009,” and now 403 tonnes of gold have been sold.

I bring this up all the time because the whole thing pisses me off because we gave those IMF bastards the gold to provide gold-standard legitimacy for their stupid fiat currency, the Special Drawing Right (SDR). And yet here they are selling the gold we loaned them! Gaaahhh!

Mr. Ash is apparently not particularly interested in how I have such a low opinion of the IMF and its little empires of crooks and liars, probably because, at the root, they are just more corrupt bankers, and it is always bankers who are the source of all economic problems, as they are the ones who can create money out of thin air just by making an accounting notation.

Oddly enough, early in my career, I tried this “accounting notation” approach with my boss as a way to “fix” the problem of my poor work performance and dismal results, instead of firing me on the spot, which was her original plan.

The way I explained it was that my Brilliant Mogambo Plan (BMP) was inspired by the fact that We’re Freaking Doomed (WFD) because the foul Federal Reserve is creating so much money. Thus inspired, I suggested that we likewise bring sales forward by creating them out of that selfsame thin air, we book the sales as a profit, thus showing that I am highly profitable, and not incompetent as implied in those lying Quarterly Employee Performance Evaluations.

When she asked, with this stupid look of confusion on her face, “Huh? What? How did you get into my office?” I allayed her natural suspicions by telling her that I figured that this would be offset by subsequent cancellations of those sales, along with our “paying” penalties for breaking the contracts, meaning that, in effect, we would deduct these additional phantom expenses from income to shelter real income from taxation, turning a loss into a profit, everybody’s happy, and we would both get all kinds of terrific bonuses and awards and promotions, and make a lot more money, too!

I remember leaning in towards her and whispering, “All it would take is for the accounting department to ‘play ball’ with us to somehow create money out of thin air, and it is your job to get their compliance and complicity, like Wall Street lobbyists extort compliance from Congress!”

The rest of the story is too ugly to talk about, and suffice it to say that it did not turn out well for me, the moral of which seems to be that creating things out of thin air, like money or sales, is a Very Bad Idea (VBI).

I could tell by the look of puzzlement on Mr. Ash’s face that he probably wonders what in the hell some stupid story, by some stupid guy, about some stupid tax fraud proposed a long time ago, and that probably never happened at all, has to do with gold, or the IMF, or anything that anyone cares about.

Suddenly, I realized he was right! So I sat down and shut up, and was pretty embarrassed until he said, “Some 57% of the 403-tonne total was bought directly by central banks, led by India.”

Inquisitive and suspicious, I wondered, “How much gold is that in terms of ounces?”  Quickly, my Agile Mogambo Mind (AMM) set to the task of multiplying 32,150 ounces per tonne times 403 tonnes, only to realize I have no idea what I am doing, and sure to be wrong, as I have been so, so wrong so, so many times about so, so many things, including, and especially, math, ranking, as it does, second on the list of Things That Confuse The Mogambo (TTCTM), losing the top spot to, “What women want and why they just don’t shut up when I tell them to shut up about my not knowing what they want like I am some kind of stupid mind-reader or something.”

That is why I am happy to report that, thanks to some help, we know that 32,150 ounces times 403 tonnes is just under 13 million ounces, which actually ain’t much at $1,400 an ounce, amounting to a lousy $18 billion, which is so little money in an age when the word “trillion” and “trillions” appears so many times in the literature, including that magazine reader who wrote in to say that he liked the beautiful Miss February so much that he could stare at her for a trillion years and never get tired of it.

The point is not that I am rambling and apparently have forgotten to take my pills this morning, but that central banks, Junior Mogambo Rangers (JMRs) and everybody else is buying gold, gold, gold, which should indicate to you that you should, too.

And if you don’t, you will learn that life can be hard, instead of easy, and which is so easy to achieve because merely buying gold and silver is enough, making it so, so easy that you giggle as you say, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

The Last Angry Man’s Problem With IMF Gold Sales originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

2011 America the Beautiful 5 Ounce Silver Coin Designs

December 31, 2010 by · Leave a Comment 

Since the 2010 America the Beautiful 5 ounce Silver Bullion Coins are now officially in the distribution channels for sale to the public, now is a good time to start thinking about the 5 ounce 2011-dated strikes of the series which include the investment-grade 2011 America the Beautiful Silver Bullion Coins and the numismatic or […]

Featured Coin News and Articles for December 26, 2010 – January 1, 2011

December 31, 2010 by · Leave a Comment 

What’s New This Week………

Greg Reynolds gives the ten leading topics of 2010. “This is my last column of the year 2010. It seems appropriate to list the ten leading topics of the year, starting with number ten.”

Steve Roach asks, “are rare coins investments?” in his blog. “Are rare coins an investment class? They are according to the Wall Street Journal.”

PMG will begin use of a new generation holder on January 3, 2011. All notes encapsulated after that date by PMG will automatically be placed in the new holder. Additionally, the new holder will be used for on-site grading during the Florida United Numismatists (FUN) convention in January.

Laura Sperber gives her opinions and predictions on the 2011 year for coins. “Consolidation in reverse! I expected a few firms to fold and smaller dealers to shut. Out of the blue comes the mega merger of Stacks and Bowers and Merena.”

Vic Bozarth gives advice on how to build a meaningful set of U.S. coins. “During the holiday season I often reflect on the many blessings I have in my life. One of those blessings is the joy I receive from handling and looking at rare coins. In fact, I love my job. I get to look at coins virtually every day as a coin dealer.”

Doug Winter writes on the proof-only double eagles dated 1883, 1884 and 1887. “Continuing my fascination with Proof-only issues, I’d like to discuss the rare Proof-only double eagles dated 1883, 1884 and 1887.”

Heritage Auctions has announced that we will be auctioning The Dr. Norman Jacobs Collection of Korean and Japanese Coins, the most important collection of its kind, from one of the most famous Asian numismatic experts to have lived. This collection will be featured in our September 2011 Long Beach Signature Auction.

NEW & UPDATED – Our coverage of rare coin and currency news has expanded with Austin Purvis taking over as Editor of Coin News Daily. This is a special section of CoinLink where we scour the web for items of interest related to numismatics and post a short excerpt and link to these “off site” resources.

We have also made changes to The Bullion Report with daily news and article updates, and a monthly analysis of the “Premiums Over Spot” for Gold and Silver Bullion products.

View all the latest rare coin news here

Gene Arensberg: New lows for gold-silver ratio

December 31, 2010 by · Leave a Comment 

11:30a ET Friday, December 31, 2010

Dear Friend of GATA and Gold (and Silver):

The Got Gold Report’s Gene Arensberg today notes that the gold-silver ratio has reached an extremely low level amid circumstances suggesting that it could go even lower as silver outperforms gold. Arensberg’s commentary is headlined “New Lows for Gold-Silver Ratio” and you can find it at the Got Gold Report here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Precious metals will accelerate in 2011, Turk tells King World News

December 31, 2010 by · Leave a Comment 

11:20a ET Friday, December 31, 2010

Dear Friend of GATA and Gold (and Silver):

Interviewed by King World News, GoldMoney founder and gold and silver market analyst James Turk offers his predictions for the precious metals in 2011. Turk expects an acceleration of their rise. The interview is 17 minutes long and you can find it at King World News here:


Or try this abbreviated link:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:


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Venezuela devalues for second time this year

December 31, 2010 by · Leave a Comment 

By Jose Orozco and Corina Rodriguez Pons
Bloomberg News
Thursday, December 30, 2010


CARACAS, Venezuela — Venezuela devalued its currency for the second time since January, enabling the government to increase revenue at the risk of pushing up the world’s highest inflation rate.

The government will weaken the exchange rate on so-called essential goods such as food and medicine by 40 percent to 4.3 bolivars per dollar on Jan. 1, unifying its two fixed foreign exchange rates in bid to pull the economy out of recession, Finance Minister Jorge Giordani said today on state television. Imports of essential goods were previously bought at a rate of 2.6 bolivars per dollar.

The devaluation will help narrow the government’s budget deficit by bolstering the bolivar-based value of the state oil company’s exports, said Orlando Ochoa, an economics professor at Andres Bello Catholic University in Caracas. Inflation, which is already the highest among 78 countries tracked by Bloomberg at 27 percent, may quicken further as food prices climb, he said.

“Devaluing has fiscal benefits but also hurts the country’s economic activity,” Ochoa said. “Clearly, this adjustment in the preferential exchange rate directly affects inflation for 2011.”

The central government posted a deficit of 58.2 billion bolivars, or $13.5 billion at the new exchange rate, between January and November, according to a National treasury report.

Giordani, who has also served as planning minister under President Hugo Chavez, said the devaluation will help spur economic growth after two years of recession. Ochoa said that a pickup in inflation will “deepen the recession.”

Chavez devalued the bolivar in January for the first time since 2005 and created a multi-tiered exchange system in an attempt to spur non-oil exports and curb the consumption of luxury imports at subsidized exchange rates. Venezuela is the largest oil producer in South America.

The devaluation will boost the tax revenue that state oil company Petroleos de Venezuela SA turns over to the government because the company had been selling some of its dollar revenue at the 2.6 exchange rate, said Milton Guzman, an economist at Caracas-based consulting company Fortuny, Guzman & Asociados. Oil accounts for about 95 percent of Venezuela’s exports, according to the central bank.

About $18 billion of this year’s $30 billion of imports were also purchased at the 2.6 per dollar rate, said Juan Socias, director of Caracas-based Grupo Soluciones, a research company that studies Venezuela’s foreign exchange commission.

“With so many exchange rates in play there has been a lot of distortions” in the economy, said Guzman. “Now by selling everything at 4.3, PDVSA and the government’s fiscal contributions will improve. That will translate into a greater flow of bolivars for the government.”

Venezuela’s oil-dependent economy contracted in 2010 for a second consecutive year as foreign currency shortages grew and crude production dropped, the central bank said in a report published on its website today. Venezuela’s is the only major Latin American economy in recession.

The economy has suffered as a Chavez-led nationalization drive scared away private investment, Guzman said.

Gross domestic product shrank 1.9 percent this year, with the oil industry shrinking 2.2 percent and the non-oil sector contracting 1.8 percent, according to today’s report, which cited preliminary figures. The economy contracted 3.3 percent in 2009.

Chavez ordered a crackdown on brokerages this year and the dismantling of an unregulated currency market they administered, which was used by Venezuelans to obtain dollars when they couldn’t get permission from the government to buy at the official exchange rates.

Sitme, the exchange that replaced the unregulated or so-called parallel market, has traded $5.04 billion to date, an average of $36 million per day. The parallel market traded between $80 million and $100 million a day, Alberto Ramos, a Latin America economist at Goldman Sachs Group Inc. in New York said in June.

The devaluation, which investors had anticipated, will provide only temporary help for the budget, said Jaime Valdivia, head of emerging market research at Bluecrest Capital Management in New York.

“This will be a temporary measure that will alleviate some of the fiscal pressures but I don’t think this changes the fundamental story of Venezuela, which is one of very high inflation, high deficits, and increasing debt problems,” Valdivia said. “This doesn’t really change that much.”

* * *

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Metals end 2010 stellar commodities rally with a bang

December 31, 2010 by · Leave a Comment 

Commodity markets were set to end 2010 on a high note, with copper powering to record highs and oil heading for its eighth rise in nine years, while investors set up for strong prices in 2011 on expectations of a continuation of this year’s recovery.

The precious metals complex has had a stellar run this year, led by palladium’s 94 percent rise, in a broad commodities rally which has pushed the 19-commodity Reuters-Jefferies CRB index up 15 percent.

Read more….

Transnet reopens coal export lines

December 31, 2010 by · Leave a Comment 

South African logistics group Transnet said on Friday it had reopened two rail lines leading to the Richards Bay coal export terminal after a derailment earlier this week.

South Africa is a major exporter of coal to power stations in Europe and Asia.

Read more….

China may not issue new 2011 rare earths export quota-report

December 31, 2010 by · Leave a Comment 

China may not announce a second rare earths export quota in 2011, the official China Securities Journal said on Friday, after Beijing raised international concern by cutting exports of the minerals next year.

The report cited unidentified government sources as saying Beijing may not announce additional 2011 export quotas for the essential minerals.

Read more….

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