B.S. in T.A. with a Minor in Miners

I don't know about you, but I'm beginning to feel an instinctual pull toward the miners. They have beaten down for so long that they finally just feel like they're ready to go higher. My gut tells me that, having reached a point where their relative valuation versus metal is several standard deviations away from normal (whatever that is), something is bound to happen. My brain tells me that prices, some of which have fallen all the way back to pre-QE2 levels, are bound to turn around soon. So, let's take a look.

Any discussion of the miners must begin with a look at the overall stock market because, at the end of the day, these are stocks we are talking about. Unfortunately for our bullish case, the S&P looks downright awful. Though fundos for most miners are improving with every uptick in the PMs, a falling stock market makes buying miners a bit like rowing upstream and a swift current can wash you away no matter how hard you are paddling.

paper_8-20sp.jpg

That said, the HUI (gold miners index) doesn't look too bad. In fact, its at a point where it appears to be breaking higher. We'll know more in a week or so but, for now, keep a close eye on the 580 level. If the HUI can stay above there, base and move higher, it will create a favorable environment for most all of the mining stocks, regardless of their current technical picture.

paper_8-20hui.jpg

Now, here's the kind of stock we're looking for. Note how Yamana struggled for the longest time to get through 13. Each time it tried and failed, the shorts were emboldened and more certainly joined the cause. Ah, but look what happened once it broke through 13! It based and used 13 as support before igniting a short squeeze that has driven it to 15.50. Pretty good stuff.

paper_8-20auy.jpg

So, what we want to find are stocks that look like AUY but haven't broken through and taken off...yet. Below are four candidates. If the HUI holds 580 next week and you end up looking for a miner to buy, I'd start with these four or any other stock that has a similar-looking chart.

paper_8-20aem.jpgpaper_8-20ego.jpg

paper_8-20exk.jpgpaper_8-20slw.jpg

Now here are four that don't look so good. You can certainly nibble at these if you want and I'm not sure I would sell them yet if I'd ridden them all of the way down. However, if you're looking to buy, I'd stay away from these and any others you find that look the same.

paper_8-20hl.jpgpaper_8-20ng.jpg

paper_8-20paas.jpgpaper_8-20svm.jpg

Time prohibits me from giving you more charts but I think you get the picture. If you're interested in a stock not mentioned above, pull up a chart yourself. I think you'll find that it either looks like the first group or the second and it will then be clear to you whether or not it is something to consider buying.

If all else fails, just daytrade the UGL and the AGQ. Mister Hyde gave up on the miners about 8 weeks ago and has been trading these two ETFs exclusively ever since. He's made about 30% and is feeling quite pleased with himself. A word of warning, though. UGL and AGQ...particularly AGQ...are quite volatile and not for everybody, particularly the faint of heart. If you don't like the heat, don't go anywhere near the kitchen. In fact, stay out of the house completely.

In time, a portfolio of miners will treat you just fine. A little patience and a little homework will take you a long way. Good luck!  TF

157 Comments

Tesla's picture

Thanks For EVERYTHING Turd!!!

Your a ROCK STAR - have a great weekend man!

Two Gun Tobin's picture

No Way

First?

silverbleve's picture

Great stuff

Thanks turd, I'm Definatley not going in the kitchen yet, I'll leave it to the real chefs. go pm's!

silverbleve's picture

Doh

Duplicate post

Invisible Hand's picture

Thanks Turd!

I appreciate the update on the miners. This is exactly what I was looking for. Thank you!

ewc58's picture

Turd, totally agree with all the ones you wouldn't touch

And I'm loving that I don't own any. I do think Kinross belongs in the first group, any thoughts there? If EGO does, I think KGC does. But I am not the Turd. Had you ruled it our or just didn't look at it?

Thank you

thecoloredsky's picture

New Gold looks like it

New Gold looks like it belongs in that upper group. Been watching it off and on, don't own any though.

1 year Yahoo chart:

http://finance.yahoo.com/echarts?s=NGD+Interactive#chart1:symbol=ngd;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Dave T's picture

GLD

From the last thread:  "... So be careful when you denounce GLD as a scam! You are playing into the hands of the same crew who rob us in the gold and silver markets at every opportunity...."

I liked the whole post, but, instead of doing battle with an 800 lb. gorilla I’d rather be running right behind that gorilla in the same direction he’s going.  Would help to know which way he’s running though.  GLD will de-couple from the spot price of gold some day and it would be wise of everyone to realize that.  What we don’t know though is when it will happen.  I hope no time soon.  I’m enjoying the ride thus far.  But I try to keep the blinders off and remind myself that a quick exit will be in store someday.

The only GLD I hold right now is in Options contracts - long calls and bull put spreads.  My long term gold is physical holdings and in Sprott's PHYS.

Jim H's picture

What about a lens other than technical chart analysis?

Certainly the Turd's chart reading skills are legendary...   but I am drawn to a more fundamental-based view as well, in which case PAAS looks to me like a pure value play;

PE = 11

EPS = 2.77

Div (yes, there is a small Div.. which makes it a bit harder to short) = 0.3%

I would be interested in hearing other opinions on PAAS and miners in general.. Thanks!

I hold USSIF.PK, HL (it has sucked wind big time), and EXK.  Bought into PAAS last week based on above.     

mouser's picture

Turd i hope you are referring to SVM from a TA standpoint

From a fundamental look they are likely one of the best buys in the silver producer space. What is not to like ? Outside of the chart...

First off, fundamentals.... SVM is the lowest cost primary silver producer on the planet. Lead and zinc revenues more than pay all mining costs.In the First Quarter of FY2012 (ended June 30, 2011), the company produced 1.6 million ounces of silver at a cash cost of negative $6.12 per ounce.

SVM totally unhedged, so will enjoy the full upside of the silver move over 50$ US.

SVM is debt free and sitting on over 200 million $ , and this while getting two more mines into production, and are actively buying back stock around 8$. Remember too they did a 116 million $ PP at 12.70 in december. Nice work if you can get it, sell at 12.70 and buyback at 8$ or so, while reporting record revenues and profits.

SVM pays a divvy of .02 a share , and this puts a real downer on shorting the stock.

Growth? Hard to find another silver miner who is growing any faster.

Recently SVM brought the BYP gold mine online, cant see how that could be a negative in this current metals environment.

By end of 2013 the production at BYP is slated to be 1000 ton per day gold and an additional 1000 ton per day lead and zinc.

Currently just 400 ton per day gold production at about 7 gpt AU average , and costs under 200$ per oz.

GC mine slated to come online with  Initial production of 700 tonnes per day mining capacity is expected to be achieved in about 9 months with full capacity of 1,500 tonnes per day to be achieved in 15 months. With the added  growth from BYP and GC ,  you can estimate double the revenues within 18 months, and that is with silver at 35$ , gold at 1500$ and lead and zinc a buck a lb average. The cost of bringing these 2 mines online is of course a fraction of what those costs would be in North America. One of the competitive advantages of CHINA is the speed and lowcost of construction in China.

There are downfalls of course, and most of SVM's beatdown i believe can be attributed to TRE scam allegations, which has created a hateon  in the NYSE  for big China based companies. Lots of disinformation of course being distributed about SVM by some firms ( Cramer 's The Street)  who claimed costs were going up and poor growth for SVM. They of course used the Q ended March 31 in which Chinese new year happens, and SVM takes a month off for holidays. The next Q of course recently reported was much, much stronger with a full 3 months of production.

2011-08-03 04:40 PT - News Release

Mr. Rui Feng reports

SILVERCORP REPORTS NET INCOME UP 82% TO $25.6 MILLION OR $0.15 PER SHARE AND CASH FLOW UP 46% TO $33.9 MILLION OR $0.19 PER SHARE FOR 1ST QUARTER OF FISCAL 2012

Disclosure , I am a buyer here, SVM is also a buyer around 8 $ and change , so i see little downside from here as SVM still has near 100 million $ set aside for the buyback. This of course  is the opposite of dilution and earnings per share will only go up with less shares OS, so less divvy payments and higher silver and gold  prices and production. 

Economical Disaster's picture

Japan, U.S., Canadian governments complicit in covering up

..Fukushima radiation

A MUST LISTEN! WE ARE FACING TOTAL HUMAN EXTERMINATION!!!!

olderman's picture

SVM + mouser

Mouser like your fundo on SVM. I have been a buyer of SVM for years and will continue.

olderman

piranha82's picture

ten year note @ 2%

http://mindonmoney.wordpress.com/2011/08/18/can-you-hear-it/

This is article makes me nervous for my gold calls... Turd, what do you think?

The Vet's picture

Dave T on GLD

instead of doing battle with an 800 lb. gorilla I’d rather be running right behind that gorilla in the same direction he’s going. Would help to know which way he’s running though. GLD will de-couple from the spot price of gold some day and it would be wise of everyone to realize that.

I agree that riding the coattails of the EE may be more profitable than fighting them, but there is always the slight possibility that the SEC gets religion and bans shorting of the commodity backed ETFs.    That will have exactly the opposite effect to the price and it would run away on the upside as the shorts could only cover by bidding for stock well above fair value.

This type of ETF structure is completely unstable if short selling is allowed, because of the ability to remove value from the assets of the trust with the short shares.  Every share being redeemed from GLD right now is being redeemed for 7% more than its proportion of the real value in gold in trust.  If nothing else happened except redemption of the traded float of shares, the last 7% of the long share holders would be left holding a completely empty bag and the shorts would be short 31 million shares worth zero! A wonderful outcome for them!

With normal short selling of a company stocks, the actual intrinsic value of the company is not affected by the short selling so the real asset value is unchanged regardless of what happens to the share price or number of extra shares generated by the short sale.

With these ETF's like GLD and SLV short sold shares can be redeemed for actual metal so the underlying value (which is only that metal) is being eroded by the short sales. The SEC should never have approved short selling for these entities and it will eventually increasingly destabilize the market. Selling GLD shares short affects the GLD price adversely in relation to the actual POG and is likely to eventual collapse of GLD with the asset going to the shorts and the longs being effectively defrauded.

The GLD trust will not have done anything illegal but the SEC, by allowing GLD to be sold short has created a time bomb.
 

¤'s picture

Thanks TF, have a good weekend

Any thoughts on SVM and why it seems to be underperforming? Is it the strong Chinese influence on the business?

Hecla puzzles me. Supposedly so much silver and such low costs yet it 's just a dog. Large short presence maybe. I guess the same could be said for NG.

I hope Silver Wheaton has a good run. If silver explodes within the next  two weeks all of the above stocks might just explode to the upside once fresh money comes pouring into them. 

I think were that close to something amazing happening in the markets with 2-3 weeks and I think were closer then we might realize.

We've been waiting for this to happen for such a long time and we have so much doubt or cynicism about the EE and their daily thievery that it seems almost hard to believe that their short scheme might just blow apart. It's becoming unraveled.

I'm also half expecting some other country to announce their gold/silver nationalization  sooner then later.  If that happens I'll say $2500-$3000 happens quicker then we could ever imagine.

lostinspace's picture

Haven't seen this posted yet.

Haven't seen this posted yet.  I love me some Schiff.

Larry's picture

@Red Pill & Blue Pilot

"Put that stuff in the right section and no one will mind at all." - Red Pill

Thanks for the respectful comment and suggestion. I'll take the credit/blame for getting that Chemtrail conversation last night. My intention was to chime in on a comment from a few days earlier, and post an instructive video to let folks who may not know of the toxic spray become aware of them through a credible, professionally produced video... and to alert those that may have not yet taken the "red pill" as you say you have.

Since I do believe the Chemtrail situation is urgent and important, I felt and still feel it is a topic that needs to be known on 'Main Street' and not relegated to a forum page that is the equivalent of an invisible back page story requiring many clicks just to find.

By the number of comments, there obviously was an interest. While I don't think the discussion got in any way out of hand, I'll concede that you are right about the intent of the main page and the forums. Perhaps it would be best, when posting something we feel people should be aware of, to make a brief comment to alert Main Street and provide a link to that forum. I appreciate it when others do that because I don't have the time or inclination to scour all of the layers of all the forums.

Then, if I'm led to a forum by a compelling subject and link and find that the information is not credible or respectful, I'll quietly ease out the door before noticed. If the same person repeatedly baits Main Street with links to useless, nonsensical or boorish content I'll not need a “rule”, I’ll use my own edit/delete/discern mechanism... without needing a blog structure to guide the decision or anyone else to .

If we don’t occasionally put off-topic stuff on the main page, we run the risk of getting pretty dull… or having a monopoly on red pills. :)

"I can respect questioning everything, these things are out of my control and I'm just worried about the task at hand....investing in PM's/Miners and being prepared." - rckymtn

Respectfully, with your interests of investing in PMs, miners and being prepared, you've just listed multiple subjects that all have places in the forums. Many hundreds (thousands?) of comments are there in each category of your interest. Assuming health, survival and warning signs are a part of your “preparation”, you'll find many fine comments in all sections, including (hopefully) the main page.

To be fair, the takeaway might be...

1) Respect the situational timing: Some/most already do this by keeping lengthy off-topic comments away from the trading hours and/or on weekends. This is a good thing, even though the pro/semi-pro traders have their own well-seasoned forums (they don’t typically use Main Street). Regardless, when the action is hot during trading hours, if it’s off topic keep it short and helpful. I'm not suggesting a ban on all things not trading or pm related... just not going overboard with it.

2) After-hours or weekends: Comment on anything that you don't mind being associated with. What you post is what you are and how you think. Post anything YOU feel is useful, helpful or humorous or inspirational, from hams, animals, rockets, music and history videos to chemtrails, EE, JPM, Fed, Cartel, CFTC, SEC, MENA, Oil, war updates and, uh, pm's. If any topic begins to take over the thread or become disruptive, then we should all remember to move it to a forum while it's fresh and hot (or stale and cold).

3) For urgent or critical information: Let us all know as soon as possible on Main Street if what you have might make us money, protect our money, guard our health or save our lives.

How's that? Fair enough? Now, if I can just figure out how to link to a forum for my latest Chemtrail comment. :)

Now back to your regularly scheduled program...

olderman's picture

HUI and the Turd Community

Turd, Norcini, Santa and others are convinced that breaking and holding above the 600 HUI level virtually guarantees a big run up in the pm equities. Judging by the number of hits on the tfmetal site, sometimes over 15,000 per day, could we begin to act collectively and commit to buying one or more of the Turd's pm recommendations in an effort to push the HUI above the lift off level. Maybe we can't do it all by ourselves, but the extra nudge could make the difference. Let's all become E-trade babies Monday morning (but with discipline).

olderman

European American's picture

To Life, Love and Miners

and some "Loot"! Aye Mate

Larry's picture

Turd's highlighted stocks above

Well, for the good and the not so good currently, I own'em all. I've long held every one Turd listed. Hope SVM comes around. Now, if someone can help me out with Faber's Ivanhoe (IVN) and Santa's TRX I'll really be appreciative. Any insight?

@ Olderman - yes. I like that idea very much. Let's buy en masse and throw in a Faber and Sinclair to buy as well!

Grigeo's picture

SVM parabolic short interest

"Any thoughts on SVM and why it seems to be underperforming?"

I'll leave the technical analyis to the many people here who know what they are talking about. 

http://www.dataexplorers.com/products/data

The short interest has increased parabolically from 1 million to over 15 million now.  And that doesn't include the naked shorts.

Lightning Round on Jim Cramer - Cramer was asked about SVM,,...he chuckled

yes, chuckled]...and said "NO".  He and his reprobate friends have targeted the stock.   They apparently don't care for SVM's buy back program, and are making an example of the stock.
 

 

Dave T's picture

@ The Vet – re GLD

Vet, that’s a pretty big “IF”, if the SEC were to suddenly get religion.  Actually, does the SEC regulate ETFs?  Also, didn’t the CFTC or some other governing organization step in and put position limits on commodities, BUT they exempted gold and silver from the limits?  The SEC is just as worthless as the CFTC.  They probably didn’t go after Bernie Madoff out of professional courtesy.  I fully agree that ETFs are out of control though while they allow short selling.  Someone didn’t think that one through…. or did they?...

I need to re-read both your posts on this subject as they are both worth digesting thoroughly.  Sadly to say though, I don’t expect financial regulators to step in and do what’s right for investors.  Protecting each other (and their employer) is their concern.

Grigeo's picture

HUI

"could we begin to act collectively and commit to buying one or more of the Turd's pm recommendations in an effort to push the HUI above the lift off level."

But when the bullion banks can naked short the stocks into the ground.  Theoretically, if the Turd community collectively owned 100% of a certain mining stock, and had the stocks registered in their own name and kept in a safe at some location other than a broker-dealer (so the shares couldn't be borrowed and shorted), couldn't the criminal bullion banks still naked short the stock into the ground?

Unlike myself, it is the stackers that have been right all along.

OC15's picture

The Miners

Suck because the banksters want to force the fiat to their POS vehicles SLV and GLD.  If these 2 are kicking ass and all of the miners are getting dumped on, they're diverting the fiat to the ETFs.

Interesting talk on SVM, when they unwind their short position to cover, this thing will blow up.  DEC calls appear to be piling on at 8 and 9.

Love to hear Turd's take on this.

duckwomanloulou's picture

NIA pump and dump critics

Could this community then not be called 'pump and dump' sites such as NIA has been accused of.  Sorry but if you put a certain no of people behind a stock it is bound to increase despite fundamentals and if Turd then flags a sell signal and we all dump then are we  surely no better than them?  Just a thought

Lou 

Thisisrich's picture

Hussmann and gold miners...

Here is an interesting piece from John Hussmann on the timing of investments in gold miners.

Hussmann

Although an old commentary (1999-2000) it is very relevant that all four of his criteria have been met, and he just pushed his miner exposure from ca. 15 to 20%.

Hussmann2

(See last sentence of last paragraph...long read otherwise).

This is a fellow that likes to do his homework.

Tom L's picture

SVM is a mess

During trading.  It has been beaten with 12 ugly sticks and any weakness in the general market or gold sees a big move down every time, intraday and everyone of them is designed to blow a support level and allow for even more piling on.

If the short interest is 15 million shares, it will, indeed, shoot up quickly.  It's a volatile stock in both directions but, Turd is right (and it's killing me) $8 has to hold.  A weekly close above $9.50 would induce some short covering. And then the rally could commence, but not before that.

HL is still dealing with the hangover from the Environmental judgment against them that popped the stock in January.  It hasn't recovered since then and the selling hasn't stopped.  I keep trying to pick the bottom and failing.  I've got some OTM Jan 12 calls I paid a little for.  Same with SVM.  I've written off my Sept SVM calls and am now in 'I hope I can recover half of my ass."

Ta,

The Vet's picture

Dave T - Re GLD

You are right... It's a big IF, but when the SHTF and it becomes obvious as to what has happened and why, it would be the only way to prevent the carnage that would result.  

The problem is that normal short selling is self limiting because eventually shorts drop the price to such an extent that the longs see value and buy.  Selling shares short increases the traded float; many retail investors don't even know that their shares have been lent out to shorts, and with naked short sales there are no limits and no accounting until the "fails to deliver" notices are issued, weeks later.   Once a share is in the market there is no way to distinguish a share issued by the fund and one created by shorting.  

The ability to redeem shares for metal in these ETF's  reduces the absolute value of the fund, not just the share price, and the longs only see a rapidly depreciating asset.  They will attempt redemption in a flood to salvage what value is left.   First ones out get gold; the last ones get nothing.  The fund must collapse leaving nothing except the short positions on a valueless shell .  It could collapse in a day or less!

GLD holds 1,290 tonnes of gold and there is that other 96 tonnes sold short so we are talking about the loss of 1,386 tonnes of what should be unencumbered  physical gold.  That's over $80 billion; a fairly big sum to explain away and enough to really screw up the gold market for quite a while.  The SEC must know this is a possibility and while it will be the EE who walk away with the spoils, it will be a hard sell politically unless they can shift the blame.

themagicbusguy's picture

miners

I'm curious what those  holding miners think about the End Game for miners? Chavez 

nationalized his countries miners. If there is a scramble for silver/gold, and if sovereigns nationalize mines and makes them state property, what good is your paper worth? Just curious. I left the Game in 2007 and went to phys thinking "The End of the Great Fiat Experience Is At Hand!" only to have spent the last three years gape mouthed at the EE's ability to keep the plates spinning.  What think ye?

cpnscarlet's picture

@Econ... "Total Human

@Econ... "Total Human Extermination"??? Then why didn't much of Asia die off after Chernobyl? That was a much nastier pile of isotopes and graphite.

Syndicate contentComments for "B.S. in T.A. with a Minor in Miners"