Precious metal miners: fathoming the abyss

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Gwyde
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Precious metal miners: fathoming the abyss

Since over two years, any miner revival has only been temporary... and was followed by fresh lows during the next leg down. The NYSE Arca gold bugs index (HUI) has slid back to the level of its October 2008 bottom. Relative to gold, HUI/Gold again quotes at its level before the start of the secular gold bull end 2000. Speaking about a gold miner bear market has become the most common understatement. Fathoming the abyss only requires a couple of graphs:

This tells the whole picture, but perhaps you like some extra detail on the rear end: can be done.

No wonder precious metal miners have become the most despised sector in the universe. Just an illustration: on the old forum for gold miners, I have been the only active poster left...

Will the odds improve? Almost certainly...

When ? Hard to tell, but it will require precious metals recovering from their own downtrend ...

Have we seen the bottom ? We've thought so several times and any recovery only was the prelude for more hardship to come. The odds still are against us.

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Off the lows

Since the early November bottom, precious metals have recovered some of their losses. With gold regaining $1200, gold miners also got traction. The HUI/Gold ratio is off its recent low, now standing at 0.146. Not yet very impressive when having a look at the above graphs.

The miner recovery has nevertheless been swift from an extremely oversold situation. It is still frail however, as any minor hesitation of precious metals immediately results in another miner sell-off of several percentage, as we witnessed last Wednesday. Yet, we end the week with decent gains. The weekly updates of the gold miner pulse blog page, show fresh graphs on HUI/Gold and SIL/Silver with daily observations over a 6 months time horizon. 

The contributor driven explorer & junior miner spreadsheet (as I used to comment on at the archived thread: Selecting explorers and junior miners) now continues mitigating its losses, since the early November plunge. At 48%, the aggregated loss still proves cumbersome. We have 16 list components up against 7 down with three flat over the week. Several weekly double digit gains may look impressive, but they are unable to materially improve the overall performance, considering how deep most of those explorers and juniors had fallen.

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Thanks!

Gwyde - appreciate you continuing to plug away with the list and your thoughts on miners. Better days ahead (how long have we been waiting?!?).

~pickaxe

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Shorter's feast

If there 's anything to be learnt from the last few years, it 's that you shouldn't be long gold on Thanksgiving, Christmas and New Year's eve. Shorters thank you, naive longs, for paying for their Thanksgiving turkey... and some more.

Moreover, shorters now have some rational arguments teaming up with them: crude plunged after the OPEC failed to agree on production cuts. More or less the complete commodity complex is taken along in the down draft. Add some dollar strength in the rebound and the stage is set for precious metals to nosedive. A rather quiet week on the broad stock markets though. The S&P is up only 0.20% over the week: after a decent start on Monday, small losses alter with tiny gains.

The Oil sectors and related services predictably are losing, but nothing worse than precious metal miners.  Over the week, gold is down 2.8% to $1168.5 after the Black Friday slide, silver makes a land slide 5.3% loss to $15.58. The HUI index cranks down on the gold slide, plunging 7.3% over the week and all of it on account of the Black Friday slide. The weekly updates of the gold miner pulse blog page, show fresh graphs on HUI/Gold and SIL/Silver with daily observations over a 6 months time horizon.

Last  week I pointed out how frail the miner recovery is, overreacting to any minor hesitation of precious metals. What we got was more than a minor hesitation of precious metals and predictably a massacre among miners. On our list, the aggregate loss aggravated to 53% again, with 21 picks down against only three counter-trend gains... of which two Aussie miners which were lucky for Sidney to be closed before the gold slide aggravated. With a loss of 12.5% and 11% respectively our benchmark ETF's GDXJ and GLDX are off even worse... if that can be a consolation.

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The curse of intra-day volatility

Last week's shorter's feast went parabolic in early Asian trading on Monday, with gold down to $1142. But the hangover was near: an intra-day rally started at the London opening and didn't back off till gold reached its intra-day high on NYMEX at $1221, closing at $1212. After speculative longs were stopped out over-night, shorters had to throw the towel only hours later.  Intra-day volatility really is a curse, both for leveraged future speculators ... and for miners. Despite gold still up 2.11% on balance over the week and silver even surging 4.56%, miners had a hard time catching up. The HUI index is up less than 2%, making HUI/Gold slide to 0.139. Juniors are off even worse as illustrated by a 2.1% weekly loss for GDXJ. The weekly updates of the gold miner pulse blog page, show fresh graphs on HUI/Gold and SIL/Silver with daily observations over a 6 months time horizon. Silver miners really have a hard time, with the Au:Ag ratio still above 73, after peaking near 80 intra-day on Monday.

While broad stock markets are steaming up to new highs, it remains damage control for the oil and mining sectors. On our contributor driven explorer & junior miner spreadsheet , the aggregate loss aggravated to 54%, with losses outnumbering gains 16 to 9. Quite a few double digit swings over the week, in both directions. Weights in your allocation may change a lot under those conditions. The cap weighed performance shows a 0.86% loss over the week, while the blunt average (all miners with an equal weight) is down as much as 2.24%.

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Allied Nevada

After deciding on a $21.5 M capital raise to cash up for the continuing exploitation loss at its Hycroft mine, the Allied Nevada share is in a tailspin. New shares are positioned at $1 and include a warrant, with two warrants allowing the purchase of one more new ANV share for $1.1. The 33% slide on the day of the announcement was followed by another double digit slide yesterday.

Even if ANV lives up to its promises to make Hycroft a profitable open pit mine (investments in the ore treatment equipment will improve the metal recovery rate and reduce costs), the dilution after the capital raise remains an impairment.

I've removed ANV from the  contributor driven explorer & junior miner spreadsheet as of Tuesday Dec 9 at the close ($ 0.93).

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Always the worst choice...

Precious metals made a remarkable leap on Tuesday. Despite a technical pull-back later on, gold ends the week up 2.4%, closing at $1221.8 on Friday. Silver even adds 4.6%, closing at $17.04. One might expect miners to rally and end the week with decent gains. Unfortunately whenever there is some alternative, miners always tend to take the worst choice possible. Broad stock markets corrected, lead down by crude and the entire oil sector. Despite decent macro-data, investors are uninspired. Profit taking after the most recent highs... tax loss selling ... 'buyer exhaustion': there's always plenty of excuses for markets to make a counter-trend and counter intuitive move. Precious metal miners sympathize south, with the HUI index down 0.4% over the week. The damage once more is worse among mid-tiers and juniors: GDXJ sheds over 2.5% and GLDX, the explorer ETF even is down 4% over the week.  As a result the HUI/Gold ratio once more slides to 0.135. The weekly update of the gold miner pulse blog page, shows fresh graphs on HUI/Gold and SIL/Silver.

Our contributor driven explorer & junior miner spreadsheet keeps aggravating its loss: down 55% (against 54% last week), despite taking the loss on Allied Nevada (the stock once more is down two dimes to $0.73 since selling our stake last Tuesday.) We have 11 gains on our list against only 10 losses (with four more picks flat). Nevertheless the balance is negative because of the magnitude of some of the slides: TRX is down close to 14%. In the Pgm mining segment, PLG even sheds 18%, while IVN also makes a double digit slide: platinum miners or explorers continue to have a hard time.

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Market sentiment determining

Another rocky ride for broad stock markets and for precious metal miners in particular. On Monday, precious metals correcting added to the down draft for miners. Gold upholding wasn't enough for miners to resist negative market sentiment on Tuesday. Yet as broad stock markets pulled themselves together, miners ignored precious metals sliding to their low of the week enjoying the rally and promptly anticipating an expected precious metal recovery.

Since market sentiment is determining, the miners index relative to gold is swinging wildly: on Tuesday HUI/Gold set a fresh absolute low at 0.1269, plunging from 0.135 on Friday Dec 12 to end the week at 0.138. (FYI on Nov 16, 2000 HUI/Gold made its bear market low at 0.1354: both the Nov 5 and Dec 16 bottoms have set new absolute lows). You find fresh graphs of HUI/Gold on the gold miner pulse blog page. The long term graphs in the opening post -showing the Nov 2000 bottom on HUI/Gold- come from an update of an earlier blog article: Hui mining index relative to gold.

On balance the HUI closes at 165.4 on Friday, virtually unchanged over the week. Among our benckmarks, GDX retreats 0.64%, but GDXJ recovers by a modest 0.46%, followed by GLDX, up 0.41%. Our contributor driven explorer & junior miner spreadsheet teams up with the winning side, mitigating its long term loss by 0.64%.

Gains (12) balance losses, with Miranda Gold unchanged. As usual there are several double digit gains (IVN + 30%, Sandstorm +21% over the week) offset by a few double digit losses: Medusa -16.7, Tanz. Roy. Expl. -15.5%). About the most peculiar move shows Pretium resources, rallying into the close in the US at $5.90, while sliding towards the Toronto close at C$ 6. Arbitrage usually takes care of such discrepancies, yet the closing price is function of orders having piled up for execution at the fix.

Due to miner volatility, both leveraged products NUGT (3x bull) and DUST (3x bear) are down more than 4% over the week.  After closing its share offering, Allied Nevada enjoyed a remarkable bounce last week, bringing the share back from its low briefly above $1 to close the week at $0.92, a penny below our exit price.

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Polishing their armor

Buying pressure wanes on broad stock markets, having rallied to new highs only some days after the latest pull-back. Precious metals have been oscillating. On this last full trading day of 2014, gold regained $1200, while silver gained 2.9% to close at $16.27. The Gold to silver ratio still stands at 73.7, barely below its recent multi-year high.

Precious metal miners are polishing their armor: the HUI index advanced 4% today. (Since our last update on Dec 19, there is however a 0.44% decline.) This most beaten-up market segment (rivaling the oil sector) saw profits dwindle across the board. Well run silver miners even face their revenue declining at an increased output volume. No surprise: while on balance, gold ends 2014 more or less where it started the year, silver (still) faces a stiff 19% decline.

With gold flat, the HUI index nevertheless shed 14.7% over 2014. Relative valuation HUI/Gold made two new absolute lows: 0.1280 on Nov 5 and 0.1269 on Dec 16. Even by the end of the 20 year gold bear market in 2000, the HUI/Gold ratio permanently upheld 0.13. You find fresh graphs of HUI/Gold on the gold miner pulse blog page.

While among our benchmarks, both GDX and GDXJ still face a small decline since Dec 19, the GLDX gold explorer ETF is up 3%. It illustrates how capricious individual miners fluctuate. Our contributor driven explorer & junior miner spreadsheet teams up with the winning side, mitigating its long term loss by 2.11%. It now stands at 53.76%. Gains outnumber losses 16 against 8, with Moneta Porcupine unchanged. There are 3 double digit rallies well balancing three double digit slides on the list. Argonaut Gold, Miranda Gold and Medusa Mining lead the winners. Aurcana silver, Monument Mining and Wellgreen Platinum slid over 10% since last update.

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Feels like January 2014 ...

The new year just started and a new logic seem born. Despite the USD continuing to strengthen, precious metals now seem negatively correlated to stock markets, rallying during the recent pull-back of the broad market indices and retreating as stock markets bounce back. Miners, underloved as they have been for years, leverage up precious metal gains and shrug off any vertigo that may haunt the broad markets. By now the HUI/Gold firmed to 0.152, thereby equaling the top reached at the intermediate recovery end November. We've left behind the 50 dma on Jan 2. This feels like January 2014, when gold miners were the best performing asset class during the first two months. You find fresh graphs of HUI/Gold on the gold miner pulse blog page

Among our benchmarks, both GDX and GDXJ have been rallying double digits since Dec 30, the GLDX gold explorer ETF also is up 12%. Despite silver still weak, SIL advanced over 10% since Dec 30. With a 13.9% gain our contributor driven explorer & junior miner spreadsheet teams up with GDXJ, the best performer among our benchmarks. The long term loss is mitigated to 47.34% (after a too lengthy excursion of being down over 50%). We had 22 picks up against only 3 down since the end of last year. With a 48% gain, Argonaut Gold is outperforming its peers, thereby significantly reducing its long term loss. Pretium Resources also is among the better performers and is the first one out of the red.

Even with the HUI or GDX still down well over 60% since we started the list, the 3x leveraged bearish ETN 'DUST' now faces a small long term loss. On the 3x leveraged bullish ETN, NUGT, you've barely left a cent on the dollar. This illustrates that these trading tools are not suitable investment vehicles on medium or long term.

In a new posting, I give an overview on the three year gold mining bear market, with longer term graphs on HUI/Gold and SIL/Silver.  The gold mining bear brought along another delisting. Since Dec 23, San Gold no longer trades on TSX (because of non-compliance). For San Gold, the recovery comes too late; its future is uncertain... 

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The Swiss adding fuel to the gold rally

Broad stock markets have pulled back since the beginning of the year. Friday's recovery doesn't wipe out losses. The gold price trend ignores dollar strength: the yellow metal steams ahead, especially when stock markets have an off-day. The Swiss are adding fuel to the gold rally by removing the peg of the Swiss franc to the euro. Closing at $1280.3 on Friday, gold is up 4.65% over the week. Silver even surged 7.63%, closing at $17.78, a price level we 've last seen in September. Platinum could not follow the pace of the gold rally and quotes at $1263, fractionally lower than the yellow metal. Palladium (the exclusively industrial precious metal) has been in a counter-trend slide for most of the week. Palladium seems to pay the price for its 'running ahead of the pack' near the end of 2014.

This ought to be straight up for miners. However they have been volatile as usual. After peaking on Monday, miners slid for two days as the gold rally took a breather. The recovery since Thursday has been swift. On balance the HUI adds 9.64% to close at 200.9: the first close above 200 since Oct 8. HUI/Gold strengthens to 0.157: well above the December (absolute) low. You find fresh graphs of HUI/Gold on the gold miner pulse blog page

Among our benchmarks, GDX has added 7% since last week, outpacing GDXJ and GLDX , the gold explorer ETF (both up 5%). Despite silver outperforming gold, SIL lagged, adding only 4%. With a 3.9% gain our contributor driven explorer & junior miner spreadsheet pays the price for its overweighing platinum metals. The long term loss is mitigated to 45.66%. We have 19 gains against 4 losses with Miranda and Moneta Porcupine flat over the week. There are 6 double digit gains over the week, led by Excellon Res., up 28%. Pretium Res. still is the only explorer up over the long haul.

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The old adage

Over the week we've seen gold strengthening, closing above $1300 on Thursday after the ECB confirmed its long anticipated QE bazooka. Broad stock markets rallied (not only in Europe).

Among miners the perverse logic once more invades the mindset. After peaking on Tuesday, it has gone downhill almost continuously. We needed a magnifying glass to notice any gold weakness on Wednesday (not on LME, only by the NY-globex close). Yet the HUI managed to lose 0.9%. The slide continued counter-trend as gold peaked on Thursday and precipitated on Friday with a 3.6% loss, making the weekly return end up in the red (-2.24%). Predictably, HUI/Gold weakens to 0.152: the old adage is back. QE has lately been shown to be detrimental for gold and miners are anticipating what may follow. You find fresh graphs of HUI/Gold on the gold miner pulse blog page

Eldorado came with a record production over 2014, but moderated expectations for the 2015 output volume. Investors sent the stock 20% lower on the day. This pretty much contaminated the atmosphere among mining investors. It makes sense for a miner to reduce production at its more expensive mining sites as metal prices remain subdued. But the majority of investors are short-sighted, with a time horizon limited to the next quarter... and it doesn't pay off to go against the crowd.

Among our benchmarks, GDXJ slid 4.4% since last week while GLDX , the gold explorer ETF, contains the loss to 3.4%.  With a 2.7% pull-back our contributor driven explorer & junior miner spreadsheet avoids a major downturn. The long term loss again aggravates to 47.15%. Eight picks are up against 14 down, with 3 flat over the week. Pretium still is the only explorer holding on to a tiny long term profit. Excelsior Gold and Oceana Gold lead the upside with double digit gains. Platinum explorer Ivanhoe and Romarco minerals lead the down side, tumbling double digits.

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Gold miners: three decades for naught

Gold miners: three decades for naught

The Philadelphia gold and silver mining index (ticker symbol XAU) has been around for decades, with the publicly available data series going back to December 1983. On that first Dec 19 the XAU closed at 107.06, while gold quoted $375/oz. Fast forward to 2015 January 21: Gold topped $1302 (after the long anticipated QE-bazooka by the ECB), while the XAU closed at 81.12. Even though revenues per ounce rose by 247%, the mining index lost 24.2% in well over 31 years.

Continue reading at the above link for graphs and plenty of evidence. Drawing the picture over the very long haul, gives a good idea how dire the situation is, which the miners have got themselves into. It's more than just not catching up with the gold price when it was rising: it's miners ending up lower than over three decades ago.

You could do worse with Enron, Eastman Kodak or Lehman Brothers...  poor relief.

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The never ending story

Gold plummeted to a low around $1250 last Thursday. Surprised?  Thursday Jan 29 happened to be the future expiry date, a monthly occasion for shorts attempting to cut their losses by selling some more contracts: the never ending story. It often also provides a decent entry point for gold bullion investors.

In the mean time, January has ended and broad stock markets are down for the year in the US, (-2.8% for the S&P). The mantra "As goes January, so goes the year" is not drawing a rosy perspective. But it's the third year of a presidential cycle and a year ending on '5', both of which have some statistical advantage over less fortunate combinations. So the market top still lays ahead of us? Let's hope so.

Back to metals and miners: gold ends the week at $1283.1, down 0.85% since Friday Jan 23. Silver is off worse, with a 5.85% weekly slide to $17.23. Again most of the damage done was on Thursday. Platinum is down 2.08%, while Palladium contains its loss to 0.52% after a counter-trend rally on Wednesday. Miners managed to resist gravity on Monday and continued rallying on Tuesday as gold recovered. Then we were in for a two day slide. Mining investors weren't much spooked by Thurday's gold slide on the future expiry: the HUI was down less than the metal. On Friday the HUI gained 3.12% (against 1.99% for gold). It's been a rollercoaster ride, but the HUI makes a 2.77% progress since Friday Jan 23. You find fresh graphs of HUI/Gold on the gold miner pulse blog page.

On the 'About this blog' page (second paragraph) you also find the links to a number of reference articles which have been updated lately, including fresh graphs.

However, our benchmark GDXJ is lagging with a 0.4% weekly gain and the Gold explorer ETF, GLDX barely manages to hold ground. Then we're off better with our contributor driven explorer & junior miner spreadsheet, booking a decent 1.12% gain over the week. The long term loss is trimmed to 46.56%. We have 13 stocks advancing against 12 declining over the week: can't get much closer to a tie. Among the winners, Oceana Gold (+6.46%) now joins Pretium Res. with a long term gain (since inclusion). Excellon Res. leads the laggards with a double digit loss. 

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Another smash for precious metals

Broad stock markets had a decent first week of February. Despite a weak close on Friday, the S&P and Nasdaq Comp. wiped away the January loss and are (barely) in positive territory again. Precious metals weren't allowed at that party and after another Friday smash for precious metals, the weekly result colors deep red: -3.88% for gold, closing at $1233.3 and -3.13% for silver, closing at $16.69. The PGM's equally suffered from the Friday sell-off, but were firmer during most of the week. Platinum is down 1.45% to $1220 and Palladium even is slightly up over the week (+1.69%) to $782.

Precious metal miners upheld relatively well till Thursday, but then completely lost ground. The HUI is down 4.44% over the week to 192.86 on account of the 5.43% loss on Friday. You find fresh graphs of HUI/Gold on the gold miner pulse blog page. On the 'About this blog' page (second paragraph) you also find the links to a number of reference articles which have been updated lately, including fresh graphs.

With the main miners index down, our contributor driven explorer & junior miner spreadsheet can't avoid the downturn either. We face a 5.2% loss over the week, bringing the long term accumulated loss to 49.53%. Over the week we have 5 gains against 17 losses, with three picks flat. Five double digit losses, led by Mirasol Res. and Oceanagold are a drag on the list. Pretium Res. remains the only pick with a long term gain since inclusion.

I'm considering to remove a couple of the worst performers to the exile section (the last TAB on the spreadsheet). Eventually Aurcana will have to go. Monument Mining, Medusa Mining, Tanzania Royalty Expl (sorry Jim S.) and Moneta Porcupine may join. I'm considering taking on board MAG silver (MVG or MAG on TSX) as the single replacement. Please reply on this thread if you have any remarks or suggestions.

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Hi GwydeFirst a thanks for

Hi Gwyde

First a thanks for keeping up this thread, and your blog, despite a quite low level of feedback comments.

The situation of the miners is essentially a cash deficiency, and to remedy that they must sell future production. That is to say they need to borrow money against the asset they own and also their labour.

In this way the miners become the first candidates to sell PM rallies of price. I don't really think they have much choice about that.

Safer to buy the second low rather than the first in such a circumstance. And if you hold a portfolio then money management becomes important because during a bear market the allocation of fresh cash should be withheld until later rather than deployed sooner.

SO at the moment we can see a rally on the chart which has been "capped" as some like to term it. I suggest that the miners are selling to refinance into this rally.

In this way the financing houses, the bullion banks , streaming and royalty companies own a substantial portion of the asset as price will make lows and they gain from the following rises with that gain being subtracted from the potential gain of the miners.

In this case it makes sense from an investing perspective to match up miners with their sources of finance to create a "pair" investment if you like. The gain of one (eg SAND) is at the expense of the other (eg SANDS's client miner).

Maybe you would like to look at this possibility as a way to smooth the fluctuations of the smaller producers. A synthetic stock comprised of eg 10 miners together bundled with one Royal or Silver Wheaton balancing stock.

How about having a couple of extra stocks on the spreadsheet ,which are not one mining stock but such a mini ETF bundle, so we can follow that performance curve for a while?

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The PM Miners ...

Gwyde, another h/t for your taking the time & sharing over at your blog ... I traded +/- 20 of the mining companies aggressively from about 2004 to 2012ish centered around my research on company fundamentals (tied to my engineering/geology background) and found that the bulk of my results were driven by just a few of the 'best in breed' players (mgmt, asset quality, asset location, op results, etc) - thus over time and experience my PM miners database shrunk from 50+ to about 5.

Fwiw, currently I am also a fan of Pretium along with Impact Silver in the junior basket and with the more established mostly focus on NGD/AEM (for gold exposure), PAAS (for silver) and FNV/SLW (for streaming). 

Post-2011ish peak, now I mostly trade small/not at all as I patiently wait for the next sustained move higher in the PM's & mining companies to emerge (hence my draw to AM & the big trade thread) ... 'The Golden Age of the Central Banks' grinds on (pun intended).

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Tahoe taking over Rio Alto: a wake-up call

Broad stock markets continue improving with the S&P setting a new record. Meanwhile the Nasdaq composite is narrowing the gap with its 2000 all time high.

Precious metals have not been inspired: after a weaker start, we finish the week with a timid recovery. Gold ends at $1227.9, still down 0.44% over the week. Silver ended 3.8% stronger on account of its 2.85% Friday rally, closing the week at $17.32. A mixed pattern for the PGM's also, with Platinum down 1.2% and Palladium up 0.77% over the week.

The HUI lost little, in line with gold. HUI/Gold keeps steady at 0.156 with very little intra-day variations over the week. Do speculators eventually start directing their emotions to where they rather should ?  -:)   You find fresh graphs of HUI/Gold on the gold miner pulse blog page. Breaking news about the numbers 1 and 2 among the top performers (on our last graph). Tahoe is taking over Rio Alto: a wake-up call for mining investors. Insiders again are convinced of brighter days ahead and they see great value in merger & acquisitions.

In the mean time, I've been working on the contributor driven explorer & junior miner spreadsheet. As announced last week, I've taken off several of the poor performers (to the 'exile' sheet). MAG silver was taken on board on Wednesday. The list is sorted in alphabetical order since a while (no more distinction between penny stocks and others). The nicks of the contributors have been removed: it has not been rewarding as anyone has seen his pick plunge. Following a suggestion by Argentus Maximus, I've added the main royalty companies and streamers to the list: Franco Nevada, Royal Gold and Silver Wheaton. They've been taken on board in the 'benchmark section' at the bottom, with their stock price at the reference date Oct 27, 2011 as the rest of the benchmarks.

After reshuffling, the accumulated loss now stands at 40.96%. That apparent improvement in fact hides a modest 0.5% loss over the week, which is more or less in line with the 1% loss of the HUI and the 0.9% of our GDXJ benchmark. Among our shares 9 picks are up against 11 down with 1 flat over the week. Platinum Metals Group (PLG) leads the up-side with a 10.4% gain. There are no other double digit moves in either direction.

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Trying to rationalize the irrational ...

Last week's tendencies have persisted, with broad stock markets making nice gains (including a fresh ATH for the S&P) and precious metals continuing their slide. Gold is down nearly 2% over the week, closing at $1203.9. Silver pays the price for last week's gain and now sheds over 6% to $16.26. Platinum is at a +5 year low, with this price level  at the close last seen in May 2009. The white metal sheds another 3.65% to $1161. Palladium was down 'only' 1.4% to $777. Gold and silver now have given back most of their 2015 gains.

Ask a couple of analysts and they will come up with their explanation, trying to rationalize the irrational ...

  • For a US analyst, the focus will be on the improvement in the labor market
  • Ask a European and he will point to working towards a solution for the Greek debt problem
  • In eastern Europe and Russia anyone will have the cease fire in the Ukraine in mind (however fragile that is)
  • ... and in Asia the Chinese have left their trading desks and are partying to celebrate the new year.

Or how about this: last year the gold mine production is estimated to have increased to 3114 metric tons, up from 2770 metric tons in 2013. Does it matter a lot? Perhaps not, because of the very high stock to volume ratio in the gold market. Moreover, the rising volumes produced in China and Russia stay where they are.

... which brings us to the main topic of this thread: last week the HUI was down 3.45%, making HUI/Gold retreat to 0.152. The HUI has wasted over half the gain it had acquired by Jan 20. You find fresh graphs of HUI/Gold on the gold miner pulse blog page. Predictably, the silver miners (as approximated by Global-X ETF 'SIL' have had a hard time. With our benchmarks GDXJ and GLDX down well over 4%, our  contributor driven explorer & junior miner spreadsheet performs in line with a 4.06% loss. The long term loss now stands at 43.36%. If there's anything positive about reshuffling the list, it's that we now have less miners contributing to the loss. There only are 4 picks up over the week, with 15 down and 2 more flat. Pretium lost 8.9% over the week, making us lose our last long term gain.

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Gwyde

GuerrillaCapitalist
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Thinking about Buying A Miner

I've been out of the market since 2012 and out of all paper since late 2014. However I think the blood continues to run in the streets and possibly now's the time to take a flyer on a pm miner. I like BTG currently and it's on Gwyde's list.

Any comments or advice are welcome.

GC

Gwyde
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A few caveats

About the list: it says contributor driven explorer & junior miner spreadsheet. So I don't feel responsible for the choice of the picks (only for kicking some out again). The fact that we average better than GDXJ or GLDX is poor comfort: only shorters and astute traders make some money in this sector nowadays.

The focus on explorers & junior miners leaves out the larger gold miners, some of which are most likely better plays for the future. The difference between the good and the ugly is like the one of 'being down 20% on' or 'having left 20% of your initial capital' ...

As mentioned above, royalty companies and streamers are another less risky way to play this sector. These companies (FNV, RGLD, SLW) have been taken on board the list in the benchmark section, along with SAND (SSL on TSX) which has been there since years.

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Gwyde

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