A Miner Key - Turd's Latest Thinking on Gold and Silver Miners

141
Wed, Feb 8, 2012 - 4:17pm

I've received quite a few requests lately for some technical analysis of some of our favorite gold and silver miners. Fortunately, today, I finally had some time to actually do the work necessary to write one. Here you go!

Of course, there's a lot more to evaluating the miners than simply Technical Analysis (TA). Production costs, provable reserves and hedging practices are all fundamental measurements for mining companies and anyone willing to invest considerable sums of money into these shares must be willing to do this additional homework. For those of you too bored or too lazy to go to all of this trouble, I present the charts below.

Before we can look at any individual equity, we must first examine the chart of the HUI (the Amex "Gold Bugs" index). If you want to look closer at the index, here's a link from your "friends" at Kitco:

https://www.kitco.com/pop_windows/stocks/hui.html

As you can see on the chart below, the HUI has been in a roughly 100-point range for the past 18 months. Though the index is just 15 stocks, it can be useful in ascertaining the general trend of the gold and silver miners. Being aware of this trend will help you to assess the relative strength or weakness of any individual issue. For example, individual equities that are out-performing the HUI should catch your attention while those that are under-performing should, perhaps, be avoided.

So, where do we start? I've got 14, different stocks to show you and the question is, what is a logical way to present them? Let's try this: The stocks can be loosely grouped into three categories:

  1. Those that are out-performing the paper metal and/or the HUI.
  2. Those that trade as if they are simply a proxy for paper metal.
  3. Those that currently stink on ice.

With that in mind, here are the gold and silver miners that currently look the best. They are presented in alphabetical order so as not to show individual preference. (Remember, I present this information as a service. You are the only one who is ultimately responsible for deciding whether or not to buy.) Since these are the best-looking, most attractive gold and silver miner stocks, let's call this group:

Rachel McAdams

First up, here is Yamana Gold Inc. (AUY). Like many of the miners, AUY peaked in 2008 and then fell dramatically. Well, this baby has done nothing but trend higher ever since and sits today just below the 2008, all-time high.

Next up is Coeur d'Alene Mines Corporation (CDE). Below is a weekly chart. Note that CDE fell with paper silver back in May but has since recovered quite well. In fact, it made a higher low back in December when paper silver was double-bottoming. Very interesting.

Below is Endeavour Silver Corporation (EXK). Longtime Turdites will recall that this is my personal favorite. I began buying it several years ago when it was around $4/share and the company announced that they had retired nearly all of their debt. You can tell by this weekly chart that it's still a compelling story.

Lastly, I must show a bit of bias here. Randgold Resources Ltd. (GOLD) looks so terrific that I felt I should give you two charts, the weekly and the monthly, so that you can really appreciate just how well its been doing.

OK, this next set of silver and gold miner stocks merit your consideration, as well. However, they don't belong in the Rachel McAdams group. These stocks are more average. They have tended to simply follow along with the price of paper metal. Because they are not overly hot but simply OK, we'll call them:

Sandra Bullock

First up is Barrick Gold Corporation (ABX). Even though Barrick supposedly covered most of their hedge book a couple of years ago, the price of it's stock is still below the highs of 2008. That said, it has recovered nicely from the lows of 2008 and has hung in there quite well through the late 2011 gold beatdown.

I'm including Eldorado Gold Corporation (EGO) in this group but it could just as easily have fallen in with the under-performers. However, the chart since September looks a lot like the chart of paper gold so I decided to fit it in here.

Below is a chart of Goldcorp Inc. (GG). Yes, it really is Goldcorp and not simply a reprint of ABX. Again, if you are looking for an equity proxy for paper gold, well...here you go:

And finally, speaking of proxies, here is Silver Wheaton (SLW). Without question, the closest thing I could find to an individual stock that trades almost exactly with the metal the company mines/produces. Note that a share of SLW is even priced close to an ounce of silver. In fact, it's so close, I thought I'd accidentally printed a chart of iShares Trust Silver ETF (SLV) instead of SLW!

And, finally, here are your dogs. These charts are so ugly and nasty that I would avoid them until further notice. Let's call this group:

Rosie O'Donnell

First up is the one-time favorite of chief CNBS clown and loudmouth, Jim Cramer: Agnico-Eagle Mines Limited (AEM). He was all over this baby between 60 and 80. I wonder how he feels about AEM now? Anyway, this one is pretty nasty:

I was somewhat reluctant to put Great Panther Silver Limited (GPL) in this group but I did anyway. It's such a small company that it is subject to rather wild swings in price. If GPL can move back above $3, I'd put it back into the "Sandra Bullock" category. Until then, GPL stays with Rosie.

This next one is just freaking brutal -- Hecla Mining Company (HL). I've seen some mentions of HL lately on the boards so I know that some of you are still holding it. I don't mean to rub salt in the wound but...

NovaGold Resources Inc. (NG) is another stinker that looked like it was going to have a great 2011 and then it just died. If NG can get back above $12, I'll start feeling better about it. Until then, be wary of another drop toward $6.

Like NovaGold, Silvercorp Metals Inc. (SVM) looked poised for a stellar 2011. Instead, rumors and innuendo beat the daylights out of SVM and it is only just now beginning to recover. If it can stay above $8 for a while, it might begin to trend higher. Not sure it's worth the gamble, though.

And, lastly, here's Santa's baby, Tanzanian Royalty Exploration Corporation (TRX). It just got the tar beat out of it in the second half of 2011 as it dropped from $7 all the way down to under $2. Yikes! You're simply placing a bet with Santa if you own this thing (which I do). Frankly, the main reason to own TRX, however, is to secure an invite to the annual shareholders meeting. I haven't had a chance to attend yet but one of these years I will. It always sounds like a lot of fun.

OK, that's it. Those are the main gold and silver miner stocks we've followed here, dating back to the old blogspot days. I invite everyone to include their own analysis in the comments section of this post. Additionally, if there are a few gold and silver miner companies that I didn't mention but about which you'd like to include some information, please feel free to add you own charts.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  141 Comments

lairdwd
Feb 8, 2012 - 4:21pm

I've lost faith in the miners

Until they show commitment to defend shareholder value from the vicious long/short bullion/miner pair trade, I will avoid.

Dr G
Feb 8, 2012 - 4:24pm

first?

Firsty? Okay, here is my problem with the miners: I'm too stupid to trade them. I think that there will be some that will go crazy in a consolidation period. That is, some small guys will make huge scores and get purchased by bigger guys and the stock will go ballistic. I don't doubt that.

I just don't know which guys those are, so I stay away. I think that some among us will make a literal fortune off miners. But I don't think everybody will. I think only a select few miners will increase exponentially in price. Rick Rule agrees with that (or shall I say that I guess I agree with him). Once again, I have more faith in stacking silver than I do in being able to pick the correct miners. So I stay away.

My other issue, is that miners are still a business, so their profits and stock price can be affected by a multitude of things that are unrelated to the underlying metals. Somebody on their board of directors can be a goon, and the price goes down. There can be a rumor that a guy is a goon, and the price goes down (buying opportunity?). They can have mines closed due to MSHA. They can have mines closed due to death. They can severely under perform in retrieving product. Any and all of that can happen while silver and gold are going sky high.

I stay away because I don't know enough to do well. I stick with stacking. I can appreciate the miners for what they are, but they aren't for me. Maybe I'm maturing because I can now say that without flinching. In former years I thought it was all for me and I could master it all.

Disclosure: bought some calls on AUY last year and got severly burned. Not AUYs fault, my fault for being an idiot.

Dr G
Feb 8, 2012 - 4:29pm

One other thing: so Rangold

One other thing: so Rangold looks great. I don't deny it. It's trading in the low 100s. What are the odds it goes to 200? What about 300? Will it ever print that?

What are the odds that physical silver goes to 50? What about 100? Seems much more likely to me.

I know these are two different means for two different ends for many Turdites (I don't think anybody is holding miners to save them when the world ends, but some are probably holding physical metals for just that purpose).

I guess that whether or not you play the miners depends on your endgame. Probably some good fiat hidden somewhere in there.

(TRX is a dog because it hasn't actually pulled anything out of the ground yet, right? It's just a concept)

tobydaniel
Feb 8, 2012 - 4:41pm

Silver Wheaton

Silver Wheaton had been the best investment of my life. Though I did ride it down from 17 to 2.50, I held on and purchased a crap load at 3.02 and held it until 42.60. Bought some shiny things with that money but like many on this board, I lost it all in a boating accident. Pretty sad about that;(.

I want to thank you Turd for the education that I am getting off this site. Its a blessing for sure and Im able to travel the world and help others who have nothing with what I make now. God Bless you buddy. I'm actually off to India on Saturday to work in the slums. Really excited.

Toby

kliguy38
Feb 8, 2012 - 4:41pm

Miners

they are in fact forming a massive bull pennant on the HUI......this on (not on the daily) hint hint....... there will be a move over the next one year that will stun most of you........so go ahead and post your bacon but when this move completes most of you will not be on the real pig train......and its the miners this year

TheGoodDoctor
Feb 8, 2012 - 4:44pm

Thanks Turd. I was looking

Thanks Turd. I was looking forward to an update on the stocks for awhile.

Strongsidejedi
Feb 8, 2012 - 4:48pm

Turd's Brother Niall is a Harvard Professor

https://www.bloomberg.com/video/85770210/

Greek default "is only a matter of time".

Niall Ferguson talks on Bloomberg.

I didn't know the Turd had a brother at Harvard.

It makes me wonder if there are other Turd relatives at Yale or Princeton too.

Be Prepared
Feb 8, 2012 - 4:55pm

4th - My Turning

A little play on the 4th Turning concept.... but the edge of the cliff feels eerily closer these days....

Our Government has now decided that drones above our skies is a good thing....

Let me get this $hit straight...

  • The TSA gets to feel me up for refusing to be gamma rayed
  • NDAA has made our military a police force against it's own citizens
  • Government is considering granting itself the authority to strip citizens of their citizenship and make them non-persons.
  • Drones will be flying above us tracking our every move.
  • The Carnivore System, in league with our Telcos, now grabs every communication for "processing."
  • The TSA will now be conducted ID checks at random government buildings, i.e. Social Security Bldg.
  • The National ID acts has yet to be repealed and our fed government is still pushing for it.
  • The Prez and Government have or will have an internet kill switch.
  • There is an active "Report on Your Neighbor" campaign being run by Homeland Security.
  • The definition of Terrorist has been changed to mean anyone who thinks for themselves is now included as one.
  • The Prez, without Senator approval, signed a treaty worse than SOPA & PIPA.

This list only catches a small picture and what is being done to us.

When you ask whether this is worse than the last 40 years.... the answer is "Yes!"

If you ask if this going to get to continue to become a hell effing storm.... the answer is "Yes!"

Don't be lulled by your everyday life into doing nothing, but sieze this precious time to learn, plan and prepare!

RaRaRasputin
Feb 8, 2012 - 4:56pm

Thanks Turd

I've 6 of the 12 that you highlighted so not too shabby although one of them is Tanzanian which I only recently bought and is green on my screen :) and Silvercorp which is still deeply underwater :(

7 of my 18 are now in positive territory so much better than it was a few months ago when they were bleeding all over the place.

Gonna hang on in there and see how these play out

RaRa

jmmergott
Feb 8, 2012 - 4:56pm

Turd: RE Santa's baby, TRX

I have the pleasure of doing IR work currently for Jim (santa) and Tanzanian Royalty Exploration. If you (or anyone else) would like information about what's going on with the company, please contact me at jmmergott[at]gmail[dot]com

-Jonathan M Mergott

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