Austrian Mint sells 41 tonnes of gold coins and gold bars in 2015

Earlier this year, the director of marketing and sales at the Austrian Mint confirmed to Bloomberg in an interview that the Mint’s combined gold bar and gold coin sales in 2015 had totalled 1.32 million troy ounces, a 45% increase on 2014, while the Mint’s silver sales in 2015 had reached 7.3 million ounces, a figure 58% higher than in 2014.

Since Münze Österreich, or the Austrian Mint in English, only publishes its annual report in July of each year, we had to wait a few months to see the granular details behind these sales numbers. Now that the Austrian Mint’s 2015 Annual Report has been published, the detailed sales figures are as follows.

Gold Philharmonics – 23.5 tonnes

In 2015, the Austrian Mint sold 756,200 troy ounces (23.52 tonnes) of Vienna Philharmonic gold coins, of which 647,100 troy ounces (20.18 tonnes) were in the form of its flagship 1 oz Vienna Philharmonics, with the remainder comprising ½ oz, ¼ oz, 1/10 oz and 1/25 oz gold Philharmonic coins, as well as a handful of the Mint’s very large 20 oz gold Philharmonics. Gold Philharmonic sales in 2015 were 56% higher than comparable sales of 483,700 ozs in 2014, and were also higher than 2013’s figure of 652,600 ozs.

Sales of the Vienna Mint’s flagship 1 oz gold Philharmonic accounted for the lion’s share of gold coin sales

Gold Bars – 16.3 tonnes

Turning to gold bars, the Mint sold 524,722 troy ounces (16.32 tonnes) of its branded gold bars in 2015, over half of which comprised sales of 1 kg, 500 gram and 250 gram gold bars. The 2015 gold bar sales were nearly 28% higher than 2014 gold bar sales of 410,300 ozs, but slightly less than 2013’s comparable sales of  711,200 ozs.

The Mint’s larger bars were the most popular in terms of total gold output

In addition to gold Philharmonic coins and gold bars, the Austrian Mint also produces a series of historic re-strikes of original Austrian circulation gold coins in the form of gold ducats, gold guilders and gold crowns. In 2015, sales of these gold re-strike coins, mostly ducats, accounted for 37,700 troy ounces of gold (1.17 tonnes), which was a 128% increase on the previous year’s sales of 16,500 ozs.

Overall, in 2015, the Austrian Mint sold gold coins (Philharmonics and historic coins) and gold bars containing 1,318,700 ozs (41 tonnes) of gold. In 2015, the gold Vienna Philharmonic’s largest markets were Europe followed by Japan and North America, and notably the gold Philharmonic was the best-selling major gold bullion coin in both the European and the Japanese markets.

Silver Philharmonics – Strong North American sales

As the Austrian Mint does not fabricate silver bars, the Mint’s silver bullion sales are exclusively from the silver coins it produces, specifically the 1 ounce silver Vienna Philharmonic coin. In 2015, the Mint sold 7.3 million silver bullion coins containing 227 tonnes of silver. The largest markets for silver coin sales were North America, followed by Europe. Silver sales in 2015 were also notable in that it was the first time that the Mint’s silver coins sales in the North American market surpassed those in Europe.

The Mint’s silver coin range also includes historic re-strikes of a Maria Theresa Taler coin in uncirculated and proof editions. These coins contain 23.39 grams of pure silver (approximately 0.2 tonnes). These coin sales are classified separately from silver bullion coin sales and their sales are quite minimal. In 2015, sales of these Taler coins reached 9,777 pieces, slightly down on 2014’s sales of 11,470 pieces.

Gold Bullion Sales Drove Total Revenues

In terms of Austrian Mint revenues, gold bullion coins (gold Philharmonics) generated revenues of  €788.9 million in 2015, up 70% on 2014’s €464.2 million. Gold Philharmonics were also 48.5% of total Mint revenues in 2015. Gold bar revenues of €547.3 million were 40% higher than in 2014, and accounted for another 34% of all Mint revenues. Silver coin sales in 2015 reached €111.3 million, 58% higher than in 2014. Adding revenues from gold coin re-strikes of €40.4 million, the total revenues from gold and silver coin products reached €1.37 billion, which was 84.7% of total Mint revenues for 2015.

Gold coin and gold bar revenues account for over 80% of  the Mint’s total revenues

In terms of revenues, annual gold sales at the Austrian Mint are far higher than its silver sales. In volume terms, the Austrian Mint also produces more gold products than its counterparts but far less silver products than its counterparts. So the Austrian Mint could be said to be a gold specialist.

For example, in 2015, and just looking at bullion coin sales, the US Mint sold gold bullion coins (American Eagles and American Buffalos) containing 31.8 tonnes of gold, but silver bullion coins (predominantly American Eagles) containing 1,495 tonnes of silver. Likewise, in 2015, the Royal Canadian Mint sold gold bullion coins (gold Maple Leafs) containing 29.6 tonnes of gold, and silver bullion coins (silver Maple Leafs) containing 1067 tonnes of silver.

Based on 2015 volumes sold of 227 tonnes of silver coins and 24.69 tonnes of gold coins, the Austrian Mint had a silver coin sales to gold coin sales ratio of only 9.19, whereas comparable ratios for the US Mint and Royal Canadian Mint were 47 and 36, respectively.

For more analysis on the bullion sales patterns of the world’s largest precious metals mints, please see BullionStar blog “Bullion coin sales boost revenues of world’s largest Mints“.

Ronan Manly
E-mail Ronan Manly on:
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Buy Gold ‘to Go Short Politicians’ as Fed Holds Rates & QE, Commodity Profits Sink

BUY GOLD prices rose to 2-week highs against the Dollar on Thursday as the US currency fell following yesterday’s “no change” decision on Federal Reserve interest rates and QE.

Gold priced in Dollars touched $1344 per ounce in London wholesale trade, making it the most expensive to buy since July 14 – one week after the 2-year highs hit in the aftermath of the UK’s Brexit referendum result.

Prices in Euro and Sterling terms also rose, adding 0.6% and 1.8% respectively for the week so far.

US Treasury bond yields edged higher as world stock markets held flat overall but commodities rose.

Silver jumped faster than prices to buy gold, gaining 4.4% for the week so far to reach $20.50 per ounce.

Betting on US interest-rate futures now put the odds of a hike at the Fed’s September meeting to 0.75% further below 1-in-5.

“Near-term risks to the economic outlook have diminished,” said the Fed’s July statement, but while “indicators point to some increase in labor utilization in recent months [and] household spending has been growing strongly, business fixed investment has been soft [and] inflation has continued to run below the Committee’s 2% longer-run objective.

“Longer-term inflation expectations are little changed, on balance, in recent months.

“[So] the stance of monetary policy remains accommodative,” the Fed concluded, and it will keep re-investing money from maturing bonds in its $3.7 trillion QE program of 2008-2014 at least “until normalization of the level of the federal funds rate is well under way.”

The Fed funds rate stays at 0.5%. It has averaged 5.1% over the last six decades.

“We maintain a longer-term target of $1450,” says the latest technical analysis of Dollar gold prices from German financial services group Commerzbank, but “short term we suspect that the market will opt to consolidate around current levels.”

“Near-term resistance lies at $1375 [early July] high…the 38.2% [Fibonacci] retracement at $1381 of the move down from 2011 [and] also the $1392 peak of 2014.”

Looking at the investment case for buying gold, “Being long gold is the same as being short politicians,” said Jeff Currie, global head of commodities research at Goldman Sachs, to Bloomberg on Wednesday.

“There’s lots of uncertainty in the world today, and gold makes a great strategic hedge against those.”

Local mining giant, and BHP’s partner in that iron-ore project, Vale (BVMF:VALE5) is also making provision of $1.2bn.

----------

Adrian Ash runs the research desk at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern and FT Deutschland; Italy's Il Sole 24 Ore, and many other respected finance publications.

This post first appeared on Bullionvault.com.

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Market Report: PMs appear to be breaking out

Gold and silver drifted this week, continuing last Friday’s end-of-week profit-taking, until the FOMC announced on Wednesday afternoon EST that there was to be no change in the Fed Funds Rate.

This was the signal for gold to gain some $20 and silver 75 cents. These moves represented an apparent break-out from the last month’s consolidation, and prices for both metals could now be on course to challenge the highs of early July.

Yesterday was a day of consolidation with a fall for gold limited to $2.50, and this morning in early European trade gold opened slightly lower still, at $1330, and silver at $20.00.

This market report will be longer than normal, because there is much to tell about what is going on behind the scenes. Some market followers, presumably relying on overbought indicators, such as the record longs held by the Managed Money category on Comex, were telling us earlier this week that the gold price was due a substantial fall.

Furthermore, the maturing August contract, which ahead of its delivery month ran off yesterday, has been a negative factor. Large amounts have been rolled over into the December contract, a situation that normally allows the bullion banks to work prices sharply lower as Open Interest contracts.

While gold’s OI has indeed contracted from record highs, the bullion banks have had only limited success in this quest, and the negative price effect is now behind us.

The underlying market for gold feels rock-solid. Part of the reason lies in the physical market (I’ll return to futures shortly). Asian demand has fallen significantly, for the simple reason that it is mostly in the form of jewellery. This year, prices have risen in yuan by 28% and by 26% in rupees. Until retail buyers become more accustomed to these higher prices, it is hard to imagine Mrs Wang and Mrs Patel continuing to buy jewellery with gusto. The result, fortuitously, is that some supply has come available to satisfy European and US ETF demand.

A number of refiners in the Middle East have been caught out by the switch, and ended up with an accumulation of unwanted inventory destined for the Asian markets. Financing large gold inventories is too costly for refiners operating on thin margins, so they have been forced to sell product to the Swiss refiners. This was reflected in a surprise export of 48 tonnes from the United Arab Republic to Switzerland in June, which was recast into LBMA standard bars for London and the US ETFs. Therefore, the price consolidation over recent weeks was partly due to the absorption of a one-off inventory unwind from the Middle-East.

That negative factor has now diminished. The pace of supply to western investors was artificially high on a temporary basis, and this excess of bullion should now slacken. Assuming demand momentum in western markets is maintained, this should help ensure bullion prices begin their next advance.

Turning to futures, it seems almost certain now that investing institutions are beginning to use Comex futures to maintain strategic portfolio allocations. We must remember that owning physical gold is a compliance problem for regular fund managers, because it is not a regulated investment. They can hold ETFs, but internal fund rules will limit ownership of any one security. Regulated futures present an efficient means of maintaining additional exposure to a particular asset class for the purpose of maintaining a medium to long-term portfolio allocation, and a good futures broker can minimise dealing costs.

This could explain why gold’s Open Interest remains at relatively elevated levels, and why the Managed Money category has become seemingly impervious to short-term movements. The next chart shows the Managed Money net position, and how extended it had become by 19 July.

The fall in Open Interest since then indicates this position will have corrected somewhat, but it will still be very high. The stickiness of new players also explains why the rapid run-off in the August contract has had less impact on the price than might be expected.

The fact that there has been the normal book-squaring without a substantial price fall indicates other forces are at work, and must be a major concern for the bullion banks that are short. If this analysis is correct, there is the unusual potential for a bear squeeze on the bullion banks in the coming weeks now the August contract is done and dusted, as they seek to limit their losses.

The situation is more extreme in silver, where Open Interest refuses to fall. After a slow start to the year, silver has now caught up with gold, and the gold/silver ratio has fallen to the mid-sixties. The extent of this move is reflected in our third chart.

On Wednesday, the Fed decided not to raise interest rates yet again, and it is becoming apparent they will only raise rates when they really have to. Therefore, there is probably a less than 50% chance that they will be raised by next January.

Today (Friday) should see the ECB’s stress tests announced. These are usually dumbed down, with banks in the past failing soon after being given the all-clear, an historical experience that seems set to undermine share prices of the weaker banks in the coming weeks. At the same time, the Italian banking crisis appears to be coming to a head, and depositors are receiving no compensation for the risk with zero to negative interest rates.

There is currently an attempt to rescue the Italian bank, Monte Paschi, by the weekend. The rescue plan seems to be getting very little traction, and the bank could fail next week.

The outlook for UK monetary policy is still causing concern, with a number of influential economists talking negative sterling rates on the back of Brexit, and the government-controlled banking group, Royal Bank of Scotland, has also warned its business customers it may introduce negative deposit rates.

Then there’s Japan. Overnight, the Bank of Japan announced its updated simulative measures. The markets expected something extra, only to find the BoJ appears to have run out of ideas. Apart from doubling its purchases of ETFs, which stops the equity market from falling, super-expansive monetary policy is unchanged. This is likely to indicate the Keynesians in the BoJ are cooking up a new surprise for us.

The views and opinions expressed in the article are those of the author and do not necessarily reflect those of Goldmoney, unless expressly stated. Please note that neither Goldmoney nor any of its representatives provide financial, legal, tax, investment or other advice. Such advice should be sought from an independent regulated person or body who is suitably qualified to do so. Any information provided in this article is provided solely as general market commentary and does not constitute advice. Goldmoney will not accept liability for any loss or damage, which may arise directly or indirectly from your use of or reliance on such information.

SilverSeek.com

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Correction Over, Gold & Gold Stocks Eyeing New Highs

In a bull market corrections can end quickly. One minute you are projecting another 5-10% downside and the next, the market has left lower prices in the dust. A negative reaction to the Federal Reserve statement could have caused lower prices but instead Gold and gold stocks are now primed for new highs. Fundamentally, we know the Fed will do nothing to prevent real rates from remaining negative. Since the trend has turned, Gold and gold stocks have mostly ignored the moronic, empty drivel emanating from these supposed geniuses. Moreover, despite reports of increased potential for a rate hike in September, weakness in precious metals abated and buyers returned.

The hourly chart below reveals that the correction in the gold stocks was simply a retest of the July breakout from the upward sloping reverse head and shoulders pattern (in May and June). The strong rebound over the past few days allows us to deem the retest successful.

GDX, GDXJ Hourly

The weekly chart shows the same retest but also how the correction served as a retest of the breakout past the 2014 highs. The arrows mark the 2014 highs and the earlier low of this week. Our minimum downside targets were GDX $27 and GDXJ $41-$42. GDX touched $27 while GDXJ’s low came at $43.

GDXJ, GDX Weekly Candles

Gold has also successfully retested its breakout. We thought it could come back to a minimum of $1300 and as low as $1280. Gold bottomed at $1310 this week and is set to close the week and the month well above $1330-$1335 resistance. Moreover, the strength in the miners since Wednesday reinforces that Gold will likely follow.

Summing it up, the correction is over and Gold and gold stocks could threaten new highs in August. A few weeks of consolidation near recent highs would not be bearish though. There are just too many people on the sidelines waiting to get in this market. They have been fooled by the CoT, the US Dollar rally or the meme that miners have gained too much too fast and need a big correction. Our views are always subject to change but we continue to see Gold reaching $1500-$1550 before any counter trend move. That implies plenty more gains in the miners in the weeks and months to come. For professional guidance in riding the uptrend in Gold, consider learning more about our premium service including our favorite junior miners which we expect to outperform in the second half of 2016.

Jordan Roy-Byrne, CMT, MFTA

Jordan@TheDailyGold.com

About Jordan Roy-Byrne CMT, MFTA

Jordan Roy-Byrne CMT, MFTA is the editor and publisher of The Daily Gold.

This post, Correction Over, Gold & Gold Stocks Eyeing New Highs, was first published on The Daily Gold.

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Yield Curveball – Mike Maloney

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Silver Price Forecast: Silver Is Insurance Against The Worst Part Of This Depression

Silver Price Forecast 2017/2016

The worst part of the world’s ongoing financial crisis is still on the way: A crisis that has its roots in the debt-based monetary system. The debt-based monetary system has facilitated the growth of debt, to levels that will inevitably bring total collapse.

Everyday we see more and more events (think Greece, Deutsche Bank, etc.) that suggest that the total collapse is very close. The number of these will increase over the coming months, while their extent will also greatly magnify.

The high debt levels are a huge burden that will strangle the world economy, since future production is reduced by debt obligations. That is just how it works. When you have huge debt, you will have less of your future income/production available due to the debt obligation that has to be met.

These debts will have to be settled. There will be no progress (growth in economy) until debts are settled. The settlement of these debts is that “worst part” of the financial crisis. The majority of these settlements will occur as the stock market collapses, and currencies/banks fail (the collapse is the settlement). This will be the greatest depression.

The crisis cannot be stopped, but you do not have to be caught up in its worst effects. Silver, as I have previously explained, is virtually the opposite of debt and, therefore; great insurance against the coming debt (particularly: stock market, currency and banking system) collapse. It is for this reason that the chart for silver prices is looking so bullish, whereas the charts for the Dow and other goods are looking really bad.

Below is a comparison of Dow charts (1920s vs 1998 – 2016):

Above, is a fractal comparison between the current period (1998 to 2016) and the 1920/30s, for the Dow (charts from tradingview.com). Follow the two patterns marked 1 to 5, on both charts. I have also indicated where silver peaks and bottoms occurred, to show that both patterns exist in similar conditions. This means that there is a strong likelihood that the crash will occur.

The Dow is looking for that peak at point 5 (on the current pattern), from where it could free fall, much like the October 1929 crash. The Dow has stayed at these peak levels for longer than I expected. However, this appears to be what is needed to get most people believing that the 7-year rally will continue (a classical set-up for a massive collapse).

Below, is a short-term chart of the Dow/Silver ratio (from tradingview.com):

The ratio has broken down from the support-line indicated. It has also broken below the key-level highlighted. The fact that the Dow’s recent rally is represented by a retest of a breakdown of this ratio, instead of a retest of a breakout, supports the likelihood that the Dow’s recent rally is fake.

Once the retest of the recent breakdown is complete; this ratio will decline very fast, as will the Dow. This decline is supported by a more longer-term analysis of this ratio.

Below, is a fractal analysis for silver:

On the silver chart, I have highlighted two patterns that appear similar. I have marked them 1 to 6 to show how they might compare. Both patterns start from a significant silver top. Both patterns represent the end part or handle of a cup and handle-type pattern. If the comparison is justified, then we are currently just after point 6, the point where a major breakout occurred.

We will likely see much higher prices over the coming months.

For more of this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Gold Mining Fractal Analysis Report as well as a Silver Fractal Analysis Report. You can also subscribe to my blog (enter e-mail at the top right of this page) to get my latest free gold and silver updates.

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Free Stuff, Monopoly Money, and Free Passes

THINKING OF THE RNC AND DNC…

Politicians get elected by telling voters what they want to hear, especially that voters will receive a pile of “free stuff.” Politicians are (usually) funded by large corporate interests, particularly the financial industry, military contractors, Big “Ag,” and Big “Pharma.” It takes $ billions to buy a Presidential election and large corporate interests expect favorable access and legislation as a result of their huge contributions. It is easy to see.

Conclusion: Politicians tell voters what they want to hear and distribute “free stuff” but they do what they must to repay contributors and solicit even more money to win the next election. But in reality, voters and promises to voters become collateral damage.

WHAT FREE STUFF? WHAT FREE PASSES?

A few examples come to mind: Trillions of dollars to bail out banks and the financial elite, more trillions to the sick-care/health care industry via government supported inflated prices for drugs and services, trillions to the military-industrial-security complex “to keep us safe,” various other individual and corporate welfare programs, the usual corruption and “no-bid” contracts, foreign aid, cell phones, tax loop-holes, QE, subsidized loans, “food stamps,” forgiven loans, massive payoffs, subsidized housing, Presidential pardons, political patronage jobs, student loans, and the list goes on.

Don’t forget the “free passes” to Wall Street bankers not indicted by the DOJ in numerous cases of fraud, politicians not indicted by the FBI for mishandling top-secret documents, and regulators that have failed to regulate. “Stay out of jail cards” have been purchased …

BOND AND STOCK BUBBLES – INFLATED BY “FREE” QE AND “FREE CURRENCIES:”

Bonds rise in price as the yield falls when central banks and others purchase bonds. Over $12 Trillion in sovereign debt currently “yields” negative interest as bonds sell at all-time highs, along with all-time highs in the DJIA.

The bond purchaser “lends” currency to an insolvent government and pays for the privilege, even though the government has assured the lender that the bond will be repaid in devalued currency units. This is clearly an unsustainable bubble. Remember: Stocks and bonds could be topping now, and BUBBLES ALWAYS POP.

Conclusion: $Trillions of paper “wealth” will vanish when bond and/or stock bubbles implode.

Death from above: Politicians and bankers are often predators that view taxpayers and the populace as a source for their needs.

Bill Holter: “They have fixed nothing because nothing can be fixed. No bullet has been dodged.”

Survival down below: We need protection from predators. We also need insurance to preserve our purchasing power from continually devaluing currencies, market crashes, failing pensions, politicians, central banks, and consumer price inflation.

Physical gold and silver come to mind.

Gary Christenson

The Deviant Investor

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What Experts Predict for the New Silver Bull Market

By the reckoning of market watchers, the silver bull has arrived. The Gold Report takes a look at what some of the experts predict for the silver price going forward and for companies poised to benefit from the upswing.

The Outlook
Like gold, the price of silver has surged following Britain’s vote to leave the European Union, with investors purchasing the “safe haven” metals to protect wealth in the event other markets falter. According to an article published on July 19 on INN Daily, the silver price has gone up more than 43% year-to-date, “leap-frogging ahead of gold post-Brexit.”

“Southern Silver Exploration Corp. will be a big winner.“

Frank Holmes of U.S. Global Investors, in a July 11 post, notes that silver tops his “Periodic Table of Commodity Returns” for the first half of 2016. “Silver demand had a phenomenal 2015, with retail investment and jewelry fabrication both reaching all-time highs,” Holmes wrote. Add to that an increase in demand for silver for photovoltaics, and now Brexit, and the first half of the year has “has been highly constructive. . .” Holmes notes that some experts believe the silver price will reach between $25 and $32 per ounce by year-end. The metal currently trades for ~$19.90/ounce.

Though optimism is prevalent, investors can expect some volatility. Because silver is both “currency and commodity,” used in a variety of industrial and other uses, its value is “more highly correlated with stocks” than the value of gold, INN Daily reports.

“Great Panther Silver Ltd. is focused on maintaining low operating costs across its existing asset base.“

The potential for volatility is also reflected in the comments of technical analyst Clive Maund, who declared the silver bull market underway in a Gold Report article on July 11. While his optimism was clear, Maund did note that a correction could come into play. “If you are a long-term investor, you may simply decide to ride out any correction,” the analyst wrote. But short-term investors might want to “take some money off the table here if [they] are long the sector, taking advantage of the comparatively high prices now prevailing.”

The Companies
A number of companies are positioned to benefit as the silver bull continues. As expert David Kranzler explains in the Mining Stock Journal, “. . .mining stocks are a ‘derivative’ of gold/silver, meaning their intrinsic value as companies is derived from the price of gold/silver. They are leveraged plays on the price of the metals.”

As such, any silver company is positioned to benefit from a rise in silver price. Kranzler’s case-in-point is Southern Silver Exploration Corp. (SSV:TSX.V; SSVFF:OTCQB; SEG1:FSE), which he believes is “significantly undervalued relative to the size of its silver reserve. It will be a big winner.” Southern Silver Exploration is a Canada-based explorer with two major projects, one in New Mexico and the other in the Mexican state of Durango.

“Golden Arrow Resources Corp.’s Chinchillas may contain half a billion silver-equivalent ounces.“

Southern Silver has also captured the attention of Vicarage Capital, which noted in a June report that the company has “an experienced board of directors and strong management team with a good track record in project exploration, discovery and development.”

In the wake of Great Panther Silver Ltd.’s (GPR:TSX; GPL:NYSE.MKT) Q2/16 production results, Heiko Ihle of Rodman & Renshaw released a report that outlined the reasons behind a target price increase to $2.25/share, among them a “fully stocked” treasury following a recent bought-deal equity financing, stable production at San Ignacio and the company’s focus on maintaining “low operating costs across its existing asset base while continuing to evaluate strategic external growth opportunities.” Ihle noted that Rodman & Renshaw has not increased its “silver price deck from $17.50. . .any such changes should benefit companies with meaningful silver production such as Great Panther.”

“We view MAG Silver Corp.’s Juanicipio project as, without doubt, the best undeveloped silver asset globally.“

Raymond James resumed coverage of MAG Silver Corp. (MAG:TSX; MAG:NYSE) as of July 11. “We view the Juanicipio project (MAG: 44%) as, without doubt, the best undeveloped silver asset globally. Our thesis for MAG is reinforced, quite simply, by the exploration upside offered at Juanicipio and elsewhere (Cinco de Mayo) and a lack of broader high-quality silver-focused investible opportunities,” analyst Chris Thompson noted in the report. “We see MAG trading at a developer discount to producers, and [primed] to rerate catalyzed by development progress and/or exploration success.” Raymond James also included MAG on its list of preferred silver equities in its July 21 Q2/16 Precious Metals Preview.

Raymond James also covers Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE); a July 11 report by analyst Chris Thompson noted that Endeavour Silver delivered better-than-expected production results for Q2/16, surpassing Raymond James’ estimates by 13%. The stronger metal price environment is changing investment decisions, leading to increased capital spending. “Capital spending across EDR’s producing assets is budgeted to increase to $17.4 mln (from $11.3 mln) with a focus on development access to new ore sources,” noted Thompson, adding, “At Guanacevi, EDR has made a production decision to develop a new mine at the Santa Cruz Sur orebody for total capital budget of $8.4 mln over 3 years.”

The stronger price environment also led Endeavour Silver to reverse a planned production reduction. “Given the improved metal price environment, management has elected to sustain production levels at 1,500 tpd and no longer ramp down to care and maintenance [at El Cubo] by year-end,” Thompson commented.

Another company positioned to benefit from an uptick in silver price is Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCPK), which recently released an updated resource estimate for its Chinchillas project in Argentina. “The updated resource estimate now also contains a maiden measured resource estimate of 17 million silver-equivalent ounces, bringing the total M&I resources to 155 million [silver-equivalent ounces],” expert Thibaut Lepouttre noted in Caesars Report in June. Lepouttre expects Chinchillas may contain “half a billion silver-equivalent ounces.”

“Credit Suisse upgraded Silver Wheaton Corp. to Outperform.“

Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) is also levered to the silver price. In Raymond James’ July 21 Q2/16 Precious Metals Preview report, the firm named Silver Wheaton a top pick both as a silver equity and a streamer. Credit Suisse upgraded Silver Wheaton at the end of June from Neutral to Outperform. Analyst Ralph Profit noted, “While CRA tax risk likely continues as an overhang, SLW’s business model still provides investors with a highly levered play on precious metals prices and SLW should still command a multiple in-line with royalty valuations and a premium to precious metals miners based on its leverage to underlying prices, free cash flow, and strong balance sheet.”

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Disclosure:
1) Tracy Salcedo and Patrice Fusillo compiled this article for Streetwise Reports LLC. Tracy Salcedo provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, shares of the following companies mentioned in this article: None. Patrice Fusillo provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this article: None.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: Southern Silver Exploration Corp., Great Panther Ltd., MAG Silver Corp., Golden Arrow Resources Corp. and Silver Wheaton Corp. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific analysts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Additional Disclosures for this Content

Mining Stock Journal, July 9, 2016
David Kranzler: “The fund I co-manage owns stock in Southern Silver Exploration Corp.”

Vicarage Capital Ltd., Southern Silver Exploration Corp., June 9, 2016
Compiled by: Martin Wood& James Smith
This document has been supplied by Vicarage Capital Ltd. for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This document has no regard for the specific investment objectives, financial situation or needs of any specific entity.  The information contained herein is based on materials and sources that we believe to be reliable; however, Vicarage Capital Ltd makes no warranty either express or implied, in relation to the accuracy, completeness or reliability of the information contained herein.

 Rodman & Renshaw, Great Panther Silver Ltd., July 18, 2016
–Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
–Heiko F. Ihle, CFA and Jake Sekelsky certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
–None of the research analysts or the research analyst’s household has a financial interest in the securities of (including, without limitation, any option, right, warrant, future, long or short position).
–As of June 30, 2016 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Great Panther Silver Ltd..
–Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
–The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
–The Firm or its affiliates did receive compensation from Great Panther Silver Ltd. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
–The Firm does not make a market in Great Panther Silver Ltd. as of the date of this research report.

Raymond James, MAG Silver, July 11, 2016
–Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
–Raymond James Ltd – the analyst and/or associate has viewed the material operations of MAG.
–Raymond James Ltd – within the last 12 months, MAG has paid for all or a material portion of the travel costs associated with a site visit by the analyst and/or associate.
–Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to MAG.
–Raymond James Ltd. has provided investment banking services within the last 12 months with respect to MAG.
–Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to MAG.
–Raymond James Ltd. makes a market in the securities of MAG.

Raymond James, Endeavour Silver Corp., July 11, 2016
–Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
–Raymond James Ltd. – the analyst and/or associate has viewed the material operations of EDR.

 Caesars Report, “Golden Arrow increases the Chinchillas resource once again,” June 2, 2016
Thibaut Lepouttre: “The author has a small long position in Golden Arrow Resources.”

 Raymond James, 2Q16 Precious Metals Preview, July 21, 2016
–The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
—Raymong James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under coverage withing the next three months.

Credit Suisse report, June 30, 2016, noted in Streetinsider.com.

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Remembering Gold’s Bullish Set-Up on Dec. 1, 2015

Source: Michael J. Ballanger for The Gold Report  (7/25/16)

Precious metals expert Michael Ballanger compares the Dec. 1, 2015 Gold COT Report with the latest one; the contrasts could not be greater.

I have a question: “Does ANYONE have the foggiest recollection of just how incredibly bullish the Gold COT (Commitment of Traders) Report structure was back on Dec. 1, 2015?”

The Large Speculators were net long a paltry 9,750 gold futures contracts; today they are net long 285,911 contracts.

The Commercials were net short 2,911 contracts; today they are net short 315,477 contracts.

The always-wrong Small Speculators were net short 6,839 contracts; today they are net long 1,577 contracts.

Market timers for gold were 104% bearish (meaning that they were short); today they are 94% bullish (long to the teeth).

Gold miners were trading at valuations never before recorded; seven months later they are up 250%.

On December 1, 2015, gold was trading around $1,050/oz; today it is at $1,323/oz.

Now I have a second question: “Does anyone realize how things have changed?”

The COT Report shown below, while historically bearish, is not going to cause a crash in gold and silver prices; it is instead going to prevent a runaway in prices until the criminally inclined bullion banks have unwound what was two weeks ago a painfully acute paper loss in the billions. I only mention these two COT reports to illustrate the contrasts between then and now.

Despite the modest weekly improvement in the COT structure, gold and silver miners are trading down from the post-Brexit peak and have now given up the uptrend line that dates back until the January lows. Now, if the HUI (NYSE Arca Gold BUGS Index) can get back above the line sooner rather than later, it is a “no harm, no foul” scenario and 300–325 could be in the cards. My bet, however, is that the miners continue under pressure until July 31–August 15, and that there will be a downward trajectory that will allow for the bullion bank behemoths to unwind their massive short positions in paper-based gold and silver futures that are supposed to represent the actual physical metals but in reality are nothing more than synthetic proxies easily fabricated and used as weapons of mass abuse and distortion.

The gold and silver markets have completed a remarkable transition from the “most reviled sector in market history” (December 2015) to “There ain’t no fever like GOLD fever!” here in July 2016. The Bay Street brokers are all falling all over themselves with gold and silver deals and my phone is ringing constantly with calls from prospectors and junior mining execs trying desperately to peddle their wares. Seven months ago, you could have picked up entire companies with decent portfolios of properties and prospects by just paying for their audited financials and exchange fees. My point is that as much as I love the rebound, it has gotten too crazy, too quickly, and with too many late arrivals now clamoring for positioning.

That is not to suggest that anything in my intermediate and long-term strategy has changed; I see gold through $1,425/oz and silver approaching $30/oz by year-end as the intermediate-term forecast I laid out in March kicks in. However, the short-term outlook will do precisely what our dear departed Richard Russell used to say about being “thrown from the horse” just as it takes off into flight. In my world, the unexpected appearance of a gut-wrenching, face-ripping correction in the metals would do what powerful bull markets do—punish the late arrivals and reward the early birds.

There is a certain portfolio manager often seen on Canada’s Business News Network that was notoriously bearish on gold back in December, launching into this laborious explanation of why gold was doomed and headed to $700/oz: “We are in a deflationary period and there is no need to hold gold when prices are going down. Fluh-flah, fluh-flah-flah-fluf-fell…” It drove me bleeding-well bonkers to listen to this “wealth advisor” talking such utter nonsense (with the public actually BELIEVING him) so you can imagine my shock when I read a commentary from said “wealth advisor” last week that was urging clients to climb aboard the “precious metals train.”

On the one hand, it frightens me when these trend followers finally capitulate and dive into the HUI 250% off the January lows; on the other hand, it is exactly what many of us have been predicting for many months. To wit, the number of portfolio managers actually recommending and owning gold and silver and the miners is estimated to be less than 1%. If that number were to grow to just 2% in the next year, I would hazard a guess that gold would see $2,400-2,500/oz with silver at $70/oz and the HUI at 500.

Interestingly, on a comparative basis, with the TSX Venture Exchange (TSX.V) ahead 68% from the January lows, it still remains moribund relative to the HUI (up 250%) or the GDX (Market Vectors Gold Miners ETF)—up 253%—or GDXJ (Market Vectors Junior Gold Miners ETF)—up 276%. Before this bull is over, the TSX.V is going to hit record highs and that record high was back in 2007 at 3,307, making the lift from current levels over 400%. When one uses the phrase “There ain’t no fever like gold fever,” it is important to understand that demographics have undergone an enormous shift as many of the prominent players from the big advance in the 1970s have passed on and the same is true for the big exploration decades of the 1980s and 1990s when new discoveries drove the markets.

What is noteworthy is that many of the new generation of investment bankers and traders are neither trained nor skilled in the intricacies of the exploration-driven TSX.V and as such have been largely avoiding it. That, my friends, is changing and when these new “Young Centurions,” with their skills in social media and technology, discover the insane profit opportunities associated with a big, new, gold discovery, the TSX.V will be the focus of generations of inherited wealth, as well as decades of central bank currency debasement with the resultant miniscule market cap of the TSX.V moving up several orders of magnitude from current levels.

I cite as proof a recent interview with Goldcorp Inc.’s (G:TSX; GG:NYSE) Brent Bergeron being asked about his company’s future M&A plans: “There are quite a few projects that are adjacent to Coffee, and we’re always looking at possibilities that will allow us to build a camp and be here for the long term,” Bergeron hints. “We’re definitely watching what junior explorers are doing, and when it’s appropriate we will make those investments and work with them to develop these opportunities. We want to make sure when there are promising projects that we’re investing in moving them forward.”

He was, of course, referring to Goldcorp’s recent acquisition of Kaminak Gold Corp. for over $500 million and subsequent purchase of 19.9% of Yukon explorer Independence Gold Corp. (IGO:TSX.V) by way of private placement. These remarks represent a huge testimonial to the outlook for gold, for the Yukon, and for the White Gold District, and with Goldcorp’s renowned skills in handling First Nations issues and permitting roadblocks, the path they are today blazing will be well used by the juniors in the region.

The top pick in my portfolio from 2015 was in fact Kaminak, which I tendered to the bid by Goldcorp (and subsequently hedged) but I still believe that the White Gold District will develop into a “camp” not unlike Timmins or Kirkland Lake or Rouyn with multiple major mines and associated infrastructure. Goldcorp’s proposed road to Dawson City will reduce the seasonality for anyone with proximity to it so undoubtedly the fact that it will transverse the eastern portion of Stakeholder Gold Corp.’s (SRC:TSX.V) Ballarat project is a huge bonus for this little junior.

Stakeholder has completed Phase One of the 2016 exploration program (soils and GT probe [trenching]) and will soon begin 25 RAB drill holes designed to probe down to 100 meters in the areas covered by the soil grid. It must be noted that 2012 trench results yielded gold values greater than those found on the Coffee project so my hopes are quite high that those elevated levels of arsenopyrite and antimony are pathfinders to a large epithermal system. Results are expected in very early August. At a $6.6 million market cap, this micro-cap junior is a low-risk entry point for what we are all hoping will be Kaminak’s little (or big) brother. (And please read the disclaimer at the conclusion of this missive.)

This week is going to prove to be critical for those looking for a near-term pop in the precious metals prices because we are getting a barrage of macro data and geopolitical noise all at once along with the Democratic National Convention or “DNC” but with recent allegations coming in from Wikileaks that some of the Hillary lieutenants were sabotaging Bernie Sanders during the primaries cannot be a positive for her. In fact, “DNC” might really stand for “Don’t Need Clinton” as the Gong Show starts to heat up.

All I know is that we have finally relocated outside of the City of Toronto and further outside of the “GTA” (Greater Toronto Area, which includes the suburbs) to a small rural town to the northeast called Port Perry. It is about 20 minutes of additional commuting time to get to Bay and Wellington but the traffic is manageable and the air one breathes is superb. It reminds me of the little town where I grew up 55 years ago where you didn’t lock your doors at night because the police force was comprised of 3,000 moms and dads with soup ladles and belts as “weapons.” It was a different time and a different social psyche to be raised in the 1950s and 1960s, but the farther one moves from the “big cities,” the more one feels as though they just got out of a time machine.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) The following companies mentioned in the article are sponsors of Streetwise Reports: None. The companies mentioned in this article were not involved in any aspect of the article preparation or editing. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
2) Michael Ballanger: I or my family own shares of the following companies mentioned in this article: Stakeholder Gold Corp. I personally am or my family is paid by the following companies mentioned in this article: Stakeholder Gold Corp. I am engaged as a consultant to Stakeholder Gold Corp. and am chairman of the Advisory Committee. I determined which companies would be included in this article based on my research and understanding of the sector.
3) Statement and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

All charts and images courtesy of Michael Ballanger.

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AS JAPAN PIVOTS TOWARD PHYSICAL GOLD, U.S. PENSIONS STILL CAN’T BUY ANY

The post AS JAPAN PIVOTS TOWARD PHYSICAL GOLD, U.S. PENSIONS STILL CAN’T BUY ANY appeared on Gold Silver Intel.

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MINING PHYSICAL GOLD — Bryan Slusarchuk

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Higher Gold, Dollar: The New Normal – Marin Katusa

Higher Gold, Dollar: The New Normal - Marin Katusa, from Kitco News

The post Higher Gold, Dollar: The New Normal – Marin Katusa appeared on Gold Silver Intel.

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Once in a Lifetime Gold Bull Market Opportunity! – Bryan Slusarchuk, Industry Expert Interview

The post Once in a Lifetime Gold Bull Market Opportunity! – Bryan Slusarchuk, Industry Expert Interview appeared on Gold Silver Intel.

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7 Signs That the Gold Market Remains Resilient

Gold and silver prices ran out of momentum during the first week of July and have been drifting lower ever since. A deeper correction seems like a realistic expectation, but precious metals are showing strong signs of resiliency. Here are seven forces that should be creating headwinds for precious metals, but are barely having any impact.

1) Increased Margin Requirements – The CME raised margin requirements in the futures market for both gold and silver during July. Raising margins makes it more expensive for paper speculators to keep their positions. This type of increase in margin requirements often results in a sharp and sudden drop in the price.

2) Futures Expiration Next Week – The expiration of the futures contract is coming up on July 27 for gold and July 26 for silver. There is a fairly strong historic pattern of gold and silver prices dropping sharply just prior to expiration. Many believe paper manipulators use leverage, false bids and employ other tactics to send prices tumbling so that they can cover and profit from their short positions.

3) The Commitment of Traders Report is Bearish –  The COT showed that speculative gold longs decreased their positions for the first time in more than a month, while shorts increased their own positions for the third week in a row. Short positions by commercial traders are near record levels and almost 2.5 times their long positions. We will get a better picture when COT data is released on Friday, but the expectation is that this trend continued throughout the most recent period.

4) Declining GLD Inventories Suggest Profit Taking – The GLD ETF has accelerated, especially by speculators and traders that have generated huge profits in the first half of the year. They do not have a bullish long-term view of the precious metals market or any philosophical reasons to be invested. They do not fear a crash in the stock market or dollar crash. They just bought the momentum and now that the momentum has slowed, they are likely cashing out. This is certainly evident in the declining GLD ETF inventories over the past few weeks.

5) Brexit Fears Fading Fast – Brexit dominated headlines following the unexpected ‘leave’ vote from the United Kingdom. Analysts were predicting gloom and doom, but financial armageddon never materialized. The decision for the UK to leave the EU helped to push the gold price higher in the short term, but investor concerns about the impact of Brexit and demand for safe haven following the vote have been muted.

6) Rising USD Index – The dollar is rising. In fact, the USD index has strengthened from 92.62 to 97.26 in the past two months.

7) Weak Seasonal Months – June and July are typically two of the worst performing months for precious metals. In order, they are June, April, March and July.

Despite all of this, the gold price is down just $55 (4%) from its 2016 high to $1,320. Silver is always more volatile, typically rising faster than gold and falling faster as well. The silver price is down $1.65 (7.7%) to $19.58, after its brief spike above $21 shortly after the July 4th fireworks.

It is important to note that both metals remain above prior technical resistance levels that will ideally turn into support. Gold must hold above $1,305 and silver above $19.28. As long as they remain above these levels, our bullish outlook remains intact.

The underlying signals of strength are even more potent for mining stocks. The mining stocks index has offered leverage of more than four times, advancing 110% vs. gold’s advance of 25%. Yet during the pullback of the past two weeks (gold -4% and silver -8%), the mining stocks index is down just 3%. Leverage to the upside and protection to the downside? I’ll take that risk/reward mix any day.

It is entirely possible that gold and silver prices continue slipping in the days ahead, especially with futures expiration around the corner. But the mildness of the pullbacks witnessed thus far in 2016 are a testament to just how resilient gold has been.

When the price corrects, buyers are stepping up to buy the dips aggressively, rather than panic out of their positions and hasten the slide. There is a certain conviction amongst gold investors, for the first time in nearly 5 years, that gold’s new bull cycle is just getting started.

Despite all of the bearish short-term headwinds mentioned above, gold is benefiting from becoming very oversold and undervalued at the end of 2015. It is also benefiting from significantly reduced expectations of how fast and far the Federal Reserve will raise interest rates. Physical demand remains robust, both from central banks and investors.

While Brexit didn’t lead to an immediate economic crisis, European banks remain highly leveraged and at risk of a collapse, geopolitical tensions remain high, currency wars and escalating and Asian wealth is attempting to escape capital controls as China’s economy cools. Stock markets are flashing overbought signals from a variety of different data points, which increases demand for safe havens such as gold. Lastly, look for a contentious and unpredictable election season in the United States to be supportive of the gold price.

We are heading into the best performing season for precious metals and all of these above elements combined suggest that prices are likely to continue higher after the current pullback bottoms. While mining stocks have experienced a incredible run in 2016, they remain undervalued relative to the metals and should continue offering strong leverage for quite some time.

Therefore, we believe that all dips should be used as buying opportunities. This is easier said than done, as most investors are too fearful to buy the dips and end up buying near tops. Instead, successful investors muster the fortitude to buy when everyone around them is selling and there is blood in the streets. This is the contrarian mindset that we employ at Gold Stock Bull and it has helped us build a portfolio of mining stocks that are up over 100% year to date.

To view our top gold and silver stock picks, receive our trade alerts and get the top-rated contrarian newsletter, simply click here to sign up for a premium membership.

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Six Mining Companies to Watch as M&A Heats Up

TICKERS: CGT; CBGDF, FCU; FCUUF; 2FU, GRG; GAC; GARWF, ICG; ICGQF, NXE; NXGEF, NORD, SSO; SSRI, SSV; SSVFF; SEG1

Precious metals prices have gained momentum since the start of this year, and corporate M&A activity is heating up again. Caesars Report’s Thibaut Lepouttre highlights a handful of mining companies with market capitalizations attractive to larger companies looking to boost their project pipelines.

In the most recent mining merger and acquisition (M&A) activity, Goldcorp Inc. (G:TSX; GG:NYSE) acquired Kaminak Gold Corp. to get its hands on the Coffee project in Canada’s Yukon Territory, and Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) is in the process of acquiring Goldrock Mines Corp. (GRM:TSX.V), whose flagship asset is the development-stage Lindero heap-leach project in Argentina.

As gold and silver prices seem to be holding their ground—resulting in increased target prices for both precious metals—it would be normal to expect more M&A transactions to occur in the second half of the year, as the midtier and senior producers wouldn’t want to miss out on any deals.

Of course, one should never invest in a company purely based on buyout speculation, but sometimes there are plenty of arguments to be made about why a company could be on the short list of their larger competitors.

In the past 12–24 months, companies have not only been focusing on cutting costs, but also on making a run toward “safer” assets. Higher-risk projects have been sold, and practically all new deals were in regions with an acceptable geopolitical risk as companies refuse to invest hundreds of millions (or billions) in assets located in higher-risk countries where the returns are only marginally higher.

Today I will focus on some logical buyout targets in the Americas.

Junior exploration companies with an existing joint venture (JV) agreement are on top of the list. Not only does the existence of a JV deal confirm the company’s asset has drawn the attention of other companies, but also those larger companies usually don’t want to deal with minority partners on a project basis.

“Making a deal on Paul Isnard might create a win-win situation for both Columbus Gold Corp. and Nordgold.“

An excellent example would be Nordgold N.V. (NORD:LSE), which dislikes having minority partners on any of its projects. Even if there’s a lot of opposition from the shareholders of the targeted company, Nordgold pushes through and usually secures 100% ownership of the asset it wants to get its hands on. That’s what happened with High River Gold Mines several years ago—Nordgold wanted to own the Taparko-Bouroum and Bissa projects, rather than having High River Gold as a minority partner—and that’s what might happen to Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX) as well.

Nordgold is earning a 50.01% stake in Columbus’ Paul Isnard gold project in French Guiana, but it’s not unreasonable to think Nordgold will want to own the entire asset. As the after-tax NPV8% of the project is almost half a billion dollars (using a gold price of $1,300/ounce), Columbus Gold is trading at just one-third of the NPV, and making a deal on Paul Isnard might create a win-win situation for both parties involved.

“Silver Standard might want to simplify the ownership structure by acquiring 100% of Golden Arrow Resources Corp.’s Chinchillas deposit.“

We see a similar situation in Argentina, where Silver Standard Resources Inc. (SSO:TSX; SSRI:NASDAQ) is mulling over entering into a joint venture agreement with its neighbor Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCPK). Silver Standard needs to do “something” as the Pirquitas mine will very likely have to close in the near future. There’s an agreement on the table where Silver Standard can earn a 75% stake in Golden Arrow’s Chinchillas silver-lead-zinc deposit, but Silver Standard rarely deals with joint venture partners, and it might want to simplify the ownership structure by acquiring 100% of Chinchillas to make sure it can mine and operate both projects as efficiently as possible.

Staying in the silver sector, Southern Silver Exploration Corp. (SSV:TSX.V; SSVFF:OTCQB; SEG1:FSE) has also undergone a true metamorphosis. This company was trading as low as $0.03 per share earlier this year, but its share price has increased sixteen-fold (!) before catching its breath in the mid-$0.30s, where it is now. Southern Silver’s Cerro Las Minitas in Mexico is shaping up to be larger than originally thought as the current resource estimate already contains 113 million silver-equivalent ounces. Southern Silver’s official exploration target is 200 million silver-equivalent ounces, but after seeing the most recent drill results, that target seems to be relatively conservative.

“Southern Silver Exploration Corp.’s Cerro Las Minitas has undoubtedly popped up on a lot of radar screens.“

Freeport McMoRan Copper & Gold Inc. (FCX:NYSE) was earning a stake in Cerro Las Minitas but walked away, not because Cerro Las Minitas is worthless, but because Freeport was (and still is) searching for large base metals (copper) projects and not for silver-lead-zinc systems, which typically attract a different crowd of companies. With the potential to discover in excess of 200 million silver-equivalent ounces (of which 60–90 million are “real” silver ounces), Cerro Las Minitas has undoubtedly popped up on a lot of radar screens.

“Integra Gold Corp. is now aiming to become a 200–250 Koz producer.“

But you don’t have to go to Latin America to find potential takeover targets, as Canada also has some interesting prospects. Integra Gold Corp. (ICG:TSX.V; ICGQF:OTCQX) is one of the first companies that come to mind as the mineralization at its Sigma-Lamaque project continues to expand. An updated preliminary economic assessment (PEA) should be released after the summer, and the NPV of the project will probably at least triple. The PEA was originally expected to be released before the summer, but after encountering some exceptional drill results just a few hundred meters away from the Triangle Zone, Integra’s management decided to postpone the PEA so it could potentially add the ounces from this No. 4 Plug to its resource estimate and incorporate it in a mine plan.

Practically anyone could be a suitor for Integra, as the company offers an excellent combination of high-grade gold mineralization in a mining-friendly region. Eldorado Gold already is an important shareholder, but just any midtier and senior producer could be interested in Integra Gold, as the company is now aiming to become a 200,000 to 250,000 ounce producer.

“NexGen Energy Ltd. blew all expectations out of the water with a maiden resource estimate containing in excess of 200 Mlb.“

And, of course, there’s more than just precious metals in the world, and the recent uranium discoveries in the Athabasca Basin could definitely be described as world class. NexGen Energy Ltd. (NXE:TSX; NXGEF:OTCQX) blew all expectations out of the water with a maiden resource estimate containing in excess of 200 million pounds (200 Mlb), but neighbor Fission Uranium Corp. (FCU:TSX; FCUUF:OTCQX; 2FU:FSE) is located within wheelbarrowing distance from NexGen, and both companies combined will very likely have in excess of 400 Mlb uranium.

“Fission Uranium Corp.’s Triple R uranium deposit is expected to increase.“

Fission’s Triple R deposit contains almost 110 Mlb uranium—and this is expected to increase toward the 150 Mlb mark as Fission is now trying to connect the mineralized systems at the different target areas—at an average grade of approximately 1.75% U3O8. However, there are higher-grade zones located within this resource estimate and Triple R has 45 Mlb in the Indicated resource category at an average grade of 18.22% U3O8.

All of the companies I’ve discussed here are buyout candidates, and their market capitalizations are still attractive for larger companies wanting to boost their project pipelines.

Thibaut Lepouttre is the editor of the Caesars Report, a newsletter and mining portal based in Belgium that covers several junior mining companies with a special focus on precious metals and base metals. Lepouttre has a Bachelor of Law degree and two economics masters degrees that have forged his analytical approach to the mining sector. Considered a number cruncher, Lepouttre focuses on the valuations of companies and is consistently on the lookout for the next undervalued mining company.

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1) The following companies mentioned in the article are sponsors of Streetwise Reports: Columbus Gold Corp., Golden Arrow Resources Corp., Integra Gold Inc., Southern Silver Exploration Corp., NexGen Energy Ltd. and Fission Uranium Inc. The companies mentioned in this article were not involved in any aspect of the article preparation or editing so the expert could write independently about the sector. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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