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Top 5 gold and silver mining stocks over the past month

These gold and silver miners appear to be heating up:

  • Solitario Exploration & Royalty (XPL). Four-week return: +18.18%. Solitario recently announced its initial NI 43-101 compliant resource estimate for its high-grade Bongará zinc project in northern Peru. The June 23 report showed “Measured and Indicated Resources totaling approximately 2.8 million tonnes grading 13.0% zinc; 1.9% lead and 19.3 g/t silver; or 15.5% zinc equivalent and Inferred Resources totaling approximately 9.1 million tonnes grading 10.9% zinc, 1.2% lead and 12.2 g/t silver; or 12.4% zinc equivalent.” HC Wainwright initiated coverage on the stock after the news and set a price target of $1.80 on the stock (which is currently trading at $1.56).
  • Minco Gold Corporation (MGH). Four-week return: +14.36%. Minco’s stock popped on news that it’s selling its Gold Bull Mountain Project located in Hunan Province, China for total consideration of RMB 7 million (approximately CDN $1.2 million). The company will now “focus on its core exploration properties in Gansu, China and its continued efforts to dispose of its other non-core assets and to diversify its investment outside China.”
  • Revett Mining Company (RVM). Four-week return: +13.59%. Early in June, Revett Mining announced it’s on schedule to resume full production at its Troy Mine in roughly a year. Permitting for the Rock Creek project in northwest Montana also appears to be going well.
  • Tasman Metals Ltd. (TAS). Four-week return: +12.37%. Notes: Tasman’s Norra Karr project contains one of the world’s largest rare earths deposits. The stock has a $1.75 price target in the next 12 months. Tasman’s currently trading at $1.09.
  • Endeavour Silver Corp (EXK). Four-week return: +11.36%. Endeavour, which operates several silver mines in Mexico, reported strong results earlier this month. Silver production in the Second Quarter, 2014 was up 9% to 1,669,609 ounces.

Top 3 gold and silver mining stocks over the past year

It’s been an amazing ride for Sibanye Gold Ltd (SBGL), Avino Silver & Gold Mines (ASM), and Tahoe Resources Inc (TAHO). SBGL is up nearly 200% over the past year. Click the infographic below for a larger version.

Top 3 gold and silver mining stocks

3 reasons Marc Faber believes the stock market is doomed

In a recent interview with Christopher Menon, Marc Faber predicts we could see a dramatic sell-off in stocks (around the magnitude of 20-30%) that could begin in the coming months. His credentials? Apparently, he correctly predicted the 1987 stock market crash. Why does he think we’re doomed to repeat that fate? Three reasons:

1) 12-month new highs have diminished.

2) Volume is slack. When volume is high, it’s on days when the market is going down.

3) Sentiment is too one-sidedly bullish.

Faber believes investors can protect themselves by moving into precious metals, specifically physical gold bullion. My favorite part of the interview comes when Menon asks if Faber believes gold could rise to $10,000 or more. Faber’s response? “You’d better ask this question to Ms Yellen and to other central bankers, it all depends on how much money they will print.”

Look for silver prices north of $50 by 2015

I love to see actual silver price predictions with dates on them. SilverSeek offered that up in an article last week:

“Most analysts, particularly in banks, were bearish from 2001 until very late in the first phase of the bull market,” Goldcore writes. “We believe that they will be surprised again when the intermediate top at $50/oz and $1,911/oz in September 2011, is passed, likely by the end of 2015.”

The white metal is up more than 10% YTD, and, interestingly, silver and gold have now broken above their key 50, 100 and 200 day moving averages. Goldcore’s even more bullish longer-term:

“It is important to remember that silver rose to a recent nominal closing high $48.41/oz on April 28, 2011. This means that silver is nearly 60% below its record nominal high of just over three years ago.

“After more than 3 years of a brutal correction and subsequent consolidation, we believe silver is set to rise above that record nominal high in the coming months. We continue to be bullish on gold, platinum, palladium and particularly silver.

“We believe that silver will likely surpass its non inflation adjusted high near $50 per ounce and its real high or inflation adjusted high of some $140 per ounce in the coming years.”

Look for silver prices to hit $100/ounce in 2-3 years

Silver prices haven’t done much over the past year. They were at $20 an ounce last July, and they’re at $20.80 today. That’s a gain of 4%. During the same time frame, the S&P 500 is up nearly 18%! Suffice it to say, it’s been a bumpy ride for gold and silver investors. 

Still, the precious metals markets are showing signs of thawing. The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), a collection of junior gold mining stocks, is up more than 33% year to date. Silver streaming company Silver Wheaton Corp. (NYSE:SLW) is up more than 28% and Pan American Silver Corp. (NASDAQ:PAAS) is up more than 26%.

Sean Rakhimov, editor of SilversStrategies.com, believes that if and when silver prices crest $26 an ounce, prices will climb higher: all the way to $32 an ounce. If prices reach $32 an ounce, the next major stopping point for the white metal will be $50 an ounce. 

“My outlook for silver for the next two or three years is somewhere between $50 and $100/oz,” Rakhimov says in an interview with The Gold Report. “It could be shorter; it could be longer, but that’s not critical. I’m going to stay with it for the cycle; it could be another 10 years to the end of the cycle. I do not expect this next leg to be final but I expect it to be a substantial run
comparable to 2010–2011 when silver went from roughly $10 to $49.50/oz. The next move could go from about $20 to roughly $100/oz, but that will take time. Am I going to take money off the table along the way? Maybe in some stocks that got ahead of themselves or that are not responding to the price move. But I would not touch any of my physical silver.”



Twitter price plunged so dramatically it literally flowed off its chart

Twitter Inc.’s (TWTR) shares fell like a stone today after a lockup expired. Suddenly, holders of nearly 500 million shares of TWTR were allowed to sell their stock, and that’s exactly what they did. The price of Twitter shares fell nearly 18 percent today wiping billions off the company’s market cap.

The funny thing was, when I looked at Twitter’s share price on Google Finance this afternoon, the price had fallen so quickly that it flowed right off Google’s chart. Click for a larger version:

twitter-price

Silver price forecast: $10 an ounce in 2015?

Silver price forecasts

Despite recent weakness, gold has been one of the best performing commodities this year. Under normal circumstances, silver would be performing even better. Call 2014 an anomaly then.

While gold is up 8 percent for the year, silver has been flat. Half of the white metal’s demand comes from investment vehicles. The other half comes from industrial uses. As the economy improves, that should drive up industrial consumption of silver. At the same time, the Fed’s ongoing quantitative easing programs mean we should continue to see investment demand for silver. Shouldn’t gold and silver prices be headed higher?

Peter Schiff, the president of Euro Pacific Capital, thinks so. He told CNBC that he believes gold could reach $5000 per ounce.

“I’ve been buying gold for over 1213 years. I’ve been recommending it for my clients. Not once have I bought gold because of geopolitical risks. I’ve never even considered that. The people who say that are the people who don’t buy any gold. I’ve been buying gold for the last decade, and it’s because central banks are creating too much money. There’s too much inflation. Interest rates are too low. And so I want to store my purchasing power in something central banks can’t print. I think we’re headed much much higher because they’re not going to stop those presses. I don’t know the time period. They’re just going to trend higher. I’ve said $5000, they’ll go higher than that.”

If that were to happen, the increase in investment demand for silver could drive prices up rapidly. Silver has been showing signs of strength in the stock market, too.

“Silver saw the largest inflows [amongst commodity ETFs] during the quarter,” says the Wall Street Journal (per BullionVault), “as investors looked to the metal as a leveraged play on improved sentiment towards gold.”

Not everyone is bullish on silver, though. Natixis analysts are calling for a base case of silver at $18.60 an ounce this year, and $15 an ounce next year (per Mineweb). They could even see the white metal falling as low as $10 an ounce in 2015.

“At 19,700 tonnes, the amount of silver held in physically-backed ETPs (exchange traded products) is equivalent to almost 80% of 2012’s mined output. If last year’s mass exit from gold ETPs was followed this year by sales from silver ETPs, this could rapidly turn into a substantial new source of supply just as happened with gold last year. Under these scenarios we could see silver prices fall to an average of $15/oz in 2014 and $10/oz in 2015.”

The only solace I get out of such bearishness is it can’t get much worse. The contrarian in me wants to buy more silver when the bears take control.

I don’t think we’re out of the woods for silver prices yet, though, so I’ll bide my time. Inflation will begin to rear it’s ugly head soon. That’s why I’ll start buying more silver. For now, my favorite investment for 2014 remains bitcoin. Check out my bitcoin price prediction page on crypt.la to learn why.

Silver price forecast: Silver should be at $87 an ounce

Any silver price forecast is dependent upon the expected behavior of the U.S. dollar. If you believe that dollar is on the verge of devaluation, you can probably expect silver prices to climb in response. Hubert Moolman’s recent piece “Monetary Collapse and Silver Price Not So Orderly Rise” at The Market Oracle, compares today’s volatile gold and silver market with the equally volatile precious metals surge in the late 1970s and early 1980s. Moolman does that by looking at patterns in the gold-silver ratio (the number of ounces of silver it takes to buy an ounce of gold).

Moolman points out that the gold-silver ratio has been trending down since roughly 1990, and that the pattern indicates we could see a gold-silver ratio around 15 in the months or years to come. Here’s his chart, which shows the gold-silver ratio over time (source):

Silver Price Forecast Chart

If the gold-silver ratio were at 15 today, we’d have silver prices at $87 an ounce. That sounds high, but keep in mind that if silver were to spike rapidly, gold would probably be climbing higher, too. That would compound the price gains for silver if we truly moved to a gold-silver ratio of 15. That would also make Moolman’s silver price forecast even higher.

Moolman’s basic thesis is that we’re on the verge of an all-out monetary collapse.

“The rise of silver and the collapse of the monetary system is inescapably linked,” Moolman writes. “Therefore, if the collapse of the monetary system is not orderly, then the rise of silver’s value will not likely be orderly. Collapse by definition suggests: to break or fall suddenly. This would suggest that when the time comes, silver will explode higher suddenly; for example, it could be possible that it rises $10, $20, $100 a day, until you can suddenly not buy it with fiat money.”

My silver price forecast

If the dollar truly were to collapse, it’s hard to argue with Moolman’s silver price forecast. Investors, consumers, institutions and governments would be clamoring to move their fiat currencies into hard assets like real estate, gold, silver and possibly even bitcoin or stocks (check out my post Bitcoin inflation hedge: The new gold and silver).

I’m not as pessimistic as him in the near-term, though. While I do expect inflation sometime in the not-so-distant future, I don’t see signs that it’s imminent. Prices can’t move higher if people aren’t spending much money (put another way, inflation require consumers to be going on shopping sprees). Economists measure the amount of money moving through the system as money velocity. Right now, money velocity is low (source):

Silver Price Forecast: Money Velocity

Until money velocity picks up, inflation will remain low, and the government’s free to print as much cashola as they want. Eventually, it’ll catch up with them, but I believes the scars from 2008 are too fresh to expect consumers to start overspending any time soon. That gives the Federal Reserve a nice grace period to continue printing money.

So long as we have low inflation, silver prices will remain low. My silver price forecast is $25 an ounce in 2014, though I expect it to go much higher in 2015 and beyond.

Why are search queries trending down?

I was drinking coffee and reading Investor’s Business Daily over the weekend, when I came across some interesting graphics. The paper reports that “U.S. search queries fell 10 percent in February from January. That’s the biggest one-month decline in the last six months.”

The number of search queries were down across the board: at Google, Yahoo and Ask.com. Here’s one of their charts showing the overall trend in search queries across all the major search engines:

google-search-trends

The total number of search queries in the U.S. spiked in January, but has otherwise been trending down since October (when there were approx. 19.25 billion searches). February saw 17.75 billion searches.

What IBD didn’t address is why there’s a downtrend in the search queries. Have we reached the search saturation point? My speculation? People are spending more time browsing on smartphones and tablets. There, apps rule, and the web experience is more passive – driven by content discovery rather than proactive web searches. I’d be interested to hear your opinions on why search queries are declining, though! Please use the comments section below.

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3 reasons silver prices could head higher in near-term

1) Gold-silver divergence. Since the start of the year, the price of gold is up more than 5 percent while the price of silver is off 1 percent. Typically, the white metal outperforms gold during uptrends, and it underperforms gold during downtrends. This year, silver just hasn’t kept pace with gold. In fact, the gold-silver ratio is hovering around 65, a level we haven’t seen since last summer. Admittedly, gold supplies are currently under pressure, but the gold-silver ratio tends to revert to its mean in the low 50s over time. If the gold-silver ratio were at 55 today, we’d be looking at silver prices around $23.50 an ounce.

2) The bear market to beat all bear markets. Jordan Roy-Byrne at SilverSeek points out just how bad silver’s bear market has been since 2011. In fact, it’s the second-worst bear market for silver in history (the first being the bear market from 1980-1982 when the precious metals bubble burst). “Our technical work suggests that we should watch for a final low and end to the bear market in the coming months,” Roy-Byrne writes.

3) Contraianism. If you buy the argument that we’re in a decades-long bull market for precious metals, then you’ve got to look at silver’s current setback as a blip in a longer-term uptrend. In 2011, analysts were bullish on silver. Had you followed their advice and plowed into silver that year, you’d be down more than 50 percent. Contrarians do the opposite of what the broader market does: they buy when everyone else is selling and sell when everyone else is buying. It takes tenacity to stick to your convictions, but if your investing timeline is long, the spring months could be the perfect opportunity to begin re-building a position in silver.

Note: Always remember ‘opportunity costs.’ If you tie your money up in one investment, you’re unable to invest in something else. In my mind, digital currencies present a more appealing investment opportunity than precious metals. Check out my post Bitcoin inflation hedge: The new gold and silver to see why.

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