zykk's Profile
zykk's Posts
The post Two Emails could also have been tiggered by me. I´ve not been posting on the forum as I find there is too much noise here. Much of it is well-intentioned, but I see far too much speculation posing as fact. The old adage – less is more – may well be pertinent here.
I stopped listening to Jim Puplava early this year and find Kingworldnews a far superior substitute. I share JPs anxieties about the number of shares, but his actions (if it is him – still speculation!) are for his clients to make judgement on - whether he has breached any fiduciary duty, made a bad decision or to see if he is proved correct. Once again I emphasize this is, if he did what it is alleged he did. And about sending him a question, frankly, I wouldn´t bother, I can´t see what it will achieve.
On the question of Webb´s strategy I do have one query (like others as I just see). If you want to get something into production why do you have to prove as many oz as possible. Get into production and use the cash generated to expand. I would only prove up the maximum if I wanted to sell for the highest possible bid. Is this not logical? I´m sure the market is confused by this – he says he wants to start production but all we see is ever more drilling and dilution. The market does not believe in Webb at the moment, he may soon have to take an unwished for alternative - a reverse split or a JV, if he cannot produce a convincing road ahead, and by that I mean not for the Tyhee aficionados, but the market as a whole.
The assertion that Tyhee is not diluting as it is adding ounces per share is not relevant, the market´s perception is different. It sees a company with a low SP, regularly adding to its share count and not seeming to make progress. This incorrect perception must be changed. Changing the perception of the company is, in my view, critical to its future success.
After the PP is over the SP must rise to the mid/upper teens quickly, this may be difficult as I can see many people bailing out, unless there is a clear strategy. I may also do so.
On the subject of large share counts Tyhee is not alone. We all know about Romarco, but take a look at T.SAS - St Andrews 333 mil shares out with production soon to start. The company was also struggling badly a few years ago, but recovered. Tyhee can easily get into production with not so many more shares. A Sandstorm type financing would allow this.
http://www.sandstormresources.com
These type of companies and other financiers were at the trade conference in Denver last week in record numbers - they are desperate for good projects. They don´t, however, fund endless drilling.
Clearly I have not written this to make friends, but I hope it contributes to the discussion.
zykk
Have just checked at Tyhee Investors Blog and seen the following link from Hubert. It seems that he was instrumental in getting Tyhee into this comparison.
http://tyheeinvestors.blogspot.com/2010/06/tyhees-valuation-from-gold-miner-pulse.html
The Tyhee report
Nice chart showing how inexpensive Tyhee is on a comparative (and actual) basis on 2010-Jun-18 after the close of Canadian markets.
This is my first post on this forum, but I´ve been a long term reader (and UC investor). There is some great information on the company here and I getting quite positive about the near future.
Perhaps this article published a couple of days ago can help with the topic question.
Andy
Still Just a Baby Bull
by Toby Connor, Goldscents.blogspot.com/ | June 7, 2010
It's sad to say but I'm afraid 90/95% of all retail traders/investors are not going to successfully ride the gold bull. The reason of course is that they are deathly afraid of draw downs. It's glaringly apparent every time gold pulls back or suffers the slightest correction. Immediately a slew of traders come on the blog and warned of impending doom. "Gold is going to $600" (think Elliot wave). Some are even brave (maybe I should say 'foolish') enough to short. Here is one we hear a lot lately, "miners are going to get crushed if the stock market enters a new leg down in the secular bear market".
Pure nonsense!
Let me show you what happened to gold and miners during the 2000-2003 bear market.
During one of the worst bear markets in history gold rallied over 50% and miners well over 200%. So this notion that the precious metals sector has to get hit during a bear market is simply ludicrous.
Now I know what you are going to say, "Just look at what happened in `08".
The reality is that the crash in `08 was a very special set of circumstances that aren't likely to repeat. Up until September the bear market was following the normal path most bear markets follow. Slow grinding declines followed by explosive counter trend rallies. Gold was holding up amazingly well during this period as were miners. Both were actually up significantly during the first 5 months of the stock market bear. It wasn't until gold entered a normal D-wave correction in March of `08 that either corrected at all.
In September a rare event happened that drastically changed the entire fundamental picture of the bear market. At that time roughly $700 billion in debt came due. The financial system needed to roll that debt over but couldn't as the credit bubble was in the process of imploding. That led to one of the few true stock market crashes in history.
The ensuing panic led to a selling climax in every asset class even including, to some extent, gold. The actual price of physical gold never even came close to dropping to the levels of the paper market. Smart money investors were taking advantage of the irrational selling by buying up every single available oz. of physical gold on the market. At the time premiums on physical were over $100 above the paper price.
The point I'm trying to get across is it took a very special set of circumstances to create the kind of selling climax that could take down the precious metals sector. Those circumstances are not present today. The EU has already gone to the printing press to halt their debt problems. The US has done away with the mark to market rules and Ben stands ready to print so we have no looming debt crisis in our future.
So if we are about to enter another leg down in the secular stock market bear the odds are it will be another slow grinding affair, very similar to the 2000-2003 bear. There will be plenty of sharp counter trend rallies and one can bank on the Fed throwing more and more trillions of freshly printed dollars at the problem all along the way.
And that, my friends, is the fundamental bedrock of the gold bull.
Now let me show you a long term chart of the last great secular bull market.
This is just about text book for a big secular bull market. We see a very extended period of consolidation below a key resistance level. Eventually that resistance level gets broken. Once it does it's like a damn breaking, the force then becomes unstoppable, ultimately reaching heights far beyond what anyone can foresee at the original break out.
In oil's case the secular bull rallied almost 300% above the $40 breakout level, topping out with a massive parabolic move lasting about a year and a half (remember me saying bubbles tend to last about 1 to 1 1/2 years as the final phase tops out?).
I want to point out this happened in oil, a commodity that was virtually impossible for the average Joe to invest in. This was a bubble driven purely by the the investing community. Remember this because it's important.
Now let's take a look at the next secular bull, one that's still in the baby stage.
Gold has just recently broken out above the old 1980 high of $850. It hasn't even doubled yet much less rallied 300%. Now if you think gold rallying to $3500 is ridiculous you are absolutely correct. There is no way gold is going to stop at a mere 300%.
Unlike oil, gold is readily available to the public and ultimately that is what drives the final stages of a secular bull market/bubble. When the public comes into the market their panic buying drives the final parabolic move to unbelievable heights. We saw perfect examples with both the tech and housing bubbles. The public was deeply involved in both.
And now, for the topping on the cake. The precious metals markets are infinitely smaller than the stock market, real estate markets or energy market. That means it won't take anywhere near as much money to drive these markets to incredible heights.
Look at that chart of oil again. A 300% gain in a very large liquid market without ever drawing in any perceptible buying from the general public.
Now look at that chart of gold again, only this time with fresh eyes. The possibilities are simply staggering. I wasn't kidding when I said this will be the greatest bull market any of us will ever see in our lifetime.
If, and this is a big if, you can ignore the nonsense from the Nervous Nellies or the gold Bears (a breed destined for extinction) and just hold on to your positions you will ultimately reap unimaginable rewards as this bull progresses.
Now I will say that yes, there are times to take profits in bull markets. You take profits when gold and miners are stretched far above the 200 day moving average. Everything eventually regresses to the mean. So when we see the HUI 40-55% above the 200 DMA then yes, you should think about selling at least some portion of your positions. But to sell positions with the miners 3% above the 200 DMA is ... well, it's just plain dumb. This isn't the time to sell it's time to buy, buy, buy.
Let me say this as plain as possible. If you want to get rich from this, the largest bull market you are ever going to see, you don't listen to the traders and you certainly don't adopt their flawed strategies. You simply can't think like that if you want to ride this bull. You need to think like a value investor. When you see value you scoop it up no questions asked. And if the market is foolish enough to give you an even better bargain down the road you buy more.
Unfortunately here is what happens. Retail investors are unable to buy value. For the average retail investor to buy he needs emotional confirmation. I see this all the time. "Wait till the breakout for confirmation before buying." The problem with that approach is that most breakouts soon fail. If one waited for the recent breakout above $1225 to buy they then had to weather an immediate draw down.
I saw this in spades at the December top. Retail traders entered in droves during that time. They were getting the emotional confirmation they needed. Then when gold corrected they either got knocked out for a loss or they held on just long enough to get out even. Most simply don't have the patience to ride the bull on his terms. They want the bull to do what they want, when they want. I suspect more investors have been lost to boredom that draw downs.
The best strategy right now is to just sit tight. Remember this is still just a baby bull and it has a long long way to go yet.
http://www.financialsense.com/fsu/editorials/connor/2010/0607.html
First time I´ve posted in a while, although I´ve been a regular reader. I think the pessimism shown on the forum is way overdone. Tyhee is one of many, many companies that have been performing poorly for weeks. I´ve not sold a single stock and will not do so unlees there is a significant deterioration in the company´s fundamentals, which I don´t expect.
A recent article on how gold stocks may perform in a market crash may be of interest to some of you.
Still Just a Baby Bull
by Toby Connor, Goldscents.blogspot.com/ | June 7, 2010
It's sad to say but I'm afraid 90/95% of all retail traders/investors are not going to successfully ride the gold bull. The reason of course is that they are deathly afraid of draw downs. It's glaringly apparent every time gold pulls back or suffers the slightest correction. Immediately a slew of traders come on the blog and warned of impending doom. "Gold is going to $600" (think Elliot wave). Some are even brave (maybe I should say 'foolish') enough to short. Here is one we hear a lot lately, "miners are going to get crushed if the stock market enters a new leg down in the secular bear market".
Pure nonsense!
Let me show you what happened to gold and miners during the 2000-2003 bear market.
width="482" />
In September a rare event happened that drastically changed the entire fundamental picture of the bear market. At that time roughly $700 billion in debt came due. The financial system needed to roll that debt over but couldn't as the credit bubble was in the process of imploding. That led to one of the few true stock market crashes in history.
The ensuing panic led to a selling climax in every asset class even including, to some extent, gold. The actual price of physical gold never even came close to dropping to the levels of the paper market. Smart money investors were taking advantage of the irrational selling by buying up every single available oz. of physical gold on the market. At the time premiums on physical were over $100 above the paper price.
The point I'm trying to get across is it took a very special set of circumstances to create the kind of selling climax that could take down the precious metals sector. Those circumstances are not present today. The EU has already gone to the printing press to halt their debt problems. The US has done away with the mark to market rules and Ben stands ready to print so we have no looming debt crisis in our future.
So if we are about to enter another leg down in the secular stock market bear the odds are it will be another slow grinding affair, very similar to the 2000-2003 bear. There will be plenty of sharp counter trend rallies and one can bank on the Fed throwing more and more trillions of freshly printed dollars at the problem all along the way.
And that, my friends, is the fundamental bedrock of the gold bull.
Now let me show you a long term chart of the last great secular bull market.
Now let's take a look at the next secular bull, one that's still in the baby stage.
http://www.financialsense.com/fsu/editorials/connor/2010/0607.html
Juniors Poised for Historic Bull Run
http://www.golddrivers.com/blog/
By Eric Hommelberg
November 05, 2009
On October 07 The Gold Report conducted an interview with me just after gold broke out to new news above $1030. During that interview I made the case for $1300 gold by spring next year and advocated to be invested in high quality juniors which are poised for a multi year bull run that could even surprise the staunchest junior investors. This piece is an update on that interview and shines a light on how to approach investing in junior gold mining shares.
Gold poised for correction? Not now!
On October 07 with gold prices just above $1030 The Gold Report asked me if I had one more final thought for the reader. I said:
Excerpt TGR Interview October 07, 2009
TGR: Any final thoughts you'd like to give our readers?
EH: Yes, most likely you'll be hearing bearish gold tunes in coming months from the traditional gold institutions, saying that gold's rise is not justified by its fundamentals and therefore bound to fall. They did so in 2003, they did so in 2005 and now they are at it again. The traditional gold institutions simply don't appreciate the fact that gold is money and how it has been manipulated over the years. Traditional gold institutions in 2005, with gold prices at $425, were saying that increased gold production would bring down gold prices; that certainly didn't boost their credibility. Still many analysts quote these very same institutions today for the very same argument— that increased gold production will bring down gold prices in the years ahead. GATA, on the other hand, said in 2001 that gold was going to $850 and that central bank selling wouldn't be an issue anymore within seven to ten years from then. We find ourselves right in the middle of that projection and gold is trading well above $850 and central bank sales have dried up completely. You are not going to hear these kind of predictions from the traditional gold institutions. No one has been right on the money more than GATA. It's therefore no wonder that GATA's credibility is rising fast. To give you an example here, the Chinese sovereign wealth fund ,which manages over $200 billion, has held already three teleconference calls with GATA—they wanted to know what GATA knows. We all know now that China has been accumulating gold for years; we all know now that China wants a new world reserve currency. This, of course, won't happen overnight, but it's quite obvious that the U.S. dollar as a world reserve currency is not going to survive. Gold will continue to rise until something new has been put in place on the monetary front and I think we are years away from that. So what I'd say is. "Stick to it and stay the course. “
END.
Well, we are just one month further now and $50 closer to our $1300 target by spring next year, this despite the many calls for $680 gold that have been aired since then through the traditional bear channels.
Now does it come a surprise to see gold holding up so well after breaching the $1000 mark and marching into higher grounds?
No, of course not, when The Gold Report asked me about a potential pull back I said:
TGR: Given the recent run-ups, would you expect a pullback before the price rises again?
EH: I don't expect a sharp pullback; nothing like the correction last year. That's not going to happen. Since gold breached the $1,000 mark for the first time in March 2008, the $1,000 area had been a resistance area. It took about five attempts to slash the $1,000 mark. A long-time resistance area becomes a support level once that level has been breached to the upside. That's exactly what happened a few of weeks ago, when we saw our first weekly close above the $1,000 mark in history. Furthermore we had our highest monthly close ever as well and this marks the beginning of a new up leg. The charts leave no doubt; they point to gold prices of $1250+ within the next six months. When you analyze the long-term charts you'll notice a pattern of long consolidation phases followed by sharp up moves. The consolidation phases last for about 18 months, the sharp up moves last for about six months, whereby gold can appreciate by 50% or more. We saw it in 2005 when gold just finished an 18-month consolidation period and then it shot up within six months from $430 to $730. That move started with a commercial signal failure, today with record high commercial shorts outstanding we could be on the verge of a commercial signal failure again
END.
Here we are, gold shooting up by $40 in the face of all nay sayers just like it did in 2005.The odds of a massive commercial signal failure are increasing by the day. Certainly the Indian bombshell of buying 200 tons of IMF gold wasn’t exactly the kind of news the commercial short traders were waiting for. And yes, the FED not willing to defend the dollar won’t be giving much comfort either, and yes, the fact that more and more investors are demanding the real metal instead of paper gold substitutes like GLD (see also my entire interview with The Gold Report) is making things worse for the commercial short traders. So yes, we are on our way to $1300 gold which is consistent with previous patterns of consolidation phases followed by sharp up moves.The chart below which we’ve send out to our members on Oct 07 visualizes this pattern:
TA GOLD CHART – WEEKLY (Oct 07)
Now fast forward to today with gold clocking $1080. Is it overbought now? Time for a correction? Don’t think so!
Another chart I would like to bring to your attention here is the relative gold chart which leaves no doubt at all. There’s still plenty of upside potential from current levels before extreme overbought territories will be reached.If gold would reach the same overbought extremes as it did on the 2005 and 2007 run up then gold should clock $1285 which again is very consistent with my $1300 prediction by spring next year.
Relative Gold chart
The relative Gold Chart (rGold) is gold divided by its own 200 dma. It has proven to be a reliable indicator in spotting major bottoms for gold ever since the gold bull market began in April 2001.
Since the gold bull market began in April 2001 gold made two major tops in which it exceeded its own 200 dma by more than 30%. (rGold value > 1.3). This happened in May 2006 and in March 2008.
On the downside gold has made some major bottoms in which it dropped below its own 200 dma by 5 - 10% (rGold value 0.90 - 0.95)
The rGold range of 0.90 - 0.95 has proven to be a reliable BUY indicator indeed over the last 7 years
The relative gold chart leaves no doubt, gold has plenty of upward potential before reaching extreme overbought territories.. The relative gold chart would reach previous peaks (2006/2008) if gold would reach $1285 which is indeed consistent with my earlier projection of $1300 by spring next year..
Now with $1300 gold in mind for spring next year and gold prices headed to $5000 or more the years ahead (see my piece ‘Gold - Last Time to Buy gold below $1000?’, what could it mean for the junior mining companies? Well, the answer is “A Lot!” In Part II of this article I will be making the investment case for junior mining companies which could stun even the most staunch gold bull out there. Fiction or real possibilities? Well, read on and judge yourself.
Junior Mining Companies Poised for Historic Bull Run
It has been quite a year for the junior mining companies. Investors declared the junior sector for being dead by end of 2008, institutions willing to finance ongoing exploration projects were hard to find and hedge funds adopted a new fancy game which was to short juniors into oblivion. During fall of last year most juniors didn’t see any up tick in their stock quote at all since shares for sale were hitting the few willing investors left like a tsunami never ever witnessed before in the universe of junior mining companies. Many juniors were priced at bankruptcy levels, levels not seen since the gold bull market began in 2001. The inevitable result was panic, a real panic which drove most investors (and gold letter writers) out of the juniors pushing management of most juniors into a mental state of severe depression.
It became quite obvious during that time that many juniors couldn’t survive this dark winter without diluting themselves into worthless penny stocks if they could raise money in the first place at all.
I always maintained the view, even during this extreme depressed period of time, that the high quality juniors would come out as winners eventually. There’s no doubt in my mind that within a few years from now valuations for the better juniors will stun most investors, the better juniors will be priced at levels not imaginable today.. The pendulum always swings from one side to the other, in other words, from overvaluation to undervaluation and back etc…
In February 2009 I published the CDNX/GOLD ratio chart below. It’s a chart which represents the performance of the junior sector against gold. I suggested that we found ourselves in a window of buy opportunities never witnessed before. The reason was simple since never ever in history the junior sector had been so depressed as in late 2008. Now investing is a quite simple game, you buy shares when prices are low (extreme undervaluation) and sell them when prices are high (extreme overvaluation). Sounds simple right? But in order to act on this simple thesis you have to ignore the mass mainstream opinion since the mass is wrong on the market for more than 90% of the time. The reason for that is shockingly simple, it’s just a law of nature, you’ll never witness a major low when the mass is buying like crazy and vice versa. All major lows in financial history have been characterized by extreme panic selling, it’s just a matter of waiting patiently until selling panic has reached its climax and for momentum to be faded away necessary to push stocks further down.
Now who will tell you when downward momentum has faded away and panic has reached its climax? Well, nobody will tell you, especially not the mainstream financial media but the charts will do.
What charts?
When it comes to the junior sector I’m interested in how the juniors perform against gold. Look, the juniors sector could improve by let’s say 20% and you’ll say ‘Great”!’. But if this 20% gain has been achieved against a 50% rise in the gold price then quite obviously juniors were not the place to be from an investment point of view.
So by charting the junior sector against gold itself one could get a clue of juniors out performing or under performing gold. The ideal situation would be of course an environment where gold is on the rise while the junior/gold ratio is on the rise as well, then a tremendous leverage could be achieved by investing in the better juniors.
Now in order to chart the juniors against gold one should look at the CDNX index vs gold since the CDNX (although not ideal) represents most junior mining companies. In order to identify the major turning points one should filter out all the daily/weekly noise and concentrate on the monthly chart only.
Now finally let’s have a peek at the monhtly CDNX/GOLD ratio chart I published in Feb 2009:
CDNX/Gold ratio chart FEB 2009
This chart clearly demonstrated the extreme depressed levels juniors reached in late 2008 and the extreme upward potential for juniors for years to come.
Now fast forward to Sept 2009 and see how this chart unfolded itself over the last 7 months..
CDNX/GOLD ratio chart NOV 2009
This chart clearly demonstrates a major bottom has been put in place indeed in Dec 2008. Now what does that mean for coming years?
Well, the key issue here are major turning points. The gold market began in 2001 and in early 2004 the junior sector had gone ahead of itself too far too fast. Yes, they became overbought against gold as shown in chart above..It was a time when most juniors were trading above the $1 mark (vs pennies today), it was a time when juniors hitting good drill results easily doubled in value.. We have never experienced such valuations ever since. So the period 2001 -early 2004 was a good period to be in juniors. Looking back the year of 2004 proved to be a major turning point. Despite the rise of gold prices juniors had a hard time to catch up with gold. After mid 2007 juniors started to decline in value against gold with a anti climax being reached in Dec 2008. So we had a cycle here from undervaluation to overvaluation from 2001 to 2004, then the cycle took us back from overvaluation to (extreme) undervaluation from 2004 to 2008 and now we are almost one year underway in a new up-leg which could lead us to new overvaluations within a couple of years from now. Overvaluations that will stun even the staunchest gold bull out there.
Yes, I’m aware that the juniors were not the place to be over the last 5 years since they are beaten up to levels not seen since the beginning of the bull market in 2001. But as the CDNX/Gold chart above demonstrates the bottom has been clearly put in place in December 2008. From there onwards the only way seems to be up for years to come. Remember the seventies, investing in juniors could have made you millionaires by investing a mere $1000 into the best performing juniors. The thing is like today that the junior sector didn’t wake up until the final years of the gold bull market.The first 6 years of the seventies bull market didn’t affect the juniors that much but things started to heat up dramatically from 1976 onwards. Any company with a name ‘gold’ in it saw its share price appreciating upon exploding gold prices. Juniors priced at pennies in 1975 went ballistic going into 1980. A good example concerns Lion Mines which went up from 7 cents in 1975 to $380 in 1980, or what about Warf Resources which went up from 40 cents to $560, or Steep Rock from 93 cents to $440.. These are no misprints, a $50 investment in Lion Mines would have yielded a profit of $380.000, not bad I guess…
Now you may wonder how come such astronomical returns are possible? The reason is quite simple, the junior market is so small that even a tiny inflow of money would have tremendous consequences for the average junior share prices.. Today, of all invested money less than 1% is invested gold and its shares and even a much smaller share in junior mining companies. Once the juniors start rising by multiples of 100% on a year to year base (as happened since December 2008) in the face of gold prices heading into new record high territories then people want to be part of that action and money starts flowing en masse into the junior sector. Even if a tiny percentage of all investment capital decides to chase the junior stocks all heck will break loose. It would be like trying guiding the Niagara waterfalls through a garden hose, needless to say some tightness will be encountered here and there…
Does it mean to go out now and buy all companies which have a name ‘Gold’ in it?
No, of course not, there will be big winners in the end but unfortunately many juniors won’t be going anywhere as well. The thing is that discovery of economic viable gold deposits is the key which will really launch a junior company. Now despite the fact over 2000 juniors are trying to convince investors they will be successful, only one out of every 2000 projects will ever make it to a mine. To make things even worse, during last decade only a very few world class gold discoveries have been made so by just randomly throwing money at juniors you will most likely end up going nowhere..
Next week I will be discussing some guidelines which could be helpful in your hunt for successful juniors. If you want to be kept updated on our Charts and upcoming interviews with CEO’s of promising juniors then please sign up HERE and start receiving our FREE GoldDrivers Report