BonTerra Resources Swings for a Double

With the rise in gold shares since the first of the year, good stories are harder to come by. Bob Moriarty of 321 Gold profiles BonTerra Resources, which he believes has home-run potential.

The ideal gold deposit today for a junior mining lottery ticket would be over 2 million ounces of medium- to high-grade gold located in a safe jurisdiction, preferably in a developed mining camp. The junior spends money exploring and developing the resource and sells it to a major or mid-tier for big bucks. It’s the pot of gold that all the juniors claim to be aiming for but few actually hit.

With the rise in gold shares since early this year, the slam-dunk stories are getting fewer and fewer as the rising tide lifts all boats. But there are still a few good stories around if you are willing to search. I’ve found one, BonTerra Resources Inc. (BTR:TSX.V, BONXF: US, 9BR:FSE), that appears to have two home-run potential projects.

Timing is everything when buying the penny dreadfuls. From late 2011 until late 2015 the value of junior gold shares plummeted as some stocks dropped as much as 99%. A very few stocks advanced and great drill results presented little more than a liquidity event to long suffering investors so they could dump shares. But from January of this year, you could have poured funds into some of the biggest crap stocks in Vancouver and seen hundreds of percent gains.

Likewise with the mining companies’ management, there is a time to buy when you can do no wrong. BonTerra Resources got as high as $7.70/share in a post-rollback price in 2011 before blowing sky high, dropping to a low of $0.09 in late 2013. The share price went sideways for two years as new management was brought in to clean up the mess left behind. The new management restructured the company, fired those needing firing and paid the bills left over. But they knew that opportunity was just around the bend because giant bear markets breed giant bull markets.

In 2012 Gold Fields Ltd. (GFI:NYSE) entered into an agreement with Kerr Mines Inc. (KER:TSX) on the Larder Lake project owned by Bear Lake Gold, a subsidiary of Kerr Mines. Gold Fields agreed to spend $40 million in exploration to earn 60% of the property. Beaten up by the decline in gold prices, Gold Fields gave up all worldwide exploration in 2015 and handed the project back to Kerr. Good timing on their part, they managed to nail the bottom of the market.

Let’s do the math. According to both Kerr and Gold Fields in 2012, 60% of the Larder Lake project was worth $40 million in spending. That makes 100% of the project worth $66.66 million according to my Bomar Brain. But Gold Fields didn’t want to spend any more money on exploration and Kerr still wanted to do a deal on the property.

Enter BonTerra at the very bottom of the market. In March they announced a deal with Kerr where they would purchase 100% of the Larder Lake property for a little over $4 million in cash and shares. The last time anyone did a deal this good was when the Dutch bought Manhattan for $24 in beads. Given that at today’s price, BonTerra has a total market cap of about $33 million; according to both Kerr and Gold Fields Larder Lake alone was worth twice the company’s market cap in 2012.

Larder Lake is a 2,165-hectare land position right on the Cadillac Larder Fault Break where records show 13 million ounces of past production. The Larder Break Fault runs from Kirkland Lake to Val d’Or. The property is a mere 7 km west of the Kerr Addison Mine with production of 11 million ounces of gold.

The project has multiple historic mines with two different shafts already sunk on the property. There has been over 100,000 meters of drilling to outline a historic 43-101 resource done in 2011 of 917,000 ounces of gold in the inferred category at 5.55 g/t and an additional 43,800 ounces of gold at 4.07 g/t in the indicated category.

While Gold Fields had an option on Larder Lake, they completed over 25,000 meters of drilling in 59 holes and spent $6 million. Those holes are not represented in the existing 43-101. I expect BonTerra to soon announce a massive drill program with a plan to issue a new updated 43-101 by Q1 of 2017.

But Larder Lake isn’t BonTerra’s only 2 million ounce potential gold mine in Canada. Their mother ship project is actually the Gladiator Project located in the Abitibi mining district in mining-friendly Quebec adjoining the Oban Windfall property. Gladiator has a 7,563 ha land position in the Abitibi greenstone belt. Gladiator is being drilled as you read with a 25,000-meter drill program that began in February of 2016. The project has an existing 43-101 resource of 492,000 ounces inferred at 3.53 g/t Au.

BonTerra Resources is a great example of a company that was handed lemons and made lemonade. They got hammered from 2011 until 2015 by almost 99%. They rolled back, restructured, and made plans to capitalize on the mistakes of others. At the very bottom of the market they were snapping up ounces of gold at $6 an ounce. When the market turned, they did private placements, got cashed up and went back to work.

The retail market has yet to glom on to their real value. They went up 200% between the low in January and a high in March but have been in a long correction since then even after picking up nearly a million ounces of gold at $6. The funds and strong hands on the other hand get it. Oban Mining Corp. (OBNNF) is a big shareholder as is Kerr Mines as a result of the deal they did in March on the Larder Lake property. U. S. Global has a piece of them along with Sprott. In July Oskisko announced they now owned 9.5% of BTR on an undiluted basis.

I’m on record as believing we are still correcting the incredible advance in gold shares since the first of the year and I believe that correction will possibly continue into October. But many shares have already corrected and are now positioned for another big advance. When this correction ends, I see a lot of fireworks.

BonTerra is well cashed up with over $5 million in cash waiting to be spent on an aggressive drill program and resource update on both major assets. In addition, at the end of the February quarter there were over 12 million warrants outstanding at an average price of $0.26 that are all solidly in the money. I would expect them to be exercised over time providing an additional $4 million in cash.

If you subtract the $5 million in cash from the $33 million market cap, investors are getting gold in the ground for under $20 an ounce and that isn’t going to last for long. They are going to increase their resource ounces and I expect as this bull matures, mining companies will begin to value those ounces a lot higher.

BonTerra is a sleeper that has not made it onto the radarscopes of retail investors but I expect them to shift gears soon and be providing a lot of solid information about drill results and plans. I liked the story enough to go out in the open market and buy shares. BonTerra is an advertiser and naturally I am biased. Do your own due diligence.

BonTerra Resources
BTR-V $.405 (Sep 12, 2016)
BONXF OTCBB 84.1 million shares
BonTerra Resources website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.

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Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: BonTerra Resources Inc. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. BonTerra Resources Inc. is an advertiser of 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) 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. 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) Statements 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) 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/article until after it publishes.

( Companies Mentioned: BTR:TSX.V, BONXF: US, 9BR:FSE,
)

Precious Metals Sector Downside Target on Friday’s Market Rout

S&P 500 Index 6-month

Technical analyst Clive Maund assesses the precious metals landscape after Friday’s broad market selloff, and offers strategies for precious metals investors.

After what happened on Friday, many Precious Metals sector investors are naturally concerned about the effect of further heavy losses in the broad market on the sector. Let’s now review Friday’s action, starting with the broad market itself, before moving on to consider the likely impact on the PM sector.

After almost two months of quietly drifting sideways, the ground opened up beneath the broad market on Friday, as we can see on the 6-month chart for the S&P 500 index below. It gapped down at the open and plunged by 2.45%, heading ever lower as the day unfolded—there was not even the customary bounce in the last hour of trading.

This was predicted back on 1st September when we had correctly identified what kind of pattern was forming, in the article Complacency Rife as Very Dangerous Pattern Completes in S&P500, a Dumpling Top, although at that time it was not known what sort of collateral impact this would have on the PM sector. This was a severe and decisive breakdown and there was almost no place to hide—most everything tanked, with the exception of the dollar and some obscure paper of the Czech Republic, I believe. Bonds plunged and yields rose, and it is thought that this may mark, at long last, the start of a rate tightening cycle, necessary to the survival of a number of banks. Of course, the rate rises, should they occur, can only be minuscule, otherwise the entire system will implode. If it does mark the start of a tightening cycle, then bonds and stocks are in for a really rough ride.

The decisive breakdown in the stock market on Friday probably marks the start of a severe downtrend. How far will it drop? It should drop, in short order, at least to the 2030–2040 level, where there is support, and could easily continue lower to the next support level in the 1990–2000 area. This latter objective is made more likely by the top pattern also having the attributes of a Tower Top, where the sharp rise out of the June lows to form the left side of the tower is now mirrored by a precipitous decline to complete the right side of the tower. This drop, should it occur, will probably be the curtain raiser on a long and brutal bear market that has been kept at bay for years now by Federal Reserve and government meddling.

If such a drop occurs in the broad market in coming weeks, what will be the effect on the PM sector? We have already seen the PM sector suffer quite severe collateral damage during Friday’s mad scramble for the exits. While it doesn’t look all that much on the 1-year chart for GDX (Market Vectors Gold Miners ETF) shown below, partly because the PM sector is much more volatile, the losses in the PM sector were double the losses in the broad market, not a good sign; while the S&P 500 Index fell by nearly 2.5%, the PM sector fell by over 5%. This means that it is reasonable to expect further steep losses in the PM sector if the broad market continues to tank as expected. How far will it drop?—probably to the zone of strong support on the GDX chart in the $21–$22 zone. While that might not look all that much from the current $26.4, it will involve a good many stocks showing further heavy losses.

With this move the correction should end, and here it is important to note that such a drop would not cause any technical damage, since GDX (and PM stock indices) would only be dropping to their rising 200-day moving averages. On the contrary, by rebalancing sentiment and shaking out the weak, it will set it up for the next big up-leg. After a big plunge, the stock market will probably grind lower in a more measured manner, whereupon the PM sector is likely to go contra-cyclical and rally. This correction now appears to be taking the form of a classic 3-wave A-B-C correction as shown on the chart, and the C-wave to the support should mark the end of it.

GDX Market Vectors Gold Miners

How should holders of PM stocks handle this correction? Most important of all is realizing first off that it is only a correction, and having an idea of where it is likely to end, as set out here, should help. There are several ways to handle it depending on what type of investor or trader you. One approach is to sell holdings now, assuming the sector doesn’t open heavily down on Monday, with the aim of buying them back when GDX drops into the support zone—this approach risks being left stranded if the sector turns up from here. Another is to sit tight and tough it out, in the knowledge that prices will recover again, once the next major up-leg gets started. But perhaps the best approach for those set up to use this strategy, given that we have a good idea of the downside target, is to insulate your positions from loss using Puts. If the Puts are sold for a profit once GDX drops into the support, and the sector subsequently recovers as expected, so that there are no losses in the stocks, the Puts will have provided a windfall profit.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosures:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the content preparation so the author could speak independently about the sector. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) 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.

Charts provided by Clive Maund

Correction in Gold and Silver Markets Continues

chanspdr

Technical analyst Jack Chan charts the latest moves in the multiweek correction in the gold and silver markets.

Our proprietary cycle indicator remains down.

Our short position was stopped out at break-even; stay neutral for now.

chanhui
Our ratio remains on sell signal.

chanspec
Speculation remains near the all-time high.

chan4
Gold stocks as represented by $HUI are on a major buy signal, but with the cycle down, a multiweek correction is in progress. Investors should wait for the next cycle bottom to accumulate gold stocks or ETFs.

chansilver
Silver is on a long-term buy signal, and long-term signals can last for months to years, more suitable for long-term investors.

chanSLV
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.

Summary
A bull market in gold and silver has been confirmed, but the cycle is down and a multiweek correction is in progress. Caution is advised.

Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.

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Disclosure:
1) Statements and opinions expressed are the opinions of Jack Chan and not of Streetwise Reports or its officers. Jack Chan is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation or editing so the author could speak independently about the sector. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) Jack Chan: We do not offer predictions or forecasts for the markets. What you see here is our simple trading model, which provides us the signals and set-ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
3) 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.
4) 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.

Charts courtesy of Jack Chan

If You Want to Own Only Two Gold Stocks, Buy These

The year’s strong performance of most gold stocks has left newcomers wondering what to buy, says money manager Adrian Day. In such circumstances, he believes investors are better off paying up for quality than looking for something “cheap” down the food chain. Day reviews two favorite gold companies, one large, one small, that he says give broad exposure to the sector.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE 71.68) is the bluest of blue-chip gold companies, an originator of the royalty model for the gold industry. Royalties, and their cousin streams, provide exposure to gold mining without the high costs and risks of mining, but with leverage and dividends, unlike bullion. They are my favorite way to invest in the sector for more conservative and longer-term investors, though no one would confuse the leading royalty companies with “Graham and Dodd”-type value investments.

Record revenues
Franco continues to perform well, with record ounces and revenues (up 38%) in its latest quarter, only partly due to the addition of two major streams, from Antamina and Antapaccay copper mines. The balance sheet remains very strong, with debt taken on last year for stream acquisitions now paid off; there is $226 million cash plus $1 billion in available credit lines.

Currently about 94% of the company’s revenues come from precious metals (of which 72% is gold). Its large portfolio has seen increased exploration activities as the price of gold has recovered.

But is it cheap?
One could argue that Franco is trading at its fair value, and as large existing holders we would wait for better prices before adding to positions. However, Franco has a habit of providing consistent growth, with fair value constantly increasing. Yes, Franco (they said) was overvalued at $40 in mid-2015 and at $30 in 2011 and at $20 in 2009. I have often said that if one could buy only one gold company, and lock it away, the choice would be Franco without question.

The company has now instituted a DRIP program, available to U.S. holders, whereby dividends can be automatically reinvested, at a 3% discount to the market, making it a great vehicle for long-term investors. The recent drop in the stock price, from an early-July high over $80, presents a good opportunity to add to positions for those underweight.

Methodical, disciplined work generates success
Midland Exploration Inc. (MD:TSX.V 1.15) is our favorite exploration company. Following the prospect-generator model in Quebec, it continues to acquire land, generate prospects, and make joint venture deals.

It has land in all the key areas in the province, with a large land package in the high-potential James Bay area (the site of Virginia’s Éléonore discovery). Its partners include companies such as Teck Resources Ltd. (TCK:TSX; TCK:NYSE), Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) and SOQUEM, a subsidiary of Ressources Québec; its latest deal is a 50/50 joint venture with Osisko combining land and expertise (including the former Virginia exploration team) on land in the Cheechoo area (an active area in James Bay). Most of its joint-venture agreements have already been renewed, indicating some success. It has continued making discoveries, such as recently at the nickel and PGE La Flame property, and strong gold showings at its wholly owned Willbob Project in the Labrador Trough. It has also just initiated an aggressive exploration program at the James Bay Éléonore Gold project, which is highly prospective.

Diversification and the necessary cash
In all, Midland has 11 active projects, including eight joint ventures, with a $5 million 2016 exploration budget. With over $15 million the bank, it has a rock-solid balance sheet that puts it in a position to do sufficient initial exploration on its projects to get the best deals from partners, and also to fund opportunities that arise without going back to market.

All in all, with the land, balance sheet, partners, and top management, Midland is well positioned for discovery and success. Few are better positioned, and none with such broad exposure to different metals and different partners.

What kind of investor are you?
With top managements and strong balance sheets, these two companies offer solid cash flow from Franco’s royalties as well as leverage from that company’s pipeline and Midland’s exploration; they offer exposure to a broad range of properties and other companies—Franco with royalties or streams on over 30 producing mines and over 300 projects in various stages of development, with partners including Barrick Gold Corp. (ABX:TSX; ABX:NYSE), Newmont Mining Corp. (NEM:NYSE), Goldcorp Inc. (G:TSX; GG:NYSE) and Glencore International Plc (GLEN:LSE); and Midland with joint-venture or option agreements on eight different properties with a range of partners. They also offer exposure to multiple resources: for Franco, PGMs, oil and copper, in addition to gold; and for Midland, base metals, rare earths and PGMs, as well as gold.

Buy these two and put them away for the duration of the bull market. Some may do better with constant trading from one hot thing to the next, but few will do as well and let you sleep at night. Hitching a ride with the best managements is as close to a sure thing as one gets.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:

1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Franco-Nevada Corp. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Franco-Nevada Corp. and Midland Exploration Inc. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. 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) Statements 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/article until after it publishes.

( Companies Mentioned: FNV:TSX; FNV:NYSE,
MD:TSX.V,
)

Avrupa Minerals Is On Sale for a Month

Bob Moriarty of 321Gold profiles Avrupa Minerals and explains why the stock is on sale for the next five weeks.

Napoleon supposedly maintained that he would rather his generals be lucky than skillful under the interesting theory that you can beat skill but you can never beat luck. Avrupa Minerals Ltd. (AVU:TSX.V) has been displaying a lot of skill with their latest drill results in Kosovo of 3 meters of 38.7 g/t Au in hole SLV058. As luck would have it, potential investors will have the chance to buy Avrupa on sale for the next five weeks due to warrants expiring soon.

Avrupa is a Canadian junior focused on projects in Europe. They use a project generator model. They pick up likely looking projects that fit their model and vend them to partners who get a big piece of the project and spend all the money. Avrupa keeps a small piece of each project but doesn’t spend money.

In the very earliest stage of new bull markets the medium size in-production companies go up the most. A good example would be Silvercorp that sold for $0.60 a share in January and is now $4.54 for a 650% gain in 8 months. Project generator companies are among the last to get on board the train because their deals take years to show benefits.

Avrupa, however, has the advantage of being around for some time and has deals now showing the fruits of investment during the wave of terror in the junior mining space. As markets improve, project generators will regain the respect and valuation they had back in 2011 at the top of the market. With just over a $10 million market cap, Avrupa has a lot of room to run.

Avrupa has a joint venture with Colt Resources called the Alvalade copper/gold project in the Iberian Pyrite Belt. They have a tungsten project in the north of Portugal with Blackheath Resources named the Covas Joint Venture. And the superb gold assays just released came from the Slivovo gold property in central Kosovo. Avrupa also has 85% of a gold project in what was East Germany in the ancient Erzgebirge mining district. Mining took place in Erzgebirge as early as 2500 BC and provided much of the tin used in the Bronze Age.

The single most significant project right now has to be the Kosovo Slivovo Gold property. An Australian company named Byrnecut International Ltd. will fund the project to a PFS (prefeasibility study) to earn 85% of the project. The PFS must be complete by April 10, 2017, to finish the earn-in. The local company owned by Avrupa is named Peshter Mining and it is completing all the requirements for a mining license that will be submitted by Q2/Q3 of 2017.

While the Slivovo project only has a 43-101 gold resource of about 100,000 ounces, the recent drilling has opened up an entirely new zone of high-grade mineralization. Avrupa’s partner is a major Australian mining contractor who is doing the PFS and an updated resource. The general plan is to start with an open pit mine and mill and go underground after more drilling. The partner has spent in excess of 3.5 million Euros so far. With a 40% unemployment rate in Kosovo the government is going out of their way to make permitting a smooth process. The required infrastructure is nearby.

The 2nd most advanced project of Avrupa is called the Covas Tungsten property and is located some 100 km north of Porto in the north of Portugal. Avrupa is in a joint venture with Blackheath Resources. Blackheath has so far earned 75% of the project. In April of 2015 the company released an updated 43-101 that showed an in-ground resource of about $200 million of tungsten. The specific grades and tonnage are in the report above but there was a mine at Covas before and with that value of tungsten, there probably will be a mine again.

The downfall of project generator companies is that it’s really hard to put a value on the company. Avrupa has three major joint ventures now that are progressing and an additional six in the wings ready for either the company to advance themselves or to JV out. Rarely does a company holding multiple projects get much value beyond their first project and perhaps half the value of the second and none for the rest of the stable. So valuation is relative and in the mind of the beholder.

I don’t know what Avrupa is worth. The company has sold for as little as $0.075 for one day earlier in March and hit a high of $0.25 in mid-August. I’m going to presume both those prices reflected the general market for juniors this year with the low in March and the high five months later. Many juniors have gone up 200–300% from their lows so presumable the $0.25 price in August reflected a reasonable price. But and this is a big BUTT, the company has about 2.5 million unexercised warrants outstanding at $0.15 that expire on September 24th of this year. That’s an artificial roof for the stock. Every time the stock gets up to $0.17 or higher, warrant holders are going to be dumping shares to exercise warrants, (1) to make a few cents and (2) to put some much needed money in the treasury. And there are another 2.8 million warrants at $0.15 due to expire in October.

If the company has any sense and I know management and I know them well, they will be putting out all the good news they can over the next five weeks. Meanwhile my opinion is that the company shares are on the sales table and come the middle of October there will be a reasonable bounce as soon as the selling pressure is lifted.

Avrupa is an advertiser and I am biased. Their presentation is excellent and informative and should be viewed. The stock is fairly tightly held with over 50% in the hands of about eight investor groups and management. Please do your own due diligence.

Avrupa Minerals
AVU-V $.15 (Sep 09, 2016)
AVPMF OTCBB 69.7 million shares
Avrupa Minerals website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.

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Disclosure:
1) The following companies mentioned in the article are sponsors of Streetwise Reports: Avrupa Minerals Ltd. The companies mentioned in this article were not involved in any aspect of the article preparation 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.
2) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. Avrupa Minerals Ltd. is an advertiser of 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
3) Statements 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) 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/article until after it publishes.

( Companies Mentioned: AVU:TSX.V,
)

Three Mining Royalty and Streaming Opportunities

Mining is a difficult business even in a rising metal price environment. As investors it makes sense to find companies that can generate leverage from the rise in precious metals while mitigating at least some of the risks associated with mining. Ben Kramer-Miller, chief analyst of miningWEALTH, says one of the best ways to do this is to invest in royalty and streaming companies.

Royalty and streaming companies provide capital to mining companies in exchange for the right to receive revenues correlated to the mine’s metal output (royalties) or to buy a portion of the mine’s metal output at an agreed upon price (streaming). Mining companies agree to these terms because they need capital for various reasons. Sometimes a mining company will sell a stream or royalty as a part of a financing package. Other times mining companies need capital and sell royalties/streams on operating mines.

Several companies operate almost exclusively through this business model, and it has been incredibly lucrative over the long term. The three big players—Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) and Silver Wheaton Corp. (SLW:TSX; SLW:NYSE)—have all generated above-average returns in the long run, having outperformed mining stocks, broader stock market indexes and the underlying precious metals. There are a couple of reasons for this. First, royalty and streaming companies make money in virtually any metal price environment, including during downturns. Meanwhile, all but the most efficient mining companies take large write-downs, are forced to sell non-core assets, and issue shares at inopportune times in order to stay afloat. Royalty companies were very aggressive in making acquisitions last year, including providing much-needed capital to companies such as Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE). This speaks to their strength, and the deals made during the bottoming phase of the cycle will serve to generate strong cash flows on the inevitable upturn, which seems to have commenced late last year.

Silver Wheaton Corp.’s cash flow will be bolstered through mine expansions at two of its biggest streaming assets—Salobo and Peñasquito—over the next few years.

Second, royalty and streaming companies make a one-time payment in order to acquire their royalties and streams. Mining companies have to continually put capital into their projects in order to replace/increase reserves and to maintain equipment. As a result, any additional discoveries that are made benefit royalty and streaming companies at no cost. A good example of this is the stream that Silver Wheaton owns on Primero Mining Corp.’s (P:TSX; PPP:NYSE) San Dimas mine, which it purchased more than 10 years ago, back when Goldcorp Inc. (G:TSX; GG:NYSE) owned the project. Silver Wheaton now generates ~50% of its initial investment on an annual basis, and the investment has already more than paid for itself. Primero was stuck with the exploration and mill expansion bills while Silver Wheaton reaped substantial benefits as a result.

This is a phenomenal state of affairs, but there is a catch: the market has caught on and investors realize the potential of the royalty/streaming model. Mining companies have caught on as well. As a result, royalty and streaming companies now trade at fairly high multiples to cash flow, and mining companies are pricing the aforementioned advantages into their models, so that streams and royalties have become much more expensive.

Is there a way for investors to benefit from this powerful business model without overpaying for investments?

The good news is that there is. Here are three ideas.

First, while the “big three” royalty/streaming companies aren’t cheap, they are not valued equally by the market. Silver Wheaton is inexpensive relative to its peers on a price-to-operating-cash-flow basis. Shares trade at ~20x forward cash flow, which sounds high. But the company’s cash flow will be bolstered through mine expansions at two of its biggest streaming assets—Salobo and Peñasquito—over the next few years. The company also has exposure to some of the most efficient mines in the world, which will likely not shut down in the event of a commodity price slump. Such exposure makes up the bulk of Silver Wheaton’s portfolio.

Second, in an upward-moving gold market it makes sense to assume more risk, and one way do this in royalty/streaming is to invest in Sandstorm Gold Ltd. (SSL:TSX; SAND:NYSE.MKT). Sandstorm did not have exposure to the high-quality assets and low-cost producers that Silver Wheaton did during the downturn. In fact its cornerstone stream—on Luna Gold Corp.’s (LGC:TSX; LGC:BVL) Aurizona mine—stopped generating cash flow as that mine had to shut down. Shares were hit hard as a result. However, Sandstorm was also very aggressive in the downturn, and going into a market upswing the company is positioned to grow its cash flow meaningfully. Given that it has exposure to lower quality assets than the big three, and given its rocky history, Sandstorm shares trade at a discount to its peers: closer to 15x operating cash flow. This is set to grow as various development projects go into production, and also as Aurizona goes back into production, a real possibility over the next few years.

Terraco Gold Corp.’s goal to become a pure-play junior royalty company makes it stand out among its peers.

Finally, the best opportunities lie in junior royalty/streaming companies with exposure to high-quality assets. In a recent article we singled out Terraco Gold Corp. (TEN:TSX.V; TCEGF:OTCPK) as one such opportunity. Terraco Gold stands out given its very low market capitalization and its royalty on the multimillion-ounce Spring Valley project in Nevada. The project is held by a well-capitalized firm called Waterton Global Resource Management, which just spent millions of dollars to acquire it from a bankrupt Midway Gold and a desperate Barrick Gold. Spring Valley is currently not producing, and as a result we believe the market is overlooking Terraco’s upside potential. However, we calculate that Terraco trades at less than 6x future operating cash flows. While this figure is contingent upon Spring Valley meeting certain production figures, the sharp valuation gap between Terraco and its more advanced royalty/streaming peers makes it attractive.

We note that there are stark differences between junior royalty companies, the primary one being that many are junior companies that happen to own royalties. Companies such as Almadex Minerals Inc. (AMX:TSX.V) or AuRico Metals Inc. (AMI:TSX) may own quality royalties on Ixtaca and Young Davidson, respectively, but these companies emphasize exploration and project development, the cost of which diminishes the compounding power of the royalty model (i.e., royalty income being used to further invest in royalties, whose cash flow in turn can further be invested, and so forth). It also exposes investors to some of the risks we are trying to avoid by investing in royalty/streaming companies. Terraco’s goal to become a pure-play junior royalty company makes it stand out among its peers, and this in turn makes it an attractive acquisition target for any of the larger royalty/streaming companies mentioned above.

The royalty/streaming model’s success has made it more difficult for investors to get quality exposure to the sector without overpaying for investments, although we’ve seen that it is not only possible but also potentially lucrative. The largest, most well-known names will benefit from a bull market in gold and silver, but some of the smaller companies that don’t have multiple low-risk cash-flow sources (if they have any at all) can potentially outperform. Investors who are able to locate royalty companies that fly under most investors’ radars will be best positioned to profit from the sector.

Ben Kramer-Miller is the chief analyst at miningWEALTH. He is well respected for his unique ability to find under-the-radar precious metals opportunities, as well as for his extensive research into rare earth elements and other critical materials. His research has been featured by Nasdaq, Kitco, Mining.com, The Financial Post, The Globe and Mail, Investing News Network and RealClearDefense, among others.

Read what other experts are saying about:

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Disclosure:
1) Ben Kramer-Miller: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Silver Wheaton Corp. and Sandstorm Gold Ltd. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Silver Wheaton Corp. and Terraco Gold 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) Statements 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/article until after it publishes.

( Companies Mentioned: SSL:TSX; SAND:NYSE.MKT,
SLW:TSX; SLW:NYSE,
TEN:TSX.V; TCEGF:OTCPK,
)

Post-Summer Outlook for Metals Investing

Balltruck_600

Precious metals expert Michael Ballanger explains his strategy for playing the gold-to-silver ratio and discusses the post-summer outlook for metals investment.

The heat I took last week over my “Back up the Truck” call was somewhat comedic in that every guru out there was urging “extreme caution.” Meantime, what was I telling you that I was doing? I was buying every gold/silver share and call option that I could afford in the last two weeks of August.

Here it is: This graphic was called “Back up the truck!” Gold was $1,315 when I created it and now it is $1,354. The blogosphere went berserk with comments like “Kiss of Death,” and “Top Talk,” and “Wrongway Corrigan,” but a funny thing happened on the way to the pillory post—everything reversed to the upside and the miners and the metals have now completely worked off their oversold conditions and have reclaimed their respective 50-daily-moving-averages (which chart gurus LOVE to talk about). The blogosphere is now eerily quiet, and my inbox is strangely devoid of snarky emails. Go figure. . .

Back Up the Truck

The newsletter gurus were all slamming me for my total and unequivocal rejection of the art of “technical analysis” when it comes to gold and silver. “Let’s go to the charts!” opined one very popular guru as he told his listeners, “Don’t blame me!” if the U.S. employment report comes in “gold and silver hostile.”

Well—it did come in hostile, because the algobots had to juice the S&P 500 up several dozen points in order to offset the massive selling in the futures. Gold and silver were seriously oversold based on a 26 RSI (relative strength index) for gold. With the RSI for the GDXJ at 31 (see the chart at the top of the story), I decided to go “ALL-IN” on Friday morning, right after the (lack of) jobs report came out, and it was NOT because of some technical “buy signal.” It was because of this famous line from the pits of the old Chicago Board of Trade: “When they’re yellin’ you should be sellin’, and when they’re cryin’, you should be buyin’!” Well, “THEY” were cryin’ big time last Friday. End of story.

You all know me well enough that after 40 years trying to decipher markets and the psychology driving them, I rarely back away from an important call, and when the opportunity arises, I usually LUNGE at it. I don’t tiptoe at it for fear that I might lose “subscribers” (because I have none), and I don’t try to hedge my comments with a multiple of “If this or that, then that or this” disclaimers. I simply email out missives with graphics like the one you see posted above.

If I’m right in my assessment of the global financial landscape, the intermediate trend for gold and silver has now kicked in and should draw gold toward that big downtrend line drawn off tops made in late 2011 and late 2013. However, back in Q1, when I penned the missive “Patiently Climbing Aboard the New Golden Bull” with gold slightly north of $1,100 and the HUI at 115, that overhead resistance was up at around $1,450. With the passage of time, today it is right at $1,400 and explains why the Cretins were pulling out all of the stops to cap the rallies back in July and August.

Ballgold1

As for silver, between now and the end of the year I see the gold-to-silver-ratio under 60, and if I get $1,400 gold, I should get silver at $23.33. However, once we see the intermediate-term trend kick in with a breakout through that dastardly downtrend line at $1,400, gold should head in a beeline to the April 2014 breakdown level at $1,525, and the GTSR (gold-to-silver ratio) should be plunging, with silver outperforming gold and junior silver companies on fire.

With the 2016 boating season now winding down and with kiddies all back to school, I see the metals dominating the financial landscape and volatility escalating. The “long gold/short stocks” trade was the one I had on in late 2015, and it worked magically until this summer when the post-Brexit panic was contained by the global central banks. The stock markets have not been on a tear because they reacted to some technical “buy signal” and they didn’t “stair-step” up the “Wall of Worry” to record highs on the S&P and Dow because of some “technical pattern.” They moved to new highs because a directive was handed down from the U.S. Treasury (Working Group on Capital Markets) to 33 Liberty (NY Fed), ordering them to levitate stocks while the Bank of Japan, the Bank of England and the European Central Bank all followed along with similar orders.

For these reasons, I’ll be doubly diligent in trying to detect another capping exercise up around $1,380, but I think the bullion bank behemoths will be too concerned with the deteriorating global macro environment to concern themselves with the gold market. So the dips should be bought in gold and silver and the miners, with the best timing tool seeming to be RSI. Forget about podcasts and “the charts,” and just hold onto your positions and add with RSI under 35 and reduce when it is north of 70. It will save you money.

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.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation or editing so the author could speak independently about the sector. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) 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.
3) 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.

Donald Trump Is Correct In Not Releasing His Tax Returns

September 7, 2016 By Dudley Pierce Baker Retired IRS Agent Founder-Editor http://JuniorMiningNews.com http://CommonStockWarrants.com My comments are not intended to be a political statement in any way…. It’s just common sense. Much of the media and Hillary Clinton continue to badger Trump for not releasing his tax returns and they will probably continue to do so. If Mr. Trump’s tax returns are currently under audit as seems to be acknowledged in the media, then we have a totally different situation. Could Trump release his tax returns, of course he could, but why in the hell would he do so? You might ask, ‘what is the big deal?’ Let me tell you. As a retired IRS Agent, I was the lead agent, team coordinator, on some of the largest corporations in the United States for many years. If Trump is currently under audit, he would be foolish, in my opinion, to release his tax returns. … Continue reading

Four Resource Juniors Awaiting Developments

Money Manager Adrian Day profiles four junior resource companies in his portfolio that he holds while he awaits new developments.

Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE 1.63) continues to advance its Ixtaca project in Mexico, and is on track for a prefeasibility study (PFS) by year-end. We expect improved economics from the earlier economic studies. Drilling continues to see attractive intercepts; the company is well financed with almost $14 million in cash. A favorable PFS could start to see interest in the project as an acquisition. We are holding; the stock has jumped from under $1.30 in the last week, and there’s no need to chase it.

Almadex Minerals Inc. (AMX:TSX.V 1.01) is the exploration spin off from Almaden. It has seen exploration success recently with a good hole at the El Cobre property, a large, though low-grade deposit. It also has a strong balance sheet. The stock shot up after the drill hole referred to above was released, moving from 40 cents at the end of July; it was under 20 cents at the beginning of the year. We like the management team, the business plan, the balance sheet and the range of properties, and consider this exploration company to have as strong a shot at success as any. However, given the strong stock move and the valuation, over $40 million market cap, we are holding but not buying at this level.

Lack of strong news makes these holds
Cartier Resources Inc. (ECR:TSX.V 0.155 x 0.18) has achieved some positive property acquisitions and exploration results, but the ongoing dilution at low prices make it difficult for the stock to move. We are holding.

Reservoir Capital Corp. (REO:TSX.V 0.085 x 0.10) has replaced its president, and announced delays in completing its annual financial statements, a disturbing sign given recent developments and lack of cash. Reservoir had a letter of intent with an Italian company to sell its Brodarevo hydro project in Serbia, but the acquiring company failed to complete its due diligence during its exclusive period. The LOI has now expired and Reservoir said it was now working with other companies that had expressed interested. We are holding—an acquisition or other deal would see a multiple on the stock price—but the company essentially has no cash and needs to complete some transaction in the near term. Worst case is that Reservoir becomes a shell, with a strong share registry and a management looking for a project. We are holding but absent news are not buying.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:

1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Cartier Resources Inc. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Almaden Minerals Ltd., Almadex Minerals Inc, Cartier Resources Inc. and Reservoir Capital Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. 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) Statements 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/article until after it publishes.

( Companies Mentioned: AMM:TSX; AAU:NYSE,
AMX:TSX.V,
ECR:TSX.V,
REO:TSX.V,
)

Despite Downturn, Silver Market Looks Positive

maundarithmaic

Technical analyst Clive Maund charts the recent downturn in silver, but also sees reason to be optimistic about the market going forward.

Silver has reacted back as predicted in the last update about a month ago. On its 9-month chart, above, we can see that it broke down from an intermediate top, as expected, back toward the important support shown. But on Friday it had a good rally, which suggests that it may not drop that far, and could turn up again here.

Overall this is a positive-looking chart and the main question is which uptrend channel it adheres to. As we can see, there has been a significant price/time correction since early July that has served to completely unwind the earlier overbought condition, so Friday’s turnaround could mark the beginning of the next up-leg. Even if it should head lower again soon, it is thought unlikely that it will drop below the support at and below $18.00, especially as it is underpinned by an important channel support line. Should it drop that low, silver would look most attractive.

The long-term, 10-year arithmetic chart gives us a much broader perspective. This is actually a very positive chart overall, for as we can see silver’s bear market phase from 2011 has definitely ended. However, it has risen quite sharply in recent months to arrive at a zone of significant resistance, so the current reaction is quite normal and should set it up to break above this resistance and continue higher.

The silver optix, (optimism) readings have eased significantly from high levels that made further gains difficult. The current readings at about 56% make renewed advance much more possible.

maundsilveroptix
Chart courtesy of www.sentimentrader.com

COTs and Hedgers positions continue to run at a high level and be a cause for concern, although they have eased a little in recent weeks. Such readings usually, but not always, lead to a substantial drop, so we should keep this in mind. On rare occasions they stay high as the uptrend continues. Therefore current readings won’t necessarily prevent a rally here, but can be expected to act as a restraining influence especially if they get even more extreme.

maundhedge
Chart courtesy of www.sentimentrader.com

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosures:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the content preparation or editing so the author could speak independently about the sector. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) 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.
3) 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/article until after it publishes.

Charts provided by Clive Maund