Silver Elevator Keeps Going Down – Precious Metals Supply and Demand

By Keith Weiner

Frexit Threat Macronized

The dollar moved strongly, and is now over 25mg gold and 1.9g silver. This was a holiday-shortened week, due to the Early May bank holiday in the UK.

The lateral entrant wakes up, preparing to march on, avenge the disinherited and let loose with fresh rounds of heavy philosophizing… we can’t wait! [PT]

The big news as we write this, Macron beat Le Pen in the French election. We suppose this means markets can continue to do what they wanted to do before the threat of Frexit, shutting off trade between France and the rest of Europe, and who knows what else Le Pen was plotting to do to the French people.

This will be a short Report this week, as Keith has been working hard on a paper to address the question of which metal will have the higher interest rate. Look for that tomorrow.

Fundamental Developments

Below as the only true look at the supply and demand fundamental of the metals, but first, the price and ratio charts.

Prices of gold and silver – click to enlarge.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It had another major move up this week, after a major move up last week and one the week before.

It now sits at the same level it was a year ago. If it breaks above 76, then the next resistance looks to be 80.

Gold-silver ratio – click to enlarge.

For each metal, we will look at a graph of the basis and co-basis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and co-basis in red.

Here is the gold graph.

Gold basis and co-basis and the dollar price – click to enlarge.

If we didn’t know better, we would say that as fast as the co-basis (i.e. scarcity, the red line) ran up, the price of the dollar (which is the inverse of the conventional view of the price of gold) ran up faster.

Actually, that is accurate. And consequently, our calculated fundamental price of gold fell over twenty bucks (though it’s still more than twenty bucks over the market price).

Now let’s look at silver.

Silver basis and co-basis and the dollar price – click to enlarge.

In silver, the same phenomenon occurred though to an exaggerated degree.

Last week and the week before, we asked:

Some speculators definitely got flushed. However, the question is how many and how much?

Then we said:

Clearly it happened to more of them this week. And, unless the fundamentals get stronger, it is likely to flush even more leveraged futures positions. Our calculated fundamental price fell three cents this week, now a buck thirty under the market.

It happened to …read more

Source:: Acting Man

The post Silver Elevator Keeps Going Down – Precious Metals Supply and Demand appeared first on Junior Mining Analyst.

Renamed Joy Global officially launched as Komatsu Mining Corp

By analyst

By Andrew Topf

Executives, elected officials and hundreds of Milwaukee-area employees today celebrated the official launch of Komatsu Mining Corp., a global mining equipment and services company operating as a subsidiary of Komatsu Ltd., based in Japan.

Komatsu America Corp., a subsidiary of Komatsu Ltd. completed its $3.7 billion acquisition of Milwaukee-based Joy Global Inc. on April 5, and at that time announced its intention to rename the 133-year-old company Komatsu Mining Corp.

“These kinds of mergers always produce some anxiety and concern going forward, but we didn’t buy this company to close it up. Quite the contrary. There’s huge experience here, more than 100 years worth. We want to capitalize on that and make it grow”: Komatsu Mining CEO Jeffrey Dawes

Before acquiring Joy Global, whose shares have been delisted from the New York Stock Exchange, Komatsu only made surface-mining equipment, while Joy was the largest independent manufacturer of machines used underground.

The deal was Komatsu’s biggest-ever acquisition since it was formed in 1921. The two combined companies have some 60,000 employees worldwide.

Jeffrey Dawes, the new chief executive of Komatsu Mining Corp., told the assembled guests that Komatsu has no plans to close the Joy Global plant in Milwaukee, which has nearly 1,000 employees. In 2016 Joy Global laid off 130 employees at the same location as today’s ribbon-cutting ceremony attended by Wisconsin Gov. Scott Walker and Milwaukee Mayor Tom Barrett.

“These kinds of mergers always produce some anxiety and concern going forward, but we didn’t buy this company to close it up,” Dawes told reporters at a news conference. “Quite the contrary. There’s huge experience here, more than 100 years worth. We want to capitalize on that and make it grow.”

The merged company said it will continue to promote and invest in the Joy, P&H and Montabert brands.

“The P&H, Joy and Montabert products align perfectly with existing Komatsu offerings, allowing us to provide customers with a full set of solutions,” said Komatsu President and CEO Tetsuji Ohashi. “But it is the people behind the product lines that will truly make our integration a success. We are very excited to welcome more than 10,000 employees with deep knowledge and understanding of the mining industry, and a commitment to service and safety. This brings great opportunity for us to expand upon the direct service approach and, together, bring products to market faster, fully appreciated by customers.”

The post Renamed Joy Global officially launched as Komatsu Mining Corp appeared first on MINING.com.

…read more

Source:: Infomine

The post Renamed Joy Global officially launched as Komatsu Mining Corp appeared first on Junior Mining Analyst.

La Défense de l’Enlightenment

By Brian Maher

This post La Défense de l’Enlightenment appeared first on Daily Reckoning.

“Of course Marine Le Pen is going to win, and thank God… France needs Marine Le Pen… like America needed Trump to put some order in the White House and the country.”

Yeah. Well.

We did something Friday we’ve never done before…

We offered readers a free trade… compliments of the house… no subscription required on any of our fancy trading services.

If Marine Le Pen won yesterday’s election in France, the trade could have potentially paid up to 900% — in just a couple of weeks.

Pretty handsome.

Our reasoning: Le Pen was such a dark horse, such a bare possibility… that any intrepid soul willing to try his luck on her should reap a windfall.

But a ghost got into our machinery Friday afternoon.

And we couldn’t push the issue out in time for readers to book the trade.

Just as well, really.

The delay spared the reader who authored the above prediction any temptation to put his money where his mouth was.

Or anyone else whose competitive spirits we may have tickled.

Of course, Madame Le Pen took a trouncing yesterday.

Her opponent, centrist “independent” Emmanuel Macron, ran away with it, 66%-34%.

And the trade is down nearly 90% since Friday.

There’s still a chance it’ll rebound to near breakeven by May 19, when the option expires.

But no 900% gain. Which is something of a relief to our troubled conscience. Imagine coming on today trying to explain how our tardiness cost you a shot at 900%?

(Would you have made that trade Friday afternoon had you received the issue in time? Let us know. And be honest! dr@dailyreckoning.com.)

Jim Rickards defied consensus by predicting both of last year’s shockers — June’s Brexit and November’s election of Donald Trump.

But Jim doesn’t shock for the sake of shocking. And this time he found himself swimming in the mainstream, paddling right alongside Mr. Establishment:

“Let me be perfectly clear,” Jim came out flat-footed in Friday’s reckoning. “I fully expect Macron to win this Sunday. I think the polls have it right this time.”

No hems. No haws. No ifs, ands or buts.

How was today’s market reaction to Macron’s win?

In a word… subdued.

The Dow was up a slender five points. The S&P couldn’t even scratch out one full point today. The Nasdaq couldn’t manage two.

Macron’s win was already “baked in the cake,” as the saying has it.

Any surprise would have been on the downside.

And VIX — Wall Street’s “fear gauge” — relaxed to its lowest level today since February 2007.

Over 10 years ago.

On the other hand, the euro notched a six-month high against the dollar today — $1.093.

No surprise there.

Perhaps more surprising is gold. The “safety trade” coughed up just 70 cents today. We suspected worse.

Now the larger question…

Is the great populist tide that swept Britain out of the European Union and Donald Trump into the White House… receding?

The Netherlands rejected a nationalist candidate in March. Now France has done the same.

Bloomberg bleats (or gloats?) that “Macron’s decisive triumph over the anti-euro Marine Le Pen …read more

Source:: Daily Reckoning feed

The post La Défense de l’Enlightenment appeared first on Junior Mining Analyst.

Warning Lights Flashing as GM and Ford Slump

auto-industry-subprime-loans-1

By Samuel Taube

Almost every investor knows the story of the Detroit auto industry collapse in the late 2000s.

The Great Recession couldn’t have come at a worse time for General Motors (NYSE: GM), Ford (NYSE: F) or Chrysler (NYSE: FCAU). As the wars in Iraq and Afghanistan raged, oil and gas prices rushed upward. That decimated sales of Detroit’s flagship products: giant trucks and SUVs.

Given that the auto industry suffered in a time of high oil prices, you’d think that it would be doing great with today’s rock-bottom prices.

You’d be wrong.

Ford and GM shares plunged Tuesday after both automakers reported extremely disappointing April sales. Revenue growth has been slowing in the industry for three consecutive months now. And auto inventories are at their highest levels since the Great Recession.

What caused this new auto industry crisis, and how bad could it get? As we’ll see below, the problems that led automakers to this point are very different from the ones that led to the 2009 bailout.
The Industry’s Own Little Subprime Loan Bubble
In the late 2000s, Detroit nearly destroyed itself by focusing on gas guzzlers in a climate of rising oil prices. But the problems with today’s auto industry aren’t really related to vehicle design, nor gas prices.

In fact, the recent collapse in auto sales bears much more of a resemblance to the late 2000s housing crash.

Don’t panic – it’s not going to destroy the global economy. The auto industry is considerably smaller than the real estate sector. And the market for auto loans is a fraction of the size of the mortgage market. But size aside, the causes of these two downturns are remarkably similar.

In recent years, aggressive sales incentives and predatory subprime lending practices have created unsustainable sales expectations in the auto industry. Manufacturers, dealers and financiers have all played a part in flooding the market with cars… And now they can’t find enough buyers. Just replace “cars” with “houses,” and you’ve got 2007 through 2008 in a nutshell.

Part of this overselling phenomenon involves dealerships offering insane bargains to credit-worthy buyers. In this time of near-zero interest rates, car sellers can’t make much money from loans to buyers with good credit scores.

Instead, they’ve been trying to make up that money with sales volume. And they’ve been offering consumers zero-interest loans and deep discounts in an overzealous bid to move units.

The low interest rates have also incentivized dealers and financiers to double down on subprime loans, which can carry APRs north of 20%. The popular HBO show Last Week Tonight with John Oliver ran a segment about the subprime auto loan boom last summer.

As Oliver explained, these subprime loans rarely end well for the borrower or the lender. Borrowers have been defaulting on their loans at an increasing rate. And when that happens, their cars get repossessed and end up back on a used car lot, thus raising inventories.

Between the predatory lending practices and the unsustainable sales incentives, it’s no wonder that the industry can’t find enough new car buyers to sustain its pace.

[iu-adbox]
The …read more

Source:: Investment You

The post Warning Lights Flashing as GM and Ford Slump appeared first on Junior Mining Analyst.

The E.U. Is Not Going Away

By James Rickards

This post The E.U. Is Not Going Away appeared first on Daily Reckoning.

[Ed. Note: Jim Rickards’ latest New York Times bestseller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis, is out now. Learn how to get your free copy – click HERE. This vital book transcends geopolitics and rhetoric from the Fed to prepare you for what you should be watching now.]

Yesterday’s runaway victory of France’s pro-E.U. candidate, Emmanuel Macron, should put an end to talk about the end of the E.U.

I defied expert consensus twice last year by predicting Brexit and the election of Donald Trump. I was widely ridiculed on both occasions, but I was proven right.

But I don’t make predictions to grab attention or make headlines. They’re based on the actual evidence I see. And I also predicted that Macron would win yesterday, which was also the consensus view.

His opponent, Marine Le Pen of the National Front party, won 34% of the vote, to Macron’s 66%. It should be noted though, that the last time the National Front party made the final round of the election, it only received 20% of the vote.

So yesterday’s loss, while decisive, nonetheless represents a dramatic gain for the National Front party. And the populist, nationalist, anti-immigration story is not going away.

But the Euro as a currency is much more stable than people realize. Not only did many believe Brexit meant the demise of the European Union. They also believed it spelled the end of the Euro as a currency.

I was not among them.

Brexit was not about leaving the Euro, for example — it was never on the Euro in the first place. Britain remained on the Pound. It was about leaving the E.U.

But beyond the Euro, there’s something more fundamental you need to understand about the E.U.

The European Union is not primarily an economic project. It’s primarily a political project.

Does it have a lot of economic problems? Absolutely, from Greece to Portugal, Italian banks, et cetera. But its primary purpose is political.

Much has been made of Brexit. But the U.K. was never really a good fit with the E.U. to begin with. Besides being geographically separated from continental Europe, Britain is also culturally distinct. Further, it has a different legal system.

Many of the countries on the continent have what’s called a code-based system of law. In a code system, problems are addressed by writing rules. There’s practically a rule for everything, including how much wine a bartender can pour into a glass, for example. If a rule doesn’t adequately address a problem, they’ll write another rule. If that doesn’t solve it, they’ll write another and so on.

Contrast that with the U.K., which has a tradition of common law. Common law is different than code-based law. Yes, there are laws, rules and regulations in common law. Probably far too many. But judges have greater discretion under common law that lets them look past the actual letter of the law to achieve equitable …read more

Source:: Daily Reckoning feed

The post The E.U. Is Not Going Away appeared first on Junior Mining Analyst.

Daily Market Wrap – Mon 8 May, 2017

By Cory The VIX closing in to a 30+ year low

A boring day for the markets but the VIX did put in a 7% down move. Complacency continues to dominate. I also look at the daily chart for the USD which remains in a downtrend and does not show a lot of potential to break this downtrend. As for the precious metals… at least we didn’t see the stocks sell off. Already a better start than last week.

Download audio file (2017_05_08-Market-Wrap.mp3)

Click here for the most recent COT report presented by Scotiabank.

…read more

Source:: The Korelin Economics Report

The post Daily Market Wrap – Mon 8 May, 2017 appeared first on Junior Mining Analyst.

European Manufacturers on a Tear on Weaker Euro

manufacturing in major economies continues to expand
click to enlarge

Both the U.S. and China continued to expand at the start of the second quarter, though at a slightly slower pace than in March. U.S. manufacturing growth relaxed a little more than 2 percent, from 57.2 to 54.8, but it still remains at a high level in the six months following the presidential election. Chinese factories pumped the brakes in April, with growth slowing to a seven-month low.

Manufacturing on a global level continued to expand as well but, like the U.S. and China, at a slower pace. The index fell from 53 in March to 52.8 in April, with the one-month reading falling below its three-month moving average for the first time since April of last year.

Like clockwork, copper and oil were off last week. As I’ve

At the start of the second quarter, the eurozone’s manufacturing sector grew at its fastest pace in six years, climbing from 56.2 in March to 56.7 in April and marking the eighth straight month of expansion. Of the eight eurozone countries that IHS Markit surveys, only Greece failed to show any improvement during the month.

Growth was spurred by new orders, output and job creation, and companies are benefiting from both the historically weak euro and the European Central Bank’s ongoing stimulus, including low interest rates. Factory jobs are currently seeing one of their strongest upticks in the survey’s 20-year history.

Ahead of France’s presidential election this past weekend—polls heavily favored the victor, 39-year-old Emmanuel Macron, over far-right candidate Marine Le Pen—the country showed impressive momentum, rising from 53.3 in March to 55.1 in April. New orders grew at their sharpest pace in six years. Meanwhile, the United Kingdom’s manufacturing sector continued to expand post-Brexit, rising to a three-year high of 57.3.

click to enlarge

Both the U.S. and China continued to expand at the start of the second quarter, though at a slightly slower pace than in March. U.S. manufacturing growth relaxed a little more than 2 percent, from 57.2 to 54.8, but it still remains at a high level in the six months following the presidential election. Chinese factories pumped the brakes in April, with growth slowing to a seven-month low.

Manufacturing on a global level continued to expand as well but, like the U.S. and China, at a slower pace. The index fell from 53 in March to 52.8 in April, with the one-month reading falling below its three-month moving average for the first time since April of last year.

click to enlarge

Like clockwork, copper and oil were off last week. As I’ve shown a number of times before, the PMI can be used as a forecast tool for commodities and natural resource prices.

Last Wednesday copper lost 3.5 percent, marking the largest single-day loss since September 2015. The red metal ended the week at $2.53 a pound. Oil tumbled nearly 5 percent on Thursday to close the trading day at $45.48, a level we haven’t seen since December. On Friday it finished above $46 a barrel.

SALT Conference

Later this month I’ll be in Las Vegas attending the annual SkyBridge Alternatives Conference (SALT), which normally attracts some of the biggest rock stars in the hedge fund and investing world. This year’s speaker lineup includes Ben Bernanke; Jeffrey Gundlach, CEO of DoubleLine; Eric Schmidt, executive chairman of Alphabet; Bill Ackman, CEO of Pershing Square Capital; and many more. It should be a highly enlightening conference, and I’ll likely have a few takeaways to share with you.

Subscribe today to Frank Talk, my award-winning CEO blog!

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. …read more

Source:: Frank Talk

The post European Manufacturers on a Tear on Weaker Euro appeared first on Junior Mining Analyst.

When Will Gold Stocks Take Off?

goldeaglecoin

Source: Tom Beck for The Gold Report 05/08/2017

Gold stocks are trading at valuations not seen in decades, according to Tom Beck, senior editor of Portfolio Wealth Global. But conditions are ideal for a new gold bull.

History makes it clear that secular bull and bear cycles in gold are mostly correlated to one indicator: negative and declining real rates and real yields. That’s the key driving force.

Supply and demand for gold are unlike other commodities. The overwhelming majority of gold produced isn’t consumed; therefore, its supply keeps on growing.

That’s why investment demand is the determining factor that drives the price higher or lower.

In times of positive real interest rates, there is little incentive to hold gold, which is why it has underperformed under those circumstances.

Courtesy of Smaulgld.com

Right now, investment demand is at a 10-year low, and though we all know that central banks do not report their leasing, buying, or selling of gold—especially in China, where gold holdings are kept confidential—and although we are all aware of the London and New York paper manipulation and smashing of gold contracts, this chart at least partially shows that many gold buyers have turned into S&P 500 buyers. They couldn’t resist any more.

Inflation has cooled its progress and yields are kept low, so we are mostly in ideal conditions for a renewed bull market in gold after six brutal years. But there isn’t a green light yet.

The fact is that the 2011 bear market, which hasn’t officially finished selling out yet, is normal!

Yes, it is long, and yes, it has wiped out a ridiculous number of stocks from the exchanges, but that is the nature of gold bear markets. Rick Rule and Doug Casey, who actually experienced 40 years of these cycles themselves, state that this is the worst one yet.

barrons

So, what is missing now is the S&P 500’s well overdue correction, and even a bear market. This is the final hurdle before gold stocks make parabolic moves higher, which I believe will even shock the few investors that are actually positioned now and are suffering from temporary pains.

My Most Advanced Strategy:

More advanced traders do not only purchase shares of the highest-quality juniors on the long side anytime there’s sustained weakness. That’s an important part of the overall strategy, and it’s called Dollar-Cost Averaging.

But what truly seasoned investors do, which is my partners’ and my own strategy as well, is short the basket of juniors (GDXJ and others) on the flip side.

Gold mining stocks are trading at valuations not seen in decades. Valuations may be at levels not seen since before 1980.

In addition, the gold miners, relative to gold, have never been cheaper since at least the 1940s. Furthermore, the value of gold in the ground ticked below its 25-year low.

Gold and gold stocks are struggling now and it could continue, but they are perfectly set up for a massive move higher once the stock market peaks. Over the weeks and months ahead, I intend to accumulate shares of the best junior mining companies on weakness and short the basket (when necessary).

The massive move in precious metals during the first half of 2016 is only the warm-up of what lies ahead. We have to take advantage of the coming weakness or we risk missing the big move when it starts. Companies like this, chaired by the ultimate mining company builder, could end up cashing investors in at 1,000% gains and more.

Tom Beck is senior editor of Portfolio Wealth Global. Known as one of the first millennial millionaires in the United States, Beck is a relentless idea machine. After retiring two years ago at age 33, he’s officially come out of retirement to head up Portfolio Wealth Global. He brings a vision of setting a new record for millionaires with his seven-year plan to accelerate any subscribers’ net worth who will commit to the income lifestyle. Beck delivers new ideas on the marketplace that were once only available to the rich. Traveling the world, he’s invested in over a dozen countries, including real estate.

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

Disclosures:
1) Tom Beck: I, or members of my immediate household or family, own shares of the following companies referred to in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies referred to in this article: None. My company has a financial relationship with the following companies referred to in this article: First Mining Finance 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. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor’s fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Charts provided by Tom Beck

Millennium Minerals, Searching for a Greater Fool

Silver COT Report

Source: Bob Moriarty for The Gold Report 05/08/2017

Precious metals expert Bob Moriarty updates investors on recent moves by Millennium Minerals in Australia and discusses recent moves in the silver COT reports.

After a record fourteen days of decline silver looks as if it’s ready for a dead cat bounce. Back in mid-March I did write about a pending correction. The open interest and speculator longs in silver futures were at record levels. Precious metals did turn about that date.

The COTs released on Friday, May 5, 2017, tell the story about who is moving the metals markets lower.

I did an interview about ten days ago where I commented on the number of speculator long positions. I said that I expected to see a decrease of 40,000 to 50,000 speculator long positions before we see a bottom in silver. Last Friday’s COT reports do a wonderful job of demonstrating just who it is that drives markets lower.

If you look at the chart above, you can see that large speculator long positions dropped by 19,480 and small speculator long positions increased by 2,187 contracts for a net decrease of 17,293 for the week ending May 2. And since we want to see just who is driving the market we look at the commercial shorts and see they closed 21,199 positions.

Now we know that all commodities are a zero sum game. That is, for every contract you have one buyer and one seller. Each person trading a contract has to either buy first and close by selling or sells first and closes by buying. There can be no “naked short sellers” since it is a zero sum game with one winner and one loser and all contracts are covered by an equal and opposite position. Anyone using the term “naked short sellers” referring to commodities is only advertising their ignorance of how the markets work.

In the week ending May 2, silver prices dropped a lot. In fact so far they have gone done 15 days in a row and went down every single day of the week the COTs cover. So if the commercial shorts were actually driving the market by closing 21,199 positions in some sort of panic, just how could they have done that?

For the shorts to close a position, they have to buy a contract back. So the commercials bought 21,199 more contracts than they sold. And the speculators sold 17,293 more contracts to close their positions than they bought. You can’t make prices go down by buying so simply and clearly it was the speculators in a panic who drove the market lower as they always do.

Without any doubt this week’s COTs will also reflect the speculators still in a panic and prices will continue to go lower until the weak hands have all sold at the bottom as they always do. The lower the speculator long positions, the safer it is to be a buyer. Speculators always buy at tops and sell at bottoms. I cover this at length in Nobody Knows Anything.

At the end of February I wrote a short piece about an Australian gold company named Millennium Minerals (MOY-ASX). Since that report, the market cap of the company dropped about 30% but lots of resources shares have dropped that much and more. The shares went down even as the price of silver and gold were increasing from the 10th of March.

The article was pretty simple and easy to understand. Through a lot of mismanagement Millennium Minerals seems to have painted themselves into a corner. For the last year they have spent all their free cash drilling out some 28 different deposits. Their largest gold resource is a transitional sulfide ore that can’t be recovered with the mill they have. They really aren’t running a mine, but an employment agency.

The company came out with a press release a week after my piece came out listing more drill results. It did nothing to increase my confidence in the company; in fact it did the opposite. When companies bury you in more or less meaningless data it been my experience that they are trying to conceal more than to reveal. It comes under the “If you can’t dazzle them with brilliance, baffle them with bullshit” rule.

Basically, Millennium has a mill designed for oxide gold. They are drilling a lot of sulfide material that can’t be recovered economically without spending $50 million or more to upgrade their mill.

I suspect large shareholders in the company are pushing management to unload the mine and mill while their shares are still in the stratosphere. The shares traded below $0.04 Aussie in December of 2015 and probably that more reasonably represents their true value than the $0.40 they reached in August of 2016. Having a tenfold increase in the share price I feel certain made major shareholders try to figure out how to unload them under the Greater Fool Theory.

I think Millennium Minerals is trying to sell the company and management has been told to spend all their free cash painting lipstick on the pig. Their latest press release dated May 4, 2017, gives me even more confidence in my belief. I have made the comment many times and in my book that when someone is trying to con you, they tell you things that are both perfectly true and perfectly meaningless at the same time.

The company claims in the release that met studies show they can recover more than 90% and some 850,000 ounces of this “fresh ore” using conventional sulfide floatation and furthermore up to 30 deposits at Nullagine are open at depth.

As to the first claim, nobody get better than 90% recovery of sulfide ores using floatation unless they roast the ore. 90% recovery would be excellent using even the most suitable oxide ore. I’m skeptical when I hear anyone claim more than 90% recovery of any ore, much less sulfide ore. Millennium is off the grid and their power costs are probably in the $0.50 a kWh range. Roasting and floatation are expensive even when power is cheap. It’s not cheap in Northern WA.

As to 30 deposits being open to depth, of course they are. The fact they are drilling 30 deposits should tell even the most ignorant of investors something important. How many other mines, not matter how large, are getting ore from 30 different holes in the ground some up to 40 km from the mill? One of the biggest costs in any open pit mine is stripping costs. And the more holes you dig for ore, the more you have to strip. If they had a low strip ratio, you can safely bet they would be bragging about it.

Millennium Minerals can only extend the life of their mine with a giant infusion of cash in the tens or hundreds of millions of dollars. They are spending all their free cash right now on generating numbers that are as meaningless at the U.S. dropping the MOAB on a hole in the ground in Afghanistan. That’s the only country in the world where bombing the place back to the stone ages improves the standard of living. They can always sell the iron from the bombs.

When you have dug yourself into a deep hole, the very best thing you can do is to stop digging.

I have no financial relationship with Millennium Minerals in any way. I am neither long nor short any shares.

Millennium Minerals
MOY-ASX $0.21 (May 05, 2017)
780.9 million shares
Millennium website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 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 832 missions in Vietnam. He holds 14 international aviation records.

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

Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. The following companies mentioned in this article are advertisers on 321 Gold: 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: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. 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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Chart provided by the author.

( Companies Mentioned: MOY:ASX,
)