TheDailyGold Free: 1/6 Update

Published: Sat, 01/05/13

Daily Newsletter
Saturday, January 5, 2013

Argonaut Gold
Corvus Gold Huldra Silver Inc. Balmoral Resources

In this update...

- Editorials
- Company News
- Premium Sample


Higher Low in Place for Gold Stocks as 2013 Beckons

After the huge decline on Thursday, our article, written on Wednesday night appears presumptuous. Precious metals have a habit of making many (including us) foolish. That being said, given the strong breadth at this point (38% in the HUI above the 200-dma and 31% bullish percent index for GDX when breadth indicators at these bottoms is usually 20-25%) and positive momentum divergences I am encouraged about the bullish prospects as the year starts. In this article we also share the two key levels we are focusing on, $48 and $55. 

Alex Letornoeau of Kitco covers the 2013 outlook for gold stocks and quotes Rob Mcewen and yours truly. I comment on the positive and negative scenario for the gold stocks. 

Company News

Argonaut Gold's warrants expired and the company raised another $115M. At present the company has (I believe) over $200M in cash. 

First Majestic Silver recently acquired Orko Silver and its LA Preciosa project, which could ultimately produce over 7M oz Ag-eq per year. The company has been a fabulous success in recent years but continues to position itself for future growth.  

Balmoral Resources recently broke out from the $1.00-$1.10 range which has contained the stock for 15 months. How many other exploration stocks are showing this type of strength?

Well, Corvus Gold is one example, though it has been rising for more than a year. 

Finally, Huldra Silver is in production and we should see a commercial declaration soon. 

Premium Sample

We cut back on our work around the holidays but are now ready to get going once again. We did publish a portfolio update covering our model portfolio positions as well as a few updated reports on those companies. We continue to update those one by one. 

We do believe the gold and silver stocks are in a very long-term bottoming process and if the next low is in already or will be confirmed in the coming weeks, then we will have been right. Our strategy is to scale into positions. We have added a few small positions in recent weeks yet still retain 35% cash in the portfolio. In recent months we've continually adjusted our holdings. Its always wise to take profits on the high-fliers and rotate into cash or lower risk positions. This way we don't get burned if the market falls unexpectedly. At the same time, you have to pick the right stocks if you want to outperform and make money when the trend is up. 

It will be interesting to see how this year shakes out. One observation I will make is we are starting to see correlations change. 2008-2010 was quite similar to 2003-2006. Stocks and commodities trended in the same direction. Even over the long-term, bonds trended higher. Yet this started to change in 2011. Precious metals have decoupled from stocks. Commodities are somewhere in between but closer to precious metals (as far as the correlation). Now bonds have begun to turn lower but precious metals haven't reacted as thought.

When correlation's change, that means markets are changing. If precious metals are going to have a huge 2013-2014 then it will be because both bonds and stocks fall into a mild cyclical bear market, leaving precious metals and commodities as likely to rebound following their 2011-2012 cyclical bear.

That's all for now. 


Wishing you good health and profits,


Disclaimer: Sponsor Companies are only sponsor companies of Do not construe sponsorship with a recommendation. We are not a registered investment advisor and information and analysis provided is for informational and educational purposes only.

This newsletter is intended for informational and educational purposes only and should not be considered investment advice. The author is not a registered investment advisor. You should consult with an investment advisor and due your own due diligence.

Argonaut Gold
Corvus Gold Huldra Silver Inc. Balmoral Resources