Dec 31

TomaGold Closes Private Placement

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TomaGold Corporation (TSXV:LOT) closed a non-brokered flow-through private placement of $190,300.

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Dec 31

Gold Futures at $1,196.60 an Ounce, Down 28% for 2013

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Spot gold prices held steady today, but gold futures fell and headed for their largest annual loss since 2000.

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Dec 31

Two Lessons for 2014 Gold Investors

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2014 finds gold investment shunned by trend-following money managers in the West…
 

GOLD has had worse years than 2013, but not many, writes Adrian Ash at BullionVault, in this article first published at ThisIsMoney.
 
Dropping more than 27% this year against the US dollar, gold suffered its worst year since 1981 (down 32%) and worse yet than 1975 (down 25%). But perverse as it sounds, 2013 proved gold’s role as financial insurance.
 
For UK investors over the last 40 years, as this annual asset performance comparison shows, gold priced in Sterling has lagged the returns from the stockmarket (including dividends), gilts, cash savings and UK house prices 16 times. It has beaten those assets only eight times. In those years however, the gains on gold far outweighed its losses under better economic conditions, beating those other assets’ average 3.8% return by 46 percentage points. Overall, gold has delivered 11% annual gains since 1973, second-only to the total return from the FTSE (15.4%) and comfortably beating the pace of inflation as the Pound has steadily lost purchasing power. But with stock markets surging this year, it was only natural that the price of financial insurance would fall.
 
2013 also proved that China’s surging gold demand does not, as yet, set gold prices worldwide. Western money managers still hold the whip hand, and it was their about-turn in sentiment which sparked the crash in gold prices this spring. This change in sentiment had various roots. Boredom with six years of financial crisis. The sharp rise in equities. Growing expectation that the US central bank, the Federal Reserve, would start to reduce its QE money printing. Trend-following money managers ran for the exits from gold, shown clearly by the sharp fall in gold ETF holdings. From the record-high holdings of December last year these giant trust-fund vehicles shed one-third of their gold in 2013. That turned what had been around 250 tonnes of annual demand since the gold ETFs were launched a decade ago into 800 tonnes of supply. Turning over some 4,500 tonnes per year, the gold market buckled.
 
Yes, Chinese households and investors proved eager buyers, snapping up all that gold and more besides. Like a growing number of private investors in the West, they took the price crash to be an opportunity, adding to their gold holdings as a long-term investment. But their demand leapt as a result of the price drop, and it was the positioning of speculative traders in US gold futures and options which weighed heaviest of all. From a strongly bullish stance, hedge funds and other leveraged players as a group raised their betting against gold prices to the highest level since 1999, the very low of gold’s two-decade bear market.
 
2013’s deafening chorus of bearish forecasts from bank analysts also matches that historic turning point. All a bloody-minded contrarian would need now is for a Western government to start selling gold. But Gordon Brown is long gone. The idea of selling Cyprus’ small gold reserves was merely discussed, not actioned in spring. Western central banks continue to hold gold close, and emerging-market governments continue to buy. When asked, they all name gold’s insurance function as the No.1 reason. 
 
Looking to 2014, events in India could be important. Formerly the No.1 consumer nation, it is now locked out of the global gold market by import restrictions aimed at cutting India’s trade deficit, in the hope of supporting the Rupee without stronger interest rates. Any relaxation of the government’s rules could support prices if Western selling continues. But metal is still flowing into the former No.1 market regardless, but without any duty being paid and with criminals enjoying a 10% margin over legal suppliers.
 
The strategic question for gold bulls, and longer-term allocations, is whether the drop of 2013 will prove to have been 1981, when gold sank from then record-highs to begin a 20-year drop. Or was it more like 1975, when central banks talked tough in inflation but then failed to follow through with strong-enough interest rates? That reloaded gold’s long bull market on the 1970s, clearing hot money out of the trend and then sending prices eight times higher as resurgent inflation saw stock markets and the returns to cash savers collapse in real terms.
 
Here sentiment amongst Western money managers and hedge funds will again prove decisive. Further tapering by the US Fed may already be priced into gold, but the mere idea of less QE helped spark the spring 2013 crash. Less money printing, however, won’t change the zero interest rates or record peace-time debts being worn by savers and investors across the West as 2014 begins.
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Dec 30

Now What? This is What

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Post-taper, here’s how January 2014 could play out for stock markets…
 

SO the FED finally came with the ‘taper’ so we no longer have that hype hanging over our heads, writes Gary Tanashian in his Notes from the Rabbit Hole.
 
The stock market took the expected ‘buy the news’ rally after having had a nice little clearing of over bullish sentiment into the Fed decision; though the mini correction did not quite have the anticipated intensity.
 
Through the looking glass, the precious metals initially rallied on the news (which we had not anticipated), then dutifully rolled over. The upshot is that stock markets and precious metals remain on their respective plans that call for macro changes to come.
 
The plan called for a Santa rally in the stock market that potentially puts an (!) on the bull case and pulls the remaining retail holdouts back into the market. Bull wise guys continue to talk about this being the most hated bull market ever, with little public participation.
 
Well, if that is the case then who on earth has put on record margin debt levels? Who on earth feeds funds to the professional money managers that are nearly all-in? Who is behind the all-in Rydex fund data?
 
From Sentimentrader.com:
“Mom and pop can now buy less than 3% of the entire US stock market with cash held in money market funds. That’s the lowest amount in 30 years.”
There is no wall of worry in the stock market. That is a financial media promotion. And after the expected mini-correction, the 30-year average seasonal ‘Santa rally’ held well in the last full week trading.
 
If the pattern is to repeat (always a valid question when using analogs) then the entirety of January could be strong as well. For our usual conservative purposes however, NFTRH will take it a week at a time, with an eye for caution around mid-month.
 
When will the time be right for a macro pivot? In big picture terms the time is right now, as signals coming in daily show trend followers in the media touting the stock market as they promote a perception that they have been bullish all along. One year ago, I felt like one of 2 or 3 people on the planet with a projected bullish resolution to the ‘Fiscal Cliff’ drama; though in full disclosure I did not think the stock market would get anywhere near current levels back then. Nor did I necessarily think the bull would last this long, although the outside projection is and has been to mid-2014.
 
As for the barbarous relic, signals are coming in daily from various mainstream media sources talking about how incredibly bearish gold is. No, really Captain Obvious? The technicals on gold have been brutal for many months now and questionable to bad for over 2 years. You’ve got to love trend followers because they always appear to be right while promoting their view.
 
Personal favorites over the last 2 days were the SocGen analysis trumpeting that gold has lost its safe haven value (gold is squarely a ‘risk off’ asset now in an atmosphere that has been instigated to ‘risk on’ by intense policy making) and an email report I received (from a source that will remain unnamed) going on and on about how bearish a coming supply glut of crude oil will be for gold, since gold is all about inflation and lower oil prices will drive down inflation. Another reformed inflationist heard from?
 
They always obsess on prices. Silly me, looking for oil to drop (nominally and in relation to gold) as a prerequisite to a positive fundamental view on the gold mining sector. Get this, high oil prices are bearish for gold mining. The inflationists got themselves into trouble with incorrect analysis and now they are rationalizing a bear case with the same flawed viewpoint. Gold is counter cyclical and oil is…cyclical.
 
Gold may well have its Waterloo, where the most notable of the Gold Generals make their stand and meet their end. The charts indicate it could be coming. That does not change the fact that the dumbest money is being herded into the stock market (risk on) and gold is now ‘risk off’. Do the math. And enjoy the punch holiday revelers, but make sure you have a good hangover cure ready. You’ll need to be clear headed in the New Year.
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Dec 30

Iran, North Korea & Other Jim Rogers’ Investments

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Beaten down and unloved, these are Jim Rogers’ new favorite investment destinations…
 

JIM ROGERS, the legendary investor and true international man, spoke with me recently about some of the most exciting investments and stock markets around the world, writes Nick Giambruno, senior editor of International Man at Doug Casey’s research group.
 
You won’t want to miss this fascinating discussion…
 
Casey Research: Tell us what you think it means to be a successful contrarian and how that relates to investing in crisis markets throughout the world.
 
Jim Rogers: Well, there are two aspects of it. One is being a trader, being able to buy panic, and nearly always if you are a trader or an investor, if you buy panic, you are going to do okay.
Sometimes it is better for the traders, because when there is a panic – a war breaks out or something like that – everything collapses, and some people are very good at jumping in and buying. Then, when the rally comes, the next day or the next month, they sell out.
 
Now, the people who are investors can also do that, but it usually takes longer for there to be a permanent rally. In other words, if there’s a war and stocks go from 100 to 30 and everybody jumps in, it may rally up to 50, and then the traders will get out, it may go back to 30 again. I’m trying to make the differentiation between investors and traders buying panic.
 
As an investor, nearly always if you buy panic and you know what you are doing, and then hold on for a number of years, you are going to make a lot of money.
 
You also have to be sure that your crisis or panic is not the end of the world, though. If war breaks out, you have got to make sure it’s a temporary war.
 
I used to work with Roy Neuberger, who was one of the great traders of all time, and whenever stocks would panic down, he was usually one of the few buyers, because he knew he could get a rally – if not that day, at least maybe that week or that month. And he nearly always did. No matter how bad the news, especially if there’s a huge drop, it’s probably a good time to buy if you’ve got the staying power and your wits, because you will likely get a rally. In terms of panic buying or crisis situations, that’s normally the way to play.
 
Now, it’s not always easy, because you are having everybody you know, or everybody in the media shrieking what a fool you are to even try something like that. But if you have your wits about you and you know what you are doing, and you know enough about yourself, then chances are you will make a lot of money.
 
Casey Research: What is the story behind your most successful investment in a crisis market or a blood-in-the-streets kind of situation?
 
Jim Rogers: Certainly commodities at the end of the ’90s were everybody’s favorite disaster, and yet for whatever reason, I had decided that it was not a disaster. In fact, it was a great opportunity and there were plenty of things to buy. In 1998, for instance, Merrill Lynch – which at the time was the largest broker, certainly in America and maybe the world – decided to close their commodity business, which they had had for a long time. I bought. That’s when I started in the commodity business in a fairly big way. So that’s the kind of example I am talking about.
 
Everybody had more or less abandoned or were in the process of abandoning commodities, and yet, that’s when I decided to go into commodities in a big way, because of what I considered fundamental reasons for doing it, but the fact that Merrill Lynch was getting out buttressed in my own mind anyway that I must be right, because, you know, everybody was out. Who was left to sell? There was nobody left to sell at that point.
 
Casey Research: What about a particular country?
 
Jim Rogers: I first invested in China back in 1999 and then again in 2005. The market at those times was very, very bad. I invested again in November of 2008, when all markets around the world were collapsing, including in China.
 
So I have certainly made investments in countries with crisis markets, and I’m getting a little better at it than I used to be, because I have had more experience now. That’s why I keep emphasizing that you have to know what you’re doing. And by that I mean paying attention to and doing your homework on a stock or a commodity or a country. If you do that with a crisis market, then chances are you can move in and make some money.
 
Casey Research: In your opinion, which countries today do you think offer the best crisis or blood-in-the-streets-type opportunities?
 
Jim Rogers: I think Russia is probably one of the most hated markets in the world. I don’t think many people have a nice thing to say about Russia or Putin. I was pessimistic on Russia from 1966 to 2012 – that’s 46 years. But I’ve come to the conclusion that since it is so hated – and you should always look at markets that are hated – that there are probably good opportunities in Russia right now.
 
Casey Research: Doug Casey and I were recently in the crisis-stricken country of Cyprus, which is also a pretty hated market, for obvious reasons. While we were there, we found some pretty remarkable bargains on the Cyprus Stock Exchange which we detailed in a new report called Crisis Investing in Cyprus. Companies that are still producing earnings, paying dividends, have plenty of cash (in most cases outside of the country), little to no debt, and trading for literally pennies on the Dollar. What are your thoughts on Cyprus?
 
Jim Rogers: When I saw what you guys did, I thought, “That’s brilliant, I wish I had thought of it, and I’ll claim that I thought of it” (laughs). But it was really one of those things where I said, “Oh gosh, why didn’t I think of that,” because it was so obvious that you are going to find something.
 
It’s also obvious, after what happened in Cyprus, that it’s a place where one should investigate. Whether it is right to buy now or not, you are certainly right to look into it. If you stay with it and you know what you are doing, you do your homework, you are probably going to find some astonishing opportunities in Cyprus. It’s the kind of thing that I’m talking about and that you are talking about.
 
Casey Research: Speaking of hated markets that literally nobody is getting into, I heard that you managed to find a way to get some sort of exposure to North Korea through bullion coins. Could you tell us about that?
 
Jim Rogers: Yeah, you know, it’s illegal for Americans to invest in North Korea. It’s probably illegal for us to even say the word “North Korea” [laughs]. I look around to see which countries are hated. In North Korea there is no stock market, and there is no way to invest, especially if you are an American, but sometimes you can find something in a secondary market.
 
Stamps and coins were the only ways I knew of that one could get some sort of exposure. This is because you are not investing in the country, obviously, because you are buying them in a secondary or tertiary market. That said, I think the US government is going to make owning stamps illegal too.
 
There were people once upon a time – and maybe even now – who invested in North Korean debt. I have not done that, but it may be another way that people can invest in North Korea. I don’t even know if North Korean debt still trades, but it was defaulted on at some point.
 
Casey Research: Another hated market that actually does have a pretty vibrant and dynamic stock market is the Tehran Stock Exchange in Iran. Have you ever taken a look at this market?
 
Jim Rogers: Yes, at one point I did invest in Iran, back in the 1990s and made something like 40 times on my money. I didn’t put millions in because there was a limit on how much a person could invest. But this was over 20 years ago. I would like to invest in Iran again, but I don’t know the precise details on the sanctions and the current status of Americans being able to invest there.
 
But Iran is certainly on my list. And so are Libya and Syria. I’m not doing anything at the moment in these countries, but they are places that are on my list.
 
Casey Research: Switching gears a little, do you have any final words for people who are thinking about internationalizing some aspect of their lives or their savings?
 
Jim Rogers: Most people have a health insurance policy, a life insurance policy, fire insurance, and car insurance. You hope that you never have to use these insurance policies, but you have them anyway. I feel the same way about what you call internationalizing, but I call it insurance.
 
Everybody should have some of their money invested outside of their own country, outside of their own currency. No matter how positive things are in your home country, something could go wrong.
 
I obviously do it for many other reasons than that. I do it because I think I can make some money finding opportunities outside your own country. Many people are a little reluctant, you know. It’s tough to leave your safe haven. So I try to explain to them, “Well, you have fire insurance, why don’t you look on investing abroad as another kind of insurance?” and usually what happens is people get more accustomed to it. And they often invest more and more abroad because they say, “Oh, my gosh, look at these opportunities. Why didn’t somebody tell us there are all these things out there?”
 
Casey Research: Jim, would you like to tell us about your most recent book, Street Smarts: Adventures on the Road and in the Markets?
 
Jim Rogers: I’ve done a few books before, and then my publisher and agent said, “Look, it sounds like it must be quite a story to have come from the back woods of Alabama to living in Asia with a couple of blue-eyed girls who speak perfect Mandarin. How did this happen? Why don’t you pull this all together and it might be an interesting story?” So I did, somewhat reluctantly at first, and then, lo and behold, people tell me it’s my best book. Whether it is or not, I will have to let other people decide, but that’s how it happened, and that’s what it is.
 
Casey Research: Jim, thank you for your time and unique insight into these fascinating topics.
 
Jim Rogers: You’re welcome. Let’s do it again sometime.
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Dec 30

Robbing the Poor

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Viewed dispassionately, government policy robs the poor to rescue Wall Street…
 

FAST-FOOD workers across the county have recently held a number of high profile protests to agitate for higher wages, writes former US Congressman Dr.Ron Paul.
 
These protests have been accompanied by efforts to increase the wages mandated by state and local minimum wage laws, as well as a renewed push in some states and localities to pass “living wage” laws. President Obama has proposed raising the federal minimum wage to ten Dollars an hour.
 
Raising minimum wages by government decree appeals to those who do not understand economics. This appeal is especially strong during times of stagnant wages and increased economic inequality. But raising the minimum wage actually harms those at the bottom of the income ladder.
 
Basic economic theory teaches that when the price of a good increases, demand for that good decreases. Raising the minimum wage increases the price of labor, thus decreasing the demand for labor. So an increased minimum wage will lead to hiring freezes and layoffs. Unskilled and inexperienced workers are the ones most often deprived of employment opportunities by increases in the minimum wage.
 
Minimum wage laws are not the only example of government policies that hurt those at the bottom of the income scale. Many regulations that are promoted as necessary to “rein in” large corporations actually hurt small businesses. Because these small businesses operate on a much narrower profit margin, they cannot as easily absorb the costs of complying with the regulations as large corporations. These regulations can also inhibit lower income individuals from starting their own businesses. Thus, government regulations can reduce the demand for wage-labor, while increasing the supply of labor, which further reduces wages.
 
Perhaps the most significant harm to low-wage earners is caused by the inflationist polices of the Federal Reserve. Since its creation one hundred years ago this month, the Federal Reserve’s policies have caused the Dollar to lose over 95 percent of its purchasing power – that’s right, today you need $23.70 to buy what one Dollar bought in 1913! Who do you think suffers the most from this loss of purchasing power – Warren Buffet or his secretary?
 
It is not just that higher incomes can afford the higher prices caused by Federal Reserve. The system is set up in a way that disadvantages those at the bottom of the income scale. When the Federal Reserve creates money, those well-connected with the political and financial elites receive the newly-created money first, before general price increases have spread through the economy. And most fast-food employees do not number among the well-connected.
 
It is not a coincidence that economic inequality has increased in recent years, as the Federal Reserve has engaged in unprecedented money creation and bailouts of big banks and Wall Street financial firms. As billionaire investor Donald Trump has said, the Federal Reserve’s quantitative easing policies are a great deal for “people like me.” And former Federal Reserve official Andrew Huszar has called QE “the greatest backdoor Wall Street bailout of all time.”
 
Many so-called champions of economic equality and fairness for the working class are preparing to confirm Janet Yellen as next Chairman of the Federal Reserve. Yet Yellen is committed to continuing and even expanding, the upward redistributionist polices of her predecessors. Washington could use more sound economic thinking and less demagoguery.
 
By increasing unemployment, government policies like minimum wage laws only worsen inequality. Those who are genuinely concerned about increasing the well-being of all Americans should support repeal of all laws, regulations, and taxes that inhibit job creation and economic mobility. Congress should also end the most regressive of all taxes, the inflation tax, by ending the Federal Reserve.
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Dec 27

Homestake Resource Announces Non-Flow Through Financing

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Homestake Resource Corporation (TSXV:HSR,FWB:B6IH) announced a non-flow-through private placement at a price of $0.05 per unit for gross proceeds of $1,200,000.

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Dec 27

Tom Irwin to Lead International Tower Hill Mines

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The New Zealand Herald reports that Tom Irwin from Fairbanks, Alaska will take the helm of International Tower Hill Mines (NYSE:THM,TSXD:ITH), as the company is preparing to slash jobs.

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Dec 27

New Nevada Gold Mine Approved

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Nevada’s Bureau of Land Management has given the okay for Midway Gold’s Pan Mine to start construction, The Ely Times reported on Friday.

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Dec 27

Colombian Mines Signs Subscription Agreement with IFC

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Colombian Mines Corporation (TSXV:CMJ) has signed a subscription agreement with International Finance Corporation whereby IFC will make a non-brokered private placement in the Company for gross proceeds of $1 million dollars.

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