May 30

El Tigre Silver Releases Assay Results, Provides Exploration Update

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El Tigre Silver Corp. (TSXV:ELS,FWB:5RT,OTCQX:EGRTF) announced assay results of a recently completed underground and surface sampling exploration program at its El Tigre Silver and Gold Project
located in northern Sonora, Mexico. Reported results included 2 metres of 976 g/t Silver equivalent, 12 g/t Gold and 256 g/t silver.

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May 30

La Ronge Gold Completes $1 Million Private Placement

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La Ronge Gold Corp. (TSXV:LAR) has completed the first of its two-tranche brokered private placement. The first tranche consists of 4 million common shares at a price of $0.25 per common share for the purpose of raising gross proceeds of $1 million. La Ronge is progressing efforts on the $6 million subscription receipt raise.

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May 30

Apples to Whales in the Gold Market

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Comparing now to the early 1980s just doesn’t work for gold prices…
 

LOUIS JAMES is senior editor of renowned gold and mining investor Doug Casey’s International Speculator, Casey Investment Alert and Conversations with Casey.
 
Fluent in English, Spanish and French, James regularly takes his skills on the road, evaluating highly prospective geological targets, visiting explorers and producers at the far corners of the globe and getting to know their management teams.
 
Now Louis James says the market seems in agreement that December was the bottom for gold, and value is becoming evident to investors. In this interview with The Gold Report, James discusses the new landscape for gold and silver and how to read the field for the best route to profits.
 
The Gold Report: Jeff Clark, senior precious metals analyst at Casey Research, recently countered a chart making the rounds which shows gold matching its 1980 inflation-adjusted Dollars peak in 2011. The chart implies we should now expect a decade or more of lower prices. Aside from the fact that John Williams of Shadow Government Statistics might have a problem with how inflation is calculated today, how are gold’s fundamentals different in 2014 than they were in 1984?
 
Louis James: The fact that things are different today than in the 1980s is a really good point. The argument over methodology almost doesn’t matter. Even if it were true that the gold price of 2011 matched the inflation-adjusted gold price of 1980, that wouldn’t mean that gold has to go down the way it did in 1980. There wasn’t a near collapse in the banking sector back then. There wasn’t the Lehman Brothers upset. The government did not triple the money supply. We’re dealing not with apples and oranges, but apples and whales.
 
TGR: If history is not a map for the future, is John Williams correct that we are getting ready for hyperinflation?
 
Louis James: History never repeats itself, but it does rhyme. I agree with John Williams. On a fundamental level, profligate governments around the world have been spending beyond their means, and eventually they have to pay the piper. The longer they put it off, the bigger the bill gets. Is it all going to unravel this year? I don’t know, but it’s impressive that someone as cautious as John Williams seems to think that it will. But whether it happens this year or next, it doesn’t really matter as long as you’re investing with a long-term view.
 
TGR: In hindsight, a lot of people have targeted last December as the bottom of the gold market. Do you look at those sorts of things in the rearview mirror? 
 
Louis James: On January 6, I published a statement to the effect that both Doug Casey and I thought our market would turn upward in 2014. On February 3, I said in print that the gold price bottom was in December. I wasn’t willing to say that until the upturn was reasonably clear, but if we wait too long to take the plunge, it’s of no use; when it’s obvious to everyone, you lose much of the upside. Those of us who started buying in January and bought aggressively in February have benefited enormously. We were actually able to issue some profit-taking calls in March before the market started correcting again.
 
TGR: What gold number are you using to evaluate whether a company can be profitable for the rest of 2014?
 
Louis James: I have two numbers I keep in my head: spot and the three-year trailing average. It used to be cautious to use the three-year because gold prices were rising and the averages were lower than spot. Now the three-year is $200 above spot, so there are serious perception and credibility issues with using it in print. But I do still look at the three-year, because these low gold prices we have now will not last.
 
Right now, the price of gold is flirting with cost of production – it’s not sustainable. Some companies are using three price scenarios in their feasibility studies: a base case near spot, a scenario at significantly lower prices and another at significantly higher prices. Today, that more optimistic scenario is often the three-year trailing average. I like this approach; I want to see that they have a project that works right now. I want to see that if gold goes lower for a while, they’re not going to dry up and blow away in the wind. And I want to see if gold goes higher, how much higher my return will be.
 
TGR: Are you investing based on the fundamentals of the macro gold and silver market or based on the challenges and opportunities of the individual companies?
 
Louis James: The macro picture sets the stage, but it doesn’t help you pick a stock. I’m very much looking at the individual companies. 
 
TGR: It has been a tough couple of years for junior mining companies. Some haven’t made it. Is it easier to spot the good ones than it used to be because there are fewer of them?
 
Louis James: Yes and no. The field has not been cleared that much at all; many penniless companies have gone into hibernation – a few have even left the field and become medical marijuana companies – but the oft-predicted tsunami of bankruptcies has not appeared. On the other hand, if you see a company that’s got the goods that was previously trading at two or three times its current price – and has the cash to keep advancing – it’s not a bad bet that it will rebound with the market. It doesn’t even have to hit a new high to make you a bunch of money.
 
Because there are many opportunities today to buy companies that have already produced extraordinary discoveries, there are far fewer grassroots-type projects in our portfolio. It’s not that we don’t like early-stage exploration – those companies actually have the most explosive upside potential – but that with so many less risky, quality plays on sale, it’s just too tempting to go with the safer bets.
 
TGR: What are your thoughts about silver compared to gold?
 
Louis James: There are vibes about silver volatility being at near-decade lows and that always precedes a surge. I’m not sure the numbers actually bear that out, other than to say, generally speaking, that low prices precede high prices because markets are cyclical. If we’re at a cyclical low, it’s not rocket science to say it’s going to go up. 
 
That having been said, there are so many new uses for silver out there, I see very strong demand, particularly in solar panel use, which is rising and rising. 
 
My way of looking at it is that silver and gold always move together. Sometimes the ratio stretches. Sometimes it contracts. But they always move together. If you’re a gold bull, you have to be a silver bull.
 
On top of that, silver is an industrial metal, while gold is primarily a safe-haven metal. If the economy is successfully reflated by the governments of the world, then demand for silver rises. You have a safer bet on silver than gold in that respect. If, on the other hand, government efforts to save the collapse of the global economy are unsuccessful, then industrial demand may fall off, but the precious metal safe-haven demand will pick up. Where gold goes, silver goes also. It’s a win-win metal.
 
TGR: What do you look for in a prospect?
 
Louis James: I’m looking for, and happy to find, something that is legitimately undervalued. The company should have great management. Its flagship project should have a net present value multiple over the company’s enterprise value (or a clear shot at that), cash in the bank to advance, and be delivering excellent exploration or development results. Then the stars are aligned and it goes on my shopping list.
 
When will we see payday? As above, it could be this is the year – Doug Casey thinks so – but regardless you should come out well if you buy value on sale.
 
And it could happen very quickly: If the Ukraine situation pushes Russia and the Western countries into an economic tit-for-tat that sends the Dollar over the edge, it could trigger the proverbial “it.” You don’t want to be short when the train is leaving the station. 
 
TGR: Thank you for your time, Louis.
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May 30

Modi’s Morning in India

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The world’s largest democracy gets its own Ronald Reagan…
 

AS YOU might recall, Ronald Reagan’s now-famous 1984 presidential campaign, “Morning in America”, renewed many Americans’ confidence in this country’s financial future, writes Frank Tang at US Global Investors.
 
Likewise, the May 16 election of Narendra Modi – whose campaign slogan, “Good times ahead,” taps into the same sense of optimism – couldn’t come at a better time for India and the surrounding region.
 
Now sworn in, Modi’s pro-business, small-government policies have already prompted many citizens of the world to liken him to such transformative leaders as Reagan and Margaret Thatcher. Investor confidence in the South Asian country has surged like never before. Because Modi has vowed to widen India’s doors to foreign investment, rehabilitate its crumbling – or, in many regions, nonexistent – infrastructure, deregulate the retail industry and loosen the red tape that has halted domestic coal production.
 
For the past six months, foreign investors have bought up more than $16 billion in Indian stocks and bonds in anticipation of Modi’s win and hold approximately 22% of Mumbai-listed equities, valued at nearly $280 billion. Since the election, the Indian markets have been bullish, with the rupee crossing 59 levels against the Dollar. These activities have made the world’s largest democracy the top performer this year among the four BRIC economies.
“We want more strength for the wellbeing of the country,” Modi said after declaring victory. “I see a glorious and prosperous India.”
Modi has a proven track record of turning economies around. As head of the state of Gujarat, a position he held prior to being elected prime minister, he oversaw annual economic growth of 10 percent. He is also credited for bringing electricity to all 60.4 million Gujarat residents – a first for India.
 
One of his loftier goals is to do the same for all 1.2 billion Indians using clean power generation such as wind and solar. Currently, 400 million citizens – more than the combined populations of the US and Canada – are without power. The plan is that by 2019, every home will be able to run at least two light bulbs, a cooker and a television.
 
Such a colossal undertaking as bringing power to every home will require the import and production of untold amounts of metals such as copper and steel, not to mention the construction and rehabilitation of the nation’s poor infrastructure, which is decades behind China’s.
 
According to Ajay Piramal, Chairman of the Piramal Group, one of the roads to India’s prosperity is “infrastructure development. Reviving infrastructure projects by streamlining approval and decision-making processes will be critical. By 2019, the structural growth rate of India should be at 8 percent or higher.”
 
Under the new prime minister’s watch, the growth of industrials and materials is very promising. India is already the fourth-largest steelmaker in the world, having produced 7.25 million tonnes in March alone. But with the implementation of new infrastructure and energy projects, steel production has the potential to explode.
 
The same can be said of coal. Even though India, the world’s second-most populous country, is rich in coal, mining has historically been stymied as a result of tortuous bureaucracy and stateism. To facilitate foreign investment in the resource and boost product output, Modi is considering breaking up Coal India Ltd., India’s state-controlled mining company.  
 
With more jobs up for grabs, more Indians will be able to afford the sort of lifestyle and consumption habits that many Americans enjoy. As I’ve previously discussed, gold is a prime gift to give and receive in India during religious holidays and celebrations. A robust working class will ensure that gold continues its trend as a desired and accessible commodity.
 
It’s too early to tell if morning has indeed arrived in India. To be sure, the nation faces many challenges that block its path to prosperity, including debilitating bureaucracy, an inefficient agricultural sector, low literacy rate and widespread poverty. But as I often say, government policy is a precursor to change, and with Modi at the helm, “good times ahead” sounds like more than an empty promise. Provided his administration can make good on his many ambitious plans, investment in the energy, industrials, materials and utilities sectors could conceivably see fair returns.
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May 30

Aristotle’s University Days

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What nobody…nobody…wants to hear about college degrees…
 

MONDAY was Memorial Day in the US, writes Bill Bonner in his Diary of a Rogue Economist.
 
We used this quiet interlude to continue the commencement address nobody wants to hear
You are heirs to a great society, a great economy, a great government…and more snaky illusions than you can shake a stick at.
 
Memorial Day gave us an opportunity to salute the fallen. Without a moment’s hesitation or thought (which is the only way to do it) those who protect us rush to the barricades or recruiting offices.
 
Germans, French, Vietnamese…Protestant, Catholic and Muslim…Nazis, Bolsheviks and Democrats…royalists and revolutionaries…mad kings…evil dictators…oligarchs, patriarchs and string pullers – all the world’s elites should pause for a minute and give thanks to the poor suckers who protect them. And you, the Class of ’14, after 12 years in prison-like schools…and another four or more in college…now you are ready to take your place among them.
 
But let’s look at what you are getting yourselves into…
 
Specifically, let’s look at the financial system. It’s not the same financial system that your parents came into. And it has some new features that are going to make you the biggest chumps in history.
 
Did I mention the Cantillon Effect, “intertemporal discoordination” and Baumol’s cost disease?
These are just ways economists have tried to understand the financial distortions and economic perversions caused by today’s money system. Look, I don’t have time to explain the entire universe to you…but here is what you need to know…
 
The whole system is rigged against you. Even college. Did you ever wonder why you went to college? And why it was so expensive? You pay an average of $30,000 a year, plus another $10,000 for room and board!
 
As we explained earliker, the unlimited credit of the post-1970s period favored talkers and meddlers over doers and makers.
 
For 90% of people, real wages have been flat since 1968. The other 10% had jobs that were mostly for college graduates – in finance and administration. That’s why you’re here: You wanted to be in that small group of Americans with rising incomes.
 
The last four years should have been the best years of your life. You were as alert, energetic and strong as you ever will be. And what did you really get for it? Did you learn more in school than you would have learned in real life? I doubt it.
 
Real life is tough. Infinitely complex. Unlimited in its subtlety and ambiguity. You never know when you’ll be tested in real life…and you never know what the test will cover. So you have to be on your toes. In college you can get through courses with CliffsNotes and cram sessions. In real life, you have to use your brain.
 
In college, life is stripped down, simplified to the point of caricature. People are turned into stick figures. History, politics, sociology, psychology, government, economics – all are reduced to simple narratives that can be taught, studied and learned.
 
An infinite variety of facts and nuances must be distilled into just a few. The flesh must be boiled off the bone. What you end up with is bare – with 10% useful insights…and 90% claptrap. And we don’t even need to mention literature, art, and gender studies.
 
Now that you’re graduating, you must think you know something. But unless you’re in the sciences or engineering, what you know is probably not worth knowing. It’s not how real life works. And the longer you spend in school studying this artificial world, the less able you are to function in the real world.
 
Most of history’s successful people spent little time in formal education. Alexander the Great, Julius Caesar, Aristotle, Hannibal, Abraham Lincoln, Cornelius Vanderbilt, Henry Ford, Charles Dickens. And thousands of others.
 
Steve Jobs, Bill Gates and Mark Zuckerberg dropped out of college. But today, big employers want you to have a college degree. Especially the biggest employer of all: the government.
Heck, today Jesus of Nazareth could apply for a job as a social worker in any town in the US. He wouldn’t get it. He didn’t have a diploma. Socrates could offer to teach a class in philosophy; almost every university would turn him down.
 
“Where’s your PhD?” they’d ask. Archimedes, the greatest engineering genius of all time, wouldn’t be allowed to design a county storm drain.
 
What kind of a system wastes strong backs and ignores strong minds?
 
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May 29

Klondex Mines Annual Meeting of Shareholders Set on June 17th

Gold Price Comments Off on Klondex Mines Annual Meeting of Shareholders Set on June 17th

Klondex Mines Ltd. (TSX:KDX,OTCQX:KLNDF) announced its annual meeting of shareholders: Tuesday, June 17, 2014 at 10:30 a.m. (EDT) Toronto Region Board of Trade, Suite 350, 77 Adelaide St. West, Toronto, Ontario.

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May 29

Samco Gold Announces Option on El Dorado-Monserrat Project With PAS

Gold Price Comments Off on Samco Gold Announces Option on El Dorado-Monserrat Project With PAS

Samco Gold Limited (TSXV:SGA) stated that it has signed a binding letter of intent with Pan American Silver Corp. that will grant PAS the exclusive option to acquire a 60 percent interest in the El Dorado- Monserrat project in Santa Cruz, Argentina. Both parties plan to participate in the exploration and development of EDM leading to the commencement of mining activities at El Dorado.

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May 28

Klondex Mines: One of the Highest Grade Gold Mines in the World

Gold Price Comments Off on Klondex Mines: One of the Highest Grade Gold Mines in the World

Derek Macpherson of M Partners recently spoke with Resource Investing News about the gold market and Klondex Mines.

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May 28

2014 Gold Demand So Far

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Physical gold investment demand falls from record highs as central banks buy…
 

LIKE a magnet, gold prices continue to be attracted to the $1300 mark, writes Sumit Roy at Hard Assets Investor, unable to break free one way or the other.
 
It’s impossible to know when this near-term consolidation phase will end, but the yellow metal is likely to move decisively when that happens. We continue to favor the upside, and indeed, latest supply and demand data from the World Gold Council seems to support that view.
 
In its latest Gold Demand Trends report, the World Gold Council said that global gold demand was essentially unchanged year-on-year in the first quarter of 2014 at 1,075 metric tonnes.
 
As always, the internals of the report are key. On the plus side, jewelry demand crept up by 3%, as lower prices made gold more affordable to consumers. But it was the investment segment of the market that was particularly interesting.
 
Overall demand from investors fell a marginal 2% to 282 metric tonnes in Jan-March compared with a year earlier. However, there was once again a huge divergence between physical gold bar and coin demand, and ETF demand.
 
Last year, demand in the physical side of the market spiked to record levels after gold prices plummeted. That offset huge, record outflows from exchange-traded funds. This year, physical demand was 39 percent lower than last year. With prices stable in 2014, there was less of a rush to buy, and demand subsequently fell from those record levels. Meanwhile, in contrast to last year’s enormous selling, ETF flows were zero in Q1 2014 – neither adding nor subtracting from demand.
 
One key takeaway from the latest data was the continued buying by central banks. Slowly but steadily, they continue to add to their gold holdings, having purchased 122 metric tonnes in the first quarter of 2014.
 
Finally, overall gold supply rose 1% year-over-year in Q1 2014, as 6% year-over-year increase in mine production was nearly offset by a 13% reduction in recycled gold supply.
 
According to the World Gold Council, “growth in gold mine production was due to new operations either ramping-up or coming on-stream.”
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May 28

Gold Miners Building Their Own Momentum

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With gold prices quietened for 2014, mining stocks need their own momentum…
 

JEFF WRIGHT of H.C. Wainwright & Co. has more than 15 years’ capital markets experience.
 
Previously with Global Hunter Securities, Wright has also worked as a managing director and head of the natural-resource practice at Shoreline Pacific LLC. Prior to that he was vice president at Montgomery & Co. and was a leader on the team that launched a capital markets business in a historically mergers and acquisitions-focused investment bank. 
 
Now, and because Jeff Wright doesn’t anticipate a major shift in the price of gold near-term, he doesn’t expect the gold price to provide momentum for mining company stocks. Instead, he’s looking at companies that can provide their own upward movement in this interview with The Mining Report, sister title of The Gold Report
 
The Mining Report: Jeff, when we talked three years ago, $2000 per ounce gold seemed to be within reach. The Toronto Stock Exchange was full of cash-heavy juniors. What is your forecast for gold’s prospects for the rest of 2014 based on today’s fundamentals?
 
Jeff Wright: Gold should stay centered around $1300 per ounce, not moving more than $50 in either direction, through the end of the year. Forces holding gold prices within that narrow band include the US Federal Reserve tapering quantitative easing to a point where, possibly in mid-October, asset purchases will end and interest rates will increase. Also, the macroeconomic environment’s improvements are still fairly soft.
 
The one area of concern that could drive gold either much higher or much lower is the continuing crisis in the Ukraine. There is safe-haven demand around the world to avert exposure to what is now viewed as a soft conflict. If the conflict between Ukraine and Russia escalates, gold could go above $1350 per ounce. If there is a peaceful resolution, gold could dip lower before coming back up $1250-1300 per ounce.
 
TMR: Do you think the Federal Reserve is willing to counterbalance if the price of gold goes way up?
 
Jeff Wright: No, the Federal Reserve’s mandate isn’t aligned with the macro-political situation in Europe. The Federal Reserve would be much more concerned about the economic impact of a conflict in Europe and its impact on gross domestic product, employment and inflation, than on the price and movement of gold.
 
TMR: Even when the price of gold was a lot higher three years ago, we were talking about the flight of investors to larger companies. With gold in the range that you predict, are some juniors standing out as value plays?
 
Jeff Wright: There was a flight from mining equities to the large-cap and the mid-cap companies a few years ago. Generalist investors left the gold and mining space as momentum dissipated. There are quality juniors out there that are in production or advancing large-scale, high-growth projects, but it becomes a stock picking exercise versus investing in a basket of juniors or large-cap mining companies.
 
TMR: How do you decide what goes in the basket?
 
Jeff Wright: It comes down to if a company has a worthy project. Is the project going to be a true mine or is it a mine that’s in production that has expansion possibilities versus one with a short mine life and a small project? We’re not looking for small projects with limited mine lives.
 
Second, we want to be in good jurisdictions with stability. That being said, there are projects outside of the usual suspects in Canada or Nevada that make sense in today’s price environment. We’re not very positive on Africa based on the geopolitical risk and the lack of interest from US institutions, but we also recognize there are some noteworthy large-scale projects there.
 
We still like Nevada. We like Mexico. We like Brazil. We like certain parts of Canada.
 
TMR: Are other small to midsized companies buying projects that have been deeply discounted?
 
Jeff Wright: There are additional opportunities out there – other projects and companies are in play. A number of high-quality projects either have lower capital costs to get to production or a reasonable permitting timeline. These projects have substantial ounces and good grade, but are at a point where the existing management team, either through lack of ability to raise capital or with geologists who have done a great job on discovery but are not production-minded, can’t take the company further. We see that transition all the time in mining and we’re certainly at one of those points right now in the cycle.
 
TMR: What will set the stage for the next rally in the juniors and how can readers prepare themselves to play a part in that?
 
Jeff Wright: It comes down to identifying companies that have a path toward advancing a project. Either they have the capital or they have the skill set. It’s going to be a very selective rally through 2014. I don’t see a broad market rally of all the juniors. There is going to be a number of companies that have good-quality projects that don’t go anywhere, or that people aren’t very excited about. A lot of that comes down to what’s the next step on this project becoming an actual mine that can show production – and profitable production at that. Investors really have to do their homework and understand that a lot of projects aren’t going to advance. They’re going to be on the shelf for a while until either costs come down or commodity prices go up.
 
TMR: Thanks for your time.
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