Bill Cara’s Blog for Aug 3, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

The big news this week is the collapse of market-maker giant Knight Capital Group (KGC). Volume in the stock has zoomed from 1.76 million shares traded on July 31 to 63.93 million August 1 to 158.30 million August 2. Valuation has plunged -75.0% in the past two days. The stock is down a lot more in the pre-open. Clearly, if a bridge loan cannot be found today, this company will likely file bankruptcy over the weekend. As I see it, a buyer will be found this weekend and the almost 800 broker-dealer clients’ accounts will be protected.


The US capital market is in a sickly state and with the recent collapses of other trading firms, MF Global and Peregrine Financial, the bankruptcy of Knight Capital is a bitter pill for Wall Street to swallow.

Many in the media are pointing to the ills of automation; but, I hardly think that is the problem. The issue is also not with greedy managers or bad management practices, and it’s not with lack of regulatory oversight. When all is said and done, the issue is one of lack of confidence in a financial system riddled with conflict of interest, the very ones put in place by a bought-and-paid for Congress. Isn’t it about time that Congress owns up to the problems they have created by not representing the interests of the people who elected them, but siding with those who financially support them?

In the bigger picture, the European banks today are receiving the love they crave from the monetary authorities that will bail them out in times of crisis. I don’t think more Intervention is appropriate, but it is what it is.


A stock that has done rather well since I selected it as my pick for top Growth candidate in the Healthcare sector at the Cara Community Whistler Conference through October 2, 2011 is Gilead Sciences (GILD).


GILD, a stock we hold in both the Growth and All-Weather portfolios, is up +51.52% from $27.71 (Oct 3) to $57.29 today., a service I am trying out (no decision yet), featured GILD today:

The “Chart of the Day” is Gilead Sciences (GILD), which showed up on Thursday’s Barchart “All-Time High” list. Gilead gapped higher on Thursday, posted an all-time high of $58.84 and closed up +6.82%. TrendSpotter has been long Gilead since June 27 at $51.25. Gilead surged Thursday after rival drugmaker Bristol-Myers suspended a study of one of its hepatitis C drug candidates after at least one patient suffered heart failure. Bristol-Myers has been in a race with Gilead to develop the next generation of hepatitis C treatments, according to Bernstein analyst Dr. Tim Anderson. Gilead bought hepatitis C drug developer Pharmasset in January for $11.1 billion. The deal gave it several experimental hepatitis treatments, including one labeled GS-7977 that many analysts see as promising. Credit Suisse analyst Catherine Arnold said that because Gilead’s GS-7977 isn’t associated with major safety issues, investors will view the company’s hepatitis C program more positively. Gilead Sciences with a market cap of $41.1 billion, is an independent biopharmaceutical company that seeks to provide accelerated solutions for patients and the people who care for them. They have a broad-based focus on developing and marketing drugs to treat patients with infectious diseases, including viral infections, fungal infections and bacterial infections, and a specialized focus on cancer.


The TrendSpotter service of is based on new-high break-outs, which is often effective, but not an approach I have favored in the past. However, I do think we have to examine the reasons for success and, in some cases, adapt. That’s why I am studying the data.

Have a good day.

Good morning, Geoff here.

163,000 jobs were added to the labor force which exceeded expectations. It is also above the important number of 150,000.

The market had already rallied overnight and continued in that direction following the data release but we need to see the full day and close.

The dollar needs a trend.


Let’s see how the trade plays out today.

Have a great trading day!

Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 1,997.93 6:44AM EDT Up 52.47 (2.70%) Components, Chart, More
^BFX BEL-20 2,241.30 Aug 2 Down 43.70 (1.91%) Components, Chart, More
^FCHI CAC 40 3,308.54 6:59AM EDT Up 76.08 (2.35%) Components, Chart, More
^GDAXI DAX 6,732.71 6:45AM EDT Up 126.62 (1.92%) Components, Chart, More
AEX.AS AEX General 325.30 6:44AM EDT Up 3.14 (0.97%) Components, Chart, More
^OSEAX OSE All Share 473.00 6:45AM EDT Up 4.97 (1.06%) Components, Chart, More
^OMXSPI Stockholm General 329.61 6:44AM EDT Up 3.63 (1.11%) Components, Chart, More
^SSMI Swiss Market 6,449.80 6:44AM EDT Up 42.50 (0.66%) Components, Chart, More
^FTSE FTSE 100 5,734.27 6:45AM EDT Up 71.97 (1.27%) Components, Chart, More
FPXAA.PR PX Index 897.10 6:59AM EDT Up 7.80 (0.88%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,407.61 6:59AM EDT Up 13.50 (0.97%) Chart, More
GD.AT Athex Composite Share Price Index 592.89 6:44AM EDT Up 0.15 (0.03%) Chart, More

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.

Cara 100 Company research notes from brokers

Raymond James report Aug 3, 2012:

Silvercorp Releases F1Q13 (C2Q12) Results – Negative
A First Look at Silvercorp’s F1Q13 financial and operating results (C2Q12).
Analysis: Even Silvercorp, with its historically low cost operations, combined with significant by-product metal production, is not completely insulated from the global cost pressures gripping the industry. On a year-over-year basis, cost per tonne have increased on the back of higher input costs such as labour, however quarter-over-quarter cost per tonne did improve slightly. The first ever positive cash cost (on a per ounce basis) reported in this quarter was largely due to much lower grades. According to management, grades are expected to improve over the remainder of the fiscal year as the key operations get back in
line with its development plan.
 Financials – Silvercorp reported adj. EPS of $0.05 vs. our and consensus estimates of $0.07.
 Operations – (On a 100% basis) Silvercorp production totaled 1.2Moz in the quarter, below our estimate of 1.5Moz due to lower than expected grades. Lead and zinc production levels were also down (~35% and ~47% respectively vs. our estimates) from the Ying District.
Although on a per tonne basis QoQ costs actually declined modestly, the slide in grades led to higher cash costs per ounce with total cash costs coming in at positive $0.16/oz vs. our estimate of negative $3.60/oz.
 Development Projects – Silvercorp also provided an update on the GC project which was hampered by a power supply restriction and the introduction of a new tailings design regulations. The company advised that this additional step is likely to delay the project 3 months to F4Q13 (C1Q13) – in line with our current estimate.
 F2013 Guidance Revision – Although lower grades early in F2013 were expected, actual grades in the quarter came in below our, and we suspect, management’s expectations. As a result the company is providing new guidance for the Ying District of 5.3Moz of silver and 78Mlbs of lead and zinc down from the previous guidance of 5.9Moz and 87Mlbs. We currently estimate 5.7Moz of silver and 93Mlbs of lead and zinc.

Vad’s Catch of the Day

Kaimu’s Sound Money

Deron’s Daily ETF Analysis

On a pop in volume yesterday, the SPDR S&P Metals and Mining ETF ($XME) formed a bearish “reversal candle” when it rallied to test resistance of its two-day high, but weakened dramatically to close near its intraday lows. As such, a drop below yesterday’s low of $38.55 could now provide a potential short sale entry trigger for this ETF. We have placed XME on our swing trading watchlist, where our exact entry and exit criteria are listed for regular subscribers. For those of you trading qualified accounts, which are non-marginable and therefore non-shortable, the inversely correlated Direxion Daily Gold Miners 3x Bear ETF ($DUST) might serve as a reasonable, though not precise, proxy to XME. The chart below illustrates the technical setup in XME:

open position summary

The Powershares DB US Dollar Bull ETF ($UUP), a commodity ETF, has been in an uptrend for several months and is now consolidating to form a base of support near its 20-day and 50-day moving averages. If UUP pulls back from its current level, it would provide a low-risk buying opportunity, especially if it briefly “undercuts” its 50-day MA (the teal line). On the chart below, we have annotated the ideal price action we would like to see in order to buy UUP as a swing trade. We will continue to monitor this ETF for a potential long entry:

open position summary

Our open short position in Oil Service HOLDR ($OIH) fell to move in our favor as much as 2.7% yesterday after, but recovered to close well off its low of the day. Turnover was also heavy in OIH. Although we would have preferred to see weaker price action into the close, OIH should continue to push lower, especially if the broad market remains weak or in a trading range. Remember that most stocks and ETFs rarely break out above long-term resistance of their 200-day MAs on the first attempt.

The commentary above is an excerpt from The Wagner Daily newsletter, which we have been publishing since 2002. Subscribers to the full version receive our exact entry and exit prices for swing trades of our top technical ETF and stock picks, access to our market timing, and more. To get started today, sign up for your 30-day risk-free subscription at or visit our trading blog to learn more about our short-term trading strategy.


Harp’s Roadmap

Cara on the Metalminers

Cara on the International Markets

CTA Trading Desk Mid-Day Report

CTA Trading Desk Post-Close Report

  1. [No set time] Monster Employment Index 8:30 AM ET... [#111669]
    By: davefairtex (5216 comments) Go to top ↑
    • [No set time] Monster Employment Index
    • 8:30 AM ET Employment Situation
    • 10:00 AM ET ISM Non-Mfg Index
  2. 3 in Buy alert 1 in Distribution Zone 10 in Sell... [#111670]
    By: davefairtex (5216 comments) Go to top ↑
    • 3 in Buy alert
    • 1 in Distribution Zone
    • 10 in Sell alert

    Accumulation Zone (6%): Monthly 9, Weekly 6, Daily 4
    Distribution Zone (10%): Monthly 12, Weekly 13, Daily 6

  3. We are beginning to receive positive responses to the... [#111671]
    By: Jack Senett (438 comments) Go to top ↑

    We are beginning to receive positive responses to the just-released Lessons 2012 ebook.

    Please remember to post your review on Amazon’s Lessons page. Tell your friends, too! Thanks, Everyone.

  4. Good morning. 08:30 Nonfarm Payrolls 08:30 Unemployment... [#111672]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    08:30 Nonfarm Payrolls
    08:30 Unemployment Rate
    08:30 Hourly Earnings
    08:30 Average Workweek
    10:00 ISM Services


    There are NO Cara 100 Ratings Changes to report at this time.


    *** NOTICE ***

    I’ll be leaving for Martin Guitar Fest later this morning. This column will not appear Monday August 6, 2012 or Tuesday August 7, 2012. Happy trading to all.


    “To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. . .I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.” ~ President Thomas Jefferson

  5. ... [#111673]
    By: NYUGrad (4750 comments) Go to top ↑
    • ALOHA!! Essentially I see the mortgage biz the same as the... [#111678]
      By: kaimu (3289 comments) Go to top ↑


      Essentially I see the mortgage biz the same as the small business biz. None of the small business owners want to borrow because they don’t have the sales. It does not matter how many incentives or tax credits Congress throws out there or how low rates are business owners will not borrow until they can see there is a light at the end of the tunnel on their revenues. That is borne out in every NFIB survey every month. I think it is the same for potential home buyers. They are fearful of the future in terms of their jobs and wages and cost of living that making a 30 year commitment is less than appealing. That though is just the ones that can qualify and who have a down payment. With student debt and the job market a lot of the youth who should be buying a home are not. Who will the baby boomers sell their MacMansions to? That is the other side, which relates to more ongoing inventory issues.

      I think your assumptions on property taxes are low over a 40 year period. The thing about 30yr or 40yr mortgages is they may be “fixed” but nothing other than that is fixed in terms of cost of living outlays. To me that is the big gamble you take when you opt for a 30yr or 40yr fiscal boat anchor.

      Are 40yr mortgages more “subprime” tactics? What about basic logistics? If I were a bank today I would not hand out home loans with terms more than 15 years. The job market does not warrant 30yr risk much less 40yr! I’ll add in the rates are too low on a historical basis.

      Who here has ever had a steady job for 40 years? Aside from my Father who worked for Chevron for 40 years I do not have any friends or relatives who have been employed in the same job much less the same career for 40 years. They have all had periods of transition where they had to rely on lower paying jobs or work more than one job. Many are just holding on by the tiniest of margins and if they ever got in a car accident or got a disease where they could not work for six months they’d be down the tubes financially and become “Wards of the State”!

      When I see the NFIB Optimism Index drop like a rock in June giving up all its gains since Jan it speaks to “guarantees”. In this monopolized anti-capitalist and anti-free market debt based world there are no such things as guarantees unless you’re in Congress or in a board room of a major global bank and even then you’re not home free!

      • Kaimu writes "If I were a bank today I would not hand out... [#111695]
        By: Ilya (572 comments) Go to top ↑

        Kaimu writes “If I were a bank today I would not hand out home loans with terms more than 15 years.” I totally agree. Borrowing short to lend long crashed the S&L financial wizards in the 80′s. Banks are stupid to lend at fixed rates for 30 years. Would not a borrower be smart to take advantage of this stupidity?

        Kaimu writes “I’ll add in the rates are too low on a historical basis.” Agree again! Would not a borrower be wise to take advantage of artificially manipulated low rates at a fixed term for 30 years?

        I’ll add that in many areas of the country, housing has bottomed. Many so called McMansions can be bought for 80% of less of replacement cost. So we have 30 year fixed rate mortgages at rates that will probably never be seen again for another 50 years on housing stock selling under replacement cost.

        Just for grins, I did a Zillow search on all the houses I’ve lived in since I was a wee lad. I’m cursed with a good memory and still know the addresses!

        1950…Pop bought a 1,000 sq ft house (new tract development) with a GI loan for $10,500. The ‘hood’ has blighted over the years but houses in that area sell for $50,000 today.

        1959…Pop bought a new all brick 1,600 sq ft house in a suburb of Dallas for $17,000. Todays price is $85,000 for the area.

        1970…Pop bought another house, 1700 sq ft with a full basement in Shawnee Mission Kansas for $31,000. Today that same house is listed for sale at $184,000.

        1974…I built a 3150 sq ft brick home in a suburb of Dallas for $65,000. It is on the current tax rolls for $384,000 and is under appraised by 30%.

        I could continue but the point is that everyone has to live somewhere and whether property taxes et al have increased, both owners and renters endure that impact but owners have paid off mortgages with depreciating dollars and have preserved some wealth via their equity positions.

        We all know that some asset classes become overpriced and underpriced over long cycles. I was thought a fool in 2005 when I published a satirical piece mocking the idiocy of the real estate bubble. When I learn to scan, I’ll post it for you. After a seven year housing debacle, prices are now probably in line with reality if not too cheap.

        Rather than a 30 year fixed mortgage with a suppressed interest rate being an ‘Anchor’, I would view that as more of a ‘Sail.’

        Need I also point out that mortgage interest and property taxes are deductable against earned income and that gains on sale, if not tax exempt in many cases, are taxed at the capital gains rate?

        Contrary to the belief of some, Boomers were not the primary buyers of McMansions. It was the 30′s and 40′s year old fireman with a school teacher wife who were sucked into teaser rates. Now that my kids are grown and I’m looking foreward to retirement, this ‘Boomer’ is looking to upsize!

        Always buy Baku straw hats in the winter.

        • But the interest even at historical low rate compounds. If... [#111696]
          By: NYUGrad (4750 comments) Go to top ↑

          But the interest even at historical low rate compounds. If you borrow X for 30 yrs and pay it via standard monthly due for 30 yrs, you will pay X2 over life of loan.

          Bottom line, buyers should put more down to increase equity.

        • Ilya - Having been involved in commercial real estate now... [#111698]
          By: Dr. Strangelove (2004 comments) Go to top ↑

          Ilya -

          Having been involved in commercial real estate now for 30 years, I believe the trouble started with Sam Zell’s invention, known as a Real Estate Investment Trust (REIT), which was the Eurkea! moment for Wall Streeters to reach their greedy hands into the pocket of Middle America’s vast illiquid real estate investment resource. Fannie Mae and Freddie Mac became the bankers’ counduit for housing while the CBMS did the same for high grade commercial conduits. So when you say “Borrowing short to lend long crashed the S&L financial wizards in the 80′s. Banks are stupid to lend at fixed rates for 30 years.” you must realize that the banks were no longer managing their own portfolios as much as managing high volumes of securitized r.e. debt (selling the debt to Wall St investors). When the S&Ls were deregulated, they began competing with banks for commercial loans, something their boards did not understand, and made a motherload of bad commercial loans that took them all down.

          Blame the greedy bank boards for going with the two-party political game to goose the housing and commercial r.e. markets to keep the economy rolling through bank deregulation and implicit guarantees.

          IMO, the 40-year amortization is just an attempt to make the runaway debt affordable to the ignorant debtor class. A fair solution would be the English Royal’s use of the 100-year lease in which one or two generations enjoy the property at a low ground lease rate but Her Majesty ends up owning half of downtown London and more real estate than an American railroad baron in a century’s time. Fiefdom has its limits. Then there’s the life estate and debtors prison but that’s for another discussion.

          • Dr. S, I could not agree more about your observations on... [#111703]
            By: Ilya (572 comments) Go to top ↑

            Dr. S,
            I could not agree more about your observations on securitizations. I would, however, add that REITs enjoy certain tax advantages. There are both energy as well as timber REITs as well as commercial RE. Many of those income streams are far more secure and pay a higher rate of return than Baa corporates.

            Sam was/is a hoot. A friend of his/mine bought up slivers of space in between high rises in Chicago back in the 70′s and put in elevator parking lots to pay the taxes…. As an intervening property, any redevelopment was forced to pay hundreds of times the going rate per sq ft. The corp was styled ‘Intervening Properties Inc.’

            OK…In a perfect Kaimu world where the purchasing power of the buck remained constant, many would forego immediate consumption at interest in order to save and purchase for cash. Alas that world has not existed since, say 1913.

            I too have been involved in commercial RE since 1984. I have never sold any building or any percentage interest in one of my developments. On average, the net rental income today is on an annual basis equal to more than half of the total sunk costs of construction and the early on depreciation tax benies were marshmellows on the cake.

            I fail to understand why the judicious use of debt is considered by many to be a mortal sin. I have always ‘weaponized’ debt as a force for use against the farce of governments and banksters. If they are so smart, hows a come they’re broke and I ain’t? Why is it that we attribute sinister powers to blithering idiots?

            When the lease rates on shiny barbaric relic hoards are equal to the real rate of inflation, I might consider owning a few kilos. Until then, I’m happy with other income producing hard and tangable assets. I guess we could borrow money to buy gold and lever up. Wait! Those guys are known as mining companys!

          • ... [#111704]
            By: Les (7233 comments) Go to top ↑
          • ... [#111709]
            By: MtnGntx (241 comments) Go to top ↑
  6. Company says "trust us, we have a new line of credit today"... [#111675]
    By: Bill Cara (4105 comments) Go to top ↑

    Company says “trust us, we have a new line of credit today” so shares have opened ~+25% higher.

    Whichever bank provided the credit line will likely be the new owner of the company. In any case, the 800 brokerage firm clients will be protected, it appears, and that’s a good thing.

  7. 08:30 Nonfarm Payrolls July (163K) 08:30 Nonfarm Private... [#111674]
    By: Bull Hunter (3552 comments) Go to top ↑

    08:30 Nonfarm Payrolls July (163K)
    08:30 Nonfarm Private Payrolls July (172K)
    08:30 Unemployment Rate July (8.3%)
    08:30 Hourly Earnings July (0.1%)
    08:30 Average Workweek July (34.5)

    Full gubmint malarky here:


    TS – Tenaris downgraded to Neutral from Add at Capital One based on valuation. Price target remains $40

    WFM – WFM is upgraded to Overweight from Equal-Weight at Morgan Stanley. $110 price target. Company can deliver 19% annual earnings growth through 2015.

  8. Is Silvercorp fairly priced at 5.00 a Share? 2012 Record:... [#111677]
    By: basketguy (90 comments) Go to top ↑

    Is Silvercorp fairly priced at 5.00 a Share?

    2012 Record: ? Sales of $238.0 million, up 42%
    ? Net earnings of $73.8 million, up 9%
    ? Cash flow from operations2 of $123.8 million, up 34%
    ? Silver production of 5.6 million ounces, up 6%
    Achieved cash costs of -$5.13/oz silver
    Declared cash dividends totaling CAD$0.09/sh, or $15.6 million
    Commenced development and mill construction at the GC mine
    Completed XBG and XHP project acquisitions
    Repurchased and cancelled 4.5 million shares

    Maybe I just need to be a patient man…..

    • I glossed over it last night, but I think the problem is... [#111679]
      By: lowpickr (153 comments) Go to top ↑

      I glossed over it last night, but I think the problem is the lower amount of ore mined and the lower grade. The 5-day power outage and ‘short and distort’ excuse does not explain it and the market is reacting to this.

  9. ALOHA!! I should think this speech by the CEO of... [#111680]
    By: kaimu (3289 comments) Go to top ↑


    I should think this speech by the CEO of Goldfields(GFI), Nick Holland, should be required reading for those who are thinking of buying gold stocks like Goldfields(GFI), which are the only ones that major brokerages push if you ask them about buying gold stocks. I would be remiss if I did not include Barrick Gold(ABX) as the “go to” recommendation of every broker from Toronto to NYC to London to Hong Kong! Not to mention these are the types of featured “senior” gold stocks that make up most of the related ETFs. I agree with Nick’s analysis of the senior gold stocks performance since 2006, which is why I stayed away from them all those years.


    I think Nick does a good job of spelling out the pros and cons and the relationship of senior gold stocks to the Gold ETFs. Good on ya mate!

    Yet this is the other side of Nick’s presentation …

    • Agree, Kaimu. Thanx for flagging this. If seniors don't... [#111685]
      By: jock (1011 comments) Go to top ↑

      Agree, Kaimu. Thanx for flagging this.

      If seniors don’t get their act together, then how can juniors find traction? Only those few now proving up a high-margin deposit, I expect.

      If seniors don’t buy juniors, can the mid-tier producers – if the seniors whose status they aspire to are failing, and therefore not finding reward in the marketplace?

      • ALOHA!! If seniors don't get their act together, then how... [#111686]
        By: kaimu (3289 comments) Go to top ↑


        If seniors don’t get their act together, then how can juniors find traction?

        No doubt! That is why these junior explorer CEOs need to get beyond “look-at-me-who’s-gonna-buy-me” mode and do like a lot of the ASX goldies have been doing which is get to “cash flow”! Nick Holland said it and I am glad he did … Free Cash Flow(FCF)!

        I look at juniors like Novagold and think they’re done for without cash flow from actual production instead of selling off assets and dilution. Whats the idea of a junior with derivatives liabilities? Plus if Barrick was going to buy Novagold it would have happened by now. I mean what is the NG share price down to now $3? What is this junk? Here it is 2012 and they’re still updating the feasibility on Donlin? How long will they be studying that deposit? It was a $1BIL+ mistake last time I looked …

        Yeah and those seniors are spending an awful lot of CAPEX to just keep production levels at barely “zero”! Its not a good time to be looking for the “motherload” when banks are mining “SUPER PIT DEBT”! For sure paper money is a lot easier to mine than hard money! Not to mention the oncoming headwinds on operational costs from the debt based monetary paradigm! Investors are not buying gold stocks because gold is money, but because investors seek LEVERAGE to “gold is money”. I also wonder what happens to the gold price when “recycle” hits the fan? Once all those Americans and Europeans have no more gold jewelry left to sell how is supply going to be maintained if mining production is down 2% since 2006? Those India and Chinese consumers need to buy gold and so does GLD? I always thought that was the weak link in all the Gold ETFs, but then again they can do what banks have been doing for centuries and lie about their supply! I also think that GLD could change their business model from 1/10th gold price to 1/15th and just keep diluting until it is as worthless as the mouse clicks it trades on! The only way senior gold producers can compete with the GLDs is stop selling the GLDs their production and create their own ETF. That way you cut off all the banks and COMEX and make them go out and mine their own damn supply for once instead of being the liability leeches they are! That way the gold price is set by a gold mining ETF and not interventionist derivatives futures markets! Hey Nick, did ya get that?

        As Bill points out above about Knight and MF Global etc. it seems there is one of those every month now not to mention two or three regional banks going BK every weekend! I am sure the same is happening globally but we never hear about those on CNBC. Nick Holland is on the up and up and I like to see that in a CEO. If I were in the market for a senior gold producer then GFI would be on my list!

        • Agree, Kaimu, when you first got PMI gold thinking in terms... [#111688]
          By: jock (1011 comments) Go to top ↑

          Agree, Kaimu, when you first got PMI gold thinking in terms of micro-mining, to get started on cash flow, it made all the sense in the world. I’m sure they could have been creative, and come up with low costs even on low volumes. But PMI was unable to finance it, no? and now is just as difficult a financing environment for N.American juniors.

          Producers banding together for an ETF would be one of 10 gold ETF’s. how to differentiate? How to explain to the public why it’s better than GLD?

          I think easier if each senior simply declares that they will hold as much gold on their balance sheet as they can, and only sell for cash when needed to fund investments not otherwise funded or to fund expenses.

          GFI could make that declaration and thus differentiate itself from other, lamer, seniors.

          FWIW …

          • ALOHA!! Producers banding together for an ETF would be one... [#111689]
            By: kaimu (3289 comments) Go to top ↑


            Producers banding together for an ETF would be one of 10 gold ETF’s. how to differentiate? How to explain to the public why it’s better than GLD?

            All GLD is, in typical banker strategy, is a “middle man”! Who buys production from GFI? It is either a mint or a bullion bank or as Nick points out Gold ETFs who now have 2500 tonnes of supply. All I am saying is cut out the middle man! The public would understand that the mining company is more reliable than a banker, especially after witnessing the failures of so many brokerages and banks over the past five years. How many of the top senior gold producers have gone BK compared to the top investment banks and brokerages? How many of the top gold producers have been before Congress doing an inquisition? Also it would remove supply from the COMEX, which in my opinion lost any chance as a free market tool for price discovery a long time ago! To study that C WORD go back to the Blanchard Coin lawsuit …

            So who do you trust? Do you trust the gold mining company who spends the CAPEX to create the product or do you trust the bankers and brokers who skim the product on fees and spreads and have no skin in the game at all? Instead of GFI losing margins selling to mints and ETFs they could recapture those margins, which would enhance their bottom line. Why should banks and brokerages control the market price? How many levels of MONETARY STOCKHOLM SYNDROME must we endure?

          • ALOHA!! Agree, Kaimu, when you first got PMI gold thinking... [#111690]
            By: kaimu (3289 comments) Go to top ↑


            Agree, Kaimu, when you first got PMI gold thinking in terms of micro-mining, to get started on cash flow, it made all the sense in the world.

            If you recall the Board brought in that Unilever “money man” David Bucket, who was suppose to make the financing happen, but then the markets collapsed. Long and short Doug never had the Board’s approval. In fact at that time they removed him as CEO. Not exactly a vote of confidence! SO the Micro Mining dies when Doug was removed as CEO and then of course the share price plunged to $0.03 and the Unilever genius left and with the company nearly BK the wise Board decided to bring Doug back on as CEO. He saved the company and the rest is history as he got booted out by the “non-majority” Aussie group led by guess who? Hummmm … yet another “bank job” … good ole Macquarie Bank Group! Lots of drama back in the day for sure!!!

          • A good review of the failings at the majors. Barrick and... [#111712]
            By: Juniorgoldminerseeker (228 comments) Go to top ↑

            A good review of the failings at the majors.
            Barrick and Kinross have obviously made changes at the top to make someone appear accountable for recent failures.
            How much of that failure simply reflects the gold price and rush from mining stocks while that price has turned down? Clearly there are plenty of operational and strategic failures too, and inflation is a two edged sword, increasing both income and costs, but clearly the problems are better hidden when the gold price is rising.

            It has been tough to be near the miners, let alone the juniors for 18 months, and that lack of performance has affected many favourites as well as the true dogs.

            At some point many here believe there will be a turn back upwards in the gold price, whether following new QE measures or perhaps following use of “tools” to increase velocity, reducing interest on reserves for example, perhaps utimately more inflationary, perhaps pushing on a string without the full force of private to public debt transfers through full QE.

            I have been wrong on the miners and juniors for some months now, once gold turns I continue to believe the miners can lead, stronger paper for the seniors and mid-tiers can realise their leverage to acquire juniors and cash distributed from large acquisitions will find it’s way to the explorers aswell as developers.

            An interesting list here of gold companies by resources and grades. Missing some but fairly wide ranging.
            Obviously grade does not differentiate deep/shallow and 101 other mineability issues, but giving some pointers for research.
            Ultimately there aren’t so many large high grade low cost deposits. Some of the popular “big” deposits like Novagold are low grade and have weak economics even at higher gold prices. Or have permitting issues like Northern Dynasty, or have jurisdiction risk issues, when will Kinross’ Aurelian acquisition of a great ore-body in Ecuador pour gold at a profit?


            New discoveries are being made as the large capital raised over the past few years pays off in a discovery cycle, but clearly many juniors are running low on cash and diluting any existing shareholders, or offering opportunity to new investors, depending how we see it.

            As for gold price targets and timing I find Alf Field’s Elliot Wave analysis interesting, here dating back to 2003.
            He has been too early to call the end of the last two big corrections…but calling it again and targeting the big wave 3 of 3 to $4,500; bold or foolish.

            Perhaps the juniors could find some leverage to that?!

            PS – Go Team GB – we’re 3rd in the medal table…!

  10. I own the first "Trader Wizard" book and it's quite good. I... [#111681]
    By: Ron Sen (975 comments) Go to top ↑

    I own the first “Trader Wizard” book and it’s quite good. I recently have been reading Howard Marks’ (Oaktree Capital) annotated book “The Most Important Thing.” It is one of the best two or three investment books I’ve ever read, and the best with respect to the analysis of risk (three chapters). It has annotations from several managers, including Seth Klarman and Joel Greenblatt.

    Well worth the time. Regards.

  11. See section above for brokerage reports on Cara 100... [#111682]
    By: Bill Cara (4105 comments) Go to top ↑

    See section above for brokerage reports on Cara 100 companies.

    I am seriously considering dropping this company from the Cara 100. My efforts to involve the company to help me produce a full explanation of their management of fraud allegations that came from Alfred Little, Muddy Waters and others in 2011 have regrettably fallen on deaf ears.

    • This does not surprise me in the least Bill. Their stock... [#111687]
      By: Jeff B (715 comments) Go to top ↑

      This does not surprise me in the least Bill.

      Their stock continued to tank after a brief recovery post crisis, and little if anything came of their counter allegations that much of what was said was wrong.

      They clarified some aspects of their operations but too much was left undefended.

      Add to that, 2012 they announced a dividend (starting in 2011 i believe):

      Is a dividend a great move on a junior mining outfit that has yet to produce significant product and who’s stock has done nothing but fall for over 1.5 years?

      Why this company remains part of the TSX mining index is beyond me. While the allegations as a whole were somewhat spurious, where there is smoke there is fire. The truth is in the share price at the end of the day, while the GDX and silver have both also fallen, which has not helped, I wonder what this stock will look like 2-3 years from now. (hint: not good)

      • Jeff B, My attitude has changed significantly after the... [#111693]
        By: Bill Cara (4105 comments) Go to top ↑

        Jeff B,

        My attitude has changed significantly after the company decided not to help me develop a case study to help all companies that come under attack from the likes of Arthur Little and Muddy Waters. My offer was gratuitous to a person I have known and respected for many years, and it was blown off. My regrets are that regulators, brokers and public companies would have benefited, and Silvercorp gained much goodwill; but it is what it is.

        I feel like I’m wasting my time with people who have their own agenda, somewhat different than what the public is expecting.

        Yesterday I met with a money manager who is a “name” in the junior mining game, and I was not surprised when he asked rhetorically, “Bill, do you really think the people in Vancouver (public company space) have changed their stripes?” Sadly I agreed, but then I added that I also happen to be disappointed in many of the people I know in Toronto in the junior mining market. At one point, there was a difference.

        • Not surprised to hear that Bill. One interesting metric... [#111694]
          By: Jeff B (715 comments) Go to top ↑

          Not surprised to hear that Bill.

          One interesting metric Ive mentioned before on this blog is the shallow factor;

          Miners that employ models and showgirl types to look after their booths at the PDAC or employ as IR professionals are short candidates in my humble opinion.

          Once jr. miner from vancouver employs an IR woman who’s resume only states BC school of fashion, her picture is actually of her in a tight v-neck shirt while making the peace sign and sporting pig-tails. not exactly investment grade representation you’d look for in a mining company. not surprisingly their stock is worth a fraction what it was 1 and 2 years ago.

          Anyone remember Val Gold at the PDAC as few years ago….lots of models passing out hats and swag at the event… 7 cents a share last I checked.

          Why a mining company feels the need to waste time and money on frivolous sales tactics is beyond me. Perhaps if they spent less time devising complex payment schemes for their board and focused on actually finding ore bodies we could restore our national reputation as mining leaders. I think theres far too many conferences and get togethers at pricey steakhouses by mining CEO’s and their consorts to signal that they are about to resume their upward trajectory.

          The industry is like other full of dedicated miners who care deeply about the business, but poisoned by the minority of more visible marketers who care only about having a good time on their way to getting rich quick.

          Its too bad…

  12. Just a quick heads-up for anyone who follows my daily ETF... [#111683]
    By: Deron Wagner (77 comments) Go to top ↑

    Just a quick heads-up for anyone who follows my daily ETF column here on the blog…Our rule-based market timing model (swing trading timeframe) has shifted from “buy” to “neutral.” Following link provides an explanation of the change:

    Have a great weekend everyone.


  13. will pick up speed in 2013... I believe there will be major... [#111684]
    By: baz22 (2875 comments) Go to top ↑

    will pick up speed in 2013… I believe there will be major breakthroughs in the comming months, with companies such as ASTM, PSTI and ISCO.

  14. ... [#111691]
    By: mntinhi (118 comments) Go to top ↑
  15. Puplava brings the citigroup economic suprise index to my... [#111697]
    By: Les (7233 comments) Go to top ↑

    Puplava brings the citigroup economic suprise index to my attention. Low and behold, wash, rinse, repeat performance of 2010 & 11 potentially setting up.

    Note the time lag between the index bottoming out in 2011 and SPY flushing out the last longs before rebounding. Could be a messy quarter ahead.

    Note that Puplava takes from numerous sources the likelihood that the US is NOT in recession.

    I was surprised to read recently that US household balance sheets are better than they’ve been in a long time, according to a DB analyst. What’s the secret? – improving stock prices combined with deleveraging (see Ilya’s comments on present housing costs).

    Someone’s got a plan that appears to be panning out. And he didn’t need to provide sugar to cushion the bottom either…

  16. I have attached a spreadsheet for SVM and compares Q1... [#111699]
    By: George (619 comments) Go to top ↑

    I have attached a spreadsheet for SVM and compares Q1 versus the prior Q4 as I have done for a number of quarters. As you know Q4 of each year contains the Chinese New Year and SVM continues to close production for 2 weeks which hurts production dramatically.

    The second spreadsheet snip allows for the 5 day power outage in the Ying district as well as uses the Q1 2012 Prices vs Q1 2013 Prices. One can see that with these assumptions revenues would have been $9.3 million more. With all that is wrong with Quarter 1, 2013, SVM isn’t in control of China power nor metal selling prices. Most of this $9.3 million would have gotten to the bottom line under the assumptions. All investors in metals and mining companies suffer or profit from these variations year to year and qtr to qtr.

    In looking at the $69,719 vs $44,545 Quarter 1 for 2012 and 2013 respectively the difference is $25,170 and 37% as shown on the second spreadsheet is due to metal prices rather than operations by SVM.

    G&A costs are up, labor costs are up, total mining costs are up and total milling costs are up. Even more significantly the silver head grade was 303g/t in Q1 2012 and 227g/t in Q1 2013. This is a 25% reduction in g/t head grade which is an astounding setback when coupled with dramatically falling metal prices!

    Yes, every facet of the Q1 was going the wrong way to cause this Quarter to make even less than Q4 2012 and much less than Q1 of 2012.

    I believe that the Updated NI 43-101 Technical Report released in June 2012 is positive for the Ying Mining district but that doesn’t help this latest reported quarter.

    As a stockholder of some significance, I was completely disappointed at the initial release but have tempered that with many hours of reading through their latest and other financial reports.

    Yes, I do think that the operations could be better run and yes I think that mentioning Short and Distort as an excuse was and is ridiculous. The Board needs to look at their compensation as well as the compensation of all the officers of Silvercorp. Every expense should be analyzed as the numbers in the last several quarters seem to indicate that the focus just isn’t there. This lack of focus is not atypical when it appears that ones products are going up in price and then they reverse. So they have and “sloppy operations” can’t be covered up by increasing product prices. Get on with it and find those efficiencies!

    The shareholders not the board and officers own the company and the latter need to realize that it is in their best interest longer term to take good care of the former. The assets are there for a cracker jack operation but only if all involved roll up their sleeves.

    August 2, 2012 guidance has lowered May 17,2012 guidance by 116,000 oz silver, 5,000 oz gold and 1,553 lbs Lead and Zinc combined. Whereas any lowering is bad, the newer guidance isn’t catastrophic.

    Yes, I would have preferred to not get involved with SVM but did and am loser more than a few $’s per share on many thousands of shares and have hung in there so far, but the SVM powers to be have to get real right now.

    It would appear, however, that ensuing Qtrs. will odds on be better but has Silver in particular bottomed from its average price this last quarter? Maybe but if not, SVM and other’s bottom lines will deteriorate even further without a doubt.

    So okay there isn’t much lipstick to apply but if one takes a bit of time to look beyond the headlines the pig isn’t quite so bad looking after all.

    • George , thanks for your thoughts I find them interesting ... [#111701]
      By: BOB 47 (361 comments) Go to top ↑

      George , thanks for your thoughts I find them interesting . I stopped holding SVM some time ago . For the most part I just wash and rince KGC , SSRI , IAG , I try to just buy at what I feel is the low of recent cycles , then try to be satisfied with a small bounce . Its a constant fight for patience . Bill said wait for the price to come to you ! That takes Iron willpower . Bob .

      • Hi Bob, I do appreciate your taking the time to respond to... [#111708]
        By: George (619 comments) Go to top ↑

        Hi Bob,
        I do appreciate your taking the time to respond to my post as I know that to digest the “stuff” takes more than a cursory glance.
        As you might have noticed, the Co. has now combined Ying,HPG&LM and TLP into one reporting district. This is bothersome as the run grades are way high at Ying,
        much lower at HPG&LM and lower still at TLP. Now all we have is a total. If for instance the “jewel” Ying isn’t producing but HPG&LM and TLP are mining a lot of tonnage the average run grade is going to go way way down. Now based on the reports that I’ve seen, I don’t know anymore what is up in that regard.
        If one were to check page 8 of the attached financial (3 mos ending 122/31/2011), Ying had a run grade of 464g/t, TPG&LM 230g/t and TLP only 149g/t. What a difference and if someone on the site can find the present breakdowns in the latest report it would be of value.

        Thanks again.

  17. Hi All - Halliburton performed the first experimental... [#111700]
    By: Luggie (639 comments) Go to top ↑

    Hi All – Halliburton performed the first experimental fracturing operation in 1947, followed by the first commercial fracturing operations in 1949. Today, Halliburton performs fracturing treatments in both the Bakken and Three Forks formations in northwest North Dakota and northeast Montana, with other operators on the Canadian side. Before 1990, when oil companies drilled vertical wells and attempted hydraulic fracturing, those initial wells produced ~35 barrels of oil per day and one out of 10 were making money. In the 1990s, horizontal drilling became available and the wells drilled during that time frame produced ~ 150 barrels of oil a day and one out of four wells were making money. Then about a dozen years later, oil companies found out how to marry hydraulic fracturing and horizontal drilling, which increased the volume to ~1,000 barrels per day IP (initial production) and three out of four wells were economically viable. Now what/who/agenda/ etc. has a beef with these technologies, combined with good drilling practices under state supervision (without the wackos at Interior, EPA etc. getting involved)? Long KOG, EOG, CLR, MRO, PBN, NOG, MHR etc. with mixed results. Happy Trading

  18. The chart is a one minute, one day chart of... [#111705]
    By: JimG (299 comments) Go to top ↑

    The chart is a one minute, one day chart of GDX:

  19. More reports of Iran missile testing this... [#111706]
    By: lowpickr (153 comments) Go to top ↑

    More reports of Iran missile testing this weekend:

    WTI is looking cup n handle. Maybe we can get a breakout and move up to the 200dma ~ 96.50.

  20. After the pullback in nat gas last week after EIA reports... [#111707]
    By: lowpickr (153 comments) Go to top ↑

    After the pullback in nat gas last week after EIA reports, there could be a bounce with the price finding support near 2.75 were both the 50/200 dmas are converging.

    Reuters: “EIA’s gross gas production report on Tuesday showed that May
    output was flat from April at 72.39 bcf per day, just shy of
    January’s record 72.74 bcfd. Output is still flowing at 3 bcfd,
    or 4.3 percent, above the same year-ago month.”

    Meanwhile gas rigs continue to fall hitting the lowest level since 1999 (see attached for YoY comparsion).

    On the storage front we are still at record highs YoY but the speed of injections is declining matching what we are seeing with drilling activity )see attached).

    Reuters again:
    “While the build came in above the Reuters poll estimate of
    23 bcf and triggered a flood of selling, some traders saw it as
    supportive, noting it again fell short of last year’s gain of 43
    bcf and the five-year average increase for that week of 56 bcf.
    The weekly gain trimmed the surplus to last year by 15 bcf
    to 472 bcf, or 17 percent above the same week in 2011. It also
    sliced 28 bcf from the excess versus the five-year average,
    reducing that surplus to 407 bcf, or 14 percent.
    But total storage remains at record highs for this time of
    year and, at 78 percent full, stands at a level not normally
    reached until mid-September. Producing-region stocks, which lost
    6 bcf last week, are at 83 percent of estimated capacity.”

  21. ... [#111710]
    By: Les (7233 comments) Go to top ↑
  22. ... is up. Enjoy your... [#111711]
    By: Bill Cara (4105 comments) Go to top ↑

    … is up.

    Enjoy your weekend.

  23. Waiting for the heat to come down, scanned news. Headlines... [#111713]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Waiting for the heat to come down, scanned news. Headlines of note:

    (GR) Greece Dep Fin Min Staikouras: May issue T-bills this month to address funding shortage – Greek press
    - Says: “The situation (with cash reserves) is borderline and will remain so until September when the (EU/IMF/ECB) report will be concluded…”

    (GR) Greece Fin Min Stournaras: Reiterates Greece is committed to “measures and reforms to revive the economy and permanently remove the threat of bankruptcy” – Greek press
    - Sees next few weeks as critical for future of the euro “because if we go down a different path than logic tells us, it could drive us outside the eurozone and into bankruptcy.”

    (GR) Bavaria Fin Min Soeder: Greece should not receive any more funds and exit the euro zone by the end of 2012 – German press
    - Says: “when a country like Greece on a continuing basis cannot pay back debts, it must leave the eurozone… Greece should quit by the end of the year. Any new aid, any easing of the conditions would be the wrong path.”
    ***Note: Soeder belongs to the Christian Social Union, the sister party of Chancellor Merkel’s CDU

    (IT) Italy PM Monti: Concerned over rising resentment in Italy towards Germany and the euro – German press
    - Says: “The pressures, which have accompanied the eurozone in recent years, already bear the traits of a psychological breakup of Europe… We must work hard to contain it.”

    (IT) Follow-up: Italy central bank chief Visco: No need at the moment to request aid from Europe to address Italy’s rising borrowing costs – financial press

    (US) Mitt Romney: Would not support Fed launch of QE3 – financial press
    - Says: “I dont think a massive new QE3 will help the economy.”

    SLV iShares Silver ETF (US) CFTC expected to announce the results of their 4-yr investigation into silver price manipulation; Could not find enough evidence to make a case – financial blog

    Euro vs US Dollar Extending gains above $1.24, 1-month high

    (EU) Germany Foreign Min Westerwelle: Opposed to broadening the powers of the ESM and to increasing the purchase of European sovereign bonds – German press (update
    )- Says: “The government cannot agree to joint liability for Europe’s debt or to liability for the unknown. That’s also true for the proposal under discussion at the moment to give the ESM a banking license…I can’t imagine the Bundestag lower house of parliament would give a majority to a policy of unlimited joint liability for Germany. As an MP I certainly couldn’t agree to that.”
    - Adds that ESM banking license would be incompatible with German constitution.

    (EU) Major investment banks are in talks with their counterparties on their derivative trades to make sure that euro transactions will continue to pay in euros if there is an exit from the EU – FT
    - Something that is not clear is if a country would continue to pay down its debt, and whether it would repay it in euros if it were to leave the EU.

    (EU) German press citing former ECB chief economist Issing and his successor Stark making critical comments regarding ECB Pres Draghi’s plans to reactivate SMP – financial press
    - Issing noting that price stability would be “massively threatened” if Draghi acts on his warning.
    - Stark noting the ECB would act outside of its mandate and potentially run the risk of losing its independence.

  24. I wonder what's going on in Australia. Woke up this morning... [#111714]
    By: Ventilation Blues (164 comments) Go to top ↑

    I wonder what’s going on in Australia. Woke up this morning and SLR took a -10% shave. Kaimu ? Any thoughts here? Announced purchase of Integra IGR, their shares up 30% , SLR – 10%.

    • ALOHA!! For me it makes sense. #1-I have shares in both... [#111715]
      By: kaimu (3289 comments) Go to top ↑


      For me it makes sense.

      #1-I have shares in both companies, mostly SLR.
      #2-The deal is not signed sealed and delivered yet. Maybe another offer? IGR management loves the SLR offer!
      #3-Never mind IGR is up 10% since SLR is buying IGR at a low share price going back to 2009/2010. Also I am sure SLR management were considering the effect of negating other offers, hence the premium. If you are going to buy highly prospective juniors then do it now while the share prices are at multi-year lows. In essence the share prices are at multi-year lows but since 2009/2010 much more property and ounces and production have been accumulated.
      #4-They have some great synergies where the new and improved SLR will practically wrap up the Mt Monger gold region including the IGR Randalls deposit/production.
      #5-Latest analyst Argonaut did a site visit(June 2012) and moved its recommendation to BUY from HOLD and put a $0.55AUD valuation on the current company. If you want to go by that analysis then SLR got a great deal @ $0.42AUD!

      I took a look at slides 5 and 6 entitled “1+1=3″ to look at the dilution side and think its a good buy considering the production and other properties and JVs. It moves the dilution up another 100mil shares to 375mil. Still lower than most other mid tier ASXers in their peer group. However, consider some 6.6mil Au ounces with an average Au grade of 3g/t Au. The next SLR JORC will put that over 7 mil with 3+ average Au grades! On the JV side the Imperial and Majestic with Newcrest looks like a shallow high-grade producer on the horizon. The new exploration pipeline is phenomenal, especially all the <100m high grade deposits lined up.

      I am sure that the SLR management is on the ball and I feel they will meet their 2013/2014 production projections of 400,000 au oz. Management proved themselves at Olympic Dam with WMC/BHP and they have proved themselves at SLR and I think the two new juniors, PRH and IGR, add substantial value in a highly prospective gold region with great infrastructure and a stable state government(WA). I think the SLR expertise in these deposits and this region will shine through.

      If you have cash and cash flow and no debt like SLR does then its a great time to be buying up the small guys at these prices! I expect this to be accreditive in the longer term, meaning in 2013. Will GDXJ(Van Eck Assoc)come shopping now? The chances are better. I think the selling is due to Being down 8% today is not indicative of the future share price. I did not sell.


      All that said I am also wary of the US/EU debt markets in the Q1/2103. I am not selling, but I am not buying either. I’ll have to go on a case-by-case basis between now and then.

  25. The "no bailout" clause of the Maastricht treaty appears to... [#111716]
    By: Les (7233 comments) Go to top ↑

    The “no bailout” clause of the Maastricht treaty appears to have been side-stepped in the following manner:

    The Governing Council has formally stated that “convertibility risk” — ie, euro break-up risk — is playing havoc with monetary policy, pushing Club Med debt costs out of control.

    The term is crucial. Italy and Spain are deemed victims of forces beyond their control. Action by the ECB no longer constitutes a “fiscal rescue”. The `no bail-out’ clause of the Maastricht Treaty has been elegantly finessed.

    Just as traders are sniffing out further QE to come, so does the media…