Tag: the gold report

Leonard Melman: Are You Prepared for Hyperinflation?

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The Gold Report: You recently told a crowd of investors at Prospectors Developer Association of Canada (PDAC) that precious metals are the best place to invest in an inflationary period. Why is that?

Leonard Melman: When prices are going up, you wouldn't want to be in housing stocks or auto financing, but you would certainly want to be in precious metals. You also might want to short the bond market. That is why you have to be aware of the direction of inflation. It is important to the concept of precious metals pricing. If you've been around for a few years, as I've been lucky enough to be, then you can easily recall a time when high inflation was the absolute key ingredient in massive previous bull markets. That is why I thoroughly look at what has led to past inflation and hyperinflation. I use four examples: the Roman Empire, the French Revolution in the late 1700s, the German hyperinflation in the 1920s and the recent catastrophe of hyperinflation in Zimbabwe. I examine whether America and other countries in the world are perhaps following the same paths that led to those previous hyperinflations.

TGR: Do you think investors are going to see hyperinflation in the foreseeable future? Continue reading "Leonard Melman: Are You Prepared for Hyperinflation?" →

Value Market in Gold Will Work for Patient Investors: Jocelyn August

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The Gold Report: Jocelyn, I'm looking at a portfolio of junior precious metals mining stocks, and all I can see is red ink. With the exception of MAG Silver Corp. (MAG:TSX; MVG:NYSE), all in that group are underwater for the past 52 weeks. We are currently in a down-trending precious metals market, and I'm interested to know if catalysts matter anymore.

Jocelyn August: Catalysts absolutely do matter right now. We may see a catalyst occur in a company followed by a 2% uptick in its stock, on the same day the sector as a whole may be down 25%. We may see that even in this price environment. If you were aware of that catalyst and you bet on it, you would actually have fared better than the sector on that day. By comparison it actually did help the stock price.

"Catalysts absolutely do matter right now."

Conversely, we also see a fair amount of catalysts that might have a negative consequence to the stock price, particularly when it comes to permit approval decisions that may go the wrong way for the company. You could get pretty badly burned. For example, back in early October 2012, Pacific Booker Minerals Inc. (BKM:TSX.V; PBM:NYSE.A) announced that the environmental assessment permit for its Morrison project in central British Columbia was denied. The stock dropped 66% in one day and then dropped even further in the week. A month after that event, Pacific Booker was down 75% from the day before the announcement. So, catalysts do matter.

TGR: In this kind of depressed gold and silver market, it appears that the effect of negative news is magnified. Is that in fact the case? Continue reading "Value Market in Gold Will Work for Patient Investors: Jocelyn August" →

David Baker's Three Must-Haves for the New Generation of Gold Companies: Accountability, Accountability and Accountability

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The Gold Report: The major gold producers have ceded market share to gold exchange-traded funds and royalty companies and are vastly underperforming those investment vehicles. If you were running a major gold producer, how would you go about restoring the appeal of your company's shares?

David Baker: Mining companies need to restore trust and give more clarity. They are confusing investors because on the one hand they tell us they have so many ounces of gold in reserves and are producing so many ounces of gold, and then they confuse us by benchmarking all this to dollarsa depreciating asset. We believe the mining companies should be consistent and report in gold; this would then give investors a clearer picture on how much gold it is costing to mine the resource and how many ounces of gold are added to the shareholder vault. Continue reading "David Baker's Three Must-Haves for the New Generation of Gold Companies: Accountability, Accountability and Accountability" →

John Williams: How to Survive the Illusion of Recovery

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The Gold Report: The last few years have been very volatile for investors, particularly resource equity investors. The mainstream media, citing government statistics of improved employment rates and housing starts, called an end to the recession and is forecasting a slow recovery in 2013. You are looking at the same indicators, but coming up with different numbers. Let's start with the unemployment rate. What are you seeing and why is it different than what we are hearing everywhere else?

John Williams: I contend that the economy effectively hit bottom in June 2009, followed by a period of somewhat volatile stagnation, and it is beginning to turn down anew. There never was a recovery and no economic data shows the type of recovery that the official gross domestic product (GDP) report is showing. The GDP shows levels of activity now that are above where the economy was before the recession. It's been above that level now for more than a year. No other major economic series has shown a full recovery, shy of perhaps inflation-adjusted retail sales, which is due to a problem with the inflation rate used to adjust the series. Generally, the illusion of recovery has resulted from the government's use of understated inflation.

TGR: Are you predicting a double-dip recession? Continue reading "John Williams: How to Survive the Illusion of Recovery" →

Gold as a Weapon in the Currency War: Chris Mancini

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The Gold Report: You recently wrote, "Gold mining companies are no different from any other company in that company managements must determine the most effective way to return capital to shareholders."

In an environment where there haven't been corresponding increases in equity prices to the price of gold, how does a management group effectively grow per-share value for shareholders?

Chris Mancini: If you're too big and don't think that you can grow on a per-share basis, the answer is to return some of the cash to shareholders through a dividend. If a company doesn't have high-quality, high-return-on-capital, low-risk projects to deploy that cash flow into, then a portion should be returned to shareholders as a dividend.

TGR: We haven't seen a whole lot of that. Continue reading "Gold as a Weapon in the Currency War: Chris Mancini" →