Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Financial Market Conditions Extremely Gold and Silver Friendly

Commodities / Gold and Silver 2011 Aug 11, 2011 - 03:09 AM GMT

By: The_Gold_Report


"Buy the TSXV" was the advice Michael Ballanger, investment advisor for Union Securities Ltd., sent to his clients the morning after the Dow Jones Industrial Average lost 698 points, the worst loss since 2008. In this exclusive Market Conditions Update for The Gold Report, he explains why he sees the current climate as "extremely gold-and-silver friendly."

As of this morning, I restated my "Buy the TSXV" recommendation based (largely) on the same reasons that I stated back in May. Until U.S. real estate turns, the U.S. economy is growing at structural stall speed. Until we see consecutive monthly rises in the Case-Schiller Home Price Index, policymakers—led by the Federal Reserve Board, the U.S. Congress, the European Central Bank, the People's Bank of China and every other individual who has never met a payroll in their lives—are going to embark on policies that are extremely gold-and-silver friendly. The Fed announcement Tuesday afternoon turned markets sharply higher, thus reinforcing my comments back in May that we will see as many periods of quantitative easing as necessary until the real estate market in the U.S. (and Europe) improves.

Now—as for the gold stocks—NEVER in my 35 years in this industry have I ever seen them so incredibly disconnected from the underlying commodity that they produce. In the past 72 hours, the fundamentals for this industry group absolutely soared and yet the shares declined. The "pundits" would suggest that "the gold stocks are telling you that gold prices are about to decline!" and I might agree with that except the historical lag effect between gold and gold shares is about four to six weeks and this has been going on since January! What I see in here is that the gold price might decline in the shorter term but the shares are going to absolutely explode based on the projected earnings and price-earnings ratio multiple escalation brought about by the very simple fact that they are extracting and selling gold at $1,700 per ounce.

I am advising clients to buy senior gold stocks as a proxy for not only this undervaluation, but also because they have less than 1% of professional managers of pension and mutual funds involved in this space. If a mere 20% of the money now trading Apple, Cisco and IBM decide to move to the precious metals space, it would inhale the entire market cap of this sector.

As for the junior mining space, avoid the penny stocks with poor treasuries that are purely exploration plays. Buy the issues that have adequate working capital and definitely accumulate the "discovery stocks" like Kaminak Gold Corporation (TSX.V:KAM) in the gold space and Tinka Resources Ltd. (TSX.V:TK; Fkft:TLD; Pksheets:TKRFF) in the silver space. These companies are extremely well-funded and their results are indicative of large gold and silver reserves in the development stage.

Without getting too animated here, I am pounding the table in my bullishness for the gold/silver sector. I am reminded of 1978 when the major markets were locked in a stagflation death spiral with fund managers holding a mere 0.7% of assets in gold, silver or precious-metals-related securities. They all moved in tandem over the next 18 months to north of 22% exposure. Well, given that the market cap of Apple Computer is basically larger than the entire TSX Venture Exchange, I would suggest that this massive asset allocation shift is, indeed, coming.

We just survived the Fear cycle; now it is time to benefit from the Greed cycle. Assess your risk-tolerance levels; look deeply into the mirror and if you pass your own internal acid test, you should get down to business and recall the famous old adage from the pits of the Chicago Mercantile Exchange: "When they're yellin', you should be sellin' and when they're cryin', we should be buyin'!" The sobs I have been hearing in the past week have been wails from the highest yardarm.

Finally, in 2009 I included a chart of the parabolic plunge of the TSXV as measured against the (then) rising price of gold. It was what turned me so bullish at the time. I urge you all to observe the same chart from yesterday:

michael ballanger


Now, go out and buy 'em!

Michael Ballanger completed his undergraduate studies at Saint Louis University, where he earned a BSc in finance and a BA in marketing. He joined the investment industry in 1977 with McLeod Young Weir Ltd., and currently serves as an investment advisor at Union Securities Ltd. His substantial background in corporate financing is further informed by his 30 years of experience as a junior mining and exploration specialist.

Want to read more exclusive Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.

1) The following companies mentioned in the interview are sponsors of The Gold Report: None.
2) USL recently acted as agent for a private placement offering of Tinka Resources and owns warrants in this stock.

Junior mining companies are speculative investments whereby significant loss of capital is possible and should be suitable for risk tolerant investors only. This article is solely the work of the author who is a registered investment advisor at Union Securities Ltd. ("USL"). This is not an official publication of USL and the author is not a USL analyst. The views (including any recommendations) expressed in this article are those of the author alone, and are not necessarily those of USL. The information contained in this article is drawn from sources considered to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it do the author or USL assume any liability. The information is given as of the date appearing on this article and neither the author or USL assume any obligation to update the information or advise on further developments relating to the information provided herein. This article is intended for distribution in those jurisdictions where both the author and USL are registered to do business in securities. The holdings of the author, USL, its affiliated companies and holdings of respective directors, officers and employees and companies with which they are associated may, from time to time, include the securities mentioned herein.

Streetwise - The Gold Report is Copyright © 2011 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

The Gold Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.

From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110
Petaluma, CA 94952

Tel.: (707) 981-8204
Fax: (707) 981-8998

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules