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
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Stock Investors Keep the Best and Dump the Rest

Commodities / Gold and Silver Stocks 2013 Oct 09, 2013 - 06:14 PM GMT

By: The_Gold_Report

Commodities

Greg McCoach, publisher of Mining Speculator newsletter, is not ashamed to admit he has taken a big hit in juniors in the last couple of years. What he has done in response is what he advises all investors to do in this interview with The Gold Report: Get rid of the also-rans and keep and build positions in those companies that have what it takes to gain in multiples when the market recovers. And he suggests six companies that could do just that.

The Gold Report: You wrote recently, "The 2008 crisis will pale in comparison to what is now on the horizon." Given that the 2008 crisis nearly destroyed the world economy, how bad will the next crisis be?


Greg McCoach: The derivative issues were never fixed after the last crisis. In essence, the laws were changed so that the banks didn't have to keep derivative liabilities on their books. That way, bank stocks could soar again. But the banks have acted even more recklessly since 2008 and are now in bigger trouble. The recent White House meeting with all the big financial players should be a warning to investors that something big is about to hit. The media touted this as a meeting to discuss the debt ceiling, but I would say it was about the crisis that is about to envelope the big banks again. Barack Obama didn't run that meeting, JP Morgan Chase ran the meeting and told everyone what was coming. The banks don't have the capital to cover their interest rate derivative problems that are as big as the Pacific Ocean. I would tell investors to expect ten times worse conditions from what we saw in 2008.

TGR: I've read that even if only 4% of the derivatives held by the banks are at risk, and only 10% of that goes south, it would completely wipe out the net worth of the top five banks.

GM: At this point, the acceleration of what I consider tyrannical measures on the part of the U.S. government has reached such a degree it's obvious that something is coming. Why would it buy billions of rounds of hollow-point ammunition? Why is it buying millions of ready-to-eat meals? Why would it take all these extra security measures? Obviously, the U.S. government knows more than the general public does and it reveals something is wrong and the government is worried about it.

TGR: We had this situation after the scandal with HSBC Holdings Plc (HSBA:LSS; HK5:HKG) where the U.S. Department of Justice admitted that criminal acts were probably committed, but prosecution would be unthinkable because the big banks cannot be allowed to fail.

GM: Well, that pretty much tells the story right there. The bureaucrats, Rebooblicans and Dumocrats, as Jim Willie says, don't represent the people of America anymore. They represent themselves and their elitist banker puppeteers. They're trying to control the message and all the outcomes. It's a train wreck in process, but you have to tip your hat to them—they have been able to keep it together for so long. We could have experienced the end game at multiple occasions in the past 12 years, but it now seems to me that the limits of their good fortune are quickly coming to a close.

If you're just watching CNN and FOX News, you're oblivious to what's really going on. But if you're a thinking person, you should start getting together food storage and get your investments in line for the major problems ahead. I can't tell you when it's going to happen because I don't have a crystal ball, but it's not a matter of if this is going to happen; it's just a matter of when.

TGR: What will be the warning signs of the next crisis?

GM: The warning signs are all around us right now and have been for the last six months. The big meeting at the White House with all the financial people I already mentioned was a huge sign. The erratic behavior lately of the U.S. government with the Middle East, particularly Syria, is also a sign. In recent weeks we have heard about a worldwide currency reset that is to take place in the very near future. This is telling those who have ears to listen that the Keynesian fraud of creating monies out of this air has reached a limit so they need to reset.

All of this means that we'll wake up one morning and life will be very different. You'll see markets performing erratically. You'll see civil unrest. Most people think it will have something to do with another banking crisis, a derivatives situation. It could be a new war. I think things could happen quickly and take us down a very dark path. All we can do is prepare for ourselves and our families. You have got to own physical gold and silver that is in your possession.

TGR: The macroeconomic indicators suggest that the prices of gold and silver should be much higher than at present. Why do you think that 2013 looks to be the year that the bull markets in these metals ended?

GM: I don't think the secular precious metals bull market has ended. I think we're just taking a pause. I liken this to the move that happened in the 1970s when we made the U.S. dollar the official reserve currency of the world, and people could again own physical gold and silver. Gold went from $35/ounce ($35/oz) all the way up to $195/oz. Then it collapsed to $105/oz. A lot of people thought that was it for gold. But then it ran to $855/oz.

Since then, we've hit $1,950/oz, which was then corrected back to the $1,200–1,300/oz level. We've been bouncing around $1,200–1,400/oz, and I believe this is just setting us up for the foundation of the next big move in gold, which will take us to much, much higher levels. I'm thinking $3,500–5,000/oz. It will be associated with collapsing currencies, the devaluing dollar, problems in the banking sector, etc.

TGR: What will be China's role in this?

GM: China is the world's biggest producer of gold, and now it is becoming the biggest holder of gold. It is dumping U.S. Treasury bills and buying anything it can get its hands on.

TGR: Is there no question in your mind that gold and silver are bargains now?

GM: Absolutely. People should be lining up to buy on this dip. This is a great opportunity. Nothing has fundamentally changed. Has the government started to become fiscally responsible? I laughed out loud when I heard about this "taper" of quantitative easing. What a complete joke. This should show thinking people the gig is up for the financial fraud being perpetrated at the Federal Reserve.

TGR: Many people argue that interest rates can't go up because then the U.S. won't be able to pay its debt, and the whole derivatives market will be threatened.

GM: If interest rates go up they are damned. If interest rates go down they are damned. Either way the Fed is screwed because of the derivative situation with their largest banks. I would expect interest rates to move in the direction that allows their banks and the U.S. government to survive the longest, but there is no way out of this that I can see.

TGR: What do you think of the argument made by the Gold Anti-Trust Action Committee that the big banks and the central bankers are suppressing the prices of gold and silver?

GM: The government doesn't like rising gold and silver prices because it tells the public that something is wrong. Now, does the government come into our market and play games? Absolutely, but I don't really pay too much attention because, ultimately, I believe free markets will dictate the course of the metals prices. It's yet another sign on just how out of control the powers that be are when they seek to control the outcome of everything. They think they are God, but they're about to find out otherwise.

TGR: You wrote on Sept. 20, 2013 that you've lost confidence in "a recovery this fall in our overall junior mining stock market." If you are right, doesn't this mean that many juniors won't survive? And if this occurs, will it make the survivors stronger?

GM: Absolutely. This is an unfortunate chain of events, but in many regards it needed to happen. There were just too many junior mining companies. There are only so many talented teams of professionals in the industry that know how to make the discoveries that can be developed into producing mines. When you look at the monies that have been raised in this sector in the last 5–10 years, we have very little to show for it. All the low hanging fruit has already been discovered.

So this "wipeout," as I'm referring to it, has been very difficult on investors, people employed by mining companies and newsletter writers like myself. I was hoping we would have a recovery this fall. The early signs in July and August seemed to indicate one because the strongest companies started to move and in many cases doubled from their lows in late June, early July. That is usually a sign that things are going to float again, but it all fell apart in September.

TGR: You have recommended that investors reduce their portfolios "to just a few of the highest quality stocks as we await the recovery." What are the criteria that determine the highest quality stocks?

GM: Companies with plenty of cash on hand that don't need to raise money right now. It is almost impossible to raise money in this sector at this juncture. Look for companies that are producing from high-grade projects with low costs, companies that will make money even if gold and silver go down further from current levels.

Even with companies like these, there is always something making things more difficult. There are a lot of great companies I like in Mexico, where the politicians are trying to change the laws to charge more taxes. Politicians have an insatiable appetite for other people's money. It will affect companies in Mexico with low-grade projects to the point it may force them out of business.

TGR: When do you think the market will turn around?

GM: Things are not going to get better at least until 2014, and in the meantime a lot of juniors hanging by their fingernails are going to go out of business. That will solidify the market for the survivors. Maybe that is as it should be. I do believe that monies we've lost in this sector in the last two years can quickly be made up if investors maintain a position, or build positions, during these low times in the highest quality companies. Because when the market does recover, it is going to be a screamer.

TGR: Can we talk about some of your favorite companies?

GM: SilverCrest Mines Inc. (SVL:TSX.V; SVLC:NYSE.MKT) is probably the top company I'd like to talk about. It has more than $40 million ($40M) in cash and growing. The company is making money whether gold or silver prices go up or down because it is mining higher grade rather than lower grade ounces. SilverCrest keeps finding more ounces as the Santa Elena mine grows, and it has made another discovery that is moving along quite nicely in another area of Mexico.

The market is so bad currently that SilverCrest is not performing as it should. It's holding its own, but is at a great discount to where it will be. This is a great situation to play because at current prices I see at least a four or five multiple when the market fully recovers.

TGR: SilverCrest was down to about $1.50/share in August, and then the price soared to over $2.20/share. But now it is back down to $1.73/share.

GM: And it could go lower. I would say that even the best companies will move lower. Tax-loss selling is going to come up. People need to clean out their portfolios. Everybody's situation is different. I've never experienced losses like this before, and I've been doing this for a long time. But once it's cleaned out, it will have to recover. If the world wants to have iPhones, computers and high-tech cars, it takes base metals, precious metals and rare earths to build these things.

TGR: You wrote that after Canadian Zinc Corp. (CZN:TSX; CZICF:OTCQB) had been given a water license for its Prairie Creek mine in the Northwest Territories, which is silver, zinc, copper and lead, the market did not get too excited about what should have been an exciting event.

GM: That was shocking to me, like a dagger to my heart. Here is a property that was discovered and developed by the Hunt brothers in the 1970s. Canadian Zinc got control of it in the 1990s and has been trying to develop it ever since. Unfortunately, the key water permit necessary for production was not renewed when it should have been, and it was a long struggle to get it back.

Canadian Zinc traded over $1.50/share many times without the permit even being close to being approved. The permit is a big deal also because it attracts buyouts from larger companies that need to replenish their reserves. And this is a unique polymetallic deposit of size. What has been drilled is already big, and holes drilled a kilometer away from known mineralization have hit. This resource has a huge signature that attracts big players in the industry.

When Canadian Zinc got the permit, the market did nothing. I think it went up $0.04/share that day and has since sold off from its high of $0.70/share. I was really counting on getting at least $1.50/share. Well, when the market does recover, I would expect Canadian Zinc will be trading at a multiple of where it is right now. So it is one to hold for the long term because it's essentially been derisked.

TGR: Let's talk about some other companies you have given a buy rating.

GM: Colorado Resources Ltd. (CXO:TSX.V) is in a unique situation. I can't recommend most exploration companies now because they have very little in the way of funds, and they can't raise money. But Colorado had $8M in the till. Then, with a key copper-gold drill hole at its North ROK property in British Columbia, its stock ran all the way up, in this market, to $1.70/share from $0.16/share. Since then, further drilling hasn't confirmed the first high-grade discovery hole, although it is building a nice resource very quickly with every successful drill hole. In my opinion, it actually may have better potential than a nearby mine that's already slated for production in late 2014 or 2015.

TGR: Is that Imperial Metals Corp.'s (III:TSX) Red Chris mine?

GM: Yes. Red Chris is only 15 kilometers away and has a very similar signature to the discovery at North ROK. Colorado is drilling at 100 meters (100m), 200m, 300m, 400m, 500m away from the discovery hole, and the company is hitting average grade or better than Red Chris'. Based on my back-of-the-envelope calculations—not NI-43-101-compliant—Colorado has already put together 100 million tons (100 Mt) of ore that's economic and closer to the surface than Red Chris'. Red Chris has 300 Mt, so Colorado is already one-third of the way there with only 12 drill holes. And Colorado is closer to the main road.

This is an incredible story. And yet, once again, the market doesn't seem to care. What's encouraging to me is that Colorado has the money in the treasury to finish all the work for 2013 and 2014 without raising new funds. I think North ROK will become a resource that is taken out by a bigger player as the company gets to the 300 Mt of ore level. And because it is trading in the low- to mid-$0.20 range, I think this is a good bet to make some serious money when the market recovers.

TGR: Let's talk about Buy recommendations in Mexico.

GM: Excellon Resources Inc. (EXN:TSX; EXLLF:OTCPK) is also in a good situation. The company has money in the treasury. Excellon is paying for the drilling with profits from production at its La Platosa project in north-central Mexico, right in the main silver belt. I've always believed that Excellon is in control of its own destiny. The company just has to keep doing what it has been doing in hopes of hitting the source of all the known mineralization it has already uncovered.

The big play, the big blue-sky upside potential in Excellon, is that it is paying for all the exploration work with its own funds, without further dilution of current shareholders. It doesn't matter how bad the market gets; this is a very high-grade situation. Even if silver prices go to $5/oz, Excellon could still probably make money at that level. That's because it has negative cash costs when you consider the high-grade lead and zinc that goes along with the silver.

TGR: Now, Orex Minerals Inc. (REX:TSX.V) has projects in Mexico but also in Sweden and Canada, right?

GM: Orex is a very good company with an extremely talented management group. I've been involved with this group before and made money, but at this point I have to be honest and say Orex is in a tough situation. It finds itself with little cash. The company has got to do something with its burn rate and just try and survive right now. Unlike Colorado, Orex does not have a major discovery in play it can fund with current monies. Orex will probably need to raise money, but this would probably be too dilutive, even if it could raise it.

TGR: Is there anything you like in Peru?

TGR: Tinka Resources Ltd. (TK:TSX.V; TLD:FSE; TKRFF:OTCPK) is another company that's on to a potentially very large discovery of merit at Colquipucro and Ayawilca. It started out as a silver resource that the company was trying to build to 30–50 million ounces (30–50 Moz) and then possibly 100 Moz. As Tinka was doing the boots-on-the-ground work, as I like to call it, it uncovered some large anomalies deeper in the system and hit with drilling what looks to be some very high-grade zinc and lead. The more drill holes Tinka can put into these anomalies to define how big this is, the more exciting it will become.

Tinka, however, is caught because it needs to raise money again. But this is one of the very few companies that may be able to actually raise money currently. I don't know how much it would want to raise at current levels, but it may be able to pull it off and keep things going. Otherwise, I would say Tinka may be in a situation where it has to slow things down and just wait for the recovery. If a company has the right people and the right share structure, it can make it. Tinka has cut everything as low as it can and has had to let go of employees. The company has cut salaries. It has enough money to cover itself for a couple of years at that reduced level, so it will probably be just fine.

TGR: Many long-time investors in the junior space have been so battered over the last couple of years that they've given up. What is the best reason for people to stay invested in juniors?

GM: I can't blame people for getting so frustrated. They've taken horrendous losses; we all have. Some of the sharpest people I know in this business have been hammered. And when you suffer a lot, you tend to say, "Hey, I don't want to do this anymore." Those who can gut it out, however, those who have the fortitude and the understanding have to dump the garbage. Just take the pain, and get it over with. Realign portfolios to the highest quality and build positions in companies that can make up for a lot of lost ground when the market recovers.

TGR: Greg, thank you for your time and your insights.

Greg McCoach is an entrepreneur who has successfully started and run several businesses in the past 30 years. For the last 14 years, he has been involved with the precious metals industry as a bullion dealer, investor and newsletter writer (Mining Speculator and The Insider Alert). McCoach is also the president of AmeriGold, a gold bullion dealer. He writes a weekly column for Gold World.

Want to read more Gold Report interviews 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 Streetwise Interviews page.

DISCLOSURE:
1) Kevin Michael Grace conducted this interview for The Gold Report and provides services to The Gold Report as an employee. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: SilverCrest Mines Inc., Colorado Resources Ltd., Excellon Resources Inc. and Tinka Resources Ltd. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Greg McCoach: I am actively buying and selling stocks and at any time may own stocks discussed. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews 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 - The Gold Report is Copyright © 2013 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.

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) 981-8999
Fax: (707) 981-8998


© 2005-2019 http://www.MarketOracle.co.uk - 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