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U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold and Silver Mining Stocks Time to Buy?

Commodities / Gold & Silver Stocks Nov 04, 2008 - 05:42 AM GMT

By: Peter_Zihlmann

Commodities

PERFORMANCE: ONE MONTH / TWELVE MONTHS

% CHANGE PRICE OCT. 31 1 MONTH 12 MONTHS
THE TIMELESS PRECIOUS METAL FUND (EUR) 3.58 -40.5% -77.6%
THE TIMELESS PRECIOUS METAL FUND (USD) 4.57 -46.6% -80.2%
GOLD 723.20 -16.6% -8.4%
SILVER 9.81 -18.3% -31.5%
PLATINUM 824.00 -18.4% +43.0%
PALLADIUM 199.00 -0.2% -46.6%
GOLD & SILVER INDEX - PHILADELPHIA ($XAU) 81.08 -38.2% -56.2%
AMEX GOLD BUGS INDEX ($HUI) 193.87 -38.3% -54.8%
GOLD MINERS INDEX - AMEX ($GDM) 574.84 -38.6% -57.5 %

The NAV of THE TIMELESS PRECIOUS METAL FUND decreased 40.5% in October 2008. The price of gold went down 16.6% while the one for silver decreased another 18.3% respectively. Gold and silver indices also plummeted 38.3% on average over the past month. Junior gold and silver stocks - the domain and focus of THE TIMELESS PRECIOUS METAL FUND - have dropped to the level of 2002 and ignore the fact that the price of gold has increased by 180%, the price of silver by 140% during the same period. The market also ignores that gold and silver companies have added millions of ounces to their reserves and many have gone into production.

Many companies trade for the value of their liquid assets. October 2008 will not only be remembered as THE BLACK OCTOBER (or should it be called red for the blood in the street?) but also as THE opportunity to pick up outstanding bargains.

TOP FIVE GOLD HOLDINGS
GOLD RESOURCE CORP. - 7.6%
ALAMOS GOLD INC. - 6.7%
MINEFINDERS CORP. - 4.0%
OSISKO EXPLORATION LTÉE. - 3.6%
MINERA ANDES - 3.2%
TOP THREE SILVER HOLDINGS
ORKO SILVER CORP. - 5.0%
FIRST MAJESTIC SILVER - 4.0%
ENDEAVOUR SILVER - 2.8%
TOP PLATINUM/PALLADIUM HOLDING
EASTERN PLATINUM - 1.5%

Our main position, GOLD RESOURCE CORP., is a good example of an absurdly undervalued company. With production starting at the beginning of 2009, mill construction being fully financed, a targeted production of 200,000 ounces AuEq at an estimated cash cost of $100/ounce and a targeted dividend of at least $0.50 per share, the share price should be ten times of what it is now - and in due course it will.

THE TECHNICAL OUTLOOK FOR GOLD

The long-term up-trend for gold is in good condition.

The HUI Gold Bugs Index has dropped to the level of 2002 when gold traded between $ 250 and $ 350.

Technical indicators as the one below also indicate a heavily oversold market.

EXPLORATION - RESOURCES - RESERVES- PRODUCTION

Value is created through discovery of mineral deposits and bringing them into production. As the table below shows, 80% of the companies of the portfolio are in production or near production. 20% of the companies have not made any decision to go into production in spite of having substantial mineral reserves. Their aim is to prove up a substantial resource in the hope that one of the majors will take them over - at a substantial premium to the cost of exploration.

HEDGING STRATEGY

As most of our investments are in CAD, we hedged our CAD position when appropriate through the forward purchase of EUR against CAD, which has turned out to have been a judicious strategy during 2006 and 2007. The CAD-positions remain unheged.

Also our EUR/USD positions remain unhedged. The € lost about 20% against the US$ since July. In the long-term, we expect however more dollar weakness.

Many junior gold and silver companies offer impressive low valuations, many even trading below liquid assets.

Companies which have recently been bought by competitors paid between $ 50 and $ 150 for an ounce of gold in the ground. Today, many companies trade at a market capitalisation of less than $ 10/ounce. THE TIME TO BUY IS NOW!

FACT SHEET http://www.timeless-gold.com/
ISIN: MT0000072612
Swiss Security N°: 1921952
Investment Manager: P. ZIHLMANN INVESTMENT MANAGEMENT AG,
Zurich, Switzerland
Currency:
Domicile: MALTA (EU)
Licence: July 16, 2004
Size (October 31, 2008) 4.87 Million €
Custodian Bank: Bank of Valletta, Malta
Administration Company: Valletta Fund Management, Malta
Auditors: PriceWaterhouseCoopers, Malta
Legal Advisors: GMTD - Law Firm, Valletta, Malta

VISIT OUR WEBSITES: www.timeless-gold.com , www.timeless-energy.com , www.sierramadre-silver.com OR www.pzim.ch

REGISTER NOW AT REGISTER@PZIM.CH TO RECEIVE OUR RECOMMENDATIONS OF ABSURDLY UNDERVALUED GOLD AND SILVER COMPANIES.

OUR RECENT RECOMMENDATION:
EUROPEAN GOLDFIELDS (EGU)

By Peter Zihlmann

www.pzim.com
invest@pzim
phone +41 44 268 51 10
mobile +41 79 379 51 57

Disclaimer: P. ZIHLMANN INVESTMENT MANAGEMENT AG does not accept any liability for any loss or damage whatsoever, that may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in the trading recommendations or in any accompanying chart analyses, whether communicated by word, or message, typed or spoken by any of its employees.

Peter Zihlmann Archive

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