April 21, 2017

#Gold @IntegraGoldCorp $ICG

Comments from Paradigm: Integra Gold - Updates


·         There are currently 6 rigs operating right now, 5 on surface (4 at Triangle and 1 at Lamaque Deep), and 1 underground at Triangle. There are 8500m of surface drilling results pending, and 10,000m (10mx10m spacing) of underground infill drilling on the bulk sample area (C2) ongoing. Drilling results have been consistent (see yesterday's release) and the confidence in the deposit continues to increase.  


·         The underground exploration ramp is complete down to 850m and has reached the footwall of the C2 zone. Integra is on track to start the Bulk Sample in May, and have retained BBA as the independent consultant to supervise and audit the bulk sample, which is expected to mine ~25K tonnes. We estimate the production ramp up from bulk sample to production below (based off of the PEA schedule):


o   2017 (Bulk Sample) – 8,000Koz

o   2018 (ramp up) – 76,000oz

o   2019 (full production) – 125,000oz


·         The C2 structure will account for the majority of production in the first 4 years, and the infill drilling is indicating that there is still potential for upgrading: the current indicated resource grade at Triangle is 8.65gpT – The 8 infill holes released on March 22 averaged 41gpT over 6.2m (uncapped and downhole widths), and the 4 C2 holes released on April 18th averaged 32gpT over 4.1m (uncapped and downhole widths).


·         We continue to view the transition from Bulk sample into production as an important de-risking element to the Integra story. The bulk sample will allow for validation of the deposit and fine-tuning during the transition on several fronts:

o   Confirm the geometry and orientation of the C2 structure

o   Confirm and reconcile the grade distribution within the C2 structure

o   Reconciliation of the resource estimates and deposit limits

o   Confirm mill performance and recoveries


Valuation Comments


-          Integra continues to rank in the top half of our Takeover Twenty rankings and trades at 0.73x NAV, in line with our emerging-developer average of 0.71x. The share price is up 55% YTD,  a reflection of management continuing to meet important milestones (positive resource update in March, ramp development on track, positive infill drilling results, bulk sample planning)


-          Although we view Integra as a prime takeover candidate, we are confident that Integra will meet or exceed our strong growth expectations over the next year and can comfortably  graduate into a Junior Producer.


-          As a comparison, we have had three graduates from our Takeover Twenty since August 2014: Guyana Goldfields (up 129% since Aug/14), Torex (up 75% since Aug/14) and Roxgold (up 52% since Aug/14). The average performance was 85%, not far off the 90% gain from companies not acquired/graduated from our Takeover Twenty in the same time frame (see our April 5th note attached). Guyana Goldfields remains on our coverage list, and now trades at 1.13x NAV.



Emerging-Developers P/NAV


April 3, 2017

#Gold & #Silver #COT Commitment of Traders

Net commitments of futures traders (attachment 1) shows that large speculators (hedge funds and money managers) have increased their long gold positions. Net commercial gold dealers have increased their short positions.


The KITCO Gold Survey reveals that Wall Street and Retail Investors (Main Street) are bullish for this week (attachment 2).


The Gold Barometer shows the same pictureas last week. Gold stocks are halfway between neutral and overbought and the physical gold price is neutral (attachment 3).


The gold hourly chart indicates that gold had a good run last Monday and then glided down till Friday, March 31st and just gained a few dollar at the end of the trading session. As per Friday, New York time 4 p.m., gold closed at US$ 1,247 per ounce, unchanged on the week (attachment 4).


HUI, the ARCA Gold Bugs Index, went nowhere last week. It is still trading below the 50-day moving average and was unable to really penetrate on the upside the 200-day moving average since November 2016 (attachment 5). HUI is an index of shares of gold companies.


Commitment of futures traders in silver reveals that large speculators have increased their long positions and net commercial silver dealers their short positions. Historically these positions are extremely large.


In the first quarter of 2017 silver (+13.4%) has outperformed gold (+8.6%).


Over the last 6 months the gold price didn't perform well against currencies of emerging markets (see attachment 7-9). It lost 7.3% versus the Brazilian Reals, 7.5% versus the Mexican Pesos and 1.6% versus the Chinese Yuan.


March 29, 2017

What #gold price are large cap gold stocks reflecting?

As can be seen from the Table below, Randgold Resources is trading at a 30% premium, which implies a gold price per ounce of US$ 1'635. On average the large capitalized group is trading at a premium of 5% or an implied gold price of US$ 1'321 per ounce.




- Gold Equities Continue to Lag the Underlying?…What Gold Price the Large Cap Gold Equities Reflecting?: Scotiabank Senior Precious Metals Analyst Tanya Jakusconek this morning noting that with the gold price continuing to march upwards post Fed (and post Trump's healthcare failure), she thought she would highlight the valuation level in the group and her stock recommendations. As per the chart below, the group is currently trading at an overall premium to gold price of just 5%!


Premium/Discount to Gold Price – %

Source: Scotiabank GBM Precious Metals Research


Recall that the "Implied Gold Price" resulting the calculated premium/discount (in the chart above and table below) is the gold price that would be need for the respective stocks to be trading at 1.0x NAV3% using Tanya's modeled estimates.


Source: Scotiabank GBM Precious Metals Research


March 27, 2017

#Palladium- The Star of the Metals Markets $PALL

The star of the week was Palladium. The grey-white metal touched the highest price since March 2015 (attachment 1).  The weekly chart shows the medium term base palladium has formed (attachment 2). The Point&Figure chart reveals the breakout of the chart formation (attachment 3).


The 10-year palladium chart shows that the metals is just US$ 100 below the peak of 2014 and therefore has outperformed, gold , silver and platinum (attachment 4). The palladium price is now trading around the highs of 2015, which could be a resistance point.


A Reuters article (March 16) stated that a fund created by Norilsk Nickel had purchsed palladium from Russia's central bank reserves to help meet demand from its customers. The central bank holds reserves of palladium, which Norilsk will use to fill orders and not for stockpiling.


The Russian central bank has been selling palladium

for years into the market (from stockpile) but lately it seemed that selling had diminshed. It all looks Russia has found a way to better control the palladium market and therefore the palladium price.


Also the big fairy tale by politicians and car dealers

that diesel engines are less polluting has come to

an end. German Chancellor Angela Merkel said once

if you buy a diesel car then you buy a car which is more environmental friendly. She said this during an

electoral campaign. Diesel engines in relation to gasoline engines are more efficient, they need less fuel and therefore emit les CO2. However, they emit a lot of nitrogen oxides, which the World Health Organization (WHO) classifies as harmful. In addition nitrogen oxides decompose in a chemical process into fine particulates which could harm the lungs.


Platinum is used to reduce emissions in diesel-powered engines whereas palladium is used in gasoline-powered engines. A strong Chinese market tends to favor palladium, which are used by catalytic converters in gasoline-powered cars, which make up the biggest market share in China and the U.S. Attachment 5 shows the applications for palladium and attachment 6 the palladium producers by country.


In an article of TD Securities  (Toronto-Dominon Bank) last December, TD looks for the palladium market supply deficit to double from 600,000 ounces in 2016 to 1.2 Mio. ounces in 2017.


The palladium market is very small with only just over 6 Mio. ounces produced per year (attachment 7).


The best vehicle to trade palladium is the ETF Physical Palladium Shares (PALL) US$ 77.49 (attachment 8). The palladium price is very volatile, which doesn't suit all investors.


March 24, 2017

After years of underinvestment, #Miners finally increasing #Exploration spending in Hunt for new deposits Bloomberg

Miners Regain Mojo to Spark $18 Billion in Exploration Hunt - Bloomberg
  • Exploration Spending forecast to rise more than 75% through 2025 to $18 Billion: MinEx
  • Discovery of world-class deposits has slowed in past decade

Miners Regain Mojo to Spark $18 Billion in Exploration Hunt

David Stringer

  • Spending forecast to rise more than 75% through 2025: MinEx
  • Discovery of world-class deposits has slowed in past decade
A rebound in exploration by global miners could see spending hit $18 billion by 2025 with China the front runner in the search for a new generation of giant discoveries.
Exploration budgets are rising after they plunged to an 11-year low of about $10 billion last year as mining companies slashed costs in the wake of a collapse in prices, according to Richard Schodde, managing director of Melbourne-based MinEx Consulting Pty, an industry adviser.
"We are coming out of the bottom of the cycle. I actually see the opportunity for the exploration sector to regain its mojo and quickly deliver a pipeline of good discoveries," Schodde said in an e-mailed response to questions. "It's catch-up time for the industry."

China, the top spender on exploration, is likely to continue to dominate in the hunt for new deposits, while Canada and Ecuador are currently among hot targets for more investment by miners, according to Schodde. The U.S. could be poised for a rise in exploration with President Donald Trump regarded as likely to be more favorable toward resource development, S&P Global Market Intelligence said in a report published in January.
Discoveries of so-called tier one projects, deposits with a net present value of more than $1 billion, have stalled. Only 12 were uncovered in the past decade compared to an average of two to three a year since 1950, according to MinEx. The average cost of finding a significant mineral deposit has tripled in the last 10 years to about $238 million, the consultancy said in a March 6 presentation.
China, the target of more than a quarter of global exploration spending in 2016, is yet to reap major rewards. An estimated $42 billion spent on the nation's hunt for new mines since 2007 has seen only two large discoveries announced and found a total slate of projects worth about $13 billion, according to MinEx. Global exploration budgets peaked in 2012 at $33 billion, the data show.

March 14, 2017

#Uranium & uranium co's - volume exploding $URA

attached the chart (2) of URA, Global

X Uranium ETF. URA provides investors

access to a broad range of uranium mining

companies (Cameco is weighted 20%). Just

look at the volume of URA since the beginning

of the year. It exploded. This means strong



Attachment 3 shows the uranium price over

the last 5 years. After declining to US$ 18 per

pound early December 2016, the price recovered

to US$ 25.50 as per March 6, 2017. The reason

is the planned annual uranium production cut of 10%

by Kazatomprom. This amount translates into

roughly 3% of 2015 global production. Kazakhstan

is globally the largest supplier or uranium (39%)

followed by Canada (22%) (attachment 4).


At the current market price almost no new uranium

project is economic. Generally speaking, a uranium

price of US$ 70 is needed in order to bring a new

uranium mine in production.



Attached is the Quarterly Commodity

Outlook by Cantor Fitzgerald. Page

1 to 9 is a comment on uranium. Page

5 explains Japanese uranium inventories.

Page 27 to 53 has comments on uranium



March 13, 2017

March 1, 2017

#Gold #ETF - The big buyers are in Germany $XETRA

Unlike a year ago when the big ETF buyers were in the U.S., this time it's the Germans. They are buying XETRA-Gold, the exchange-traded fund backed by bullion. Investors poured almost US$ 906MM into this ETF this month, the biggest inflow since inception in 2007. As of February 13, holdings were estimated at 157.9 metric tons (attachment 1).

The motivations of the buying are political. The uncertainty about BREXIT, U.S. politics, and elections in Holland (March) and France (1st round April, second round May).

The latest buying spree by them was done between US$ 1,220 per ounce and US$ 1,250 per ounce. Attachment 2 shows the sharp and long decline of gold from 2012 with a low in January 2016 round US$ 1,040 per ounce. After that a rally occurred till July 2016 to around US 1,370 and subsequently gold fell back to around US$ 1,125 per ounce. The current rally is still considered to be against the major trend, which is down. A breakout over US$ 1,350 per ounce would signal the end of the bear market. Gold is not out of the woods yet.

February 28, 2017

$HUI ARCA Gold Bugs Index lost 5 % yesterday, is #Gold next?

As per yesterday's "Gold and silver" post that the ARCA Gold Bugs Index (HUI) wasn't advancing anymore despite the bullion price rising last week. We said this flashed some yellow-lights, a signal to proceed with caution. It was also a divergence.


Yesterday the HUI (Gold Bugs Index), after firm moments after the opening, sold off losing 5% on the day. The index also broke through the 50-day moving average on the downside. Usually the gold stocks are leading the spot gold price. The volume was heavy on the downside.

Attachment 2 shows the 30-minutes chart of gold. It shows the sudden drop of the gold price yesterday.



February 27, 2017

#Gold & #Silver #COT Silver spec longs highest in 12 months

Commitments of Futures Traders show that

large speculators (hedge funds and money

managers) have increased their long positions.

Net commercial dealers increased their short

positions. The positions are almost the smallest

of the last 12 months (attachment 1).


The Gold Barometers reveal that gold stocks

are overbought while the physical gold and

silver are in neutral territory (attachment 2).


As the KITCO Gold Survey (attachment 3)

shows Wall Street and Retail Investors are

bullish for this week.


The Commitments of Futures Traders show

a complete different picture in silver than

gold. Large speculators continue to build

positions while net commercial silver dealers

are increasing their short positions. These

positions are approaching the highest level

of the last 12 months and are historically

very high (attachment 4). Once the showdown

is coming it will be dramatic.


The Gold hourly chart (attachment 5) indicates

the advance of the gold spot price last

Thursday and Friday. Gold closed, as per last

Friday, New York time 4 p.m., at US$ 1,256

per ounce for a gain of US$ 21 per ounce on

the week.


Interestingly, while the gold bullion price

rose the ARCA Gold Bugs Index (called HUI)

couldn't advance. The advance of this index

stopped at the 200-day moving average and

the MACD crossed the red line about two weeks

ago (attachment 6). This flashes some yellow

lights, a signal to proceed with caution.


Attachment 7 shows the HUI Index and the

Gold price on the graphic just above. It shows

the divergence between the gold mining stocks

and physical gold.



February 20, 2017

#Gold & #Silver Commitment of Traders COT Report

Net commitments of Futures Traders show that large speculators (hedge funds and money managers) have reduced their long positions. Net commercial gold traders have reduced their short positions. Both sides are currently not heavy committed in the gold futures market (attachment 1).


The Gold Barometer (attachment 2)reveals that gold stocks are currently overbought. However, the physical gold and silver is in neutral territory.


The KITCO Gold Survey indicates that Wall Street and Retail Investors are bullish this week (attachment 3).


Commitments in silver trading shows that large speculators have increased their long positions. Net commercial silver dealers have increased their short positions. Historically these positions are very large and have reached the level of August 2016. We are unable to explain why the commitments in silver versus gold are so different.


We attached (5) the silver long term Point&Figure

chart. As can be seen silver is probably forming a

large 5-year Reverse Head&Shoulder Formation

with a neckline at US$ 22 per ounce. This pattern is

much more bullish than the long term chart of gold.

But the word is not short term but medium to long



Gold is in the vault of the Central Banks, hence it is a monetary reserve. In extreme economic situations gold served as safe haven for investors or got confiscated by governments. Most governments don't own any silver anymore. We don't believe that in extreme economic situations silver would be confiscated. In the modern world silver has become also an industrial metal.


Attachment 6 shows the gold/silver ratio. The chart shows that the ratio fell in spring 2016 out of an uptrend channel. In other words investors need to buy less ounces of silver for 1 ounce of gold. This is telling you that in the medium to longer term silver is more bullish than gold.


Silver producer should seek to acquire more silver mines. Unfortunately they have done exactly the opposite lately, acquiring gold mines.


The hourly gold chart (attachment 7) indicates that gold traded during the week between US$ 1,220 per ounce and US$ 1,242 per ounce. As per the close in New York last Friday at  4 p.m. gold traded at US$ 1,235 per ounce for a gain of US$ 2.00 per ounce on the week.