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-- Posted Tuesday, 9 November 2010 | | Source: GoldSeek.com
Not only are gold and silver prices at records, incoming traffic to goldseek.com and silverseek.com are also breaking to new levels – over 300,000 monthly readers, nearly 20 million page views and growing. Gold has certainly moved to a new level of awareness as measured by this demand metric YET still just ½ a percentage of global financial assets are allocated to gold. Back in 1980 we were at an estimated 2.77%. In my view, 2010 rivals the monetary-financial issues experienced in 1980, so there is significant room to move back into precious metals. In 2006 my belief was that the Federal Reserve would ultimately come to a difficult decision. There would be two choices: "sacrifice the economy or the (US) dollar". So as the first mega wave of deleveraging and deflationary consequences were counter measured with additional credit expansion with an aggressive paper printing campaign (debt monetization), the greatest credit bubble continued to expand even further. 2010+ 2010 is looking very different to me. The fractional reserve system that has created further artificial (or borrowed?) economic activity over the past few years seems to be wearing off too quickly to many observers. Despite the TRILLION$$$ in stimulus and rapid money creation globally, the façade is wearing off and the next round of money pumping has begun. 
Are we now entering the hyperinflationary stage? It is estimated that in 2011 alone, the TOP 15 developed countries (US, Japan, UK, Spain, Greece, etc) will need to raise some $10,200,000,000,000 ($10.2 trillion!) to finance their growing debts. That is 27% of their combined economic output. Not 2.7% but 27%! The consequences will be felt through further monetary devaluations. In essence a big part of the overhanging debt burden is being paid off through an inflation tax for paper currency holders. How much longer will $ or € holders go without having real monetary insurance and protection against this inflation? Where to next for gold? As trust diminishes and the supply of paper money increases, the monetary metals (gold, silver..) are set to see additional huge capital inflows. Gold’s recognition as money is returning and growing globally. With this comes a surge in physical gold demand which is causing gold supply constraints in the global bullion markets. As the inventory supply grows thinner, the gold and silver prices will reflect this by continuing to move upward as physical gold’s scarcity is truly recognized. Relative to the US $, which is the most popular price ratio quoted; I believe that gold could be $1,500 or $1,600 before the year is out. $2,000 gold in 2011 seems highly probable, but will it be a straight shot up to that level or more of a gradual rise? Our longer-term (multi-year+) view at the GoldForecaster.com is that gold prices are going to such incredible heights relative to the US $, € and other paper currencies that we rather not mention these eventual targets at this time. Our next upside target remains $2,000. As far as pullbacks go, it’s very difficult to predict the short-term effects at this time. When they do occur, I expect we will continue to see very strong support under these conditions. Gold market volatility going forward should continue to increase. The precious metals bull markets will continue to be a wild ride! Gold and Silver Stocks I have been a gold and silver stock investor for over 15 years. In that time I have come to respect the extremes the market can present as we witnessed recently in 2008. There are big risks and rewards for gold stock investors, but gold stocks as a whole have underperformed, or at best, kept pace with the gold price over the past several years despite record setting gold prices. I believe that we now will find the opposite taking place, with most gold stocks advancing higher and faster than gold’s price advance. Within these circumstances, the big gold stock gains will come from being positioned in the right companies. Gold, Silver Stocks – 3 Gold & Silver Stock Opportunities Understanding the risk of investing in mining stocks is critical, but for those willing to do their homework and shift through the thousands of opportunities, there are some terrific risk-reward investments. Here are a list of gold and silver companies I believe will continue to do well going forward and represent some of the best opportunities to me. Mid-tier Gold (and Silver) Producer Gold Resource Corp. – Ultra Low Cost Producer, Soon to be the highest dividend paying gold stock? NYSE-AMEX: GORO | www.GoldResourceCorp.com One of the most incredible gold and silver success stories in recent years. Gold Resource Corp. is discovering what appears to be a very young and large epithermal system in southern Mexico. With production slated to increase in the coming year+ to 200,000 gold equivalent ounces with a $0 cash cost, the very high-grade gold, silver and base metal deposit is rewarding investors with share appreciation. Since 2006, I have continued to make GORO my #1 gold stock pick. Why? I simply haven not been able to find a better team, asset and gold/silver company structured (and developing) the way this company is. More recently, the company completed a $55 million placement to accelerate production, exploration and expand the mill by 50%. Which could mean the company is now targeting another ramp up to 300,000 gold equivalent ounces per year production with a $0 an ounce production cost. 
With fewer than 53 million shares, the company remains a terrific investment opportunity going forward. A total of 4 consecutive monthly dividends have already been announced (3 cents per month) and more are expected in the months ahead. Assuming a continuation of 3 cents per share and using a 1% dividend yield, that would mean GORO should be valued at $36 a share – the same initial price target Gold Stock Analyst John Doody made in October when making Gold Resource Corp. one of his Top 10. What other gold producers are paying in dividends and yields: · Low Cost Gold Producers: o Goldcorp ($46): $0.36 | 0.80% o Gold Resource ($23) $0.36+ | 1.65%* o Agnico Eagle ($80): $0.18 | 0.20% o Yamana Gold ($12): $0.08 | 0.70% *assuming $0.03 a month continuation. · Senior Gold Producers: o Newmont ($62): $0.60 | 0.95% o Barrick Gold ($50): $0.48 | 0.95% o Goldfields ($17): $0.19 | 1.10% o Randgold ($98): $0.15 | 0.20% o Harmony Gold ($12): $0.14 | 1.10% o Kinross ($19): $0.10 | 0.50% Average yield among all gold producers is 0.72%. GORO would require a $50 share price to match this average yield (assuming $0.36/share per year dividends). AND it should get even better, as production and cash flow increases, management will continue to target 1/3 of cash flow in form of dividends. Assuming 200,000 ounces per year at $0 cost, which could turn out to be over $1.50 a share in dividends per year – or roughly 4 times the current monthly amount! Take annual production up to 300,000 ounces/year with gold at $1,400 an ounce, this should generate over $2.50 per share in yearly dividend payments. Last week GORO announced they have intercepted the Baja vein, one of the two initial veins to be mined. Ore stockpiling will occur in the “near term” and ensures a seamless transition into a much more profitable phase of the mining operations. As production increases from underground mining following completion of the roughly 70,000 ounces of open gold pit mining in 2011, GORO should become the largest gold dividend paying stock! As I mentioned in July, I believe GORO is in the process of being revalued higher -- and that report was made under now outdated assumptions. Now with the accelerated development of the mine, this continued production growth and upside from aggressive exploration provides GORO with the growth momentum to continue to outperform the gold bull market. GORO will continue to be my #1 holding.
Junior (near-term) Gold Producer Timberline (Gold) Resources Corp. – 2011 Gold Producer; Vertically Integrated Mining Company NYSE-AMEX: TLR | TSX-V: TBR | www.Timberline-Resources.com
This past June I flew up to Butte, Montana to take a look at Timberline’s Butte Gold project. A 50-50 Joint Venture with Small Mine Development (SMD), pioneers of cemented backfill in underhand cut and fill mining. SMD has an extensive history from the early 1980’s providing contract mining services to the biggest gold companies in the world including Newmont Mining, Barrick Gold, Anglo Gold. They certainly are experts at building and mining, and the Butte Gold project is a perfect opportunity for Timberline and SMD to jointly profit from record gold prices. Also note that the owner in SMD is also Timberline’s largest shareholder and a director. Together with Timberline and SMD, the company has a terrific management team to successfully bring this successfully into production. The Butte Gold project is several months from gold production where high-grade (0.27 gold ounces per ton) will be mined and shipped to a mill close by operated by Barrick Gold. The ore is very rich (drill results just released intercepted over 7 and 15 ounces gold per ton – bonanza grades!) and with an anticipated $450 cash cost and 60,000 ounces per year production rate, that is nearly $30 million per year in cash flow for Timberline’s 50% exposure. The deposit currently has 750,000 ounces of gold which provides for over 10+ year mine life. With under 60 million shares and just over a $60 million market cap, Timberline Resources appears to be highly undervalued based off Butte Gold’s near term production status. But there is more. Earlier in the year Timberline acquired Staccato Gold, buying gold ounces for just dollars an ounce. This acquisition provides Timberline with a huge Nevada land package which includes several past producing open pit mines with several hundred thousand ounces in defined gold resources. There is currently an active drill program on this property; results and an updated 43-101 are due in the short-term. I believe there is a terrific opportunity to see this asset go into production a few+ years from now.
Timberline Resources is a vertically integrated mining company. What this means is that Timberline has the in-house resources to explore, drill and develop properties. Not too many junior mining gold companies have these resources. Timberline has two drilling divisions (Mexico and western USA – primarily for Newmont Mining) which combined should generate revenues of over $20 million next year with some cash flow to the company. I believe with the boom in exploration after 2008’s near cease in development work, the drilling division should grow further and become a more valuable asset to Timberline going forward. I have been accumulating shares of Timberline Resources in anticipation of a strong share price revaluation as seen in 2009. Over the past year Timberline’s shares have been not participating in the advancement in the company’s near-term gold producing asset, the rising gold prices or revaluing the company’s recent acquisition. It has lagged and created even greater value disparity… and opportunity. I believe in the coming months, a more respectable market valuation for Timberline will occur and as we saw in 2009, it is likely to be very quick share revaluation process. Gold & Silver Exploration – ‘Prospect Generator’ Nevada Sunrise Gold Corp. – Nevada’s Next Big Gold Discovery? Drill Results Soon. TSX-V: NEV | US: NVSGF | www.NevadaSunrise.com
Nevada Sunrise Gold Corp. is relatively new gold company – a prospect generator with 5 gold and silver properties. Two of its five projects went into $12 million JV with Animas Resources. The initial focus is on the Golden Arrow project where $1 million must be invested by end of this year. In September Animas began earning towards their initial interest with a dozen+ core and reverse circulation drill program, exploring some very interesting targets including Round Mountain (Golden Arrow is 60 miles south in the Walker Lane district) style disseminated gold mineralization. Dr. Odin Christensen is leading Animas’ exploration activities at Golden Arrow. He was previously a director of Nevada Sunrise until early 2010. Odin worked for Newmont for over 20 years, and in addition to being the miner’s worldwide exploration manager, he played an instrumental role in developing their Carlin Trend assets in Nevada. He is an exceptional resource to be focusing on the Golden Arrow project.
We should be seeing drill results from this drill program shortly and with successful discovery of additional mineralization zones, this property which already has a 43-101 measured and indicated gold resource of around 300,000 ounces, could quickly grow into a million or multi-million ounce gold and silver deposit. This could become one of Nevada’s next big gold discoveries and mine. Nevada Sunrise Gold Corp. is pushing ahead with up to $12 million in exploration work commitments at two of their excellent projects by their JV-option partner. Nevada Sunrise is following a very similar JV strategy as AuEx, with JV partners spending OPM to earn ownership in projects while shifting the burden of exploration risk from the company. The Company benefits by retaining a significant interest and seeing its projects develop without having to raise the initial millions of dollars to do so. The case for gold juniors has been a strong consideration as to why I have recently taken a sizeable investment in a relatively new gold exploration company - Nevada Sunrise Gold Corp. (TSX-V: NEV) - with around a $10M market cap and a resource of nearly 1/2 million gold ounces. The company has a portfolio of five Nevada based Gold and Silver projects which I believe, with some work, have the upside potential to grow into multi-million ounce deposits -- which would then become very attractive to a larger miner looking to replenish and/or grow its reserves. I have recently been adding to my Nevada Sunrise Gold position. - Peter Spina, GoldSeek.com Coming Soon - Part II: More quality gold and silver stock opportunities. Disclosure, Conflict of Interest: I am long Gold Resource Corp., Timberline Resource Corp., Nevada Sunrise Gold Corporation. These companies are also sponsors on GoldSeek.com, which I am the President of. I am positively biased. These are my opinions and mine solely. I am not a registered investment advisor. I strongly urge you to do your own investment due diligence. Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina only and are subject to change without notice. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report. Additional Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this report is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in stock reports are not a specific buy or sell recommendation and is presented solely for informational purposes only. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise outside of the trading timeframe listed above. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
-- Posted Tuesday, 9 November 2010 | Digg This Article | Source: GoldSeek.com
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Peter Spina's experience with the precious metal markets started back in the mid-1990s, which led to the creation of GoldSeek.com back in 1995. Today GoldSeek.com ranks in the top three most popular global gold websites and its sister site, SilverSeek.com ranks as the most visited silver website in the world. Back at the start of the new secular precious metals bull market, Peter established the technically-focused subscription newsletter, Gold Seeker Report, which at the start of 2005 was merged into the more comprehensive Gold Forecaster (goldforecaster.com) service. In addition to the newsletter and websites, Peter frequently appears in the media including MarketWatch, Reuters, and theStreet.com
Previous Articles by Peter Spina, GoldSeek.com
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Record Gold & Silver Prices, Traffic and 3 Gold Stocks: Gold Resource, Timberline Resources and Nevada Sunrise Gold
