I was emailing back and forth with my pal Brien Lundin, editor of Gold
Newsletter, this week and as we were basking in the limelight of
analytical brilliance, it occurred to me that having a stock that many of us
own, Kaminak
Gold Corp. (KAM:TSX.V), suddenly the target of a $520,000,000 bid by a
major mining company, Goldcorp Inc. (G:TSX; GG:NYSE), is exactly how proper
analysis should be rewarded. At least, that's how we were taught, to say the
least. To wit, this event is truly a significant watershed and a concrete
block of confirmation that the New Golden Bull has arrived. Whether or not
you are a raving foam-in-the-mouth bull, or a patient hiding-under-the-desk
bull (as am I), Goldcorp's bravado is a wonderful thing to behold and would
have made Harry Callahan proud.
What really got me thinking that inevitably Kaminak would be acquired was
when the company released the preliminary economic assessment in 2015 where
it basically told us that in an area covering perhaps 20% of the land
package, it had identified 1.8 million ounces (1.8 Moz) gold Measured and Indicated
and 3.4 Moz Inferred. So with a 5 Moz deposit in arguably the most
mining-friendly territory in the world, it really wasn't much of a surprise
when mighty Goldcorp stepped in with a half a billion dollar bid, but it WAS
an absolute delight. Good on Goldcorp and good on all of you that own/owned
Kaminak, but rather than standing here holding the bouquet of roses, batting
my eyes and curtseying, let's move on. . .
The COT Report:
For the week ended May 10, this Ali-Frazier slugfest continues with the
Commercials covering a few shorts modestly. I think that whenever the bullion
bank bubbleheads cover shorts into essentially a flat or rising market, the
following move is not likely to be down. However, these last few weeks have
been as chopped up as I can recall and traders usually get that kind of
treatment with whipsaw losses everywhere. I have determined that gold and
silver miner ETFs (GDX [Market Vectors Gold Miners ETF]/GDXJ [Market Vectors
Junior Gold Miners ETF]/SIL [Global X Silver Miners]) are far too overbought
to initiate new positions, but selective junior explorers that have yet to
move look OK and the gold-to-silver ratio still favors silver over gold and
is a glaring short. One thing I am not doing right now is TRADE; I am holding
on for dear life with modest hedges in place with self-medication a
necessity.
I've had a lot of emails this week asking me where I will deploy the proceeds
from the Kaminak sale and surprisingly, I will leave the original $0.77/share
entry price in Goldcorp stock and then take the profit of $1.83/share and buy
the "Magnum" portfolio with the proceeds. I launched the Magnum two
weeks ago and as you can see from below, it got a nice boost this week.
Because Kaminak is now gone, it will be replaced with Stakeholder
Gold Corp. (SRC:TSX.V), maintaining our exposure in the White Gold
District of Canada's Yukon Territories. The new names on the list are Iconic
Minerals Ltd. (ICM:TSX.V), West Red
Lake Gold Mines Inc. (RLG:CSNX) and Western
Uranium Corp. (WUC:CNQ), and a fourth will be added but shall remain
nameless until some material, non-public information becomes material public
information. The last one will be also a silver/gold story and it could very
well be the next Kaminak. (Don't you love how I shamelessly bait the hook with
that?)
I have never seen a bull market as powerful as the one in which we find
ourselves after five years of psychological and financial agony where central
bank management of "everything" has given way to a massive
migration to real money and sound currency alternatives. I wish I would have
been sage enough to understand the importance of Chris Powell's famous line,
"There are no free markets; there are only interventions," back in
2011 but since we can't turn the clock back, I just keep my head down and my
feet moving because this gold market has serious legs beneath it and silver
even more so.
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University
where he earned a Bachelor of Science in finance and a Bachelor of Art in
marketing before completing post-graduate work at the Wharton School of
Finance. With more than 30 years of experience as a junior mining and
exploration specialist, as well as a solid background in corporate finance,
Ballanger's adherence to the concept of "Hard Assets" allows him to
focus the practice on selecting opportunities in the global resource sector
with emphasis on the precious metals exploration and development sector.
Ballanger takes great pleasure in visiting mineral properties around the
globe in the never-ending hunt for early-stage opportunities.
All charts courtesy of Michael Ballanger
