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Recent M&A Activity In The Gold Sector Could Be Telling Us Something

Cory
June 28, 2018

In the past 2 weeks we have seen two acquisitions that were on the larger side, Dalradian Resources and Arizona Mining.  John Kaiser joins me to share his thoughts on what these acquisitions mean for the overall sector. It is noteworthy that Dalradian was acquired by a private equity firm, Orion Mine Finance, and Arizona Mining was taken out by an Australian Company, South32.

Click download link to listen on this device: Download Show

Click here to visit John’s site for more resource stock commentary.

Discussion
64 Comments
    Tom
    Jun 28, 2018 28:15 AM

    long CLSN

    Jun 28, 2018 28:40 AM

    Thanks Cory. I needed that right now. Could you ring up Spanky and make sure he get a listen? 🙂

      Jun 28, 2018 28:54 AM

      Spanky is completely out to lunch and should be ignored by all who wish to make money.
      The fact is, the miners have been acting very well considering all the bearishness out there.
      GDX is currently up 13%+ versus gold since February:
      http://schrts.co/P4bJxf

        Jun 28, 2018 28:54 AM

        Out to lunch huh? I am not necessarily predicting doom longer term.

        And in the short run I have said over and over and over we are due to bounce significantly soon. I just have serious doubts whether GDX/$HUI will be able to get through their declining 50 or 100 WMA on the next bounce.

        In sum, anyone thinking the next leg up in the miners is about to begin imminently (i.e., 2016 high being taken out) is going against pretty much every empirical example we have in the miners over the last 30 years. And I am talking specifically about the current alignment and direction of the 50, 100, 200 and 300 WMAs.

          Jun 28, 2018 28:08 AM

          Yup, out to lunch.

            Jun 28, 2018 28:23 AM

            Show me a single chart (for any stock or commodity) that shows the following sequence of events:

            1. bullishly aligned and uptrending (or at worst flat) 50, 100 and 200 WMAs;
            2. the 50 WMA then crosses below the 100 WMA, and price subsequently stays below the 100 WMA (and without contact) for 8 or more weeks;
            3. the 50 WMA then crosses back up through the 100 WMA without both of those MAs first crossing below the 200 WMA and then price takes out the high prior to the 50 and 100 WMAs crossing within a year.

            Show me a single chart that shows that series of events and I will shut up.

            Jun 28, 2018 28:25 AM

            Actually, in number 3, the last part where I say “within a year.” Make it 2 years.

            Jun 28, 2018 28:26 AM

            My claim has nothing to do with your technical requirements.

            Jun 28, 2018 28:33 AM

            And please keep insulting me. I’m not sure what the basis is at all. I have not been insulting you.

            Jun 28, 2018 28:15 AM

            Your analysis is based on emotion and delusion and results in hyperbole. Forgive me for getting annoyed with it.

            Jun 28, 2018 28:27 AM

            Like I said I wish I could have just been a dumb sheep and plowed everything into FANGs post 2011. Ignorance truly is bliss. I have learned a very very hard lesson about the irrationality of markets and the power of central banks over the masses. It’s actually pretty disheartening and depressing.

            Jun 28, 2018 28:54 AM

            If you go to the FANGs now, you’ll be making another big mistake. This isn’t 2011.

            Jun 28, 2018 28:32 PM

            A big mistake on what timeframe? 1000 years from now after a nuclear winter? You simply cannot and will not lose in nominal USD terms. Just rebalance your portfolio every 3 months to maintain a 20% physical gold position.

            Jun 28, 2018 28:42 PM

            If all you want is to avoid nominal losses, what the heck are you doing speculating in the miners?

            Jun 28, 2018 28:51 PM

            Because they still haven’t completely broken down yet, despite my realizations over the last 7 years. So I am willing to entertain that there is a small percentage chance that I am dead wrong and the miners shoot to Uranus tomorrow.

            b
            Jun 28, 2018 28:58 PM

            Mathews insults are not personal spanky, he insults anyone that disagrees with him, people that understand charts are just one way to view markets, anyone that likes the wrong color etc.
            Its not personal.

            Jun 28, 2018 28:46 PM

            Nonsense little b, you’re just too special to get it.

            b
            Jun 28, 2018 28:38 PM

            I stand corrected, your insulting is personal.
            no issues.
            to itch his own.

            GH
            Jun 29, 2018 29:21 AM

            “I am not necessarily predicting doom longer term. ” –No??? How many times have I seen you predict waterfalls, soul-crushing declines, and years of going nowhere?

            “I have learned a very very hard lesson about the irrationality of markets and the power of central banks over the masses. ” — You’re not the only one. Rick Rule lost everything in the beginning. I know a guy who was a desk trader at Lehman, decades ago, and what does he say? You have to lose to learn to win. These are lessons I learned the hard way, too. That’s why one of my favorite market sayings is, “Do your learning with small money.”

            “It’s actually pretty disheartening and depressing.” As a human being, I agree to an extent. One would hope we could do better. But reality is reality, and getting depressed over it seems like a poor choice. As a cold-blooded market operator, this human failing is what creates opportunities.

    Jun 28, 2018 28:37 AM

    Seems like Bonterra is potentially building a very large land position and resource of high grade gold.

    It would be good to hear experts on the Bonterra acquisition of Metanor.

      Jun 30, 2018 30:32 AM

      The #merger is unexpected, but I’ll take it. (Got a small position in $MTO after they restructured last year), and averaged down a few months ago, so this gets me near parity. It is unusual to see $BTR as an #Explorer #takeover a #producer, but the mining industry never ceases to amaze. 🙂

      Metanor is in better shape now than investors may realize that are still thinking of them through the lens of 2-3 years ago. They have cleaned up their share structure, improved their #production costs, and have done some good but not great #exploration work over the last year or two. There will be synergies between the 2 companies to consolidate the land and there are some mining revenues coming in to help the cause.

      https://ceo.ca/mto?1701018a475e

    Jun 28, 2018 28:56 AM

    Gold will most likely drop another 1% before it turns up…
    http://schrts.co/DY5B51

      Jun 28, 2018 28:20 AM

      Avi was suggesting he didn’t want to see GLD lose the 119 area. Maybe we’re about to see whose analysis is worth listening to. Add this full moon effect and anything can happen. http://www.321gold.com/editorials/moriarty/moriarty062818.html

        b
        Jun 28, 2018 28:45 AM

        Bobs article this morning provides yet more hope for the bulls.
        A full moon is on its way.

        Just 1 teansy issue with full moons, sometimes they cause an acceleration, in this case it might be to the downside.

        Dent could yet be proven a genius.

        I have to stick with my guess tho, bounce in july and down for the beginning of a bull run in aug.

        I really cant say I enjoy taking an opposite view from Dent, its gotta make ya nervous.

          Jun 28, 2018 28:00 AM

          It’s not really going out on a limb to suggest a bounce. Of course it will bounce.
          The questions are, however, from what level and how high.

          From a cycles perspective, we are on week 28, which is right on the average length for a complete intermediate cycle. So I am not going to argue at all that we are close in time to a significant low (within 2-3 weeks max, if not earlier).

          I just think the downward sloping 50 and 100 WMAs will prove to be tough to breach now, and it’s possible a bounce to say the 50 WMA could set up a very large plunge.

            b
            Jun 28, 2018 28:08 PM

            I dont use charts Spanky, my prediction of a bounce soon then down in aug, from the aug low (whatever that turns out to be) up we trend to december.

            Its just historically what happens, and i play odds.

            Ya gotta figure the downside is limited (unless Dent is right), and the upside should be anywhere from 3-10 to 1 depending on where ya put your money.
            Thats good enough odds to put the money in.

            Also, if Dent is right we could be in for the crash and deflation of the century, possible I guess, but picking that to happen by christmas would be a pretty ballsy call if ya ask me.

        Jun 28, 2018 28:59 AM

        I don’t know Avi’s paid work but I like what I’ve seen of the free stuff. I bet he isn’t worried about a brief loss of the 119 level.

        Gold is currently breaking bull-to-date uptrend support but that doesn’t concern me the way many chartists think it should. It’s been 2.5 years and the next leg up will benefit greatly from the fear this action generates.
        If the rest of the technical/cyclical picture were different, such a break of uptrend support could be far more ominous.

        http://schrts.co/VXNN4a
        (Chart will update after the market closes)

          Jun 28, 2018 28:23 AM

          Here’s the actual paragraph from Avi that I was referring to:
          “While I certainly could not foresee the complex moving sideways for almost two years (as I am only an analyst and not a prophet), at least for now I will have to retain a bullish bias of the GLD for as long as the 119 region holds as support. And, it looks like the next few weeks will tell us if the market will follow through on this pattern or not. Should we see such follow through, it will likely take most by surprise, as they have been lulled to sleep over the last two years by the price action in the complex. Yet, this is how markets seem to work. The train often leaves the station with the fewest possible passengers aboard. And, then, as they say, the chase is on.”

            Jun 28, 2018 28:34 AM

            Thanks. I still bet he needs a few daily closes below that level to get really concerned.
            Under the circumstances, I’m not worried.

            GH
            Jun 29, 2018 29:26 AM

            Avi echoes my thoughts perfectly.

            A short but scary break of a significant support area is not an unlikely way for the next major up-leg to start.

        Jun 28, 2018 28:04 AM

        Take a look at the RSI reading on the following chart. Gold hasn’t been so oversold since 2016. This is one indicator that significantly more downside is unlikely in the short term.

        http://schrts.co/5L6fSm

      Jun 28, 2018 28:03 AM

      Matthew, are you worried about the Marxist Obrador who looks like he will win the election on Sunday? It may be the last free election in Mexico in our lifetime. This can’t be good for USAS, AG, EXK, GORO, etc. GG, PAAS, and AEM also have large mines in Mexico.

        Jun 28, 2018 28:06 AM

        Bonzo, I replied as follows under your comment from yesterday:

        Bonzo, your guess about the commie is probably every bit as good as mine but I am not going to sell anything based on his coming win.
        Even if he does ultimately prove to be as bad as we might fear, I doubt very much that there will be any big changes very soon.

          Jun 28, 2018 28:21 AM

          Thanks, Matthew. I missed your reply yesterday. Let’s hope the polls are wrong and that Obrador loses. I feel better about Australia now than Mexico, and Sprott has just bought several hundred thousand more shares of NSRPF in the open market.

        Jun 28, 2018 28:00 AM

        Mexico will probably be one of the first countries to start the nationalization wave that is bound to sweep the world in due course.

        Any excuse to sell the miners is typically found. I suspect when he wins, the Mexican miners are going to get crushed.

          Jun 28, 2018 28:06 AM

          His win is more likely to mark a low since it is pretty much priced-in.

            Jun 28, 2018 28:13 AM

            “…pretty much priced-in.”

            Yeah…

            Jun 28, 2018 28:17 AM

            Yeah. Do you think there’s a chance he’ll lose?

            Jun 28, 2018 28:23 AM

            All the articles I looked at suggested he will win by a wide margin. It’s not even in question.

            And I was being sarcastic about it being priced in. It never is.

            Jun 28, 2018 28:28 AM

            I see.

          b
          Jun 28, 2018 28:45 PM

          Investing in miners in Mexico is much more risky with recent developments no matter who wins the election.
          Throw in a little nationalization and payoffs will need to be higher for further risks.

    Tom
    Jun 28, 2018 28:12 AM

    long SSW

    Jun 28, 2018 28:58 AM

    AMZN bottoming here on the daily charts, getting ready for a continued move to new ATHs.

      Jun 28, 2018 28:24 AM

      And just before AMZN fell 5%…

      On June 21, 2018 at 8:12 am,
      spanky says:
      Red alert! AMZN is down today. Hope everyone is buying a little. It’s a blessing from god.

      On June 21, 2018 at 10:14 am,
      Matthew says:
      A single red day is not “weakness” or what’s meant by a pullback.
      The last two daily overbought readings were “worked off” with 15% declines. Regardless, it’s not the smartest approach for a risk averse person like yourself.

      Jun 28, 2018 28:31 AM

      Why don’t you bring up the post where I was saying to sell everything else and go long AMZN around $900-1000. It is headed up up up up up and away to infinity.

        Jun 28, 2018 28:34 AM

        And like I said, the market action for AMZN is completely rational. The Fed has created the greatest moral hazard in the history of the world, and companies like AMZN and GOOG are the absolute top beneficiaries. Zero risk. All the reward. Go long and get rich. Buy some gold every year with your winnings as a hedge and be done with it.

          Jun 28, 2018 28:56 AM

          Zero risk? Don’t be a nut, Spanky. You don’t want life-changing losses.

            Jun 28, 2018 28:29 PM

            Do you really think the Fed, with the 21 trillion in backstops in place from them and the US govt, is going to allow the market to crash??? They have a printing press and a CME account and they can’t be audited. What else do you need to know?

            Jun 28, 2018 28:38 PM

            EVERY single major top comes with convictions just like yours — even among so-called experts.
            Don’t be Irving Fisher’s Mini-Me.
            http://time.com/3207128/stock-market-high-1929/

            Jun 28, 2018 28:47 PM

            But it not NOT a widely held conviction. People genuinely believe the fundamentals have improved (look at the stellar employment reports). On the other end, Austrians like yourself maintain their conviction that the Fed will lose control (yet they have been thoroughly embarrassed over the last 10 years by the CBs).

            The day the masses believe what I do, the DOW will be at 100,000+.

            Jun 28, 2018 28:55 PM

            I have never said that the Fed would lose control. Be responsible with your dumb words.

            Jun 28, 2018 28:57 PM

            Again, with the ad hominem. What is wrong with you?

            you are tilting at windmills!

            Jun 28, 2018 28:03 PM

            Ad hominen? It is DUMB to put words in people’s mouths. What’s wrong with YOU?

            Jun 28, 2018 28:05 PM

            I should know better than to engage someone who whines like you do without embarrassment.

            GH
            Jun 29, 2018 29:31 AM

            Not to mention talk out of both sides of his mouth, and do one think and say another, without embarrassment.

            Pretty typical of the increasingly popular victim mentality in the US–I can be a burr under everyones’ saddle and be rude in dialogue, but as soon someone has a cross word to say about it, ‘Oh poor me.’

    Jun 28, 2018 28:16 AM

    Nice head and shoulders on AG. Price is now approaching the neckline. If the neckline breaks (is this even a question?), the price objective is about $6. Good stuff.

      Jun 28, 2018 28:43 AM

      AG also has a black candle on the weekly chart in the low 6s. I have very little doubt it will get there in time.

    Jun 28, 2018 28:55 PM

    GDXJ lovely black candle. Down we go over the next couple of weeks.

    The monthly candle will lilkely be closing at its low–a terrible sign longer term IMO. At a minimum is absolutely guarantees that we make lower low in July.

    Jun 28, 2018 28:25 PM

    $HUI closed with a black candle today. No way today marked the low. If it rallies tomorrow and for a week or two subseqently, it will be extremely ominous. This sector is the absolute dregs.

    Meanwhile, prepare to watch the Dow and Nasdaq head higher.

    Jun 28, 2018 28:15 PM

    UUUU was up 13.5% today. Anyone know of any news?

    CFS
    Jun 28, 2018 28:51 PM

    US dignitaries endorse nuclear’s importance
    27 June 2018

    A group of 75 senior US figures, including former statesmen, military, industrial and academic leaders, have written to Energy Secretary Rick Perry imploring him to take immediate action to prevent the closure of reactors, citing the contribution of nuclear power to national security. Meanwhile, the US Senate has passed a 2019 appropriations bill providing USD1.2 billion for nuclear energy programmes and supporting nuclear innovation.

    “We write to commend you for recognising the important role our civil nuclear energy sector plays in bolstering America’s national security. We urge you to continue to take concrete steps to ensure the national security attributes of US nuclear power plants are properly recognised by policymakers and are valued in US electricity markets,” the 26 June letter begins.
    …..

    Jun 29, 2018 29:27 AM

    IThanks CFS for the good information