2 Great Gold Charts from New US Global Report

Here are two charts from the new US Global Investors report that I found interesting ...

First, here's a chart showing dividend payers in the gold space ...

Remember, the 5-year Treasury yield is currently 1.74% (marked on the chart). 

And here's a chart of inflation expectations ...

For more on inflation and what it could mean for gold, read my story in FreeMarketCafe's Daily Grind, "The Inflation Drought Is Over."

To read the whole US Funds report, CLICK HERE.

Dollar and Gold Chart & The "PDAC Curse"

Here's an updated chart of the UUP, which I've been using to follow the US Dollar ...

(Updated chart)

The US dollar folded like a cheap card table today as the Euro currency rallied ... partly on comments from European Central Bank president Mario Draghi. The market takes Draghi's comments as less dovish on EU monetary policy. Well, if you say so, my European friends. Anyway, as you can see from the bottom of the chart, dollar weakness is bullish for gold. Gold is now poised to make another assault on $1,350.

I think the piss-poor numbers from retailers like Costco and news that office supplies retailer Staples is shuttering 250 stores are probably also weighing on the dollar.Why is the dollar ignoring the fact that US jobless claims fell to their lowest level in 3 months? 

Janet Yellin says the Fed is watching the weather. Well, the weather can change. Stay warm, my friends.

One more note on gold. There is generally a drop in mining stocks after the Prospectors & Developer's Association of Canada -- the world's biggest mining conference, which just wrapped up in Toronto -- known as the "PDAC Curse."

But as analyst Eric Coffin pointed out in an interview with Kitco's Daniella, the PDAC Curse is in normal years. This year, 2014, is a year coming out of a bear market. The PDAC Curse is much less likely to happen in such a year.

Seasonal swings have been thrown out the window since the third quarter of last year anyway. My view: Buy value, and hold on for what is likely to be a hell of a ride.

Fraser Institute Survey of Mining Is a Good Read

The Fraser Institute published its Survey of Mining Companies 2013.  There is a lot of great information here. A stat that jumped out at me is that companies in the survey report their exploration budgets shrank an average 26% in 2013 from 2012.

Other tidbits ...

"The mining exploration investment climate in Alaska has steadily degraded over the past two years"

Chile remains the top-ranked jurisdiction in South America. Venezuela remains the lowest ranked. "Venezuela is a horror story. If you have success, you can count on someone stealing it from you."

The Dominican Republic fell from 60th to 97th (out of 112). Ouch.

Argentina -- "The current currency control regulations make Argentina a terrible place to have an operation. Argentina is fine if you want to explore and spend money there, but ironically, it is a terrible place if you finally have success and create a profit-making operation."

Peru has been considered a top-notch place to mine, but note this warning. "Community decisions are not binding and subject to change at each local election, non-stop community meetings, huge increase in cocaine production and trafficking in Northern Peru."

Read the rest HERE

Brazil Resources -- PDAC Gold Developer Interview

Here's a video I shot at PDAC 2014 with Amir Adnani, the head of Brazil Resources (BRI on the TSX-V in Canada; BRIZF on the OTCQX in the U.S.)

Brazil Resources is a gold developer in Brazil. It acquired another company, Brazilian Gold, back in November. The points that Amir makes in our chat ...

• It has a total resource (all categories) of 3.9 million ounces of gold.
• It has $6 million in cash and a tight share structure.
• It has a strategic partnership with a Brazilian company headed by a former high-level politician. This removes a lot of the political hurdles.
• There is a preliminary economic estimate on its flagship Sao George Project. Brazil Resources got this project as part of its acquisition of Brazilian Gold.

And yet, at first, investors hated the deal, judging by the action in the share price. Then, when they wised up to what Amir and his team had done, the share price went like this ...

(Updated chart)

As you can see, the stock has more than doubled since late December.  Even now, it has a market cap of just $98.5 million.  It has volume that's too light for me to recommend this in my current Oxford Club publications. And after such a meteoric rise, one might expect a bit of consolidation.

So, if this company attracts your interest, do your own due diligence and be prepared to ride out volatility .... perhaps a lot of volatility.  And finally, just because I'm profiling Brazil Resources does not make this an endorsement or recommendation.

One thing you may take away from this video is that Amir Adnani is a master of the art of the deal.  He's always looking for the next accretive acquisition. He sees real opportunity in the sub-$100 million market cap space, a space he says the big miners are ignoring.

PDAC Video & Chart -- Exeter Resources (XRA)

At the PDAC, I had a chance to sit down with Yale Simpson, co-chairman of Exeter Resources (XRA on the NYSE).  When I worked for Weiss Research, I recommended Exeter before it spun off Extorre, a gold project in Argentina that it sold to Yamana.  My subscribers at that time had the chance to make money on Exeter and Extorre, and more than once.

Now, we've seen three years of a down market.  Time has been cruel to juniors like Exeter.  But it still has the same great management, it has an interesting project in Chile (and is busy getting water for that project, always a goal in that part of Chile). That project is called Caspiche.  Exeter has shifted from trying to JV/sell the entire project to just mining the oxide cap (which could produce 100,000 ounces a year) and then perhaps targeting a high-grade underground core. Caspiche holds both gold and a lot of copper. And it also has lot of cash for a junior ($38 million).

Exeter is working on things that should be a steady news stream for the rest of the year. In the past, when the market was so bearish on gold, good news was not a driver of price.  One test of if we're really moving into a different stage of this gold market is if the market reacts differently to Exeter's news releases this time around.

Here is a video I filmed with Yale Simpson ...

Sorry about the sound, but the PDAC is a wee bit crowded.

And here is a weekly chart of Exeter (XRA) ...

(Updated chart)

The stock is still in a big downtrend, but MACD (momentum) has turned positive. This is not a recommendation. Do your own due diligence before buying anything.

PDAC 2014 Gold Miner Update for Monday

I talked to a lot of great gold miners and developers yesterday at PDAC 2014 in Toronto. I also talked to a uranium company today. I expect more of the same today, along with base metals. Before I get to that, though, I wanted to take a quick look at gold and miners generally.

There seems to be a news-driven rally in gold right now.  Maybe it's because Russia is choosing a conflict with Ukraine over Crimea, as many believe.  I think it's more likely that the fact that China's manufacturing PMI slumped to a 3-month low is also shaking the markets, and leading many traders to believe that China is going to crank up the liquidity floodgates to keep its economy growing at a quick pace.

In any case, this is breaking gold out of the slump that it entered into last week, and pouring cold water on the broad stock market. Maybe gold miners will follow the broad market lower, maybe they'll follow gold higher. Here is a chart showing the overhead resistance for the Market Vectors Gold Miners (GDX), as well as support if it does continue to zig-zag lower ...

(Updated chart)

Looking at the chart, you could see the GDX was rolling over and probably headed for a test of one of those support levels. But the news over the weekend may have changed that, so keep an eye on overhead resistance.

Good luck out there today.  And if you're in Toronto, as I am, stay warm.

Why Is China Depreciating Its Currency?

China’s currency, the yuan, or renminbi, tumbled by the most on record last month – a 1.3% drop in February against the greenback. In fact, the yuan swooned to a 10-month low of 6.1815 per dollar. That’s the largest decline since China unified official and market exchange rates in 1994.

This happened because the whisper is the People’s Bank of China will double the yuan’s trading band by the end of June.

Officially, China is moving toward looser exchange-rate controls to promote the yuan in global trade and finance.  Unofficially, I think they’re trying to boost their economy by juicing exports. One way to do that is with a cheaper currency.

In other words, this may be the first shot in the global currency devaluation wars that many have warned about.

Why does this matter for gold? Ordinary citizens use gold to protect themselves from inflation. And the citizens of China, all 1.35 billion of them, already have a cultural affinity for gold.

China's cultural affinity for gold explains why that country's imports and sales soared to new records last year.

What do you think ordinary Chinese will do if inflation in China heats up from its officially mild 2.5% rate?  

No one has a crystal ball, but inflation is likely to happen if China’s currency falls in value -- because a falling currency makes imported goods and materials more expensive.

Do you think ordinary Chinese will try to protect themselves from inflation by purchasing more gold?  There’s no way to know for sure, but a yuan will get you a dollar that’s just what they’ll do.