Is There Anything Else Necessary to create a short squeeze of epic proportions in the gold market? Yesterday we saw that Gold went into backwardation on the LBMA for the first time since Nov 2008 when the world feared a complete meltdown of the financial system. Today, the sentiment is far different than it was back in 2008 as no one wants to miss the “next” rally in equities, greed abounds and fear doesn’t seem to be present.
It is important to understand that gold should never ever go into backwardation unless something is really wrong. Gold is money and future money should ALWAYS carry interest with it. When gold for delivery today costs more than gold for delivery in the future, it carries with it “negative interest.” These phenomena can happen in other commodities if there is a shortage, since gold has been mined for 5,000 years and vaulted, no shortage can occur…unless the price is too low to coax it out onto the market. I have written many times that this was the case, the price of gold is too low which creates excess demand and inhibits supply. The current backwardation may be validating this view.
Yeah, CGR is the most speculative stock in my portfolio, and only got a few shares at this point. Claude probably survives, and will do great when gold goes over $5,000 per ounce, because at that price Amisk and Madsen are worth something. One plan is to wait until the company makes a new 5-year low. Got to be disciplined and patient, fearless and lucky to make any money with this stock. My strategy: Wait until the share price drops under twelve cents a share. Those are just my thoughts on this sleepy little company.
There are cheaper alternatives out there, not many, but a few. So there's hope out there if you feel like bailing on CGR and staying in the sector. You could buy CRCUF, Canarc Resources, for about ten cents a share. It has done nothing for the last ten years, but they got very good management. That alone makes it a better bet than CGR here. You could buy MEAOF, Metanor resources, for about 8 cents a share. That one has really lousy management, but they are mining gold and there is limited downside with an stock trading under 8 cents. There's also SHVLF, Starcore, trades for fifteen cents or so, they mine gold and silver in Mexico. Or you could bail on CGR and buy BRD, that's basically what I did. BRD, Brigus, trades for fifty cents or so. They got very good management, and are a low-cost 100K+ Au oz annual producer. Used to have 50K shares of CGR, now own 50K shares of BRD, 65K shares of MEAOF, and about 30K shares of CRCUF, and when CGR drops under twelve cents, then the plan is to step in and buy more CGR..
Also like EXK a lot here, that's my biggest holding. And would like to buy some PVG, Pretium Resources, that one has very strong management and killer properties. Thinking that we are finally putting in a bottom with gold and silver prices here. No limit to high those two will fly...