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What's Inside:
- Question of the Week
- Audio of the Week
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Question of the Week
Question: I figured the crash in 2008 was going to be a once-in-a-lifetime kind of thing--I mean how often do we get a good, old-fashioned credit crisis? That decline in the miners, particularly the explorers, was shockingly fast and nasty, so I took solace in the fact that few, if anyone, saw it coming to that extent, and by the time I'd digested it, we were coming out of the hole. I never expected to see those kind of paper losses again, except if I'd held on to mining stocks after the end of the bull market, so seeing those kind of bad numbers again hurt worse this time.
Also, I seem to have had a run of companies hitting problems and it's really put the idea in my head that mining is actually a stupid business model. You spend years and millions of dollars drilling holes to delineate a resource in order to issue a ton of shares or go deep in debt to actually build a mine and generate a product whose price you can't control. Then if you're fortunate enough to go into production without a hitch, any number of nasty surprises just wait to bite you in the butt. Taxes, government regulations, nationalization, labor unrest, a geological oversight, a bear market, or something more exotic that I can't imagine. Even if a company gets it right the whole way, it gets punished with the others when the market goes south.
You've said that we buy miners for leverage to the price of metal, but after a while, that leaves us with a complicated portfolio of companies to keep track of and it seems most of them are bombarding us with bad news of one kind or another. Lower-than-expected grades, hardware setbacks, the Argentine government...you name it. Aside from having several solid producers and take-out plays in our portfolios, couldn't we get the same kind of leverage as the juniors with something like the NUGT 3X gold miners index? You have recommended using the gold or silver ETFs as trading vehicles, but perhaps you could put a word in the report about how we could use leveraged index ETFs as well. I've been considering a radical restructure of my IRA to replace most of my specific company stocks with the NUGT index and using cash from the reallocation to add to some uranium positions. Not ready to pull the trigger on it yet, but really giving it a thought. Comment: Appreciate the well thought out response. Mining is extremely tough as you outlined. I have pointed out the motto of the Northwest Mining Association- "If it can't be grown it has to be mined". It does not dilute your thoughts-- merely wish to point out today's world would not exist in this form without mining.
We have included using ETF's for trading in a few issues of TMR. Do not know how long you have been a member. We are addressing warrants in the July issue and David Smith will be updating the ETF report in the August issue.
We don't push it (leverage) as most people cannot take the leverage if it goes against them, and some tend to like to blame us.
David Morgan
Founder The Morgan Report-- Money, Metals, and Mining.
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Audio of the Week
The ENTIRE ECONOMY is a MASSIVE Ponzi Scheme!
Gold and silver fundamentals and a much-needed dose of reality.
We Are At The TRUE COST of SILVER & GOLD MINING! ... David Morgan
In this segment Ellis Martin speaks with David Morgan of TheMorganReport.com about the cost of producing gold and silver for mining companies. With rising costs of production and reduced spot prices is it still equitable? Who's affected by these costs? Investing in gold and silver stocks--still a good idea now?
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Metals Ready To Rumble?
Don't get left behind. David Smith talks with Talk Digital Network.
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Are you taking steps to preserve your wealth?
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Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Because individual investment objectives vary, this Summary should not be construed as advice to meet the particular needs of the reader. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice. Any action taken as a result of reading this independent market research is solely the responsibility of the reader.
Stone Investment Group is not and does not profess to be a professional investment advisor, and strongly encourages all readers to consult with their own personal financial advisors, attorneys, and accountants before making any investment decision. Stone Investment Group and/or independent consultants or members of their families may have a position in the securities mentioned. Mr. Morgan does consult on a paid basis both with private investors and various companies. Investing and speculation are inherently risky and should not be undertaken without professional advice. By your act of reading this independent market research letter, you fully and explicitly agree that Stone Investment Group will not be held liable or responsible for any decisions you make regarding any information discussed herein.
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