Larry Edelson: Hello, everybody. This is Larry Edelson. Thank you very, very much for joining today. Let’s get started.
In my last webinar, and I want to also reiterate today that mining shares are really now poised for explosive gains. This is a chart that I have been looking at and in a nutshell, we are about to embark on a very powerful major third-wave rally in mining shares. On the right side of this chart you can see that it points to 600 HUI Gold Bugs Index which is roughly a tripling from its current level; however, we are going to go over the next few years a lot higher than that. I expect this index to at least quadruple and probably quintuple and possibly even more before this next bull market in gold and precious metals and mining shares is over.
That said, I also want to take a look at this next slide here which gives you a zoomed-in look again at the HUI mining share index. Now if you take a look at the left side of this chart, see that from the major bottom back in late December 2013 we had a very clean five waves up which are labeled 1, 2, 3, 4, 5 in the middle of the chart and then above that you will see another number 1. The five legs up since my other models have confirmed that mining shares are now in a new bull market. So we are going to label that first leg up as a very small degree rally but one that nevertheless has confirmed a new bull market.
Moving to the right of that chart now, you will see some circled letters. That is basically showing you the recent correction into late June of this year labeled A, B, C and the number 2 and now we are beginning another leg up of a very small degree and we are now into three legs and on the very far right there you can see the number 4. That is the pullback that I am expecting that we are going to be buying into. From there we should be heading higher and the market should unfold in these impulsive waves higher over the weeks and months to come. So everything is looking really terrific for mining shares.
Now, I will just quickly summarize here. The mining sector has indeed bottomed in my opinion and is beginning a major, major new bull market. The short-term daily action is now also setting up for a powerful third wave higher on the daily charts and that is perfect for commencing our active trading in the mining shares. I will recommend that you begin buying now by placing orders just beneath current market prices and that is I am allowing for one more slight pullback. We want to buy on the cheap to minimize our risk. You will get the alert after this event concludes.
In the following slides I am going to show you the stocks that I have picked for this initial foray into mining shares. Please note I have deleted the names and symbols of the companies I am about to recommend from this presentation and that is because I want to prevent front running and in fairness to all Gold and Silver Trader members. That means I want you acting all at the same time. If I were to put the actual symbols in the charts, I am afraid some would jump off and act before others so I have disguised the names and the symbols for this presentation. In the alert that you receive, you will get all the details.
The first miner I am going to recommend, I will give you some fundamental data. It has 42.7 million ounces of proven gold — that is gold that has been proven by geologists and that will be mined, 44.7 million ounces of silver plus 1.4 billion pounds of copper to boot. So that is a nice add-on for this miner. The all-in sustaining production cost for this miner for gold and for silver in terms of silver/gold equivalent ounces is roughly $1000 per ounce which is rare these days with many miners having an all-in sustaining production cost of $1200, even $1300 per ounce. First quarter 2014, it already produced 665,000 ounces of gold.
Here is a daily chart of miner number one. If you look at it and upon closer scrutiny when you receive the transcript and these charts, you will notice that it is following the wave pattern that I just described for the HUI Index. We have, at the end of May we saw a nice 1, 2, 3, 4, 5 waves up and now correcting, preparing for that nicely sloped green arrow to the upside which will be wave number 3 to the upside. That is what we want to be looking to catch.
Miner number two, the second miner I am going to recommend today, it is a silver company with over 500 million ounces of silver and cash production costs of just over $10 per ounce which is also very good. It also has about 2 million ounces of gold with a cash cost of a very low $310 an ounce.
Here is a daily chart for miner number two. Here we have a major wave up that ended in about March of this year. We had a rather sharp correction into mid May, early June as you can see with that red circle C and the blue square, wave number 2, and we have had another minor wave up of five waves and we are now pulling back into a C-wave which should commence the next impulsive third wave rally higher.
Now, what I am describing to you are Elliott Waves based on hidden Elliott Waves which I will discuss in my upcoming course in a few weeks but it is also confirmed by my system models which you have heard a lot about over the years which are based on my proprietary methods which really involve a lot of cycle work and a lot of physics work in determining the pressure points in the market. That means basically that the combination of hidden Elliott Wave theory, my cycle models, and my proprietary pressure models basically tell me that we are about to begin another leg up in mining shares which will be the most powerful yet.
Pick number three is actually going to be a mining share ETF and this chart here; you can see that we had a confirming wave up into the middle of March labeled with a square and the number 1. That confirmed the turnaround from bear to bull in this particular mining share ETF and from there into the middle of May, early June we saw another corrective downtrend into the bottom of wave 2 and, again, like the other two charts, another minor degree wave up and we are in the process of a correction right now. We want to buy this particular ETF on one slight pullback, looking for much, much higher prices going into August and early September.
Now, some very important notes. First, immediately after the Q&A session, again, I repeat, you will receive an email alert with the specifics for each stock to buy. But importantly, please follow my order instructions in that alert and do not, I repeat, do not chase any of the stocks. That will not be a good situation for you. More often than not, you will pay more than you have to or more than you should and we want to act together as members rather than trying to beat each other to the punch. Do not worry if you see the market move a little bit after the recommendation is released, okay? It will come back more likely than not to my buy prices and if I need to adjust the order at all, you will be the first to know. So please, do not chase the stocks.
Also know that all recommendations that I make in the Gold and Silver Trader are based on a theoretical $25,000 of equity available for trading plus my money management and risk reducing strategies. You should always adjust the number of shares that you trade accordingly. For instance, if I specify in an alert to buy 200 shares and you have $50,000 in equity, you would trade 400 shares or twice as many. Or if I specify 200 shares and you have $15,000 in equity that you are trading, you would trade 120 shares or 60% of what I recommend in the alert.
The math is really very simple. In the second example if you have $15,000 in equity and the theoretical account for Gold and Silver Trader is $25,000, well 15,000 divided by 25,000 is 60%. So if I specify 200 shares in the alert and you have $15,000, you would take 200 shares and you multiply that by 60% and you would arrive at 120 shares which is what you should be trading. This is what you call position sizing. There are many ways to position size but this is a very simple way to position size shares in what you are buying to help reduce risk and controlling risk is the name of the game.
Now, I promised you we would go to some questions and answers so I have printed out some of the most popular questions that I received over the last couple of days and I am going to go through them with you and then we are going to conclude today’s event and please stay tuned to your inbox for the email alert that will go out.
Here is question from Robert. He asks, “Gold futures have traditionally experienced a July/August selloff for the past 20-odd years.” Do I think this pattern will repeat again in 2014 and how will that affect gold going forward?
Yes, there is typically some seasonal weakness for the precious metals in August/September but it is not a hard and fast rule and everything I am looking at for this summer tells me exactly the opposite. In fact, gold is up $9 again today. Silver is up some $0.12. We are already into July. I do see a little bit of a pullback over the next few days but the summer of 2014 is actually shaping up to be a very strong period for the precious metals despite all this talk about seasonal weakness. And why is that? I personally think it has a lot to do with the fact that the stock market is very, very toppy and also the war cycles that I have been talking about. There is a lot brewing out there in geopolitical conflict that is not going to take a break or a summer vacation.
Here is another question from Carl. “I have heard or read that the U.S. government will be confiscating citizens’ funds in excess of $100,000.” I am going to abbreviate the question a bit. “I have also heard that they will not touch money invested in stocks. Is there any truth to this?”
Yes, there is some truth to this. Okay, let me be clear. I have heard from my reliable sources behind closed doors in Washington that Washington is seriously considering embracing the Cyprus model of confiscating depositor, bank depositor money which is now a law in Europe if a U.S. bank should go under. So FDIC insurance may be a moot point going forward. If you are in a bank that fails and you have in excess of $100,000, you are at risk of losing some of that money will be bailed in to bail out the banks. It is not the mid-law in this country but it is under serious consideration. It is something we all have to be very concerned about.
Second part of the question, “They will not touch money invested in stocks. Any truth to this?”
Yes. For Washington to touch the stock market and grab your stocks away from you, either in retirement accounts or anywhere else would be the end of capitalism as we know it. The U.S. equity market is the last bastion of capitalism on this planet. The United States government is not going to go near it. If they nationalize your retirement accounts, they are going to do so by requiring you to own government bonds to help them pay off the debt. They are not going to touch your stocks.
Curtis asks, “I have been hearing a lot about royalty companies like Royal Gold. I do not see any royalty companies on your list for Gold and Silver Trader. Why?”
The reason for that is those are royalty companies. They pay royalties like dividend companies. They are buy and hold. You will find them in upcoming issues of my Real Wealth Report. But I do not expect to be trading them. They are really not tradable short-term miners that you want to have in the Gold and Silver Trader portfolio which is for active trading.
Okay, David asks if I would address the manipulation in the precious market. “I often see massive sell orders affected in off hours of the market. It seems like the worst time to get the best price, so why are these manipulators trying to depress the price, etc. Other times I see $15 moves. A long-time silver analyst has recently noticed that huge commercial silver traders are selling short silver and gold very heavily. Are these manipulations?”
Let me be perfectly clear about this. There are short-term manipulations that go on in every market under the sun whether you are talking about gold or silver, stock market, shares in Apple, rice, cocoa, and coffee. It does not matter. There are big people with money, big institutions with money that love to play games with the very, very short term. What they will do is scalp a dollar or two off the market, okay? Either in the middle of the night or in Asian markets, however, and that will never be stopped. It will never be stopped. It has gone on since day one, okay? And the more they try to regulate it, the newer the games they will find to do those simple manipulations.
Does it affect you? No, it does not. Okay, let me tell you why, okay? The markets are bigger than any group of central banks or hedge funds or what have you trying to manipulate the market and they cannot and have not ever been able to change a bull market to a bear market or a bear market to a bull market. It is utterly impossible to do. So please do not… I get this question all the time and it is put out there by analysts who engage in fear mongering, scare you, and more often than not they are dealers in gold and silver or dealers in rare coins and they are trying to sell you something. I have nothing to sell you, okay? The markets are free markets. They will always prevail. You cannot control them. No one can control them. Do not buy that it’s out there, please.
Okay, this is from Bill. “My wife and I have 401(k) plans that are limited to mutual funds. Will the Gold and Silver Trader make mutual fund recommendations in gold and silver?”
I am afraid not. Mutual funds in gold and silver are something that will be found in Real Wealth Report. They will not be traded in Gold and Silver Trader because of several reasons — liquidity, you can only get in and out at the close, etc., plus they are better off the domain of 401(k) plans and other buy and hold type strategies, not active trading.
Okay, Joe asks, “Let’s say gold explodes and reaches $5,000 an ounce and I want to sell my gold coins. How would I go about selling them and who the heck would buy them at such a high price?”
Whoever is going to buy them at $5,000 is going to be somebody who thinks gold is going to $10,000. There is always going to be a market for buying and selling gold. Who will buy them? Your dealer will buy them, okay? So I really would not worry about it. The liquidity in the gold and silver markets right now is down considerably in the three-year bear market. As the bull market begins to unfold, the liquidity will come back to the market making it much easier to buy and sell the investments that we handle in Gold and Silver Trader as well as bullion investments.
A good question from Beverly, “Would you please explain why Barclays Bank has reduced its assessment of IAMGOLD’s reserve to resource production ratio by 47%.”
We own IAMGOLD in the Gold and Silver Trader portfolio. What Beverly is referring here to is the fact that all miners, not just IAG, have been producing more gold than they have been able to replace. Remember, these are miners and like oil companies, when you produce oil, you have to find new reserves and resources to extend the life of your company. Over the last few years, gold and silver miners have been producing more gold than they can find. This is a very, very bullish fundamental for gold going forward. It means supplies are dwindling. So is it for IAMGOLD or any other miner that is seeing its reserves reduced compared to its resources? No. It is, on the other hand, extremely bullish.
Linda asks, “Will we be using text alerts for trading alerts?”
Yes, that service is available to you. Please contact customer service to make sure that you get signed up for alerts if that is what you want via your smart phone.
Okay, Carwin asks, “I am about three weeks into my Gold and Silver Trader service and I have already covered my three-year subscription costs.”
Well, congratulations. I hope I can keep up the good work there, Carwin.
“Can you give me some idea as to how many open positions you may recommend on average for the portfolio?”
Once we get cooking it will probably be about a maximum of five to seven stocks in the portfolio at any one point in time.
Another manipulation question, “It seems like the traditional forces like Goldman Sachs go out of their way to depress and manipulate gold prices to have their manipulations to gold’s detriment run its course or are they still an ongoing impediment to consider?”
Again, the manipulations do not impact the trends in the market. If they did, gold never would have gone from $255 an ounce to $1521 an ounce. There were allegations of a manipulation the entire time and gold kept going up, up, up. Their manipulations never affect the trend. They are looking for surefire money trying to squeeze $0.10 or even $1 out of the market situation. Sometimes they are trying to test support levels or overhead resistance levels but they cannot defy nature and nature is what drives free markets. There are what? 100 million? 200, 300, 500 million investors that trade gold and silver? Is Goldman Sachs, J.P. Morgan, Barclays Bank, or the London a.m. and p.m. fixing crowd going to effect the actions of hundreds of millions of investors? Never happens.
Hugh asks, “I notice that you use stop losses rather than trailing stops. Could you explain?”
I do use trailing stops when appropriate. I will adjust the stops per my system as needed. So, yes, I do use trailing stops, okay? And you will see that going forward.
That is really it for today. I received hundreds of questions. I cannot possibly get to them all but I really do enjoy doing this so perhaps I can work to schedule an exclusive Q&A session. I will keep you abreast of that. For now, I hope you enjoyed today’s session and please stay tuned to your inbox. The email alert with the specifics for the recommendations on the three mining shares will be going out within in a few seconds after we conclude this event. Thank you very much for joining today.
There are just a couple important closing notes. The first is the email alert. I have reiterated that several times.
Second, effective immediately, all new recommendations will be aired via a presentation similar to the one today either immediately before the alert is sent or immediately after. I have heard from several subscribers that they really enjoy this. Do not worry if you cannot attend an event. You will get the alert no matter what and you will always get a transcript.
When exiting a position I will not be doing a web presentation. That will be a simple sell signal to get out and each week you will also receive an editorial issue with a bigger picture outlook on what I am seeing in the precious metals and other related markets and on a macroeconomic level. Time permitting, when I do presentations I will also, like today, do a Q&A session but it is really time permitting and, as I mentioned just a minute ago, I am going to try to schedule some exclusive Q&A sessions where we can do this online.
Again, thank you for attending and I repeat, keep an eye on your inbox. The recommendations are coming out momentarily. Thanks for joining. This is Larry Edelson.
