September 8, 2011

By Kevin Michael Grace

In the bad old days, it was popularly believed that the monarch’s touch could cure scrofula. Thank goodness we have put such superstition behind us. Our modern rulers believe merely that their words can cure the economy. Responding to the decision of the Republican Party to not offer a rebuttal to President Obama’s jobs speech today, former Speaker Nancy Pelosi retorted that this “silence” would “speak volumes about their lack of commitment to creating jobs.”

Lest this space be accused of partisanship, it should be pointed out that the Republicans share the delusional Democratic belief that not a sparrow falls to the ground without some politician’s blessing. At last night’s Republican debate, Rick Perry and Mitt Romney went at it hammer and tongs over the question of which of them had triumphed in “creating jobs” in their respective states.

Zero Hedge contrasts the inanity of the 2011 Republicans with the stirring words of Ronald Reagan in his TV address for Barry Goldwater. Yet for all his talk of limited government in 1964, in 1980 candidate Reagan famously affirmed his belief that the economic prosperity of the United States of America was the personal gift of the sovereign. “Are you better off than you were four years ago?” he taunted Jimmy Carter. “Is there more or less unemployment in the country than there was four years ago?”

That this hubris is a worldwide phenomenon can be demonstrated with reference to the European Union, which began in 1958 as a simple free-trade zone but now threatens to become the United States of Europe. Former Chancellor Gerhard Schröder’s bellicose demand is certain to reinforce memories of an earlier Chancellor’s New Order, but all the king’s horses and all the king’s men will not be able to put European fiscal union together. They will try, even as their political support collapses, but they will fail. And this is good news for gold.

As Mike Shedlock writes, “Gold has been inversely correlated with the dollar most days, reacting to credit stress news in Europe and Swiss franc gyrations more than anything else… If the crisis in Europe is over, gold will pull back hard, regardless of what the dollar does and regardless of what Bernanke does.”

Of course the Eurozone Crisis will not end until the Euro collapses, or the PIGS are expelled. In the meantime, the casualties mount. Proud Switzerland has been forced to yoke its franc to the Euro donkey, leading George Maniere to exclaim, “With the Swiss stepping down as the world’s safe haven currency, gold is now the de facto safe haven currency. Lest there be any confusion there is now one king— gold. So I say, ‘Long Live the King.’”

At press time, gold traded at $1,870.50 per ounce, with silver at $42.40. Gold has almost entirely recovered from the mini-crash that followed news suggesting “the crisis in Europe is over”— or at least quelled. That gold fell just as the Swiss abjured the safe-haven crown struck some as suspicious. Hinde Capital CEO Ben Davis said, “Why was it [gold] selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. When I say that, the central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn’t want the price of gold to skyrocket on what is incredibly bullish news for gold.”

No doubt there are many who believe talk of “gold suppression” fits its speakers for tin-foil hats. The Chinese government, for what it’s worth, disagrees. GATA reports that Wikileaks has released a 2009 cable from the US Embassy in Beijing to Washington summarizing official Chinese opinion: “The US and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the US dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the US in maintaining the US dollar’s role as the international reserve currency.”

Or as Marc Faber told Bloomberg Tuesday, “When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

For those who wonder when gold miners will begin to profit from this insurance, that time may be at hand. The International Business Times reports that, according to CIBC, the “pendulum has swung in favor of equities instead of bullion.” Analyst Tom Wallis predicts, “Lag effects associated with equities in past rallies suggest that the market will start to discount operational risk when the market risk of the underlying commodity is high. We are approaching these levels.” Specifically, “Wallis says the best performers will be smaller-capitalization gold miners. In that vein, he upgraded San Gold and Banro to Sector Outperformer.”

At Minyanville, Jeb Handwerger chimes in, “Promising explorers…will grow increasingly attractive as acquisition targets for the older majors.” Ivan Lo at Equedia agrees, “Once the majors get rolling, the juniors will follow as buyouts and takeover rumours begin. The majors will take advantage of beat up juniors, and this will fuel speculation into that market segment. Then the triple digit returns will begin.”

Seeking Alpha features Osisko Mining, Allied Nevada and First Majestic Silver and concludes that the first “has one of the best management teams in the gold sector,” of the second, “For the next several years this stock is likely a winner” and that the outlook for the third is “very bullish.”

The Gold Report notes the expert analysis of National Bank Financial’s Paolo Lostritto: “We reiterate our Outperform rating and our $4.20 target on Vista Gold’s shares.” (Currently trading at $3.75.)

The Toronto Star reports that the estimated cost of BC’s Donlin Gold Project, owned jointly by Barrick and NovaGold, has risen from $4.5 billion to $7 billion.

And at the Globe and Mail, Dave Price’s September 8 small-cap stocks to watch include Silvercorp Metals, which has rebounded as it rebuts an anonymous accusation of fraud, Aurizon Mines and Pacific North West Capital.

Finally, the Sun News Network’s always entertaining Ezra Levant laments the media’s failure to pay more attention to President Obama’s “exotic” extended family. Be careful what you wish for, Ezra. Obama’s Auntie and Uncle are already in the US of A. Bring over Granny Sarah from Kenya and half-brother Mark from China, and you’d have enough Obamas for a reality show. From the press release, “E! Network is proud to present a new show of Capitol importance, debuting November 8: Obama’s Family Hood. Can four Presidential relatives live together without driving each other crazy?”

August 18, 2011

By Kevin Michael Grace

It is in the nature of politicians to present themselves as indispensable men. Remove me from office, they warn, and all manner of chaos will ensue. Why, the very sun may fall from the sky. It is for this reason that politicians can abide being hated or feared, but they cannot abide being ignored or mocked.

Jimmy Carter suffered the latter fate, and this doomed him to a single term. Fairly or not, he came to be seen as irrelevant to the economic and foreign policy crises that bedeviled America. Then he became a laughing stock. On April 20, 1979, Carter was fishing on a pond near his home in Plains, Georgia, when he was allegedly assailed by a “killer rabbit.” According to one report, “It was hissing menacingly, its teeth flashing and nostrils flared and making straight for the President.” Carter flailed at the beast with a paddle. It is disputed whether he managed to strike it, but it is beyond dispute that he was left shaken—and ridiculous.

Cecil Adams commented on the failure of the Secret Service to preserve the safety and dignity of the President of the Free World, “An amphibious rabbit assault is a tough thing to defend against.” Indeed. As Enoch Powell once observed, “The great function of statesmanship is to provide against preventable evils.” Unfortunately, the great function of politics is to always take the credit but never the blame.

According to the Washington Examiner, President Obama delivered a mini-State of the Union August 15, wherein he claimed that he was doing a helluva job—”We had reversed the recession”—until he was assailed by some killer “bad luck.” Specifically, the Arab uprisings, the Japan tsunami and the European debt crises. “Those are things that we can’t completely control,” Obama said. He then asked, “How do we manage these challenging times and do the right things when it comes to those things that we can control?”

Never mind that the events in Japan and the Arab world have had a negligible effect on the US economy. The European debt crises are a different matter, for they proceed from the same causes that have produced the American debt crisis. As the Congressional Oversight Panel reported last year, the $700-billion 2008 TARP bailout “flooded the [international] markets with money to stabilize the system,” and a large amount of US taxpayer-guaranteed money ended up in the vaults of European banks.

To be fair, TARP was on Bush’s watch. But Obama has been in office since January 2009, and he must answer the rhetorical question he posed above. At close of trading August 18, the Dow Jones had fallen 420 points for the day to 10,990. This was attributed to further grim financial indicators. Paul Dales of Capital Economics commented, “The plunge in the headline index of the Philly Fed [manufacturing survey], to -30.7 in August from +3.2 in July, was simply awful. It leaves it at a level last seen in March 2009, when the US was last in recession… Meanwhile, the 3.5%-month-over-month fall in existing home sales in July, to 4.67 million from 4.84 million in June, shows that the housing market will not save the US economy.”

So did Obama reverse the recession? Karl Denninger doesn’t think so: “This is a continuing Depression that our government, conspiring with the banksters and media, has intentionally and fraudulently covered up.” Denninger is incensed with the allegedly “extremist” Tea Partiers in Congress. He asks them these questions, which could just as easily be asked of President Obama: “Has anyone heard any demands to lock up the fraudsters stealing homes with fraudulent documents? To break up the ‘too big to fail’ banks and toss their executives in prison where they belong? To put a stop to the fraudulent issuance of credit economy-wide? To take Bernanke out behind the woodshed and stuff a sock in his mouth…”

No, Obama thinks the world of the Ben Bernanke, and his response to the terrors in the equity markets will be, as always, to create more “money.” As it happens, we shall have to wait until after Labour Day to hear from the President, as he has urgent business in Martha’s Vineyard. The Secret Service would be well advised to keep a close watch for water-dwelling mammals.

Three cheers for Jim Flaherty, who takes a brave stand against fiscal irresponsibility. Canada’s Finance Minister told the CBC August 13, “This is a fundamental need both in the United States and certain European countries. We need governments to demonstrate that they can get their financial issues straightened out in terms of deficit and debt.” What, no more Canadian stimulus? “It will take economic contraction” for that to happen, Flaherty said. Coincidently—or conveniently, take your pick—the Wall Street Journal reported August 17, “The Canadian economy, a stalwart of growth among the Group of Seven in the post-recession recovery, is at risk of shrinking in the second quarter, data released Tuesday indicated.”

Meanwhile, the inverse relationship between equities and precious metals continues. Gold traded at $1,826.80 at press time, with silver at $40.74. As $2,000 an ounce beckons, Wells Fargo sees a “bubble that is poised to burst.” Bank analyst Dean Junkans warned, “There could be substantial risk to gold once the fear that the world is coming to an end subsides.”

On the other hand, Jonathan Chen at Seeking Alpha sees $2,000 by the end of the month. He explains, “There is a crisis of confidence around the world, and when there is a crisis of confidence, people freak out. When people freak out, everything [in equities] is sold, whether it deserves to be sold or not… [And] when you get a crisis of confidence, money all piles into one place: precious metals, particularly gold.”

With the gold-silver price ratio now at 45:1, there are some who expect a silver breakout. Silver Wheaton CEO Randy Smallwood said last week the price could top $50 before January 1. Eric Sprott is even more bullish, in an interview today: “As you know I have opined very often that I think silver should trade at a 16:1 ratio to gold. That would imply a price today of something like $110 or $120.”

And yet gold and silver stocks stubbornly refuse to rise. In the Globe and Mail, Shirley Won reports this could result in a “frenzy” of takeovers. Potential targets? She quotes analysts who suggest several: Osisko Mining, Perseus Mining, Keegan Resources, Sandspring Resources, Guyana Goldfields, Extorre Gold, Allied Nevada, Trelawney Mining and Rubicon Minerals.

Simit Patel at Seeking Alpha believes Vista Gold to be “grossly undervalued.” Rob Chang of Versant Partners tells the Globe that Premier Gold is another takeover target. He has “raised his price target to $11.55 from $10.15.” (It trades now at $6.60.)

Finally, and again at the Globe, self-described “Whig” John Ibbitson adds his voice to the growing “Is the world coming to an end?” controversy. “It’s still possible to feel good about the way things are going,” he writes. “You just have to try very, very hard.” He admits that globalism has impoverished North Americans to the betterment of Third Worlders but concludes this is “simply the price of making a better world.” One does not recall this robbing-Peter-to-pay-Paul argument being made when globalism was sold to us as a universal panacea. Surely Dr Johnson was correct when he said, “The first Whig was the Devil.”

April 28, 2011

By Kevin Michael Grace

When the great Canadian thinker Marshall McLuhan was asked about his ability to see into the future, he questioned the premise. I do not see into the future, he said, but I can see the present. This distinguishes me from almost everyone else, because they see the past and then extrapolate that into the future. McLuhan thus explained why the great changes in history and society have always shocked almost everyone, especially the “experts.” And this gives us an insight into the controversy regarding the gold and silver “bubbles.”

Peter Koven noted in the April 21 Financial Post, “As gold and silver prices continue to rise, Canaccord Genuity is confident that they are going even higher. Analyst Steven Butler raised his 2011 price deck for both metals, and is now forecasting US$1,525 an ounce for gold and US$42 an ounce for silver. Perhaps more significantly, he hiked his ‘peak’ price scenarios to US$1,600 for gold and a staggering US$47.50 for silver.” Staggering, eh? At press time, one week after Butler’s bold prediction, gold was trading at $1536.40, while silver had blown past $47.50 to arrive at $48.37. Silver has doubled in value since October 2010.

Reuters April 28 attributed the gains to “signs that the Federal Reserve would maintain a loose monetary policy” and our old friend “inflation worries.” Worryingly, it noted that earlier Thursday the price almost reached the all-time high of $50.35 in 1980. This was when the Hunt brothers attempted to corner the market. As we know, they failed, and silver swiftly collapsed to $11.

So is the promise (or threat) of $50 an institutional (or psychological) panic button? Mike Shedlock thinks so. Now, no one has been more eloquent or forceful in his denunciation of loose monetary policy than Shedlock, and he makes clear April 27, “This is not a top call. I have no idea how high silver will go. No one else does either.” And yet, “Today I cashed out of silver, trading it for an equal dollar value of gold.” Why? “One thing I have learned is parabolic moves seldom end well… The advance in gold has been steady and orderly. In contrast, the advance in silver has been anything but orderly.” Shedlock concludes that silver “is highly likely to revisit the low $20s at some point… Except for pure speculation, I see little reason to even hold silver in this spike.”

If history is to be our guide, than Shedlock’s action is the sensible one. But Marc Faber, interviewed on CNBC April 8, suggested that a new chapter has begun. In short, “The system has become dysfunctional.” Faber pointed out that Federal Reserve Vice Chair Janet Yellen had recently admitted that, were it possible, she would institute negative interest rates. So the US government is determined to debauch its currency. This means that cash and bonds are “dangerous” and that the only true sources of worth are “anything that cannot be multiplied at the same rate as money.”

Faber argued that monetary policy was a proxy for class war, since the “wealthy benefit from money printing,” as they can move their assets offshore, while everyone else takes it in the neck. This earned him a frosty and mildly disgusted rebuke from lovely CNBC cohost Becky Quick: “I guess that’s one view.” According to Faber, precious metals are a prophylactic against a worthless dollar. As for the “bubble” argument, he reported that a recent conference of 200 top wealth managers, when asked how many had more than 5% of their own portfolios in gold, not one hand was raised. In other words, precious metals are undersubscribed.

As if to confirm Faber’s thesis, Fed Chairman Ben Bernanke gave a press conference (a first) Wednesday and confirmed that he will likely continue to launch money yachts: QE3, QE4, whatever it takes. Dennis Dale at the American Conservative saw him as Elmer Fudd, singing “Kill-the-Doll-ar…Kill-the-Dolll-ar” to Wagner’s Ride of the Valkyries. “After a few choice words out of Helicopter Ben,” Danny Furman wrote on Seeking Alpha April 28, “silver climbed from $46 to $48 per ounce and closed over 7% up from daily lows.” Just as Eric Parnell noted (on Seeking Alpha April 18), “Silver began exploding higher literally on the same day [August 27, 2010] that Ben Bernanke gave his Jackson Hole speech confirming the delivery of QE2.”

Given that, as noted above, the price of silver has doubled in six months, one might expect handsome appreciations in silver equities. Jonathan Ratner cites four such given speculative buy ratings by Nicholas Campbell of Canaccord Genuity: Alexco Resource Corp (price target $12.25, current price $9.43), Bear Creek Mining Corp ($14, $8.20), Golden Minerals Co ($38.75, $19.60), MAG Silver Corp ($19.25, $12.09).

Over at the Gold Report April 25, Zig Lambo and JT Long interview MineralFields Group Investment Analyst Ron Wortel, who selects five TSX-listed juniors likely to profit by reviving old gold mines: Clifton Star Resources, Trueclaim Exploration, Visible Gold Mines, Golden Hope Mines and Trade Winds Ventures.

And for those who believe gold is going to the moon, Michael Bryant at Seeking Alpha April 26 suggests eight miners best suited for maximum returns: Allied Nevada, Midway Gold, US Gold, Gammon Gold, Kimber Resources, Northern Dynasty Minerals, Richmont Mines and Paramount Gold and Silver.

And finally, could Marshall McLuhan have predicted this week’s big story-that a TV pitchman best known for his orange face, snarling voice, louche morals and the worst combover in creation could browbeat the President of the United States into releasing a document we had been assured did not exist? Quoth the master: “Only puny secrets need protection. Big discoveries are protected by public incredulity.”

Coral Gold Has 3.4 Million Gold Ounces Inferred In Nevada

By Kevin Michael Grace

David Wolfin doesn’t wait to be asked whether his company’s stock is undervalued. The President and CEO of Coral Gold Resources Ltd is positively adamant about it. “Newmont just bought out Fronteer. In Toronto, at PDAC, they basically said the sale was equivalent to $200 an ounce in the ground. We are trading at 10 bucks an ounce in the ground. We are extremely undervalued.”

Wolfin is referring to the facts that Coral has a 2009 NI 43-101 inferred gold resource of 3.38 million ounces at its Robertson property on the Cortez-Battle Mountain Trend in Nevada and a current market cap (April 20) of only $23.4 million. Actually, that works out to about seven bucks an ounce. Asked to explain the disparity, Wolfin answers, “Most people chalk it up to being in the inferred category or that it is uneconomical. These are the things that we have to prove to the world are not true.”

Part of Coral Gold’s problem is that, for about 20 years, its Nevada properties languished in the mining version of what Hollywood calls “development hell.” Wolfin explains, “We built a small heap-leaching operation there in the late 1980s. The stock price went up over $10 a share, but then a couple things happened. The price of gold went down. Our mine manager got stricken with cancer and died, and our recovery rates weren’t as high as we had hoped for. Later we discovered sulphide rock was getting mixed with oxide rock, and sulphide rock takes longer to break down and oxidize. We shut down the mine at that time, and we were approached by 30 major mining companies.”

Coral chose a joint venture-option agreement with Amax Gold. Wolfin: “They came in and started a big drill campaign. They did a feasibility study in 1994, and we shopped it around, but it turns out it wasn’t bankable. They didn’t put enough of the drill-indicated resources into the reserve category.” Coral indicated its unhappiness with Amax, so the property was divided, with Coral eventually regaining full ownership of Robertson.

Amax was later taken over by Cyprus, which became Kinross. Placer Dome bought 61% back-in rights on the Excluded Property, and then became Barrick. (There are two other Cortez properties, Norma Sass and Ruf, which are joint ventures with Levon Resources.) This wasn’t the end of the uncertainty. Wolfin explains, “The Bureau of Land Management contacts us in 2000 and says, you guys haven’t cleaned up the mess in the mine you had in the late 1980s because the property was tied up by those majors. So we embarked on a massive reclamation program which stretched over five years.”

Since 2005, Coral has been confirmation drilling Robertson. Assays reported from November 2010 to January 2011 have included 1.096 grams per tonne over 18 metres, 6.24 g/t over 1.5 metres, 1.34 g/t over 19.8 metres, 3.74 g/t over 6 metres and 1.37 g/t over 24.4 metres. Robertson’s 43-101 inferred resource went from 1 million ounces to 2.3 million ounces in 2008, to 3.4 million ounces in 2009. Over 500,000 feet has been drilled, 1,160 holes. Wolfin says, “It is an inferred resource because all the work done by Amax was done pre 43-101, so it doesn’t qualify. Which is a shame, because Amax used MRDI, which is now AMEC. It was done at the highest standards of that time. Today we are looking towards upgrading those ounces from inferred and working on a preliminary economic assessment. It is due in July. That will be a major milestone for the company because it will show the world it’s economically viable to put in a mine.”

Coral has petitioned to drill 500 holes and seeks a blanket permit. Wolfin admits this will take some time. He says, “Because we had a heap leaching operation there, we are treated differently than a grassroots-exploration property. We did an environmental assessment in the 1980s, but now we have to do a new one. We are doing cultural surveys, studying the pygmy rabbits, the sage growths, the rattlesnakes, whatever kind of animals and rodents are there.”

Beyond the historic delays, missed opportunities and current permitting frustrations, what bothers Wolfin most is the seeming inability of the market to comprehend what Coral has at Robertson. For example, the property adjoins Barrick’s Cortez Pipeline Mine, which last year produced 1.14 million ounces gold at $312 per ounce and has proven and probable reserves of 14.5 million ounces. He adds, “If you look at Allied Nevada, one of Bob Buchan’s new companies (he’s the one who started Kinross), similar story. They’re mining half a gram of gold; they started three years ago at 30,000 ounces a year production. Now they’re talking a quarter-million ounces a year, and they’re a $3.4-billion market cap. We’re not much different.”

Coral has $3 million in cash and only 31 million shares. Wolfin concludes that Robertson’s economics can’t be ignored much longer: “There are 160 million ounces of gold on the Carlin Trend and probably 50 million or 60 million on Cortez-Battle Mountain. We have 3.4 million ounces there. It’s been found at 1,000 dollars an ounce. That’s 3.5 billion dollars staring you in the face, and we’ve got a market cap of $23 million.

February 7th

By Kevin Michael Grace

US Department of Education researcher Dr Donald Leu has reported he could not shake the belief of students in the existence of the endangered Pacific Northwest Tree Octopus, even after he explained he had directed them to a hoax website. He concluded of “digital natives,” “Anyone can publish anything on the Internet and today’s students are not prepared to critically evaluate the information they find there.” At this point, we can cue an army of codgers growling, “Kids today… And stay off my lawn!” But where is the evidence that those of us not educated by computers are any better at critical thinking?

Gold ended the week at $1,350, with silver at $29.11. Bloomberg News reported February 4, “Gold declined in London, trimming the first weekly gain this year, on expectation that an economic recovery will curb demand for the metal as an alternative investment.” The expectation arrived Friday. As Alix Steel of The Street reported, “Gold prices had been shielding themselves for a good jobs number with the unemployment rate expected to rise to 9.5% because more people entered the labor force while the private sector is expected to add 160,000 jobs. However, the U.S. economy added only 36,000 jobs and the unemployment rate dropped to 9%. Still, Wall Street seemed to shrug off the data which put some pressure on gold prices.”

Perhaps Wall Street, which enjoyed its best January in 14 years, is too giddy to notice there is something distinctly curious about American labour statistics. As Mike Shedlock wrote on his blog, “The unemployment rate (based on the household survey), unexpectedly fell from 9.4% to 9.0%. How did that happen? Based on population growth, the labour force should have been expanding over the course of a year by about 125,000 workers a month, a total of 1.5 million workers. Instead, (for the entire year) the BLS reports that the civilian labor force fell by 167,000. Those not in the labor force rose by 2,094,000. In January alone, a whopping 319,000 people dropped out of the workforce.”

In the US, people who stop looking for work, the “chronically discouraged,” are no longer considered “unemployed.” At Zero Hedge, Tyler Durden reports, “At 64.2%, the labour force participation rate (as a percentage of the total civilian noninstitutional population) is now at a fresh 26-year low, the lowest since March 1984… Those not in the Labor Force has increased from 83.9 million to 86.2 million, or 2.2 million in one year!” One Zero Hedge reader comments, “That’s odd. I don’t hear much about this number in the MSM.” No, indeed. As it turns out, from a statistical point of view, it is very much in the interest of the US government for the chronically discouraged to remain so. Should that 2.2 million start looking for work again, the official unemployment rate would skyrocket.

The BLS (Bureau of Labor Statistics) publishes an “alternative” unemployment figure, one that includes all those working part-time not by choice. January’s rate was 16.1%. According to Gallup, which surveys 30,000 Americans on this question, the rate is 19.2%.

So it is entirely possible to conclude that the biggest economic stimulus in American history has little to show for it. Except perhaps a reckoning. On that score, Nassim Taleb is withering. Bloomberg reports February 3, that the author of The Black Swan told a Moscow conference, “We have a very dire situation in the United States, and every day that goes by it gets worse. Every day that goes by, we’re spending money. We’re increasing that cumulative debt.” He compared the United States to basket-case Greece and said investors should at all costs avoid US treasuries and the US dollar. Why so down on the dollar? “Euros have Germany, the dollar has nothing.”

It was not reported whether Taleb had anything to say about gold, but the Financial Times reported February 2 that the Chinese are mad for it. “China’s gold imports are estimated to have more than doubled from a year ago in the run-up to Chinese new year, putting the country on track to overtake India as the world’s largest consumer of the precious metal… Precious metals traders in London and Hong Kong said on Wednesday they were stunned by the strength of Chinese buying in the past month. ‘The demand is unbelievable. The size of the orders is enormous,’ said one senior banker, who estimated that China had imported about 200 tonnes in three months.”

Despite the slight fall on Friday, the gold market is bullish again. Even before Newmont bought Fronteer for $2.3 billion, Derrick Penner wrote in the Vancouver Sun February 1, “Mining … is expected to dominate M&A [mergers and acquisitions] in a year that could surpass 2010. This is, of course, to quote a bad cliché, the time to ‘make hay while the sun shines’ for mining firms… It’s a good time to be mining, or opening a mine. Or, if you don’t have a mine to open, as one analyst once told me, it is perhaps easier to buy someone else’s mine than try to discover a new one of your own.”

Colombia, Reuters reported February 1, “is hot again,” both in terms of exploration and M&A. “Seemingly overnight, its nearly dormant gold-mining industry has stirred to life, and the country has become a mecca for junior miners searching for the next big find.” The story quotes Medoro Resources board member Robert Doyle, who enthuses, “It has a good, clean, democratic government. …And it has very clear, well-defined mining laws and environmental laws.” Other companies mentioned here are Continental Gold, Ventana Gold and Greystar Resources.

One hot Canadian explorer is Detour Gold. Martin Mittelstaedt wrote in the Globe and Mail February 2 that Detour “likes to bill itself as the exploration company holding Canada’s largest undeveloped gold deposit. This week, the estimates of the size of that deposit got significantly larger, causing analysts to upgrade their stock targets while renewing speculation that the company could be in line for a takeover by a major producer.” Blyth has “nearly tripled his target price to 40¢ (from just 14¢)” and concludes, “This is a [1.5-million-ounce] gold reserve, feasibility complete, permitted and ready to build–all held within a company with a current market cap of $112-million.”

Shirley Won reports in the February 2 Globe and Mail that the Top 10 equity holdings in the BMO Precious Metals fund as of December 31, 2010, were Rainy River Resources, Sandspring Resources, Trelawney Mining, Allied Nevada Gold, Keegan Resources, Orezone Gold, Semafo Inc, Tahoe Resources, Kinross gold and Goldcorp Inc.

At Seeking Alpha January 31, Michael Bryant responds to the question, “Will silver outperform gold?” with, “Can’t you own them both?” He argues that “Paramount Gold and Silver appears to be ideal for this.”

Also at Seeking Alpha, Kurtis Hemmerling touted the following silver stocks February 3: Silvercorp Metals, Pan American Silver, Silver Wheaton, Silver Standard Resources, First Majestic Silver, Coeur d’Alene Mines, Endeavour Silver, Hecla Mining, Mines Management and Mag Silver.

Finally, those who believe the Internet is responsible for raising a generation of suckers are invited to familiarize themselves with the Great Spaghetti Tree Hoax of 1957. Reactionaries of that time were wont to blame contemporary gullibility on the then-new media of television, but a truer villain is human nature, which is eternal.