A Golden Trio from New World Investor

10/26/2017 5:00 am EST

Focus: COMMODITIES

Michael Murphy

Former Editor, New World Investor

This is getting silly – and dangerous. The S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite and the Russell 2000 all hit new record highs recently. The S&P has posted over 40 new closing highs this year, explains Michael Murphy, editor of New World Investor.

The daily chart is showing a parabolic increase and we know that these always end badly. They create a vacuum under them as every last bear and short-seller gets squeezed, and then the vacuum rapidly sucks prices back down.

Gold is holding over $1,256 and will move up quickly if I’m right about a stock market retracement. China said their proven gold reserves reached 12,100 tonnes at the end of 2016, and they intend to mine them. That is second only to South Africa.

They produce 450 tonnes a year now and plan to increase production to 500 tonnes a year by 2020. The government keeps all the production.

Paramount Gold Nevada (PZG) raised $7.0 million in a public offering of 3.2 million shares at $1.40 with a “greenshoe” of 320,000 shares. At the same time they did a private placement of 1.775 million shares to Seabridge Gold (SA) and Albert Friedberg’s FCMI.


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Canaccord Genuity, Cantor Fitzgerald, and Roth Capital co-managed the deal. This gives Paramount enough money to get through 2018, including completing the pre-feasibility study and permitting for Grassy Mountain. PZG is a buy under $5 for a $10 first target when gold gets over $1,600 an ounce.

Sandstorm Gold (SAND) said they sold approximately 14,290 gold equivalent ounces during the September quarter, the second highest quarterly total in their history.

The attributable gold equivalent ounces were delivered from 20 royalty assets. CEO Nolan Watson said: “I’m glad to report that after three quarters we are on track to meet our stated production guidance for the year.

Our royalty portfolio has reached a critical mass and is generating reliable cash flow from our producing assets and there are a number of exciting projects being developed and explored.” SAND is a buy under $10 for a $25 target.

Sprott Inc. (Toronto: SII) is acquiring the management of another of my recommendations, Central Fund of Canada (CEF), a closed-end fund. On the conference call, management said that the deal doubles their physical bullion franchise to $8.5 billion under management.

They’re paying C$120 million to get C$4.3 billion in assets under management that throws off fees of C$17 million a year. They can also stop spending money on the large legal fees they’ve had fighting CEF’s management for the last two years.

It adds 90,000 primarily US-based clients for cross-marketing and is “expected to drive material earnings growth.” SII.TO is a buy up to $3 for a $7 target.

Note, the primary risk associated with all of the gold-related positions discussed above is that the prices of precious metals could fall due to US dollar strength.

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