Thursday, February 17, 2011

Silver Blasts Higher, Constantine and Timberline News

Two of last year’s Vulture Bargains issued interesting news today.  We will get to that in a jiffy, but first a little crow is on the menu here at GGR.  We like our Crow served chicken fried, with lots of salt and pepper, some dinner yeast rolls, sautéed peas & carrots mixed right in with southern rice and some good old brown gravy, thank you very much.  

Crow Tastes Good Sometimes  

Less than an hour after this morning’s “nagging feeling” post went “live,” you know, the post where we spent most of the time showing in the charts why the nagging feeling that had crept in was not showing in the charts, … you know, the post that said that if silver broke out today, our brand new hedges would be gone and gone quick;  … the post that said that we had gotten “smaller” in some issues and that the Trading Gods would probably laughingly send them much higher now that we had not only done that, but then announced it publicly! … less than an hour after that post went live, kaboom! Silver didn’t just print a feeble, “maybe-looking” just-barely kind of new high.  No, sir and madam, silver blasted up and into what had to be a virtual boxcar full of trading and short seller trailing buy stops in the $31.30s and $31.40s. 

It was a short-marauding power surge, to be sure.  Here is a short-term look at the largest silver ETF, iShares Silver Trust (NYSE:SLV) for quick reference: 


(SLV 7-month, daily, OHLC bars. If any of the images are too small click on them for a larger version.)


Don’t you just love it when the Trading Gods reveal their sense of humor?  

When we got “smaller” in size in some issues (as much as 15% of our holdings in some of them), and when we put on some gold and silver hedges earlier in day today and yesterday, it was with the notion that silver had traveled right almost to its previous turning high and therefore was in the third day of near or “at resistance”.  We reasoned that the Big Sellers of silver futures and forwards pretty much had to either knock silver silly, or it would get into buy and short trailing stops that had to have migrated to just above the previous turning high (just above $31.21 on the Cash Market).


The idea was that if silver bears did come out swinging today, we wanted some protection and a little less exposure, but as we said, if the silver bears didn’t come with guns blazing and silver did go on to a convincing breakout, then we wanted out of our silver hedge right quick.  

Well, here’s Kitco’s familiar chart of just the last three trading days of silver action for the “play by play.” 



Notice, please two red stars.  The first star is about where we were finishing up today’s first blog entry and sending it on to be posted.  The second star is about where our newly put-on silver hedges became newly gone! (Cue the Gods-Laughing sound effect … several times for good measure.)  

Isn’t this fun?  As it happens we are still very, very long in lots of ways, just not with our usual short-term trading positions, so even though we took a small hit on a hedge position, … even though today’s great action for our small miner positions was on somewhat fewer shares on some of them, darn if it doesn’t feel like we got the party started!  

Put on a party hat, let’s call it a “sacrifice to the Gods” and have done with it! (Smiling).  

DM Looks Even Less Like the Others

Recall our post not long ago about this Definition Move for silver not looking like the previous three examples, and how silver might actually be putting in a mid-point consolidation?  (Link to that report here.)  Well, today’s action in silver certainly does not argue with that notion, does it?  Here’s that longer-term silver graph again for reference.  


(Silver, weekly since 2001, showing the prior three Definition Moves) 


Constantine News 

On another note, our 2010 Vulture Bargain #6, Constantine Metal Resources (TSX:CEM.V or CNSNF) issued news today, that we wanted to call extra attention to.  Normally we do our communicating about Vulture Bargains on the private, password-protected subscriber pages, but we are making an exception this one time.  

The news release from CEM begins:  “CONSTANTINE-CARLIN JV EXPANDS YUKON GOLD PORTFOLIO AZTEC PROPERTY ACQUISITION --  Constantine Metal Resources Ltd. (“Constantine”) (TSX Venture - CEM) and Carlin Gold Corporation (“Carlin”) (TSX Venture - CGD) jointly (the "Companies") are pleased to announce a signed agreement with Yukon prospector Ron Berdahl (the “Vendor”) to acquire a 100% interest in the 226 claim, 4,724 hectare, Aztec Property (the “Property”). The Property is located in the Mayo Mining District, approximately 50 kilometers south of Atac Resources Ltd.’s recent Osiris discovery. The Constantine-Carlin 50/50 Joint Venture (the “Joint Venture”) has also acquired two additional properties by staking, comprising another 533 claims. Combined with new staking, the Property acquisition expands the Joint Venture Yukon land package to 2185 claims and approximately 175 square miles (450 square kilometers).” 

Those interested in the rest of the CEM press release can find it at the link just below: 

Readers may recall that Constantine is one of the Vulture Bargains from las t year that has already rewarded us with our favorite way to own shares of these high-risk-high-reward small miners and explorers, what we call Free Shares.  Just below is our short-term tracking graph of Constantine: 



Recall that we chose CEM as VB #6 on September 23 at Canadian 11-cents, largely on the basis of the strong management and directors and we felt that their Palmer VMS project in SE Alaska alone justified our “cost.”  CEM has quite a few other irons in the fire and has done well for us since then.   We called for Free Shares December 31 at a Canuck quarter (more than a double).  Free Shares is where we Vultures sell part of the holdings to recoup all of the seed money so that our remaining shares are essentially risk free.   Free Shares turns a high-risk game into a no-risk game.  

With the press release above, and probable new drilling about to get started near Timmins in Ontario, we can pretty well guess what the discussion will be about at the CEM booth in Toronto the first week of March at PDAC.  For those not yet familiar with our VB#6, we’d suggest taking a “tour” around their web site.  Just click on the Constantine Logo link at the right edge of every GGR web log page.    

CEM, a sponsor of GGR, closed today, Thursday, at 26-cents a copy, up about 136% since our September call.  We are in no hurry to do anything with our Free Shares of CEM.  We’d like to stick around for the really fun part if we can.  

Timberline Says Step-Out Drilling Results Indicate Resource Expansion Opportunity 

While we are at it, our VB# 4 and our 2011 Top Pick in the junior mining space in Steven Halpern’s Challenge, Timberline Resources (NYSE-AMEX: TLR, TSX:TBR.V), also released interesting news today.  

The TLR press begins:   Coeur d'Alene, Idaho - February 17, 2011 - Timberline Resources Corporation (NYSE Amex: TLR; TSX-V: TBR) ("Timberline" or the "Company") announces the successful completion of its 2010 exploration program and the receipt of all drill assays at its Lookout Mountain Gold Project along the prolific Battle Mountain-Eureka Trend of central Nevada. 

Timberline's Executive Chairman and Vice-President of Exploration, Paul Dircksen stated, "With consistently positive assays and recoveries, our 2010 drill results strongly support our belief in the potential for near-term development of a low capital, low operating cost, open pit, heap-leach gold mine at Lookout Mountain.  We will now complete our 43-101-compliant resource estimate, continue bench-scale metallurgical testing, and begin our Preliminary Economic Assessment (PEA).  We are greatly encouraged with results from step-out drilling to the south which indicate that the deposit remains open along strike and at depth.  We are now planning a follow-up drill program with objectives to expand the existing Lookout Mountain resource and to test other priority targets at our South Eureka property." 

Be sure and catch the rest of the press release at this link:  If the least bit interested in this soon-to-be producer of Montana gold and promising Nevada explorer with a new resource estimate coming soon, one can visit their new and improved website by clicking on the Timberline Logo at right.  

Just below is our short-term tracking chart for TLR for reference.  TLR is a sponsor of GGR, but we would say the exact same things about them even if they were not.



We chose TLR as our Vulture Bargain #4 in July of 2010 at $0.75 as it was being included in the Russell Microcap Index.  TLR closed today, Thursday, at $1.16 even on the day.  We think that TLR is very strongly undervalued, but we doubt it will remain that way forever.  

You should have seen Executive Chairman Paul Dircksen’s face light up when he was telling a group of us about the Lookout Mountain project, part of the S. Eureka property in Nevada Timberline acquired in its acquisition of Staccato Gold last year.  We were of the distinct impression last June that Dircksen and Timberline president Randal Hardy are convinced that S. Eureka is a second company maker for TLR (the first being their flagship Butte Highlands JV near Butte, Montana, which should be producing upwards of 50,000 to 70,000 ounces of high-grade, low cost to mine gold per year about this time next year).

Dircksen, a seasoned geo with quite a few economic deposits to his credit (at least 8 we know of), is what we refer to in Texas as “The Real Deal.”  We strongly suggest folks check them out and see if they agree. 

We can be sure of what the Timberline people will be talking about at their PDAC booth …  they will be talking Montana and Nevada gold.  

Small resource companies are not for everyone.  Please read our disclosures and disclaimers posted on every GGR web page.  Caveat Utilitor.  

That’s enough for today, but there will certainly be more to come shortly.  




The Original
Vulture Speculator

Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

"I've been a huge fan of Gene and his amazing work for years..."

Brien Lundin, CEO, Jefferson Financial, Host of the annual New Orleans Investment Conference and Publisher of Gold Newsletter

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