first majestic silver

Why The Next Few Months Could Be An Attractive Entry Point For Gold Equities

CEO & Chief Investment Officer @ U.S. Global Investors
December 15, 2014

•Gold traders are exhibiting bullish sentiment for a third week as the price of bullion continued through a second weekly advance. Assets in the SPDR Gold Trust, the world’s largest bullion exchange-traded product, rose on Tuesday at the fastest pace since July. The holdings are up almost 1 percent in December, snapping four straight months of losses.

•Gold prices jumped this week in reaction to a pullback in various equity markets worldwide. Shanghai stocks had their sharpest fall in five years as a consequence of tightening credit conditions.

•U.S. Mint American Eagle silver coins made history this week, topping 400 million in all-time sales and setting a new annual sales record as sales have surpassed 43 million for the year. HSBC analyst James Steel noted, “The beauty of coin demand is that it is a very good barometer of retail demand.”


•Allied Nevada Gold slumped after a heavily discounted sale of shares and warrants raised $21.5 million this week. This comes amidst news last week that the company cut its gold and silver sales forecast for 2014.

•After several attempts to raise capital through a debt offering, Platinum Group Metals raised $110 million through a bought deal managed by BMO and GMP. The share price pulled back about 13 percent on the news.

•Guatemala’s government approved a new law that raises taxes on transnational miners from 1 percent to 10 percent. Canadian junior Firestone Ventures and Vancouver-based Tahoe Resources are part of a group of affected entities that are joining forces to challenge the law.


small cap mining correction

•Canaccord Genuity recent updated its study looking at the four major TSX Venture corrections in the last three decades. The TSX Venture index is considered a good proxy for small-cap gold stocks. It’s official; we now have experienced the longest small-cap mining correction in 30 years.

S&P TSX Venture composite index

•The study also showed the best three months to gain exposure to gold have historically been December, January and February. With the authors believing the end of the correction could be nearing, the next couple of months could provide an attractive entry point into gold equities.  Coming out of the previous four corrections, returns of 144 percent, 196 percent, 347 percent, and 252 percent were experienced.

•The National Bank of Belgium is the latest central bank to show interest in repatriating its gold reserves. According to International Monetary Fund (IMF) data, Belgium holds 227.4 metrics tons of gold, representing 34.2 percent of its official foreign reserves. Most of the gold is held with the Bank of England, the Bank of Canada, and the Bank for International Settlements. The topic of gold repatriation has heated up in recent weeks after Switzerland voted down a referendum on November 30 that would have seen the central bank increase its gold reserves by 20 percent and the Dutch central bank announced in mid-November it had repatriated 122.5 metric tons of gold. Additionally, French political leader Marine Le Pen wrote an open letter to the governor of the Bank of France on November 25 requesting that the country’s gold holdings be repatriated.

•Clarus analyst Jamie Spratt named Klondex Mines, Richmont Mines, Semafo, Kirkland Lake Gold, Agnico Eagle, AuRico and Detour Gold as the companies with the best opportunities to generate alpha in 2015 among gold miners.


•Mining operators in Burkina Faso fear losing tax cuts after the government announced a plan to review the mining industry.

•TD Securities published a report saying that the first few Fed monetary-tightening steps should take gold and silver to new cyclical lows. However, it sees the metals moving higher after that and forecast gold at $1,175 in the first quarter of 2015 and $1,275 by year end.

•The Fed will meet next week as policymakers debate the timing of the first interest-rate increase in eight years. A rise in borrowing costs would put downward pressure on gold prices.


Courtesy of

Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. Under his guidance, the company’s funds have received numerous awards and honors including more than two dozen Lipper Fund Awards and certificates. In 2006, Mr. Holmes was selected mining fund manager of the year by the Mining Journal. He is also the co-author of “The Goldwatcher: Demystifying Gold Investing.” Mr. Holmes is engaged in a number of international philanthropies. He is a member of the President’s Circle and on the investment committee of the International Crisis Group, which works to resolve conflict around the world. He is also an advisor to the William J. Clinton Foundation on sustainable development in countries with resource-based economies. Mr. Holmes is a native of Toronto and is a graduate of the University of Western Ontario with a bachelor’s degree in economics. He is a former president and chairman of the Toronto Society of the Investment Dealers Association. Mr. Holmes is a much-sought-after keynote speaker at national and international investment conferences. He is also a regular commentator on the financial television networks CNBC, Bloomberg and Fox Business, and has been profiled by Fortune, Barron’s, The Financial Times and other publications.  Visit the U.S. Global Investors website at  You can contact Frank at: [email protected].

The naturally occurring gold-silver alloy is called electrum.
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