Monday, August 30, 2010

SLV - 2 year chart technical analysis

Here is the chart of the iShares Silver Trust ETF (SLV) since Oct of 2008. (Click on the chart for a larger view)

On the chart above, a trend line is drawn from the low's of October 2008 ($8.45) to a dip in the price that occurred on Feb 5th, 2010 ($14.37).  These two points are circled in light blue.

There are two horizontal lines on the chart, the white one is the last break high of $19.44 which is the current resistance level.

The other line colored in green is the last 2 year high that was made on March 14th, 2008 at $20.73.

The upwards trend line connects with the 2 year high line of $20.73 close to the end of this year. If Silver continues to move up with the Gold market, AND follows the upwards trend line, we may see the old high met or even pierced to log in a new 2 year high. (In Silver and with this ETF, SLV).

Over the past 2 years, Silver and SLV also has a tendency to rally up, then pull back and consolidate. (On a bullish trend upwards). If Silver does produce a new high, I would expect the same trend to continue.

No technical tool can predict what is going to happen in any market, stock or commodity. All of these asset classes move by themselves and can move higher / lower on any economic or worldwide news.

Thursday, August 26, 2010

Basic Technical analysis Silver

Here is the chart of the World Silver Index (XSLV) since Oct of last year with a closing price of $18.98.    (Click on the chart for a larger view)

  • Since last year in Oct (09), Silver has been in a trading range between ~$17.40 to ~$19.50 with the exception of late Jan to Feb where it had dipped to a low of $14.65. Note
  • The price closed above all three key moving averages of 15, 50 and 100.  Bullish
  • The 15 day moving average is above the 50. The 100 day moving average is above the 50. Neutral
  • Stochastics K line is above 80, D is in the overbought area. Neutral to Bullish
  • Closed above the upper Bollinger Band. Bullish
  • The price is above the last rally highs. Bullish 
  • Intangible - Moving into September, highest price appreciation month for Gold/Silver on statistical basis. Bullish
Silver over the past 10 months has been in a trading range and most longs have not made any significant gains. This metal has made the most profit for swing traders and some day traders. I do expect that the Silver to Gold ratio to go down in the coming years from it's current 65/1 ratio. With that being said, I also expect Silver to break the 2008 high of $21.35 within a year if not sooner. When that happens, I would also expect new spike highs as there will be short covering along with new shorts coming into the market.

There are many large institutions that can manipulate the Silver Comex market and I do not believe things will change going forward. People will make allegations, but in the long run, nothing will happen and no one will get prosecuted. Based on that assumption, I am a believer that trading Silver is one of the best way to profit going forward. Just make sure your on the 'right' side of the trade.

If your a longer term investor, holding Silver bullion is great way to prevent your savings from loosing value due to the coming inflation (possible hyper inflation). Accumulating Silver bullion each month similar to dollar cost averaging is another good way to invest in the metal.

The overall trend is up and will trend with Gold. If you believe that Gold will appreciate in the coming years and the Silver/Gold ratio will start dropping, we should have significantly higher Silver prices.  See a prior post that suggests that Silver will hit $32 and ounce based on the Fibonacci algorithm from the lows in the early 2000 to the high in 2008.

Tuesday, August 24, 2010

Gold technical analysis Aug 24, 2010

Here is the chart of the World Gold Index (XGLD) since April of this year with a closing price of $1232.    (Click on the chart for a larger view)
  • The trend is still up and trending higher from the July 28th low at 1155. The MACD Histogram peaked on 8/19 and has started trending lower. Neutral to Negative. 
  • The price closed above all three key moving averages of 15, 50 and 100.  Bullish
  • The 15 day moving average is above the 50. The 50 day moving average is above the 100.Bullish
  • Both Stochastics K and D lines are above the 80 level and are 'embedded'.  Bullish
  • The K line has crossed over the D line and is heading down. Neutral to Negative.
  • The price is still above the last high (resistance) on July 13th at 1218.80.  Bullish
The price spiked lower today based on housing data that was released this morning, but rebounded nicely to close above the resistance line at ~1219. Gold has had a solid rally from the 1155 level to the 1230 ($75) level over the past 3 and a half weeks. I would expect a trading range for the next week or two before the possible seasonal rally in September.

If You Like Gold’s Rally, Silver May Not Be Far Behind

Here is an article from Jared Levy who is the editor of Smart Investing Daily

Last week I wrote about how gold may not only be a great investment for the short term (it’s up another $20 since my article) but also has excellent prospects for the long term because of its beauty, versatility, industrial use and inflation hedge. Silver has many of these properties as well and at a much lower price, but before you get all excited about gold and silver, there are some things you need to know about these two precious metals and how they are related.

A Little History on Gold and Silver

While they may both be precious metals and move in tandem in terms of price movement, gold obviously is in far less supply than silver. A total of 165,000 tonnes or roughly 5.3 billion troy ounces of gold have been mined in human history, as of 2009. Sources vary slightly, but average total production of silver throughout history is about 46 billion troy ounces.
Silver, which has been mined for thousands of years, has seen over 50% of its production in the past 40 years. This means that silver, which trades for about $18, is about 1/68 the price of gold, which is trading for about $1,225. This ratio is extremely high; there have been times in the past when the ratio was much lower; for centuries, 16 ounces of silver got you 1 ounce of gold.
Even though more silver has been mined and the price is considerably lower, it does have a ton of exposure to industry and when economies are booming and factories are producing everything from electronic goods to clothing (silver is used in clothing in two basic forms as a bacteria inhibitor), the price of silver will tend to move higher even faster than gold. Remember gold is considered more of a “safe haven” dollar investment, so it may remain strong when the U.S. dollar is weakening.
Gold and silver have a long history with one another and tend to be highly correlated, meaning when one is moving up, the other is as well and vice versa, with gold usually being the leader. I personally don’t think the price of gold is getting back down below $1,000 any time soon, so what about that ratio between the two?
Gold Versus Silver Prices Chart
View Larger Chart

Silver does, however, tend to be more volatile than gold, so if gold is up 10%, silver might be up 15-20%. The bottom line is that silver, like gold, can make a great investment if you feel that industrial demand will return, but inflation may be a problem. I certainly feel that silver still looks attractive at these levels and has not participated in the huge gains that gold has; it should catch up.
In my mind, that gap may need to be filled and that would mean silver moves higher by the end of the year! Just keep in mind that if the gold price corrects, the silver price may do so as well, but it may look worse, so be prepared that you may have to weather a little storm before silver moves to higher levels.
Aside from that, silver is a great long-term investment and a partial inflation hedge as well.

So How Do You Invest in Silver? Buy the Silver ETF

Just like gold and the GLD, everyday stock investors who want to take ownership in silver have an option called the iShares Silver Trust ETF (SLV:NYSE), which is also an actual trust that owns silver and then sells shares of that silver to the public (just like GLD does for gold). It trades just like a stock and is easily bought and sold in your account.
Because of silver’s lower cost, the SLV trades right around the actual price of silver, which is currently about $18. There are small fees associated with SLV, but they are minimal and shares can be bought right through your broker and held in your retirement account. SLV is one of my favorite ETFs along with GLD for buying commodities, and it’s optionable for all you option traders out there.

Consider Silver Coins

Another similarity that silver has to the yellow stuff is its history as a currency (remember silver certificates?). Silver coins can also be extremely collectible and can command values far and above their metal weight and/or face denomination. They can be stored in your home safe or other secure storage and are typically less volatile investments.
First Federal Coin has a new silver coin offer they just told us about; they’re China Silver Pandas. You even could walk away with a tray of these China Silver Panda Dollars in mint-supplied packaging.
But you should know that First Federal Coin only has 350 of these original Mint-supplied trays… so you need to act fast. I also need to remind you that we do have an advertising relationship with First Federal Coin, and we could profit from any sales. But considering the China Mint strikes fewer than one million of these coins, they could offer you a profitable strategy. Take a few minutes and learn about these China Silver Panda Coins.

Buy Silver Miners

The companies that mine and sell silver can be another great way to participate in the rise in price of silver; two of my favorites are the two largest companies in the sector by market capitalization: Silver Wheaton Corp. (SLW:NYSE) and Pan American Silver Corp. (PAAS:NASDAQ). If you want to really step on the gas and amplify returns, buying a silver miner may be another choice. Remember that the amplification works both to the upside and to the downside.
Take a look at the SLV ETF versus SLW stock over the past year… SLW is up 110%, with the price of silver up about 28%. The trends are very similar though.

View Larger Chart

In summary, you have three different ways that you can invest in silver and it too may offer you the diversification you need in your investment portfolio in this uncertain marketplace!

Sunday, August 22, 2010

Goldman Sachs - Gold to $1300

Here is an article from CNBC's Daryl Guppy which states that Goldman Sachs suggests that Gold could reach $1300 which may be a 'conservative estimate'.  If you follow the financial markets, you know that Goldman Sachs is a VERY SIGNIFICANT player in the US Stock market.  Their buying and selling can influence the markets and they have posted very profitable quarters, even when the market is in a downturn. (Shorting equities). When they make predictions, it's like a self fulfilling prophecy. I would guess that they have loaded up on Gold contracts as well as on some of the major miners. I would also guess that they will be selling Gold when the market peaks based on seasonal and technical data, then shorting to reap maximum profits.

In recent weeks, the price of gold has rebounded from the support level of $1160, due to three main factors.
First is the confirmation that China has been buying gold and that it has become easier for people to buy gold. The World Gold Council estimates China produced 313 tons of gold in 2009 but demand is expected to be more than 420 tons.
Second, is the suggestion by the U.S. government that they will move into a second round of quantitative easing. This fear is combined with the developing double-dip in the U.S. economy as shown by the head-and-shoulder reversal pattern in the Dow.
Third is the call by American investment analysts at Goldman Sachs that gold could reach the price of $1,300. This is a conservative estimate, and just a few dollars higher than its recent high of $1,248.20.

Gold is built on demand and supply, but its movement is driven by psychological factors. This is seen in the variety of psychologically based patterns in the gold behavior. The first of the these was the parabolic trend that developed between March and December of 2009. This trend shows accelerating excitement which collapses quickly. The 2009 December price retreat was sudden.
This was followed by an inverted head-and-shoulder pattern starting January of this year and ending in March. This pattern captures the increase in bullishness as market trends recover. The chart pattern target of $1,250 was achieved in June. The pullback from this pattern target found support near $1,160 and this is the important technical feature used for understanding the potential future price development.
A peak at $1,250 and support at $1,160 have the potential to define a broad trading band. The upper edge of the band was tested in May and June. The lower edge of the band was tested in January, April and July. The width of the band is projected upwards above the upper edge of the band and provides a longer term price target near $1,340. There is a high probability the new trend will develop consolidation behavior near $1,250 before breaking above this resistance level.

Tuesday, August 17, 2010

Gold technical analysis August 17, 2010

Here is the chart of the World Gold Index (XGLD) since April of this year with a current price at $1225.    (Click on the chart for a larger view)
  • You can see the low a few weeks ago (July 28th at 1155), the trend up and the MACD Histogram crossover on Aug 3rd circled in Red.   Bullish
  • The price is now above all three key moving averages of 15, 50 and 100.  Bullish
  • The 15 and 100 moving averages are below the 50 DMA. Neutral to Negative.
  • Both Stochastics K and D lines are above the 80 level for the 3rd day.  Bullish
  • The price broke through the last high (resistance) on July 13th at 1218.80.  Bullish
We have higher highs and higher lows and Gold is about $35 away from the all time high that was hit in mid June 2010. I would expect the trend to continue through Sept based on the seasonals and IF both Stochastics K and D lines remain above 80. If we continue for another day with both lines above 80, it will be 'embedded' or 'locked in' and the bullish trend should continue. The bullish trend is broken when the K line dips under the D line, then under 80. (So trader should keep an eye on this signal) There is no one indicator that tells you when to buy, sell or hold and commodities and stocks often get 'whip-sawed' where the price dips then heads back up.

Remember that nothing in the financial markets repeats all of the time, there are no guarantees that the Gold market appreciates into the fall. We can only follow what the price action is doing at the current time.

Monday, August 16, 2010

First Majestic Silver Q2 earnings

 FIRST MAJESTIC SILVER CORP. (FR-T) (the "Company" or "First Majestic") is pleased to announce the unaudited financial results for the Company's second quarter ending June 30, 2010. The full version of the financial statements and the management discussion and analysis can be viewed on the Company's web site at or on SEDAR at

Second Quarter 2010 Highlights ($CAD)
Change from Q2-2009
Gross Revenue
$31.8 million
Up 102%
Net Revenue
$29.0 million
Up 122%
Mine Operating Earnings
$13.1 million
Up 679%
Net Income after taxes
$8.9 million
Up 757%
Earnings Per Share -- basic
$0.10 per share
Up 900%
Cash Flow Per Share (non-GAAP measure)
$0.14 per share
Up 1300%
Silver Ounces Produced (excluding equivalent ounces of gold and lead)
1,538,798 ounces Ag
Up 86%
Silver Equivalent Production
1,656,165 eq. oz.
Up 73%
Silver Equivalent Ounces Sold
1,623,844 eq. oz.
Up 51%
Total Cash Costs per ounce
US$ 8.20
Down 10%
Direct Cash Costs per ounce
US$ 6.16
Down 2%
Average Revenue per ounce sold
US$ 18.68
Up 48%

Results of Operations

Consolidated gross revenue (prior to smelting and refining charges and metal deductions) for the quarter ended June 30, 2010 was $31.8 million (US$30.3 million) compared to $15.8 million (US$13.5 million) for the quarter ended June 30, 2009 for an increase of $16.0 million or 102%. Compared to the first quarter ended March 31, 2010, consolidated gross revenue increased by $9.9 million or 45%. The increase in revenues in the second quarter of 2010 is primarily attributable to a 25% increase in silver ounces sold compared to the first quarter ended March 31, 2010. The increase in ounces sold are due to the launch of the new cyanidation plant at the La Encantada Silver Mine and the improving operating levels at the La Parrilla Silver Mine which combined, contribute a 86% increase in silver production compared to the second quarter of 2009.

In the second quarter of 2010, the Company sold 1,623,844 ounces of silver equivalent at an average price of US$18.68 per ounce compared to 1,073,129 ounces in the second quarter of 2009 at an average price of US$12.60 per ounce, representing an increase of 51% in shipments over the same quarter in 2009 and a 25% increase over the first quarter of 2010. In the first quarter of 2010, the Company sold 1,298,659 ounces of silver equivalents at an average price of US$16.23 per ounce.

Production of silver, excluding any equivalents from gold or lead, increased by 9% over the prior quarter and 86% compared to the second quarter of 2009. The Company produced 1,538,798 ounces of silver in the current quarter, 1,409,825 ounces of silver in the first quarter of 2010 (commercial and non-commercial production), and 827,720 ounces in the second quarter of 2009. In the second quarter of 2010, 93% of First Majestic's revenue resulted from the sale of pure silver making the Company the purest silver producer relative to its peers.

The new plant at La Encantada achieved commercial production on April 1, 2010. The design of the new plant allows for the production of silver doré bars which are generally 93-97% silver with small amounts of lead, gold and other metals making up the balance of the contents of these bars. During the second quarter, furnaces were installed allowing for the discontinuation of concentrate production. The economic differences are significant and are beginning to reflect in the financial numbers. Management completed a review of the economics of lead production and concluded that, due to the relatively small amount of lead produced historically and the current lead prices, ore was more valuable if processed directly through cyanidation rather than being floated, and thus the flotation circuit was shut down in June 2010. As a result of the discontinuation of flotation, concentrate production decreased in the second quarter and lead as a byproduct decreased by 41% to 1,494,548 pounds. The economics of switching from concentrate production to doré production resulted in a savings for La Encantada of approximately US$2.61 per ounce in the second quarter of 2010 and a savings of $1.10 per ounce for consolidated operations. The new La Encantada cyanidation plant achieved average throughput of approximately 2,900 tonnes per day in the second quarter. This average throughput is expected to increase in the third quarter.

Total commercial production for the second quarter of 2010 increased by 22% compared to the first quarter of 2010. Total production (commercial and non-commercial) for the second quarter of 2010 increased 2% from the prior quarter and 73% from the same quarter of the prior year to 1,656,165 ounces of silver equivalents consisting of 1,538,798 ounces of silver, 541 ounces of gold and 1,494,548 pounds of lead. This compares to the 957,936 ounces of silver equivalents produced in the second quarter of 2009, which consisted of 827,720 ounces of silver, 746 ounces of gold, 1,493,162 pounds of lead, and compares with production in the first quarter of 1,619,403 ounces of silver equivalents consisting of 1,409,825 ounces of silver, 857 ounces of gold and 2,542,071 pounds of lead.

Net sales revenue (after smelting and refining charges, metals deductions, transportation and other selling costs) for the quarter ended June 30, 2010 was $29.0 million, an increase of 122% compared to $13.0 million for the second quarter of 2009. Net sales revenue for the quarter ended June 30, 2010 increased by 59% compared to $18.2 million in the first quarter of 2010. Smelting and refining charges and metal deductions decreased to 9% of gross revenue in the second quarter of 2010 compared to 17% of gross revenue in the second quarter of 2009, due to a shift in the production mix toward silver doré which is a major benefit from the new cyanidation plant at La Encantada.

The Company generated net income of $8.9 million in the second quarter of 2010, or earnings per common share ("EPS") of $0.10 compared to a net income in the second quarter of 2009 of $1.0 million or EPS of $0.01. Net income for the second quarter of 2010 included non-cash stock-based compensation expense of $0.6 million and an income tax provision of $1.4 million. In the first quarter of 2010, net income was $3.0 million resulting in EPS of $0.03. If the revenues and expenses of the new plant were deemed commercial in the first quarter (recorded as income rather than capital) an additional $2.3 million of capitalized profits would have increased EPS in the first quarter to $0.06.

Direct cash costs per ounce of silver (a non-GAAP measure) for the second quarter of 2010 were US$6.16, compared to US$6.31 per ounce of silver in the second quarter of 2009 and US$4.94 per ounce of silver in the first quarter of 2010. The cost increase was attributed to an increase in the peso relative to the US dollar, as well as an increase in electricity and diesel costs compared to previous quarters.

Total cash costs per ounce (including smelting, refining, metal deductions, transportation and other selling costs, and by-product credits, which is a non-GAAP measure) for the second quarter of 2010 was US$8.20 per ounce of silver compared to US$9.15 per ounce of silver in the second quarter of 2009 and US$8.11 per ounce in the first quarter of 2010.

Mine operating earnings for the second quarter of 2010 increased by 679% to $13.1 million compared to mine operating earnings of $1.7 million for the second quarter of 2009 and are associated with an increase in net revenue during the second quarter of 2010. When compared to the first quarter of 2010, mine operating earnings increased by 78% from $7.4 million.

Operating income increased by 907%, or $11.2 million, to $10.0 million for the quarter ended June 30, 2010, from an operating loss of $1.2 million for the quarter ended June 30, 2009, due to the 51% increase in ounces sold and the 51% increase in average US$ revenue per ounce of silver sold. When compared to the first quarter of 2010, operating income increased by 114% from $4.7 million.

During the quarter ended June 30, 2010, the Company invested $2.6 million in its mineral properties and a further $3.0 million in additions to plant and equipment on a cash basis. This compares to $3.2 million invested in its mineral properties and a further $5.9 million in additions to plant and equipment on a cash basis in the second quarter ended June 30, 2009. When compared to the first quarter of 2010, the Company invested $3.4 million in its mineral properties and a further $1.4 million in additions to plant and equipment on a cash basis.

Wednesday, August 11, 2010

Gold Seasonals

Is Gold going to follow the seasonal pattern this year? If Gold trends with the historical averages, we may see new highs heading into the fall as the current price of ~$1200 is about ~$60 away from last years high in late November.

Why does Gold tend to appreciate in September and into the fall? (With an exception for October) There are a few reasons which may provide the answer. It has to do with gift giving and Gold has been a significant and coveted precious metal over hundreds of years.

1) Muslim holy month of Ramadan starts in mid August and heads into September with gift giving.

2) Post wedding season in India followed by Diwali, India’s largest festival.
In India, weddings are a major. Most marriages are arranged, and couples are usually married during autumn festivals like Diwali. It is believed that being married in festival season provides good luck, longevity, happiness, and success for a marriage. The families of Indian brides give them wedding gold in 22-karat jewelry. With Gold’s bright rich yellow color, it’s beautiful on the bride, but gold’s intrinsic value helps secure her financial future and her financial independence within her husband’s family.
India is the world’s largest consumer of gold. Most of it is in the form of jewelry, but Indians don’t separate gold jewelry and gold investment like we do in the West. They are one and the same. Brides’ dowries may not sound like much, but collectively they are the biggest seasonal driver of gold investment demand on the planet. Around 40% of India’s entire annual gold demand occurs during the short autumn wedding season.

3) Christmas is a world wide celebration

Jewelry is often given for Christmas and Gold is a popular item as it retains its value and has appreciated nicely over the last ten years. Diamonds are typically for wedding rings and Silver does not have the elegance and worth for wearing. The Christmas holiday has also been taken up by several countries, even though they are not religiously Christian.

4) Chinas National day celebration in October and the New Year in 2011.

In addition to the National day and New Years, the Chinese government has also suggested that people purchase Gold for their savings. You can now purchase Gold at most banks in China.

I would guess that professional commodity traders will be keeping a close eye on the Gold and Silver markets in the coming weeks to spot a possible bull trend based on the seasonals. If Gold/Silver does make a run for the ~$1300+ area you can bet your last silver dollar that major buyers will be placing their bids in to ensure they get a piece of the market. (Which may send the prices higher, and the shorts covering).  If it is anything like last year, they will also make sure they lock in their profits before the end of the year so they can show healthy returns on their balance sheets.

Monday, August 9, 2010

Allied Nevada Gold - Profit In Q2

Allied Nevada Gold Corp. (ANV: News , ANV.TO) announced financial results for the second quarter, posting net income of US$20.8 million or US$0.26 per share, compared to a net loss of US$6.9 million or US$0.12 per share in the prior year quarter.
Revenue from gold sales for the period was US$35.9 million, compared to US$3.7 million in the previous year period. Total revenue for the quarter was US$37.1 million, compared to US$3.8 million in the asme period last year.
Further, for the fiscal year 2010, the company said it expects to mine approximately 29 million tonnes of material, including approximately 11 million tonnes of ore at an average grade of 0.56 g/t gold and 9.7 g/t silver. The company reiterated its guidance of 100,000 ounces of gold sales at a cost of sales per ounce of gold sold of between US$400-US$450 for 2010.

Sunday, August 8, 2010

Technical analysis Gold (XGLD)

Gold has had higher highs and higher lows over the last 7 or so trading days and is on a uptrend.  It looks like the 50% Fibonacci support held last week and bounced nicely off of it.  Gold is now trading over the 15 day and 100 day moving average which is a bullish sign. It will need to break the 1212 area to get over the 50 day moving average and over the 1219 area to get over the highs in mid July.

The MACD Histogram crossed over the center line on Aug 3rd which is another bullish indicator. The K and D Stochastics are in the overbought area and are in an uptrend, another bullish indicator. Are we in for a early seasonal bullish run?  I'm not 100% sure of that, but the chart definitely indicates that it is on the way up. There may be a pullback sometime in August to get in before a possible bullish run into the fall months of Sept, Oct and Nov.

Friday, August 6, 2010

Silver Standard Reports Second Quarter 2010 Results

VANCOUVER, BRITISH COLUMBIA -- 08/05/10 -- Silver Standard Resources Inc. (TSX: SSO)(NASDAQ: SSRI) provides the following updates on the Pirquitas Mine and principal development projects and reports on headline financial results from the company's second quarter ended June 30, 2010. Effective January 1, 2009, the company adopted the U.S. dollar as its reporting currency and all figures are in U.S. dollars, unless otherwise noted. (This news release contains forward-looking information that is subject to the risks and assumptions set out in the company's Cautionary Statements on Forward-Looking Information located on the last page of this news release.)
Pirquitas Mine, Argentina
During the second quarter the mill processed 345,661 tonnes of ore at an average milling rate of 3,798 tonnes per day, compared to 3,070 tonnes per day in the first quarter. Open pit mining continued to operate well with 3,900,000 tonnes or 43,000 tonnes per day, similar to the 3,876,000 tonnes or 43,000 tonnes per day mined in the first quarter.

The significant improvement in cash production cost per ounce is due to the higher production resulting from improved grades and recovery. Including deductions, treatment and refining charges, royalties and export taxes, cash operating cost per ounce is $14.98 compared to $36.61 for the first quarter 2010. At the beginning of the quarter, operations began encountering zinc in the mined ore, and the mill optimized the current circuit to produce a saleable zinc concentrate. The mill produced 896,000 pounds of zinc and shipments commenced at the end of June. In July, the mine produced approximately 614,300 ounces of silver with grades of 277 grams of silver per tonne and recoveries of 65.3%, exceeding the second quarter average grades and recoveries.
During the second quarter, mining activity continued through a transitional horizon as well as exposing some sulphide ore. Operations will continue to mine through transitional ore during the third quarter, with levels of sulphides increasing by the middle of the fourth quarter. Significant progress was made with the metallurgy of the transitional ore during the first six months of this year which resulted in improved mill recoveries. In addition, the mill has started to produce zinc concentrates from the current installed flotation facility. Due to high zinc values encountered in the mine, the company is now anticipating producing 3.0 million pounds of zinc in 2010. The tin circuit is commissioned and will be operated when suitable material is available. Due to the lower tin grades in the initial levels of the mine, tin production is now estimated at 600,000 pounds for 2010 compared to the previous estimate of 800,000 pounds.
The company expects production for the full year of 2010 to be seven million ounces of silver at an average cash production cost of $10.00 per ounce of silver (net of by-product credits) and $14.00 per ounce cash operating costs. Please refer to the cautionary note regarding forward-looking statements and non-GAAP financial performance measures contained in the Management Discussion & Analysis.
Financial Results
(All figures are in US dollars unless otherwise noted)

- Silver Standard produced a total of 1,692,466 ounces of silver and sold
  1,091,911 ounces during the second quarter of 2010.
- The company recorded a net loss of $15.2 million or $0.19 per share for
  the three months ended June 30, 2010, compared to a net loss of $1.4
  million or $0.02 per share for the same period in the prior year, and a
  net loss of $22.8 million or $0.30 per share in the six months ended
  June 30, 2010, compared to a net loss of $4.0 million or $0.06 per share
  in the comparable 2009 period.
- Loss from mine operations narrowed in the second quarter to $1.6 million
  including revenues of $14.1 million which were net of deductions,
  treatment and refining charges. Cost of sales was $10.6 million plus
  $5.1 million in non-cash depletion, depreciation and amortization.
- For the three months ended June 30, 2010, exploration expenditures
  totalled $14.3 million, compared to $4.7 million in the second quarter
  of 2009. Expenditures totalled $1.3 million at the San Luis Project in
  Peru ($1.2 million in the second quarter of 2009); $4.2 million at
  Pitarrilla in Mexico ($1.2 million in the second quarter of 2009); $2.9
  million for the Snowfield Project in Canada ($1.0 million in the second
  quarter of 2009); and $3.7 million at the Brucejack Project, Canada
 ($nil in the second quarter of 2009).
- Cash and cash equivalents at June 30, 2010 were $57.7 million compared
  to $26.7 million at December 31, 2009. Working capital at June 30, 2010
  was $89.4 million compared to $24.5 million at December 31, 2009.

Principal Projects
San Luis Project, Peru
The feasibility study has been finalized and approved by the board of
Silver Standard for submission to the joint venture. With the
completion of the feasibility study, Silver Standard has now vested a
70% interest in the joint venture. See the news release dated May 10,
2010, for details on the San Luis Feasibility Study. The joint venture
is currently negotiating long-term land access agreements for the
Pitarrilla Project
At Pitarrilla in Mexico, the Breccia Ridge underground feasibility
study is underway and planned for completion in Q4 2010. Pitarrilla is
among the largest silver discoveries in the last decade and is
100%-owned by Silver Standard.
Based on the pre-feasibility study, the underground component of
Breccia Ridge now contains probable silver reserves of 91.7 million
ounces. Early indications are that this number will improve as the
feasibility study progresses. The Breccia Ridge Zone, containing 63% of
Pitarrilla's total silver resource of 643.6 million ounces of measured
and indicated silver resources and 82.3 million ounces of inferred
silver resources, is the main focus of current project activities and
is one of five zones of mineralization identified to date on the
Snowfield Project
A National Instrument 43-101 compliant Preliminary Assessment was
completed for the Snowfield Project, located 65 kilometers north of
Stewart, British Columbia, during the quarter. The project includes
development of an open pit mine, a processing plant, infrastructure,
waste rock storage and tailing impoundment areas to recover the
mineralization identified to date. Details are summarized in a news
release dated June 1, 2010.
Preliminary results from an ongoing metallurgical program indicate
the potential for significant rhenium recoveries at Snowfield. The
potential impact of rhenium on the project's economics, as well as the
inclusion of the higher-grade gold
and silver resources of the company's adjacent Brucejack Project, will
be examined in an updated Preliminary Assessment which is currently
This season's exploration program includes an 18,000-meter drill
program primarily focused on expanding the project's known gold
resource. The Snowfield project currently hosts measured and indicated
gold resources of 19.77 million ounces and inferred gold resources of
10.05 million ounces, along with resources in copper, silver, and
molybdenum based on a cut-off of 0.35 grams of gold-equivalent/tonne.
Geotechnical and large diameter drilling for advanced metallurgical
studies are planned to be included as part of the drill program.
Preliminary environmental and geotechnical investigations will be
carried out at the proposed mill tailings locations.
Brucejack Project
A 24,000-meter drill program is underway for the Brucejack Project.
One goal of the drilling is the expansion of the newly-discovered
Bridge Zone, which is developing into a significant gold-silver
porphyry. Other drill targets include the continued testing for
expansion of the high-grade Galena Hill and West Zones, and new areas
which have been defined by surface sampling and mapping.
Drilling to date has encountered high-grade gold and silver
mineralization first identified in the 2009 drill program. The results
demonstrate consistency of these high grade intersections over a
relatively broad area. (See the July 12 and July 29, 2010 news releases
for details). The Brucejack Project currently hosts measured and
indicated resources of 4.04 million ounces of gold and 65.4 million
ounces of silver and inferred resources of 4.87 million ounces of gold
and 71.5 million ounces of silver based on a cut-off of 0.35 grams of
Diablillos Project
At Diablillos in Argentina, a preliminary metallurgical program to
assess the heap leaching characteristics of the mineralization has been
completed. On completion of other engineering studies now underway, a
preliminary economic assessment will be completed to test the potential
economics of the project.

Thursday, August 5, 2010

Minefinders expects gold-silver production to rise in the second half

 Precious metals mining and exploration company Minefinders (TSX:MFL, AMEX:MFN) has released its results for the second quarter ending 30 June 2010, reporting revenues of $21.6 million and operational income of $2.4 million, with a net loss of $0.9 million.

The company, which operates the multi-million ounce Dolores gold and silver mine in Mexico, made proceeds of $21.6 million from the sale of 14,073 ounces of gold and 266,129 ounces of silver at an operating cash cost of $597 per gold equivalent once sold.

Gold and silver production decreased in Q2 of this year to 13,783 ounces and 277,147 ounces from 23,336 ounces and 419,946 ounces in the same period last year, respectively.

“Gold and silver production in the second quarter reflects the lower grade ore stacked to the leach pad during the first quarter this year,” said Minefinders president and CEO Mark Bailey.

These results were in line with management expectations as previously flagged up by the company itself, hence the muted response from investors.

Bailey added: “However, production from phases 2 and 3 of the pit reached target levels during the second quarter, eliminating the need to supplement production by processing low-grade stockpile material. The average gold and silver grades stacked to the leach pad in June of 0.51 grams per tonne and 40.7 grams per tonne respectively reflect the higher grade ore that we are now starting to access. With grades increasing, tertiary screen repairs complete, optimization efforts well underway and the phase 2 leach pad ready for loading ore in August, production is expected to increase through the second half of this year.”

The company is also closer to producing a detailed feasibility study on the construction of a mill at Dolores, which would increase production from operations. During the second quarter the company continued to advance its 2010 exploration program and identified a new mineralized zone, the North Dome.  The presence of underground and extended mineralization to the south of the open pit was also confirmed.  In addition, drilling commenced at the Minefinders' grass-roots La Virginia property, for which initial results are said to be encouraging. Assay results are expected to be reported in the third quarter.

Early last month, the company released the results of an independently prepared pre-feasibility study (PFS) for its La Bolsa gold and silver project in Sonora, Mexico. The study contemplated conventional open pit mining methods at La Bolsa with low cost heap leach processing, considering two economic projections with both a ‘base case’ (effectively underestimating prices of gold and silver) and a ‘current spot’ case (as name suggests, considers gold and silver price at current spot level). Both of these cases came out with very buoyant results for the project and the company indicated it is a significant step in bringing the deposit into production. Going forward, Minefinders are going to consider their options over the next few months to best realize value from the project.

Separately, the company has made two new appointments to its team. Laurence Morris will join as vice president of operations, with effect from September 1, 2010, while Thomas Bagan has been hired as vice president of corporate development, beginning August 23rd. Laurence will be responsible for leading the strategic development of the company’s mining operations and Bagan will look after the company`s corporate and project development initiatives.

Minefinders has a market capitalization of C$595 million (US$585 million), with around US$21.3 million available in cash and cash equivalents as of June 30, 2010.

The company currently has four projects underway (La Virginia, Planchas De Plata, La Bolsa and Real Viejo) as well as its flagship, in production mining project (Dolores), all located in Mexico. The Dolores mine commenced production of gold and silver in November 2008 and is expected to produce more than 1.7 million ounces of gold and 64.4 million ounces of silver from heap-leach operations over a 15.5 year mine life.

Wednesday, August 4, 2010

Detour Gold Reports Results From Its 2010 Drilling Program at Detour Lake Project in Ontario

Nice drill results from Detour Gold

TORONTO, ONTARIO, Aug 03, 2010 (MARKETWIRE via COMTEX) -- Detour Gold Corporation /quotes/comstock/11t!dgc (CA:DGC 26.62, +0.92, +3.58%) ("Detour Gold" or the "Company") reports assay results for its 2010 drilling campaign at the Detour Lake gold project in northern Ontario. The 2010 drilling campaign of 90,000 metres is over 90% complete. The program is focusing on the western extension of the Detour Lake open pit deposit between section 17,540E and 18,000E on a 40X40 metre drill spacing. Thus far, the Company has completed 78,352 metres in 154 holes. Today's results include an additional 25 holes totaling 13,620 metres (including one hole abandoned for 42 metres). Thus far, the Company has released drill results from 79 holes of the 2010 drilling program.

The Company plans to issue an updated mineral resources and reserves statement for the year-end, which will include the 2010 drilling program. Drill results to date indicate that the gold mineralization continues west of the current US$850 pit shell, which is expected to have a positive impact on the mineral resources and reserves. The current mineral reserves (proven and probable) currently stand at 11.4 million ounces of gold (347.5 million tonnes averaging 1.02 g/t) (Technical Report filed on SEDAR on June 30, 2010).

All 25 drill holes were completed from section 17,540E to 18,060E, west of the Calcite Zone. The majority of the gold mineralization was intersected outside of the feasibility study open pit (based on a gold price of US$850/oz), along the same wide mineralized corridor. Of significance, holes DG-10-883 on section 17,820E intersected 4.04 g/t (uncut) or 1.11 g/t (cut) over 51.0 metres, DG-10-896 on section 17,900E intersected 4.59 g/t (uncut) or 1.97 g/t (cut) over 39.0 metres, and DG-10-888A on section 17,980E intersected 3.38 g/t (uncut) or 2.50 g/t (cut) over 38.1 metres.

Tuesday, August 3, 2010

Kinross purchases Red Back Mining Inc.

 Kinross Gold Corp. on Monday said it agreed to take over Red Back Mining Inc. in an equity deal that values Red Back Mining at $7.1 billion. The merger requires approval from at least two-thirds of votes cast at a special Red Back Mining investor meeting slated for September. The deal underscores the lasting lure of commodities, particularly gold, for investors still feeling skittish about the health of the global economy.

For proof, look to China. The country’s central bank said this week that it will extend financial support to gold producers, including backing foreign acquisitions, Bloomberg reported. Closer to home, investor John Paulson also is scooping up big positions in gold, and his Paulson & Co. holds about a 4.7% stake in Kinross, according to LionShares.

For Toronto-based Kinross, the attraction is Red Back’s two major gold mining projects in West Africa, the Chirano mine in Ghana and the Tasiast mine in Mauritania, along with exploration efforts in those countries.

Investors don’t seem as gold-obsessed, with Kinross shares down about 4.7% on the Big Board as analysts are warning about the hefty pricetag. Red Back shares, already trading near all time highs, rose 7.9% to C$28.07, still under the C$30.50 value of the Kinross bid.

Bank of America Merrill Lynch estimates the deal effectively costs $1,303 for each gold equivalent ounce, while August contracts for gold on the New York Mercantile Exchange are changing hands are around 1,185.80 a troy ounce. The price of gold is up about 24% in the last year, though an ETF tracking the stocks of gold producers [[GDX]] is up around 5% so far this year.

Meanwhile, there are new headlines every day about climbing prices for other commodities. The Wall Street Journal reported this week that our bacon fix is getting more expensive because of higher U.S. prices for pork bellies. Hot weather in Russia and crop problems elsewhere also are sparking dramatic price increases for wheat.

Gold historically is a place where people stash money when times are tough. Gold prices, which peaked earlier this summer at a record $1,265 an ounce, have proven susceptible to investor moods. When equity markets are more stable, gold tends to sink as more money flows into growth assets.

Monday was an odd time to announce a gold deal, as equity indexes rallied. But with continued fears of a stagnating economy, the gold rush looks to last awhile longer.

Sunday, August 1, 2010

Technical analysis Gold

 Gold has been trending down since late June after hitting an all time high at ~1260. Since then, we now have lower highs and lower lows which is the definition of a downtrend. The price is below three of the moving averages of 15, 50 and 100 which is a bearish sign. If we continue down and break the Fibonacci support at the 50% level, we should have the next support around the 1130 level. I think we will trade sideways to maybe a bit lower for the month of August. Then keep your eye on the price action just before September hits as Gold tends to appreciate based on seasonals.