The Morgan Report Blog

The Most Beautiful Metal

Richard (Rick) Mills
aheadoftheherd.com

As a general rule, the most successful man in life is the man who has the best information

Vanadium is a soft, silvery gray, ductile transition metal and is the 22nd most abundant element in the Earth’s crust. Vanadium in not found by itself, instead it’s most often found in chemically combined forms occurring in about 65 different minerals and has been historically mined as a by-product of other mining operations.

Vanadium is primarily obtained from the minerals vanadinite (Pb5(VO)3Cl) and carnotite (K2(UO2)2VO4·1-3H2O). It is found in magnetite (iron oxide) deposits that are also very rich in the element titanium. It is also found in aluminum ore, rocks with high concentrations of phosphorous-containing minerals, and sandstones that have high uranium content. Vanadium is also recovered from carbon-rich deposits such as coal, oil shale, crude oil, and tar sands. Vanadium can be recycled from mining slag, oil field sludge, fly ash and other waste products.

Vanadium’s symbol, a V, is based on an 8th-century figurine of the Scandinavian goddess of beauty Freyja. The symbol is set against text from a 13th century Icelandic saga. Norsemen called Freyja by another name, Vanadis, which is where vanadium got its name.

Vanadium may be the most beautiful metal of all – once extracted and dissolved in water, various forms of vanadium turn into bright, bold colors.

A sword of Damascus steel was said to be so sharp that it could split a hair dropped on the blade, cut a floating feather in half or split wide open a steel helmet with equal ease. The blades were said to be so flexible they could bend through 90 degrees without breaking.

Most Damascus steel was derived from blocks of ”wootz,” a form of steel produced from the vanadium-rich iron deposits in South India.

A big mystery down thru the ages is what were the properties of wootz that produced such blades – malleable when heated, extraordinarily tough when cooled and able to take on a razors edge and hold it thru the thick of battle.

The answer has come fairly recently – it takes high carbon content, vanadium and low metal working temperature to produce the much superior Damascus steel.

The Arabs took the steel to Damascus where it was used for many centuries.

The first time vanadium was discovered was in 1801 by Andrés Manuel del Rio, a Professor of Mineralogy in Mexico City. Rio sent samples, and a brief letter describing his discovery, to the Institute de France in Paris, France, for confirmation and credit. His letter was lost in a shipwreck and the Institute only received his samples which Rio had named erythronium.

In 1830, while analyzing samples of iron from a mine in Sweden, a Swedish chemist, Nils Gabriel Sefstrôm rediscovered vanadium.

In 1867, Sir Henry Enfield Roscoe, an English chemist, isolated vanadium by combining vanadium trichloride (VCl3) with hydrogen gas (H2).

In 1869, pure vanadium was produced by Henry Roscoe at Manchester, England.

Henry Ford was the first to use it on an industrial scale, in the 1908 Model T car chassis.

Uses

Vanadium has remarkable characteristics which give it the ability to make things stronger, lighter, more efficient and more powerful. Adding small percentages of it to steel and aluminium creates exceptionally ultra high-strength, super-light and more resilient alloys.

Nearly 80% of the vanadium produced is used to make ferrovanadium or as an additive to steel.

Vanadium-steel and Ferrovanadium (a strong, shock resistant and corrosion resistant alloy of iron containing between 1% and 6% vanadium) alloys are used to make such things as axles, crankshafts and gears for cars, parts of jet engines, springs and cutting tools.

Although other metals can also have similar effects on steel only a small amount of Vanadium is required to dramatically increase its tensile strength, making Vanadium one of the most cost-effective additives in steel alloys.

Less than 1% of vanadium, and as little chromium, makes steel shock resistant and vibration resistant.

Vanadium-titanium alloys have the best strength-to-weight ratio of any engineered material on earth.

Vanadium, being corrosion resistant, is used to make special tubes and pipes for the chemical industry.

Since vanadium does not easily absorb neutrons it has important applications in the nuclear power industry.

A thin layer of vanadium is used to bond titanium to steel.

Vanadium pentoxide (V2O5) is used as a mordant, a material which permanently fixes dyes to fabrics. V2O5 is also used as a catalyst in certain chemical reactions and in the manufacture of ceramics. It can also be mixed with gallium to form superconductive magnets.

Vanadium oxide is used as a pigment for ceramics and glass, as a catalyst and in producing superconducting magnets.

Vanadium is mined mostly (85% of global production) from vanadium-bearing titaniferous magnetite found in ultramafic gabbro bodies in South Africa, north-western China, and eastern Russia.

Purification processes ultimately produce vanadium pentoxide (V2O5).

Unlike other commodities, there is no market quote for vanadium. Vanadium is traded by contract, directly between the producers and consumers – global market prices are set by whatever steel industry customers are willing to pay.

Vanadium or V flow batteries

Every sunny afternoon there’s a remarkable amount of the sun’s energy, in the form of solar power, fed into the electricity grid. The problem is that all this new electricity is coming at the wrong time of day. Between noon and 4pm is a trough in power demand. It’s during peak hours of demand in the evening when all this excess energy can be utilized.

An emerging market opportunity is rapidly developing for vanadium pentoxide (V2O5) to be used as the main ingredient, the electrolyte, in the vanadium redox flow battery (VRFB) aka the Vanadium Flow Battery (VFB) or V flow battery. Other vanadium redox battery technologies, such as lithium-vanadium phosphate batteries are also being advanced.

Vanadium Flow Battery’s can store large amounts of energy almost indefinitely, which makes them perfect for wind/solar farms, industrial and utility scale applications, to supply remote areas, or to provide backup power.

Vanadium is going to become a crucial part of the renewable energy revolution.

“Electrical distribution grids must operate within one simple principle, that energy consumption must be met by energy production instantaneously. Therein lies the problem; solar energy is intermittent, meaning it has variable energy output and is extremely uncertain due to natural conditions. The output can vary on daily, hourly, weekly, and possibly even monthly bases depending on where depending on where the solar panels are set up. This is a serious limitation when integrating solar plants to major grids. Energy storage would be able to solve this problem of energy reliability and security, and it could also be utilized to control to demand and reduce the load on base load plants that traditionally use fossil fuels. The objective of integrating enery storage technologies is to generate an electricity reserve, which would stabilize the energy market, reduce the need on reserve fossil fuel plants, smooth out short term power quality applications, reduce the requirements of the spinning reserve, provided black start capacity, reduce the vulnerability of renewable, provide greater access to electricity, and finally make the energy produced more affordable for the masses.” Nathaniel Ahlers, Review of Grid-Level Energy Storage Technologies

Energy Storage Roles on the Electric Grid

According to the U.S. Energy Storage Monitor, energy storage demand, especially at the business and utility scales, will increase ten times in just the next five years.

The Energy Storage Association states that corporate investments in energy storage reached $660 million in the third quarter of 2016.

Fact – A lack of energy storage is the main factor limiting the spread of renewable energy.

Fact – When we can create, and easily access as required huge stores of energy, we will be free from much of our dependence on fossil fuels.

New battery technology, efficient, easily accessible stored energy, is essential to our renewable energy future.

How VFB’s work

Batteries store energy and generate electricity by a reaction between two different materials, usually zinc and manganese.

In VFB batteries, these materials are liquid and have different electric charges. Both liquids (V2+/V3+ and VO2+/VO2+) are pumped into a tank. A thin membrane separates the two liquids but the liquids are able to react and an electric current is generated.

Vanadium is used because it can convert back and forth from its various different states which carry different positive charges. The risk of cross contamination is eliminated as only one material is used. They are also safer, as the two liquids don’t mix causing a sudden release of energy.

The liquids have an indefinite life, so the replacement costs are low and there are no waste disposal problems. Also, battery life is extended potentially infinitely. By using larger electrolyte storage tanks VFB’s can offer almost unlimited energy capacity and they can be left completely discharged for long periods with no ill effects.

“V-flow batteries are fully containerized, nonflammable, compact, reusable over semi-infinite cycles, discharge 100% of the stored energy and do not degrade for more than 20 years. Unlike solid batteries, like lithium-ion or lead-acid, that begin degrading after a couple of years, V-flow batteries are fully reusable over semi-infinite cycles and do not degrade, giving them a very, very long life.” James Conca, The Energy Storage Breakthrough We’ve Needed

Introducing hydrochloric acid into the electrolyte solution almost doubles the storage capacity and enables the system to work over a far greater range of temperatures, from -40°C to +50°C.

Presently, the largest installed V-flow battery in the U.S. is in Washington State at the Snohomish County Public Utility District’s Everett Substation. This vanadium battery can keep the lights on in 1,000 homes for eight hours.

V-flow batteries offer the best deployable large battery storage technology developed so far.

Vanadium has also begun to play a role in applications for electric and hybrid vehicles. Vanadium acts as a supercharger to batteries by increasing the energy density and voltage of the battery. This is important for electric and hybrid vehicle performance since energy density equates to distance/range, while voltage equates to torque.

Demand Outlook

“VRFBs have emerged as a promising solution for grid services because of their long lifecycle potential and high energy capacity, which can provide extended discharge times. Additionally, given the ability to scale power and energy of a system independently, VRFB technology may be a long-term solution for off-grid power systems and micro-grids. In particular, these systems could be used to support residential, community, military, and commercial end-users, and to fulfill remote-energy-access needs of rural areas in developing countries.

Approximately 90% of today’s vanadium consumption occurs in the steel industry. About 10% is used for non-ferrous alloys (titanium alloys, super alloys, magnetic alloys) and chemical applications (catalysts, dyes, phosphors). VRFB energy storage applications, in which V2O5 quality requirements are usually more rigorous, accounted for about 1 kt V demand in 2014, compared to global production of 94.3 kt V that year.

Estimates on vanadium requirements for VRFB vary among producers, with an average of approximately 8 Kg of high purity V2O5 per KWh. Currently, there are few vanadium producers able to produce high purity V2O5 and products show significant differences in purity and trace element levels…

Considering the potential size of the grid energy storage market, even a slight increase in VRFB demand would mean significant growth in V2O5 consumption for this end-user product. For example, it is estimated that the vanadium consumption in the battery energy storage industry could rise 3100% by 2025, to 31 kt V.

Currently, 55% of global V2O5 production occurs in China, followed by 17% in South Africa, 8% in Russia, and 4% each in the USA and Austria.” Canadian Nation Research Council (CNRC) report

There is no primary vanadium production in Canada or the U.S.

Conclusion

Currently traditional clean, green, renewable energy sources are unreliable sources of electricity production. Vanadium’s unique properties make it ideal for a new type of batteries that will revolutionize our energy storage systems.

The Vanadium Flow Battery (VFB), given its unlimited storage capacity, long battery life, low maintenance requirements, adaptability and almost non-existent environmental footprint is today’s answer to efficiently storing and accessing energy. The stored electricity will reduce our reliance on fossil fuels cutting pollution and CO2 emissions.

Vanadium, and the fact VFB’s are the basis for a more efficient, reliable, and cleaner electrical energy market, needs to be on your radar screen.

Richard (Rick) Mills
aheadoftheherd.com

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of aheadoftheherd.com.

***

Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice.

Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

 

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2017 – A Sterling Year For Silver?

I have spent most of my life watching, writing, speaking, trading, investing, and listening to almost any and everything to do with the silver market. Given this, there are several insights that you (the market) have provided me over and over again, at a level rising to conviction about many retail silver market participants.

Although what is written from this point forward will be opinion only, some readers might interpret it to be factual – or at least based upon much experience. Silver Investors – just like the metals themselves – are far more volatile than gold investors. To some people, silver can become a religion. The conviction of a true silver-bug is often comparable to that of a pit-bull. Being open-minded is not always the most highly-rated quality for this type of person.

Read rest of article here….
http://www.silver-phoenix500.com/article/2017-sterling-year-silver

 

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Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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Zimbabwe’s Meltdown in Overdrive | The Morgan Report

David Morgan and David Smith of The Morgan Report join the show to discuss the monetary meltdown playing out in Zimbabwe and their book Second Chance: How to Make and Keep Big Money from the Coming Gold and Silver Shock-Wave.

 

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Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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The Morgan Report’s Weekly Perspective with David Morgan

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Thus was born The Morgan Report – since then we’ve helped 11,000-plus members scattered over the globe in every continent and over 100,000+ e-newsletter subscribers have read our weekly e-newsletter — This Week’s View from The Morgan Report.

Through our publication, The Morgan Report, we provide you with ways to achieve greater financial security and wealth in all sorts of environments.

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Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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How you can receive “free” stock in a new game-changing company! David Morgan

Prospector-Masthead-2011-web

Reprinted from the current Issue of The Prospector

As publisher of The Morgan Report, in the process of making an almost two year’s long study, we featured a new technology company in the microcap category that could change the mining industry. First and foremost, we usually don’t spend much time in this part of the Resource Sector, because frankly, the risk tends to be significant, without a commensurate ability to define a company’s potential. In other words, reaching a point where we have arrived at a realistic reward-to-risk metric.

However, we do keep an open mind. So when an intriguing story came our way, we spent serious time investigating, and finally recommending it to our subscribers, as a speculative investment…with unusual potential.

Mobile Gold Mill Prototype

Mobile Gold Mill Prototype

The company carried out its stated plan, but due to a “fly in the ointment” beyond its control – having nothing to do with its technological progress – the stock itself did poorly. In fact, it sat out last year’s January – August, 2016 barn-burner rally, during which most other resource sector stocks moved sharply higher. It even managed to trade at less than half the price that I, David Morgan, had paid for what I was judging as a ground-level opportunity.

Nevertheless, I have learned to leave room for a reappraisal, if and when new information comes my way. This trait – developed from many years of balancing skepticism with curiosity…and common sense may have presented my subscribers – and perhaps you – with a situation that contradicts the old saw which says “it’s too good to be true.”

Here’s where the story gets interesting. In performing the final phase of our due diligence on the project, and with the TMR team visiting their lab at our expense – the CEO told me about another aspect of his work. It was so intriguing that, even though prohibited from taking pictures or notes, and being sworn to secrecy, I stayed an extra day to meet with the chemist.

Just Say No to Cyanide!

Just Say No to Cyanide!

I witnessed their patent-pending “chemical solution” which can be used in the extraction of gold from certain types of ore bodies, functioning exactly as designed, without causing ANY harmful effects. The solution is inert – the ingredients are actually classed food grade quality! The process is similar to a cyanide circuit, but simpler and safer. It involves partitioning precious metals into an aqueous solution followed by extraction, using conventional methods like electrowinning, carbon absorption or precipitation.

Some of the benefits to operators include: reduced environmental impact, a broad applicability spectrum, an accelerated permitting process, access to deposits in cyanide-prohibited mining jurisdictions, reduced operational cost, not to mention improved occupational safety and reduced tailings emissions.

But for now, the most exciting potential may be in the Electronic Waste (E-Waste) sector, where gold (as well as silver, platinum and palladium) recoveries, classified in grams per tonne of processed material are far superior to the best gold mines on the planet. Ongoing E-Waste testing, using the reagent, is verifying and enhancing throughput yields. In fact our Senior Analyst, David Smith and I recently made a flight to Vancouver, B.C. to meet directly with the company chemist, and watched precious metals literally “fall” out of the solution.

Great for refining Gold ore and E-Waste; Safe for the Planet

Great for refining Gold ore and E-Waste; Safe for the Planet

Great for refining Gold ore and E-Waste; Safe for the Planet

Here’s the Bottom Line, with two caveats. First, this opportunity is for aggressive accounts who understand what we teach – which means that it is highly speculative, best approached with money you can afford to lose. Second, the analysts at The Morgan Report and I already own stock in the parent company, and at some point may buy more.

The “core” details: You must be a shareholder of record by around the first week or so of March 2017. For every TEN shares owned in the parent company, you receive approximately ONE share in the new (spinoff). We’re all on the same playing field, because just like you, I myself can buy into the parent company in the open market, at the same share price.

You may be wondering… So, how good is the parent company? The exact details can be found in the February Issue of The Morgan Report, modified here—

Question to the Editor: David, after the spinout takes place, do you still have high hopes for the parent company? Could its stock suffer if people buy the original operation just to get shares in the new one and then sell? – Thanks, Greg

My response: We agree that some may choose to sell parent company shares after obtaining the new spinout. And yes, the mobile mill concept’s development has been slower than anticipated. However, when we made that special trip to Vancouver to witness the new chemical process, we also took time to see what improvements were being made with the parent company’s unique, mobile ore-refining platform. I met with a UK engineer who has an impressive patent-pending process that virtually eliminates the need for expensive and space-consuming ball mills (ore crushers).

Personally, I view the parent company favorably. How well its share price continues to be received by the market as the new one goes public is anyone’s guess. But as things currently stand, I intend to hold onto my shares. After all, the company will be using the new reagent in its own gold-refining process. This could turn out to be a case where the whole (both companies) – “is greater than the sum of its parts”.

The Wrap: So, how does the value proposition for this “outside the box” mining sector company story strike you? Don’t let indecision or the fear of taking action keep you from doing further research while “the price is right”. This kind of “plan your work; then work your plan” behavior is one of the main themes in our new book Second Chance: How to Make and Keep Big Money during the Coming Gold and Silver Shock-Wave. In fact the company we’re discussing is just one of seven that we profile! We’re here for you, through our books, our interviews, consultations and especially, our monthly letter.

David Morgan is a widely recognized analyst in the precious metals industry; he consults for hedge funds, high net-worth investors, mining companies, depositories and individual investors. He is the publisher of The Morgan Report, and a featured speaker at investment conferences in North America, Europe and Asia.

 

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“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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David Morgan on Donald Trump, The Police State and Precious Metals

Jeff interviews silver guru David Morgan of the Morgan Report, topics include: what Trump’s election means for the deep state, a stronger military, the wonderful line up for the TDV Summit and Anarchapulco, the precious metals market in 2017, a trader’s market, a great track record, subscribers have benefited greatly, David discusses one of Ed Bugos’ stock picks, a new environmentally friendly precious metal extraction technology to replace cyanide, an investment opportunity, energy metals, The Morgan Report, a growing potential for capital controls.

 

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Because there is a 100% failure rate of ALL fiat money throughout history, you will learn what to do by obtaining your Free Report. Just enter your first name, your primary email address and click the Get Special Report button below.

Our mission statement reads…

“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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The February 2017 Edition of The Morgan Report is available for Subscribers.

David Morgan’s nuanced – and perceptive – Editorial take on The Donald’s ascendency to the Oval Office should help temper, from both ends of the political spectrum, the reader’s expectations and concerns about what comes next. Love him or hate him, resource sector investors are going to be in for a wild – and potentially profitable ride as his presidential term plays itself out!

For your own good – and that of your investments – you really need to memorize and reflect upon David Morgan’s precise and comprehensive definition of just what the Deep State represents. The tectonic plates of the current crop of “winners” and “losers” are grinding together, with outcomes of incalculable significance to everyone involved.

Last month’s Vancouver Resource Investment Conference (VRIC), at which your Editor was a Keynote Speaker, was well-attended, giving another indication that the precious metals and mining shares’ bull run is on its way back. He has also been invited, along with other prominent names, to speak at the Anarcho-Capitalist Conference in Acapulco later this month.

David’s considered opinion on the path this year of gold, silver and palladium, should help TMR subscribers plan their portfolios in a way that responds to market-driven events, rather than attempting to predict them. Being aware of the primary elements, and how they push investment values back and forth can be a more fruitful study than simply acting on the opinions of those who think they can predict the future.

David finishes his analysis by looking at the metals used in battery and energy storage applications – avoiding the hype now filling the airways seeking investment dollars from the gullible.

Senior Equity Analyst, Chris Marchese, gives readers the full-meal deal on a silver miner that – if it’s not on your radar screen now – certainly deserves to be! By all indications, this one is considerably undervalued in relation to its peers. Part of the reason for our deep understanding of this company is that – unlike some analysts who compose their reviews from the comforts of an easy chair – TMR actually likes to put boots on the ground to either confirm or deny the data. Just one more reason why the nominal price for a subscription to The Morgan Report can put you “In the room – In the Deal” more effectively than if you had spent an additional 5 – 10x on some other newsletters.

TMR has recently added another value proposition, titled Development and Exploration, to its Asset Allocation section. Subscribers will want to watch this space – now containing six contenders for prime time status – to help inform their own asset allocation decision-making.

We finish this month’s issue with Letters to the Editor – the answers to which in and of themselves, might “trump” the value proposition offered by an entire issue of other letters!

Up, down, or sideways, you need to have David Morgan and The Morgan Report’s team of analysts at your side helping you position properly for the resurgent bullish posture of gold, silver, base metals and the mining stocks.

Sincerely,
David Morgan

 

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Our mission statement reads…

“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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Intrinsically Coupled Leverage: Are Mining Equities the Blue Chip Stocks of Tomorrow?

Intrinsically Coupled Leverage-image1

If we take a look back in time to one of the most horrendous economic hardships ever faced in the United States – The Great Depression, we find that Homestake Mining and Dome Mines were two gold producers that made their shareholders wealthy during that time period.

Before Barrick Gold acquired Homestake, I used to be fond of stating that from the original Dow companies Homestake, was one of the few originals! In other words, gold and gold mining, truly stands the test of time.

Much of the current economic commentary today revolves around a large contraction in the financial landscape, with the Baltic Dry Index hitting lows, some of the largest banks being basically insolvent, and even China showing clear signs of slowing considerably. Many financial commentators are clearly looking for a possible recession or deflationary period before the Central Banks can force currency into the system and get inflation started again on Main Street.

At the peak in 1938, a $1,000 investment in Homestake grew to $6,760! However, this is only part of the story because this is nominal growth, but during this deflationary period every “dollar” is more valuable over time.

Moreover, during the next six years Homestake Mining paid out a total of $128 in cash dividends. In fact the 1935 dividend alone reached $56 per share. That’s almost a 70% dividend yield payout (basis 1929) in only one year! Indeed, hard asset investments (gold mining shares) were islands of economic refuge during the gruelling years of the Great Depression.

We must remember that gold was revalued, exploding the margins for gold miners. It was hard to lose money when your newly hiked sales price was guaranteed and your costs stable or falling. It was a bonanza of gargantuan proportions. The Hearst family, which controlled the Homestake mine, rewarded themselves, and minority holders, the bounty via dividends. Today, it’s hard to imagine any gold miner paying out most of its earnings in dividends, however paying “handsome” dividends is certainly probable.

So where does this put us today? First we need to clarify that gold is a crisis hedge and not only an inflation hedge. As the above example clearly illustrates, gold mining did extremely well during the 1930’s depression. However, we need to realize that gold could not be owned by U.S. citizens during this time, gold had been revalued upwards, costs were decreasing, and the only proxy for gold ownership was through the mining equities.

Further, if one is to study Professor Roy Jastram’s work, “The Golden Constant” is a unique examination of how gold’s purchasing power has remained consistent over the centuries. The book is the only in-depth examination of how the purchasing power of gold has performed over the centuries in both England and the USA. It contains a thorough explanation of how the gold market evolved and how this is related to economic and political developments, from 1560 in England, and from 1800 in the USA. I can state that academics, economic historians, and economists interested in monetary and financial history will find this book extremely valuable.

What is not always evident is that during much of the analysis, the world at large was on a gold standard or had some tie to gold, which means to analyse the market in terms of a system with no tie to gold whatsoever, requires looking at that metric.

It has been examined numerous times and determined that every time a “monetary system” (read – currency) was not tied to money, (gold and/or silver) there has always been a failure of that currency. Period. End of story. There is not a single exception to this fact. Yet, today we find many in the academic and economic realm that either insist it cannot happen, or that paper (currency) will trump gold. Yes, that for the first time in all of recorded history, that a piece of paper (digital currency) will reign supreme over a substance that has been known as money for thousands of years. It must be stated that authorities in many jurisdictions are implementing requirements for no cash transactions, and fully digital systems. In other words, the effort is being made by the banking system at large to make sure that paper does win over gold.

IS IT DIFFERENT THIS TIME?
In certain ways it is different, because the failure of the reserve currency of the world, the U.S. dollar will affect nearly every person, business, bank, and financial institution on the planet. Furthermore the demand to escape the financial breakdown is unlimited when one asset class – precious metals, is sought by anyone and everyone that is motivated by fear of losing their security based upon a faith in a system that is failing before their eyes.

Every time this psychological shift in conscious has taken place in the past, it is swift and moves in an uncontrolled manner, which means all the propaganda from the mainstream press cannot stop the “run to gold.” It is possible with the very tight and strongly held positions in both gold and silver, that they will become unobtainable in size. Which means large hedge funds, ETF’s, Sovereign Wealth Funds, etc., will not be able to find gold or silver in the quantity they want and the price will be bid up to extremely high levels.

Every time there is a financial panic, fear drives the decision process and clear judgement is rare. If we truly witness a run to gold, the large
gold dealers may decide to keep their inventory and not transact business until the currency markets stabilize.

All of this seems almost fanatical because these types of events occur rarely in history and usually skip generations so there is little memory of the hardship imposed by a system that pretends to print wealth, when in fact it must be produced.

All of this, leads to the reason that the mining shares could go into a once-in-a-lifetime bull market extreme that has not been seen since the 1930’s, because when people cannot buy gold or silver- they will race to the mining shares as a proxy for gold and silver in the ground.

Think about it…You run a huge hedge fund and see what is coming ahead of your peer group. You cannot buy physical gold because the mandate is that for you and many in the industry, you are not allowed to buy commodities. This is the main reason ETF’s were started, to comply with legal regulatory issues because ‘stock only’ restricted money managers are allowed to buy them, even though in theory they are buying physical metal.

Back to the main point; there are so few top-tier precious metals companies, that the amount of money flooding into these issues will take them to extreme valuations. Because the costs of extraction are dependent upon several factors with energy being the most important, the margins could be compromised, depending upon how the oil market does during a financial crisis.

Regardless, the overall margins in the mining shares could be so unbelievable that the normal leverage of about three-to- one, could go to something like ten-to-one for the major companies, and well beyond that for the mid-tier and junior miners.

The real question to ask ourselves is what the financial landscape would look like after the initial panic move into the precious metals, which could fuel a historic rise in the mining shares. If the move is parabolic and unsustained, then we would need to think of this as a trade only. However, much more likely in my opinion, is the financial establishment will be forced to implement gold back into the monetary system, and at a much higher value than present.

This implies that the margins on the mining shares would be significant for a long period of time, and the dividend payments
would be sought after by income seekers, pensions, insurance companies and many others. This would over time, place this investment class into a “utility” type of mentality but based on real money.

There is little doubt that regardless of the future outcome, the rise in the precious metals that lies ahead of us will be historic in nature, and as it is often stated; perhaps ninety percent of the move will be achieved in the last ten percent of the time, which implies that what lies ahead for precious metals will certainly go into the financial record books.

 

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Precious Metals Bull Market Will Continue in 2017, Says David Morgan

Nothing beats performance for anyone in our industry. No matter how well liked or disliked, anyone in the investing industry is judged by PERFORMANCE. Making stock selections is a tough business and market timing is even tougher. This does not deter us, however, and we will share our views for 2017 by looking back at January 2016. This is the information originally given only to our paid members. There is a free list available through the website for those seeking a weekly perspective on all the markets. Our premium members receive not only analysis on resource companies, but intermediate timing calls as well.

We highly suggest that all readers of this exclusive content given to Streetwise Reports take a look at our “picks” against an index, to verify just how well we did or did not perform with our analyses. And, yes, the January 2017 Morgan Report will continue to bring you investment ideas to help you preserve and build wealth.

Here is a partial look into last year’s January 2016 issue:
Every year we list our top picks that we expect will outperform over the following 12-to-18 months. We typically choose two to four from each category: Top-tier, Mid-tier and Speculation. If you had put an equal dollar amount into each pick, you would have ended the year up 99%. While this is an excellent rate of return over a 12-month time-period, 2016 was a wild ride for precious metals and especially the mining stocks.

If you had the ability to get out of each position at its 52-week high, you would have returned 228%. While this is unrealistic, had you listened to David Morgan’s call for a medium-term top, and sold your trading positions, you would have booked a realized gain of roughly 190%. We will provide some of these picks and why we chose them, as well as listing the worst performing.

Senior Producers. First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE): This was a no brainer given the market valuation of the company, starting the year out at just $3.42/share. It has an excellent management team and a very lucrative asset base driven by low cost production, even though it didn’t engage in what most primary silver miners did; high-grading. In fact, First Majestic “low-graded” select assets such that it could mine higher grades when silver prices rise. The typical silver company doesn’t have the luxury of being able to do this. Costs were lower year-on-year for many reasons including the 2015 acquisition of Santa Elena, which First Majestic was able to mine more profitably, as well an identifying the potential for future expansion. Going forward, the company will realize capital investments made into existing assets after starving them of capital during the 2012–2015 bear market. This will be illustrated through higher output at existing operations in the second half of 2017, to the first half of 2018.

Mid-Tier Producers. Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT): The operator of the highest-grade gold mine in the world (Fire-Creek) had a lot to offer in terms of upside potential coupled with a valuation discrepancy. Klondex began the year just under $2/share, and lagged the mining complex for essentially the first seven months of the year and then began to outperform. This was driven by several elements—the bid for and subsequent acquisition of the high-grade Hollister mine, first production from True North tailings reprocessing and a prefeasibility study of a full scale True North operation and a positive production decision. Organic growth from Fire-Creek, Midas and True North should support growth through the end of the decade, complemented by additional growth from Hollister, which could begin operating in 2017 as the Midas mill has excess capacity from which it can process material from Hollister.

“Organic growth from Fire-Creek, Midas and True North should support Klondex Mines Ltd.’s growth through the end of the decade.”

Speculation. Santacruz Silver Mining Ltd. (SCZ:TSX.V; SZSMF:OTCQX; 1SZ:FSE): This was a very speculative and risky pick at the start of 2016 given its debt-laden balance sheet but like all investments, especially in this sector, it is all about management. It had over $20 million in debt at the start of the year, the majority coming due within the next 12 months. Its management team led by Arturo Prestamo was able to amend its debt obligations through a combination of paying some down through raising capital, a portion being forgiven and a portion amended into a much smaller note due in quarterly installments beginning in H2/17. Aside from that, Santacruz had acquired the rights (for a period of 15 years) to mine the formerly producing Veta Grande mine in Mexico, which is now its cornerstone asset, complemented by the Rosario mine and mill and the Cinco Estrellas mine (mined material has begun to be trucked to the Rosario mill, given that it has 300+ tons per day (300+ tpd) excess capacity).

While the majority of our top picks outperformed the HUI (NYSE Arca Gold BUGS Index) or related benchmarks, we did manage to pick some underperformers, the most notable being Goldcorp Inc. (G:TSX; GG:NYSE). The company had some small hiccups in the first half of the year with operations remaining fairly steady over this time, but this was enough to cause its stock price to lag related benchmarks.

2017 Outlook and a Top Pick for You

Last year I was optimistic that we would see a rise into the first few months, as things appeared better my caution remained as gold was leading silver. This was confirmed because the gold/silver ratio was not confirming the move. Finally, silver came on with a vengeance with the shares leading the way. However, with the recent sell-off to some, it feels like the entire precious metals complex is similar to the Greek myth of Sisyphus where the sinner is condemned to an eternity of rolling a boulder uphill then watching it roll back down again.

At this point we are convinced we still are in a bull market even though we are well aware of the Harry Dents and Martin Armstrongs letting everyone know gold is going lower. In a bull market there will be some severe shakeouts to convince people they should not be in the market, and that is what we are experiencing now. If the gold/silver ratio were to move above 80 and gold were to trade below US$1050, we would reexamine our view. At this point we think most of the damage is done and we can expect a first-quarter rally that may not begin until late January or February.

Since we still affirm that the bull market is intact, it makes sense to us to trade a portion of our holdings as market conditions warrant. We did make our call and sold into strength, taking some gains off the table. Those gains have been gathering dust, staying in cash for now, with the plan to buy in over the next four to six weeks. We understand that position trading is not for everyone, but it does give one some advantages to see that boulder roll back down the hill AFTER taking some profits.

We don’t often provide our research to the public for free, after all it is how we make a living. Yet let us give you a speculation, Prophecy Development Corp. (PCY:TSX). This company has been on our list a long time staring as Prophecy Coal, and the company spun out the Wellgreen PGM mine for free to shareholders, very similar to one of our current holdings. The PGM company went straight up for a short time increasing many multiples.

Prophecy Development has two very attractive development projects in Bolivia in Pulacayo and Paca. Pulacayo has had already seen significant capital investment in recent years as it was held by Apogee, which was overextended when precious metal prices entered the bear market from 2012–2015, and in turn sold these projects to Prophecy.

Prophecy is looking to commence small-scale production (200 tpd at Paca and 100 tpd at Pulacayo) sometime in the spring or summer. Both deposits are very high grade with Pulacayo (underground) having a resource with silver and silver equivalent grades of 530 grams per tonne (530 g/t) and 688 g/t and Paca (open-pit) having a resource with silver and silver equivalent grades of 363 g/t and 444 g/t.

Initial production should see total production of roughly 700,000 oz silver (annualized), however, this has the potential to increase and increase very significantly moving forward. In particular, we view the scalability at Pulacayo to be tremendous, making Prophecy a very exciting company to watch for years to come. The biggest drawback for investors is the fact that its silver assets are located in Bolivia and while this is a risk, we do believe the “Bolivian discount” is overdone and with recent history regarding asset nationalization has primarily been on early-stage projects which haven’t been permitted. Even so, we categorize a company such as Prophecy as a speculation for a reason.

Further, Prophecy isn’t a single asset, single country company as it also owns two significant coal assets including Ulaan Ovoo (with the significant rise in thermal coal prices over the last year, Prophecy is discussing whether to bring it back into production as early as this year), located in Mongolia and 17km away from the Russian border and the Chandgana power plant development project, also in Mongolia. Lastly, Prophecy owns an exploration stage titanium-vanadium-iron project in Ontario, Canada.

A Speculation where our hands are tied

Let’s face the facts. There is a lot of competition in the resource sector to deliver, which means large capital gains count! We have a trifecta of speculations that seem to line up at the start of this year, and we can only hint at one, because we make our living through the paid research we do for you in the paid Member’s Only section of the website. We have a speculative company that will be voting on a spin-off company that could be a leader in the electronic waste field. We are not allowed to mention much more because of legal restrictions that require all information be in the public domain at the time we publish. When/if this company “changes the path of the mining industry itself” remember you read it exclusively in Streetwise Reports.

The Morgan Report not only keeps an eye on the obvious mining sector investment pearls, but, in addition, doesn’t hesitate to cast its analytical net far and wide in hopes of unearthing an investment gem that not only might “rewrite” our subscribers’ portfolios, but that could even change the path of the mining industry itself.

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David Morgan is a widely recognized analyst in the precious metals industry; he consults for hedge funds, mining companies, depositories and individual investors. He is the publisher of The Morgan Report, author of the book The Silver Manifesto, and a featured speaker at investment conferences in North America, Europe and Asia. As a public service, he provides a free weekly e-letter available at The Morgan Report.

 

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Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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Special Riches In Resources Free Report

Because there is a 100% failure rate of ALL fiat money throughout history, you will learn what to do by obtaining your Free Report. Just enter your first name, your primary email address and click the Get Special Report button below.

Our mission statement reads…

“To teach and empower people to understand the benefits of an honest monetary system.”

Today’s monetary system is based upon a lie. The lie is that you can get something for nothing, or perhaps more simply stated, wealth can be printed. History has shown throughout 5000 years that whenever a country has tried to maintain this illusion (lie), failure has been the result. We invite you to learn more about what The Morgan Report can do for you. Click on the Learn More About The Morgan Report button now!

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