Author Archives: pmontesdeoca

Is Gold, Ready to Explode?



Gold’s Long-Term Secular Bull Market Is Intact



The 18-year gold cycle is intact and gold is about to embark on the next leg up.

The 9-year gold cycle also indicates a long-term buy signal.

The 12-month supply and demand outlook is bullish for the next year.

Factors that favor gold today include negative interest rates and gold mining company’s reduced operating costs and capital expenditures.

18-Year cycle

The long-term secular bull market in gold is intact and about to embark on the next leg up. This leg is projected to take gold to new all-time highs. Despite several pullbacks, the price has held above the long-term 50-month simple moving average SMA of $1235 for three consecutive months for the first time in 4½ years.

Read more HERE.

Long-term Play for Silver Bull Market: First Mining Finance, FFMGF


  • Leadership
  • Increasing Gold Assets
  • Considerable Upside


The gold and silver market looks to be bullish, as I argued in my last article (1), and others, such as Boris Mikanikrezai (2) have also argued. It is an excellent time to buy into the gold and silver sector and one of the best long-term silver plays may be First Mining Finance Corp. (TSX: FF, OTCQX: FFMGF, Frankfurt: FMG).




First Mining Finance was founded by CEO Keith Neumeyer, who has a strong track record of building multi-billion dollar companies. He has bought unloved mining projects at the bottom of bear markets and then reaped massive profits when markets recovered.


Neumeyer founded First Quantum Minerals in 1996 when copper was trading at times below a dollar a pound. He bought several Africa copper assets in Zambia, the Democratic Republic of Congo, and Mauritania.  Today the company is one of the largest copper producers in the world and is valued at $14.5 billion.


In the early 2000s, Neumeyer founded First Majestic Silver, when silver was trading at $5/ounce. He bought four silver mines in Mexico at a time when there was almost no competition for their purchase. First Majestic is now the second largest silver producer in Mexico and has a market cap above $3 billion.


Patrick Donnelly is the President of First Mining Finance. With his extensive resume including 20 years of experience in mining, he could have joined any company. He was a mining analyst for four years, covering mining equities. During that time, he has said that he learned that a key factor in determining which companies flourished and which failed was leadership. He said in a interview, “In mining, which is a very risky industry, the most successful companies have very strong management team with a track record of success.” (3) He joined First Mining Finance Corp. because he knew Nuemeyer and his success with First Majestic and First Quantum. Neumeyer, Donnelly said, has had “tremendous success building companies. You want to work with people like that, people who have a track record.”


Neumeyer also has proven he is a good bottom picker. In an interview with King World News on September 13, 2016, he said, “You never know exactly when valuations are going to turn around,” but sooner or later they do. He said, “We are in a great position to take advantage of an improving environment.” He stressed that the company doesn’t need $1500 or $2000 gold to turn it into a multi-billion dollar company. They just need to educate the market and start to develop their assets. (3)


That top-notch leadership is shown by companies wanting to join or partner with First Mineral Finance. Donnelly said, “It makes it a lot easier to do deals.”


Increasing Gold Assets


In 2015 during the severe bear gold market when gold could be bought in the ground for less than $10 per ounce, Neumeyer founded First Mining Finance Corp. The company planned to buy mineral assets at low prices. It went public in April 2105 with zero gold in the ground and during its first 14 months, First Mining Finance made 8 acquisitions, which included 12 projects in mine-friendly North America. By September 2016, the company had 14 million ounces of gold in all categories. The company’s market cap was $370 million and all of its projects were economic grade, established resources and had existing infrastructure.


By March 2017, the company’s market cap had risen to $570 million with 7 million ounces of measured/indicated resources, and 5 million ounces of referred gold in the ground. In Ontario, the company owns almost every single gold development that isn’t owned by a senior gold mining company.


Considerable Upside


Donnelly said First Mining Finance offers “considerable upside.” The company bought most of its assets for about $10 an ounce, yet the market values those assets at about $3 an ounce. Therefore, he feels, those assets are clearly undervalued. He expects valuations to go to $100 an ounce.


With few new gold strikes, First Mining Finance is ideally situation to reap the benefits of any future rise in gold prices. First Mining Finance has a significant amount of gold in the ground, in politically safe North America, which can be used to generate income through asset sales, spinouts, royalties and/or metal streams.


The company has $19 million (Can) in cash and in the past couple of years has done an incredible amount of work preparing their projects to produce. The firm has conducted 20,000 meters of drilling at their Goldlund project comprising 100 holes; 87 holes had significant gold mineralization.


First Mining Finance also updated its Preliminary Economic Assessment (PEA) for the Springpole project. The project appears to be very economic with an after tax rate of return of 26% and a net present value of $800 million US. The project is predicted to produce 300,000 ounces of gold per year at a cost of about $600 per ounce US. Donnelly said, “It’s a very robust project.”


Neumeyer said, “Once the market starts to appreciate what we have accomplished and the quality of our assets, the value will rise.” It just “takes time and money to build a multi-billion dollar company.”


In Neumeyer’s view the stock trades for next to nothing.  He said, “I did this to create a billion dollar plus company and the shares are going to be up substantially. . ..We will hit a parabolic trend at some point,” maybe up to $5000 gold.


He may not be far off. During the last bull market gold traded at $250 an ounce and rose to $1900 per ounce; an eight fold move. If the low during the last 5-year bear market was about $1050, an eight-fold move would mean gold trading at $8000 per ounce.


If gold makes such a move, Neumeyer argues, “Shares of FMFC and other mining companies with good people and good assets will outperform other firms by 2 or 3 times or more. I’ve seen it happen before.” His Quantum Minerals went to $140 per share when copper was over $4. He said, “It’s hard to predict how crazy the market will get, but. . .I believe we have the best gold portfolio in the industry.”


First Mining Finance also offers diversity. The company has 28 assets, which is diversified by assets, by jurisdiction and by stage. Donnelly said, “It’s almost like an ETF, or private equity for the little guy.

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.


JNUG Prediction Meets First Target


JNUG Prediction Meets First Target

JNUG meets target predicted in October 10 report

New target is $20.84

In my October 10, 2017 report, I recommended two aggressive plays to take advantage of the proprietary Variable Changing Price Momentum Indicator’s (VC PMI) forecast for bullish gold. One of the recommendations was for Direxion Daily Junior Gold Miners Index Bull 3X Shares ETF (JNUG). Today (October 12), JNUG has already completed the first target (sell 1) forecast in the report, which was $20.11.


I recommended that coming into this week, if the JNUG price reached levels of $20.11 and $20.84, if you are long, you should gradually take profits off the table. JNUG already reached $20.44.

“The VC PMI gives you a level where you can see when the up-trend or the price momentum would be negated to neutral, which is $18.71. You can use $18.71 as a protective stop. If the market moves down to $18.71, then it automatically activates the extreme blow the mean levels of $17.98 and $16.58. The market might be moving lower. This would tell you to cover any bearish sentiment or short position at $17.98 to $16.58, with a trigger price of $17.98 and an automatic stop at $16.58. If the market moves down to $16.58, it would trigger a buy 2 signal, so you would hit a buy 1 trigger at $17.98 and buy 2 at $16.58. At that point, you would reverse and go long. If the market hits a trigger at $17.98 or $16.58, I recommend using $16.58 as your stop. If you buy at $17.98 and the market turns around and closes above $17.98, you can raise your stop at that point to $17.98, your entry point. The first target would then be $18.71, which is the price momentum level from the buy 1 or buy 2 levels. If the market closes above $18.71 twice, it would activate the upward targets of $20.11 and $20.84.”

We use the first and second levels of the extreme above the mean to provide a range of between 1 and 9. At 9, which we label the sell 2 level, the market is extremely overbought and the probability is 94% that the price will revert back to its mean or average price.

This concept relating to the mean took a long time for me to understand using technical analysis. I could not understand that when the market turns and begins a trend up, particularly on a long-term basis, and all the technical analysts see that signal as a buy signal, the majority of the time the market retraces back. I have found that once the price is accomplished to a price extreme above the mean, the market usually retraces back to the mean, with at least a 50% Fibonacci retracement 90% of the time. Why? Reversion to the mean.

Reversion or regression to the mean is a statistical term related to the phenomenon that if one measurement is extreme, then the next measurement will tend to be closer to the mean than the first.

Mean reversion trading looks to capitalize on extreme changes within the pricing of a particular security, based on the assumption that it will revert to its previous state. This theory can be applied to both buying and selling, as it allows a trader to profit on unexpected upswings and save at the occurrence of an abnormal low.

JNUG has met the sell 1 level of $20.11 and has come down to test the $18.71, the mean for the week, and has rallied back to where we are currently trading at $19.67 (12:27 pm PT, Thursday, October 12). The next target is $20.84, which is activated for the remainder of the week.

Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts. It is for educational purposes only.




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