When stock prices fall, a lot of novice speculators come up with every excuse under the sun to justify their predicament. At what point do you wake up and smell the roses? What you are witnessing is a general sell off or washout in the PM sector. We are almost at the point where the diehards capitulate and sell out. We are not there yet, but we are getting closure by the week.  If I hazard to guess, that will come in the next few months or even weeks.

 

What you have to look at is the price of the underlying commodity and make your decision to stay invested based on the outlook for that commodity... Gold or Silver.  IMO, we are still in a secular bull market in the PM complex which is driven by the CB policies of unlimited money printing. This is not going to stop any time soon, the Gov't can talk all they want about ending quantitative easing but that is all it is, cheap talk meant to replace concrete actions on deficit reductions, They are deep in debt and the CB will have to continue to print or interest rates would soar send many into bankruptcy .No need to go off topic, but just know that we are dealing with elite politicians who are only concerned about re-election. That will not change until we reach the great reset point which is many years away. 

 

Back to the PM... we have had a long running secular bull market in PM ( Gold and Silver) and it has been nothing short of an amazing run. You ca clearly understand why many believe it is over... $300 gold to $1900 or Silver from $3 to as high as $49. Come on, can you blame the naysayers who watched from the sidelines and cannot bring themselves to buy now. All secular bull market runs are fuelled by doubt, have you all forgotten the 2008 collapse in the PM stocks which followed the gold price drop from $1000 to $750 ... a 25% drop or the 50% drop in silver from 20 to $10? ... at the point everyone argued it was over. Gold has fallen from Sept 2011 peak of $1900 to as low as $1550, an 18% drop. It may even test the $1550 level and Silver could test the low $20 before it is over. This will surely wipe out the weak hands who are now just throwing in the towel. It is a natural process in an ongoing secular bull market. The sooner they all sell, the sooner it will be over and the third and final mania phase will be underway. This is the point in time when all the naysayers who never bought in join in to what will surely be a mania blow off phase.

 

How to survive in this environment, sell down your positions to a level that does not cause you anxiety or sleepless nights and get ready to re-load as soon as the underlying commodities reassert themselves. That could be as soon as March, April or May...maybe the end of summer. Unfortunately, I think you will experience a more pain as prices hit their bottoms but it will snap back quicker than you can imagine. So either reduce now or stick your head in the sand for six months but make sure you have a core position in the underlying and pick your companies well

 

As for AUN, it has good leverage to rising silver prices and if all goes according to plan, rising production. It reminds me of First Majestic when it was $4... I have some reservations about the companies mngt (left for another day) but I believe the underlying commodity will bail them out. The roll back should have been accompanied by positive developments but clearly they had none to speak of other than what was is already  known. I guess they just decided to do it now in the down draft or cyclical bear cycle which is not helping matter and confirms my reservations about mngt.

 

No one knows how low it will go from hear but it will bottom soon, the roll back will occur, we will hopefully lose the day traders and find real investors.

 

One final note, you may recall back in December a large block of stock traded after hours knocking the stock down to $.80 from the 4 PM close of $.95. Was this just a coincidence or was the seller tipped off to the share rollback... don't think too hard about this..... just know what you are dealing with... Good Investing.

 

PS. Not meant to offend anyone, just my opinion.