Our New Venture 'Stock Trader' Update 02 April 2013

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The precious metals market is currently drifting sideways as this period of consolidation continues. The mining sector is still relatively subdued as evidenced by the HUI which stands at 353.16 today,

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Church of Cyprus wins bailout lawsuit

Archbishop Chrysostomas II

The ink was barely dry on the bailout of the Cypriot banking system last week when the legal challenges began rushing in, with local lawyers backed by influential business figures already winning some small victories.

The first serious challenge was launched by the Church of Cyprus, which has big business interests on the island, questioning the legality of shareholders in the Bank of Cyprus having their equity stakes taken as part of the bailout mechanism.

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The Chess Game of Capital Controls

The best indicator of a chess player's form is his ability to sense the climax of the game.

–Boris Spassky, World Chess Champion, 1969-1972

You've likely heard that the German central bank announced it will begin withdrawing part of its massive gold holdings from the United States as well as all its holdings from France. By 2020, Bundesbank says it wants half its gold reserves stored in its own vault in Germany.

Why would it want to physically move the metal from New York? It's not as if US vaults are not secure, and since Germany already owns the gold, does it really matter where it sits?

You may recall that Hugo Chávez did the same thing in late 2011, repatriating much of his country's gold reserves from London. However, this isn't a third-world dictatorship; Germany is a major ally of the US. So what's going on?

Pawn to A3

On the surface,

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Dissecting Cyprus

Since last week, the top news story has been the banking crisis in Cyprus – a small country with a GDP of approximately $25 billion (about the size of the GDP of Vermont). Despite its tiny GDP, it has bank deposits in excess of $90 billion. Offshore depositors (mostly British and Russian) represent more than half of these deposits due to Cyprus's status as a tax haven.

What did Cypriot banks do with these deposits? They made all sorts of loans in Greece. Loans that don't look so good now, and could cause a collapse of Cyprus's banking sector. And that would result in massive losses to depositors.

To the Rescue…

To remedy this unfortunate situation,

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Spanish central bank offers grim economic forecast

These towers look a tad ominous!

MADRID (AP) — Spain will sink deeper into recession and unemployment will worsen this year as the country struggles under the weight of austerity measures taken to repair public finances and the effects of a weak global economy, the central bank said Tuesday.

The Bank of Spain said it expected the economy to contract 1.5 percent this year, compared with 1.4 percent in 2012, and only return to growth in

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Nigel Farage - Major European Bank Runs Now Taking Place

 

Today Nigel Farage told King World News that what they have done in Cyprus has now sparked major banks runs in Europe.  Farage, who is Britain’s popular MEP, also stated, “Even people like me who have spent many long years warning that things are out of control are really, really scared by the events of the past few days.”  Below is what Farage had to say in this extraordinary and exclusive interview:

Eric King:  “The Cyprus deal that’s been brokered here, your thoughts in the aftermath of that?”

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Cyprus and EU agree draft proposal to rescue banks

(Reuters) - Cyprus, the European Union and the International Monetary Fund have agreed a new plan to resolve the island's bank and finance a rescue of the country, an EU official said early on Monday.

The proposal, which will now be presented to euro zone finance ministers for discussion, will involve setting up a "good bank" and a "bad bank" and will mean that Popular Bank of Cyprus, known as Laiki, will effectively be shut down.

Deposits below 100,000 euros in Laiki

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Silver Wheaton Corp to pay Quarterly Dividend of US$0.14

Introduction

Today Silver Wheaton Corporation (TSX: SLW) (NYSE: SLW) declared its first quarterly cash dividend payment for 2013 of US$0.14 per common share. This dividend will be paid on April 2, 2013, and will be distributed on or about April 12, 2013. This is good news for shareholders in that it is the highest quarterly dividend to date by SLW. Randy Smallwood, President and Chief Executive Officer of Silver Wheaton commented on the dividend payment as follows:

"2012 was another exceptional year for Silver Wheaton, anchored by a fourth quarter that saw record production, sales, revenue, net income, and cash flow for the company," "With the addition of production from Hudbay's 777 mine midway through the year, plus growing production from Peñasquito, San Dimas and Zinkgruvan, 2012 production exceeded our forecast by over one and a half million ounces."

"This translated into sales of over 27 million ounces, with the fourth quarter coming in at over nine million ounces, and full year cash flows of over $719 million. Given our dividend policy of paying out 20% of the trailing quarter's cash flow, Silver Wheaton's strong production growth profile directly translates into higher dividends, with $0.35per common share paid during 2012, almost double what was paid in 2011, and our strong fourth quarter resulted in our first dividend in 2013 being $0.14 per share."

Fourth Quarter highlights as follows:

We would draw your attention to the

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Silver Prices Capped by US Dollar

 

As the chart shows silver prices have been trading in a range of approximately $35.00 to the high side and $27.50 at the lower end for over a year now. The oscillations appear to be a lot less volatile of late which is surprising given the financial turmoil in Cyprus. Usually when there is uncertainty in the financial markets

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Trapped Longs in the Gold Market

The following article is an excerpt from one of our past updates “Gold Beaks Down, Tests $1600”, sent to our subscribers February 18^th 2013, when gold was $1611 (now $1580) and the HUI miners index was 379 (now 349). We believe that this information is very relevant in the current market situation, as well as for future situations, and have therefore decided to publish this piece for the perusal of the general public.

Trapped Longs

Longer term subscribers will recall us writing about “trapped longs” on a number of occasions before.  We would like to explain the concept again for the benefit of new subscribers and to demonstrate how this applies today gold market, particular to the mining stocks. The concept of “trapped longs” simply applies to market positioning where the market is long, wants to sell, but can’t (or won’t). Of course you can get trapped shorts as well and the same dynamics apply.

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