Yamaha Gold Inc. TSX: YRI - A Look at upside potential - May 21st Options - Strike 13

Yamaha Gold Inc -> Annual report here.

Production	2010	2011E	2012E
Gold (oz.)	135,613	130-140,000	125-140,000
Cash cost (per oz.)	$327
By-product cash cost (per oz.	$(2,073)
Copper (million lb.)	149	145 - 160	140 - 160
Cash cost (per lb. of copper)	$1.17

Mineral Reserves and Mineral Resources

Gold 3.1 million oz. proven &probable + 2.5 million oz. measured & indicated
Copper 2.1 billion lb. proven & probable + 1.4 billion lb. measured & indicated
Source


This is a solid company that is pumping out millions of oz of silver and will be for years.  With these massive moves in the metal market, these stock will preform quite strongly as there stability forces investors to have to take into consideration the full implications of Silver $40 being with us for some period of time. 

I picked up May 21st - Strike 13's a couple of weeks ago.  The orange lines indicate strike (horizontal) and expiration date (vertical).  The cyan lines above it are projections for future areas of resistance.  If we are in a wave 3 as the scenario above, a fast move to one of these levels could be materializing.

Fortuna Silver: FVI.TO exited waiting for entry next week

Fortuna silver (TSX:FVI) has been breaking out very hard last two days.  I mentioned yesterday that I am becoming skeptical as we are trading above the bollinger bands which is considered relatively extreme.  Therefore today I sold my shares at 6.65 and plan to wait for a entry under the bollinger bands next week.  Considering that the price action ended at 6.43 I am confident that a bit more downside could be expected however, this stock I am very excited about.

Silver New Post-Hunt Brothers High ($40), Gold All time High ($1466), FVI.TO had 15.47% gain (all time high!)

With the dollar continuing to get crushed with events such as these looming:

• The threat of a government shutdown
• Portugal has officially asked for help from the ECB
• Japan aftershock and degrading nuclear situation
• Riots/revolutions in middle east/Africa occuring in Cote D'Ivoire, Syria, Yemen, Tunisia, Egypt, and more
• Libya where there is a full blow new war causing oil prices to sky

 It is easy to understand why Gold and Silver are seeing relentless buy pressure.  Remember the FED has pumped massive amounts of money into the system via QE1, QElite, QE2.  They are doing this by buying back Treasury bonds some issued literally 1 week earlier by the Treasury Department.  For foreign holders of US debt, their patience is running on empty leading many people to believe that the US dollar could face massive sell pressure over the next year.  This would lead to substantial inflation in the US.  If you were a treasury holder would you want to be the last one out of the door?

  Well silver has officially hit $40 twice.  I fully expect that when the stops are taken out that are around the $40 level watch out.  There could be a correction, however, $50 will be hit by Summer there is little doubt.  This is truly remarkable, as last summer the price was fighting a battle around the $18 mark.  Check out the latest price @ Kitco

All time high for gold.... Wow.  1500 will have to be touched by summer.  Check out the latest price @ Kitco   

Now to a specific company I have been trading and commented about over the past few months.

Fortuna Silver Mining FVI on the TSX:
From a technical standpoint this looks very attractive for various reasons:

• Massive Move breaking to new all time high ($6.30)
• Volume was 2.9 million where the 50 day average is 782K
• MACD had a bullish cross over
• Slow Stochastics is a 58 therefore plenty of room to run

Caveat: The move today was massive, and took price action above the Bollinger band.  Therefore, a pull back is very likely and will be a buying opportunity.

GOLD and SILVER surge

 Above is Kitco live 24 hour Gold chart

Above is Kitco live 24 hour Silver chart

Gold has broke above 1450 and touched a new all time high of 1457 and change.  Silver got above 39.00, the highest it has been in 31 years.

The S&P500 today started strong but ended flat on the day.

The divergence between metals and stock markets I believe will happen within the year.  I expect markets to roll over while metals continue showing strength. They have been so closely correlated as QE1 and QE2 worked their magic.  However, the increase in metals was I believe from the debasement of the USD.  As the stocks market realizes QE3 might not come right away, stocks will likely roll over.  However, Inflation expectations are increases and I expect more demand for the inflation hedge that gold and silver provide.  Ben also mentioned in his speech that he will tolerate "transitory" inflation.  This is a path to 5-10% inflation unchecked.  If expectations embed a Volcker style hike may be necessary to halt inflation.  We will see what the summer holds for us. I think 100-130 oil will be with us for a while.