ENDEAVOUR AND TIMING - INTEREST RATES UP…UP…UP

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ENDEAVOUR AND TIMING

We have recommended Endeavour Silver for some time now but have never characterized this silver mining stock as a stable investment (stock price wise). We conclude that in the past year two major disappointments have contributed to the stock volatility:

1. First on August 12, 2024, the company reported the failure of “…the trunnion on the primary ball mill” at their Guanacevì mine:

   

   Guanacevì Mine LINK

2. Second, and in our opinion, more disappointing was the major delay in starting (termed ‘wet commissioning’), their huge new Terronera silver mine. Rather than starting by the end of 2024, the company had to confess in January that the delay would last for months into Q2. (sigh!)

But now at last the delay is over with the announcement last Tuesday:

Endeavour Silver Corp. ("Endeavour" or the "Company") (NYSE: EXK; TSX: EDR) is pleased to announce the commencement of wet commissioning activities at its Terronera Project in Jalisco state, Mexico; a critical milestone in the lead-up to full-scale production.

Endeavour Silver Wet Commissioning

And, in addition, EXK expands silver production via the acquisition of Minera Kolpa:

Acquisition Minera Kolpa

Therefore WE ARE POUNDING THE TABLE in recommending that you take a full position in EXK before they report the Q1 earnings.

Note that one of our other silver miner recommendations- Coeur Mining (CDE)- in the 3 days since their ebullient Q1 release surged from $5.68 to $7.84 (38%).

…and EXK should report in the next few days and like with CDE the estimates of a breakeven Q1 are easy to beat!

STRONG BUY EXK @ $3.57!

HIGH YIELD NEWS

Just because ‘speculative Bob’ ignores dividends and income considerations in our personal picks, does not deprive us of the felt responsibility to recommend high yielding companies for readers who want to have at least some of their stocks actually pay a dividend.

So when the Motley Fool pitches our high yielding pick Annaly (NLY), we am happy to pass along the article:

Motley Fool ANNALY Link

We will however, caution that since NLY is an REIT, the current 14% is NOT fixed- unlike, say, a T-Bond where you know to the penny how much you can expect. The size of the payment will vary from quarter to quarter but (if memory serves) averages over 9-10%.

Guide to REITs

We have followed NLY for years and have high comfort in their expertise in using leverage to, over the cycle, maximize your return. And you should note that expertise was severely tested by the classic bond bear market since 2020.

NUFF said.

INTEREST RATES KEEP CLIMBING

As we pitched last week, interest rates continue to rise. All of our recommendations on how to play this continue very much in force:

1. SHORT the Jun 30 Year T-Bond @ 114 11/32,

2. SHORT the Japanese 10 Ten Year JGB @ 140.21

3. MOST IMPORTANT (as the safest and longest running and the highest potential gain play- you could like make 20 times or more) BUY the March SOFR 95.3125 puts @ $100

History offers an interesting analogy. In 1977, the key metric on interest rates was the Thursday report from the Federal Researve on the growth of the M2 money supply. Until 1977, when the money supply rose, then interest rates would go down because investors figured that some of that new printed money would go to buy bonds, thus pushing down interest rates. But for the first time in early 1977, the report of more M2 was greeted by higher, not lower, interest rates. Within a couple weeks as this new pattern repeated, then the press figured out that public sentiment had concluded that the impact of spending more paper money on buying bonds was outweighed by the fear that the new money could fuel the already high inflation expectations and that would drive interest rates, not down, but UP.

Thus the market knew quickly that the previous expectation that printing more money would drive down interest rates - HAD BECOME AN ILLUSION.

By contrast, when in September of 2024 the Fed cut the one interest rate - the Fed Fund (that they directly controlled then) - for the first time, interest rates responded NOT by going down (as they had before), but by going UP! Check out the key 10-year Treasuries chart below:

10-YR Treasuries Chart

But the old illusion that the Fed controls interest rates still reigns in the press and among so many American investors. That gives this speculator comfort that by expecting higher interest rates, he is taking the opposite side to the reigning illusion. And we are profiting because recently interest rates are going up as bonds are going down. Look at the chart below from Goldman Sachs, AND the one below that from Trading Charts:

LINK Interest Rates UP

We claim the KEY QUESTION speculators like me are asking:

“…With the enormous sums- over $100Billion per week- that the Treasury has to auction, how can the Treasury find buyers without paying higher interest rates?”

This speculator concludes by repeating our portfolio recommendations:

1. SHORT the Jun 30 Year T-Bond @ 114 11/32,

2. SHORT the Japanese 10-Ten Year JGB @ 140.21

3. MOST IMPORTANT (as the safest, longest running, and the highest potential gain play - you could like make 20 times or more), BUY the March SOFR 95.3125 puts @ $100

WHAT I LEARNED

• The Truth of Fauci and Pfizer:

Fauci & Pfizer Article

• RFK PRAISES THE US LOW NUMBERS OF MEASLES DIAGNOSED DEATHS- note how the title of this report:

RFK Jr. praises measles response in Texas, US by making comparison to Europe Kennedy said the U.S. measles response is a "model for the rest of the world."

This conflicts with how ABC in the body of the report finds numerous ways to critique RFK’s comments for not pushing the measles vaccine aggressively enough:

ABC News Article