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Gold shares, cheapest since 2002, said to be ‘coiled spring’ for rally

November 30, 2011 by · Leave a Comment 

GATA

By Thomas Biesheuvel
Bloomberg News
Tuesday, November 29, 2011

http://www.bloomberg.com/news/2011-11-30/gold-shares-cheapest-since-2002…

Gold mining stocks are trading at their cheapest level in at least nine years even as the industry’s profits are estimated to almost double this year and bullion trades close to its historic high.

The benchmark NYSE Arca Gold BUGS Index (HUI) that includes Barrick Gold Corp., Newmont Mining Corp., and AngloGold Ashanti Ltd. ended last week at 17 times earnings, the lowest since at least November 2002 and below a five-year average of 37 times.

Investors sold equities across the board as Europe’s debt crisis soured the corporate profit outlook, and they’re ignoring analyst projections for bullion and gold producers. The gold index’s 16 members will increase combined per-share earnings 94 percent this year, according to estimates compiled by Bloomberg.

“When you look back in history, you will say this was a buying opportunity,” said John Wong, a portfolio manager at CQS Group’s New City Investment Managers in London and lead manager of the $200 million Golden Prospect Precious Metals Ltd., a fund holding gold and silver stocks. “It’s like a coiled spring.”

Gold equities have fallen 5.6 percent this year, heading for the first annual decline since 2008. Gold reached a record $1,921.15 on Sept. 6 and is set for an 11th annual gain.

“The market doesn’t trust big spikes,” said Jon Bergtheil, an analyst at Citigroup. “People will wait to see if gold holds above $1,600 for a while.”

Gold averaged about $1,706 an ounce in the third quarter, 39 percent more than a year earlier, and is forecast to average $1,859 next year, according to the median estimate of 18 analysts compiled by Bloomberg. It closed Nov. 28 at $1,712.

Hedge fund manager David Einhorn said Nov. 1 that a “substantial disconnect has developed between the price of gold and the mining companies.” Einhorn’s Greenlight Capital Re cut holdings of the commodity in the third quarter and moved funds into the Market Vectors Gold Miners ETF, which tries to replicate the Arca Gold Miners Index (GDM) of metal producers.

Gold miners’ earnings per share and per-share cash flow reached the highest levels in at least nine years during the third quarter, according to data compiled by Bloomberg.

“When earnings are reported, the market will be all goggle-eyed about how much cash is flowing in to these companies and what their balance sheets look like,” said Bergtheil. “You tend to get a response at that time.”

Gold equities have been dragged down as investors seek a haven from market turmoil stoked by the sovereign debt crisis. The MSCI All-Country World Index has fallen 12 percent this year while the Stoxx Europe 600 Index has sunk 16 percent.

Barrick Gold, the world’s biggest producer, has slipped 6.8 percent in 2011, even after posting record earnings in the third quarter. AngloGold Ashanti, Africa’s biggest supplier, has slipped 10 percent, while Newmont Mining has advanced 6.2 percent. None of the members of the Gold BUGS Index have outperformed the metal this year.

Investors have been increasing holdings in exchange-traded products physically backed by gold to bet on gains in prices for the precious metal, without accepting the potential negatives that come with holding company shares.

“Investors are voting with their feet,” said Ian Preston, a resources analyst with Goldman Sachs Australia Pty in Melbourne. “They can get all of the leverage they want out of going straight into an ETF without any of the operational risk, or political risks, or general risks associated with equities.”

Holdings in gold ETFs on Nov. 23 reached a record 2,350.8 metric tons, valued at $127.6 billion, according to data compiled by Bloomberg. Hedge funds and other speculators increased their net-long position, or bets on higher prices, for four weeks, the longest stretch since March, Commodity Futures Trading Commission data show.

“Gold equities will come back,” Norm Pitcher, chief operating officer of Vancouver-based Eldorado Gold Corp., said in an interview yesterday. “The one thing you don’t have when you are buying an ETF is any upside to exploration, and I think the companies that have good exploration assets are the ones that will probably be valued a little higher.”

That attraction of ETFs over stocks may also fade when concerns ease that the European debt crisis will ravage corporate profits, said New City’s Wong.

“Gold mining shares are still equities, so they are determined by the equity market as a whole, not just gold,” said Wong. “The performance of equities in a bear market is bad. Once there is some stability and people are prepared to take risks, I see that there will be a massive move.”

* * *

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Remember precious metals’ fundamentals, Embry tells King World News

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GATA

10:50p ET Tuesday, November 29, 2011

Dear Friend of GATA and Gold (and Silver):

Sprott Asset Management’s John Embry tells King World News tonight that he’s trying to get investors to remember the fundamental factors favoring gold and silver, which is hard enough even before contemplating the washout in mining shares. But like GoldMoney’s James Turk, Embry envisions silver’s doubling rather quickly. An excerpt from his interview is posted at the King World News Internet site here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/29_E…

Meanwhile, full audio of geopolitical analyst Jim Rickards’ latest interview with King World News has been posted here:

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/11/29_…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Chris Martenson on exponentially rising debt and rapid depletion of resources

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GATA

10:35p ET Tuesday, November 29, 2011

Dear Friend of GATA and Gold:

Market analyst Chris Martenson made an absolutely brilliant and eloquent presentation to the Spanish Precious Metals Association’s conference in Madrid on November 16, emphasizing the exponential growth of debt in Western economies amid a worsening depletion of crucial natural resources. GoldMoney’s ever-adept video crew was there to capture it, and while it is an hour and 11 minutes long, there’s not a wasted moment in it. You can watch it at the GoldMoney Internet site here:

http://www.goldmoney.com/video/martenson-presentation.html?gmrefcode=gat…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

 

Only skullduggery explains falling gold price amid turmoil, Embry writes

November 30, 2011 by · Leave a Comment 

GATA

12:02p ET Tuesday, November 29, 2011

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry writes in his latest column in Investor’s Digest of Canada that only surreptitious market intervention can explain the collapse of gold prices since September even as the world financial system has been teetering on the brink of collapse. But Embry also notes growing awareness of the market manipulation issue, as represented by the recent acknowledgement of GATA by the Financial Times. Embry’s commentary is headlined “Collapse of Gold and Silver Points to Skullduggery” and you can find it at the Sprott Internet site here:

http://www.sprott.com/Docs/InvestorsDigest/2011/november-18-2011.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Junior miners priced for $400 gold, Got Gold Report’s Arensberg writes

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GATA

11:47a ET Tuesday, November 29, 2011

Dear Friend of GATA and Gold (and Silver):

In the latest edition of his Got Gold Report, Gene Arensberg calculates that junior gold and silver mining companies are now priced as they were when gold was struggling to break $400. This would seem to be a buying opportunity — or maybe the only buying opportunity right now is in freeze-dried food, bottled water, and ammunition. The new Got Gold Report is posted in the clear here:

http://www.gotgoldreport.com/2011/11/got-gold-report-season-of-blue.html

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Improving the operation of legendary silver mines along the Veta Madre (Mother Vein) in Guanajuato, Mexico

November 30, 2011 by · Leave a Comment 

Great Panther Silver Ltd.’s [NYSE.GPL, TSX.GPR] extensive property in the Guanajuato silver district includes many famous Spanish colonial era mines along the Veta Madre, or “Mother Vein.” Today Great Panther continues mining high grade silver from several ore shoots that extend below historic workings, plus they are also finding hidden adjacent veins with drills and other modern exploration methods. When I toured the company’s Guanajuato mines last month I saw they have recently completed substantial infrastructure and operations improvements.

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Great Panther Silver Confirms Continuity of Santa Margarita Gold-Silver Veins and Extends Guanajuatito Mineralized Zone to Depth at Guanajuato

November 30, 2011 by · Leave a Comment 

Great Panther Silver Limited (TSX: GPR.TO)(AMEX: GPL) (“the Company”) is pleased to announce that underground drilling programs at the Company’s wholly owned Guanajuato Mine have been successful in confirming continuity of the Santa Margarita gold-silver vein plus two footwall veins between the 435 and 500 metre levels, and in extending the Guanajuatito silver-gold mineralization below the 100 metre level, down to the 390 metre level (see also news release January 27, 2011).

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Mining Consultants and Geotechnical Consultants

November 30, 2011 by · Leave a Comment 

SRK Consulting is an independent, international practice of mining consultants and geotechnical consultants servicing mainly mineral exploration and mining industry clients. Formed in 1974, SRK emplo…

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Chemicals for Mineral Treatment

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Clariant Mining Services is a leading global supplier of chemicals and integrated services to the mining, explosives and fertilizer industries. Our products and services provide reliable explosive em…

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P&H Showcases MAS 361 Roof-Mounted Unit in White Paper

November 30, 2011 by · Leave a Comment 

P&H Mine Air Systems has released a white paper which details the features of the MAS 361 roof-mounted unit.

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