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Investors Take Note: The Swiss Gold Referendum Has Already Changed The Gold Market
- The upcoming Swiss Referendum has already changed the gold market as it has put gold in the public domain for citizens and politicians.
- Recent events by central banks across the world are suggesting a new view on gold and the desire for repatriation.
- If the psychology of the gold market has changed to demand repatriation then there may be a large rise in the price of gold.
What It Really Costs To Mine Gold: The Randgold Third Quarter Edition
- Randgold’s costs on both a core and a core non-tax basis have continued to fall on a year-over-year and sequential basis.
- This decrease in costs is primarily due to the company's ramp-up at its world-class Kibali mine in Congo.
- Investors need to carefully monitor the decision of the Congolese government concerning new mining taxes as it will cut into the company's profitability.
- Randgold remains one of the few gold miners with costs low enough to survive at $1200 gold and offers investors a quality low-cost producer with growth potential.
What It Really Costs To Mine Gold: The Eldorado Gold 3rd Quarter Edition
- On a core cost basis, Eldorado's third quarter costs rose on a sequential and year-over-year basis but still remain one of the lowest in the industry.
- Core non-tax costs remained in-line with previous quarters and keep the company's costs before taxes under $1000 per ounce.
- Eldorado remains one of the fewest miners profitable at current prices.
What It Really Costs To Mine Gold: The Yamana Gold Third Quarter Edition
- Yamana's core costs rose significantly in the quarter, but most of it was due to a huge write-down and extraordinary taxes experienced in the quarter.
- To get a better idea of the company's costs we need to analyze core non-tax costs, which Yamana did an excellent job with in the third quarter.
- Most of the profitability of the company did not show in the quarter because it didn't sell much of its production and booked extra-high taxes.
- Yamana is setup to have a very good fourth quarter as it sells third quarter production and probably will see much lower taxes.
What It Really Costs To Mine Gold: The Agnico Eagle Third Quarter Edition
- Agnico Eagle’s costs on both a core and a core non-tax basis have continued to rise as it saw its highest costs in 2014 in the third quarter.
- Cost increases were mostly due to a combination of increasedexploration, production, and amortization related costs, and decreased goldproduction compared to the excellent first quarter.
- We're disappointed at the high costs seen in the third quarter but it is not completely unexpected as the company continues to integrate its new acquisitions.
What It Really Costs To Mine Gold: The Newmont Gold Third Quarter Edition
- Newmont’s costs on both a core and core non-tax cost basis have risen to the highest levels of 2014.
- Investors shouldn't be too concerned as in the current quarter copper production was drastically reduced due to issues at Batu Hitau.
- Newmont has received large tax reimbursements over every quarter in 2014. This isn't sustainable and increased taxation should have a negative impact on future core costs.
What It Really Costs To Mine Gold: The Barrick Gold Third Quarter Edition
- Barrick’s gold-equivalent production costs on both a core and a core non-tax basis fell noticeably in the third quarter.
- Third quarter cost decreases were due to a combination of increased production and lower nominal costs.
- Though the company had a very good quarter, investors should still be careful as it will be important to see the company maintain its cost structure moving forward.
There Are Strange Things Happening With The Gold Held At The Gold ETFs
- Gold ETFs are continuing to see withdrawals of physical gold despite increases seen in physical silver at silver ETFs.
- Gold withdrawals are not strictly correlated to the gold price. Otherwise, we wouldn't see that discrepancy.
- Gold withdrawals may be a way for bullion banks to satisfy Asian gold demand as they began approximately the same time Chinese gold demand skyrocketed.
- Thus investors should look at the decline in gold held at the GLD ETF as a bullish sign.
Update: Randgold Reports Strong Earnings And Is Well Prepared To Respond To The Ebola Crisis
- Randgold reported strong earnings that surprised the market, as it increased gold production sequentially.
- The company also revealed that it is actively and regularly preparing for any Ebola outbreak, to help minimize the impact on operations.
- Investors should greatly lower any risk premium associated with Ebola.
What It Really Costs To Mine Gold: The Goldcorp Third Quarter Edition
- Goldcorp’s costs on both a core and a core non-tax basis rose significantly on a year-over year basis.
- This rise was due to increasing costs and lower gold-equivalent production due to operating issues at some of the company's mines.
- We expect production to rise again in upcoming quarters and capital spending to decrease into 2015.
- For gold investors, the fact that costs are well above the current gold price suggest that the current gold price is too low to be sustainable in the long-term.
The Next Steps For Gold Investors
- Precious Metals investors need to make sure they construct their investment thesis to help them select their gold investments.
- The current price for gold is unsustainable as most miners sell it for above their current all-in costs.
- Exploration budgets at miners have been cut significantly and that means that we think acquisitions will be the name of the game in the next few years.
- Investors should look for miners with good balance sheets and a significant portion of their valuations in "in-ground" reserves.
- Investors should look for developers and explorers that have the characteristics of a good acquisition and enough cash to avoid desperation deals and dilution.
What Should Gold Investors Do Now?
- Gold fell last week when the Fed cut QE and the Bank of Japan increased QE.
- The fundamentals right now are not relevant to gold as it is trading based on very negative sentiment.
- Investors need to think long-term and control their emotions as that is the only way to weather "sentiment bottoms".
- Investors should not be idle, but instead be developing their strategies and culling their portfolios to the best gold stocks.
Our Favorite Gold And Silver Potential Takeover Candidates (Part 1)
- Investors should consider finding quality explorers and developers, since miners will need to replenish existing reserves.
- We expect acquisitions to increase significantly over the next few years, regardless of the gold price.
- Exeter Resources is a convincing acquisition target for a company like Kinross because of its location and price.
Update: Kinross Gold Sells Fruta Del Norte Project
- Kinross Gold sells its much maligned Fruta Del Norte for around $240 million in cash and equity.
- The proceeds will help add liquidity to Kinross's balance sheet and help service its large debt load.
- Investors will be able to tell a lot about the nature of management's approach based on whether they conservatively or aggressively use this money.
Russians Make Largest Gold Purchase In 15 Years: What Does It Mean For Gold Investors?
- Russian central bank purchases 1.2 million ounces of gold in September.
- This is the largest gold purchase by Russia in over 15 years.
- If the Russian central bank keeps up monthly gold purchases of this size then it will impact total annual gold demand.
- There may also be significant political motivations in publicly announcing this large gold purchase.
Chinese Gold Production Falling As Physical Demand Jumps
- Shanghai Gold Exchange weekly withdrawals reach 68 tonnes which is the second highest weekly withdrawals for 2014.
- Withdrawals continue existing trend seen over the last few months of Chinese buyers increasing physical demand as the price drops.
- Chinese miners are also having a tough time producing gold and expect production growth to fall significantly over the next few years.
- Drop in Chinese gold production will mean demand will have to be met by further gold imports.
Update: Bear Creek Mining Removes VP Of Exploration
- Bear Creek recently announced the elimination of its VP of Exploration position, though the company will maintain a consulting contract with Mr. Rios.
- This position is very important to any explorer and shows management is very serious about cutting costs and preserving cash.
- This decision will not affect any of the large short-term catalysts for the company as neither require spending from the areas being cut.
- We think this is the right move by the company as sometimes it is better to do nothing and sit on reserves than drain cash in a down market.
Update: Exeter Resources Expands Its Water Drilling Program
- Exeter Resources recently expanded its water drilling program after first holes show good water results.
- Management expects last two holes will continue to show that water resources can support the Caspiche project.
- Water results are one of the remaining unanswered questions regarding Caspiche development and may be the last straw that an acquirer needs to pull the trigger.
Is It Time For The Gold Bulls To Panic? It All Comes Down To The True State Of The U.S. Economy
- The key to the gold trade lies in the true nature of the US economic recovery.
- The most recent jobs report was not as strong as it may seem and looking beneath the numbers reveals a lot of problems in the economy.
- Falling commodity prices also reveal a lot of economic weakness as we would expect them to rise in a strong economy and not fall.
- Falling commodity prices, a rising US Dollar, and increased debt loads put pressure on debtors and suggest the potential for a debt crisis into a Fed taper.
- Gold is what investors would want to own if we start to see debtors default on obligations.
Update: Iamgold Sells Niobium Operations
- Iamgold recently decided to sell its niobium operations for total consideration of $530 million to Magris Resources.
- This deal eases the burden of the company's debt load as now Iamgold will have enough cash on hand to pay off debts if it chooses.
- Additionally, this deal will give Iamgold the financial flexibility to acquire companies or properties if the gold price turns around.
- We think this deal was a good deal for Iamgold because it allows management flexibility to react to the gold price and either be aggressive or hunker down.
Update: Novo Resources Begins Drilling And Bulk Sample Program
- Novo Resources recently announced that it will begin its drilling and bulk sample program in early October.
- This program should help give investors an idea of the potential of Beaton's Creek and bring the property closer to production.
- The results should be released over the next few months which should provide a nice catalyst for the company as North American explorers slow operations for the winter.
- Investors able to shoulder the risk should consider buying shares now as most of the stock is closely held and there is a small amount of float.
Latest COT Report Shows Short Managed Money Positions At Highest Level Of 2014
- Latest Commitment of Traders report shows that short positioning by Managed Money traders has increased to the highest level of 2014.
- The last time these short positions were at these levels was December of 2013, which was around the gold bottom.
- Contrarian investors should be interested in building long positions at these high short levels regardless of their long-term view of gold.
Gold Investors Dont Despair As There Are Many Bullish Catalysts For The Market
- Gold has been hit hard over the last few months due to a strong US Dollar but investors have plenty of bullish catalysts.
- Indian gold demand is reportedly up significantly as premiums and smuggling rises due to upcoming festivals and a strong monsoon.
- Possibly the biggest catalyst for gold is the upcoming Swiss referendum which could change the way the Swiss bank manages it reserves.
Update: Richmont CFO Departs To 'Pursue Other Opportunities'
- Richmont's CFO has announced his resignation to pursue other opportunities - which is usually a bad sign.
- We think in this case his departure was related to Mr. Carmel's earlier departure, and is simply the company cleaning up the former leadership regime.
- Investors should be awaiting the announcement for the company's new CEO, as that will tell us a lot about the future of the Island Gold Deep deposit.
What It Really Costs To Mine Gold: The Timmins Gold Second Quarter Edition
- Timmins costs on both a core and a core non-tax basis rose in the second quarter on a sequential and year-over-year basis.
- Costs primarily rose as a result of lowered grades experienced in the quarter which management expects to continue for the rest of the year.
- Even though Timmins costs disappointed on the quarter, their costs still remain one of the lowest in the industry.
- The fight with Sentry Investments was settled in the second quarter, and we will be curious to see what changes will be implemented as a result.
Novo Resources: An Explorer With A Project That Could Forever Change The Mining Landscape
- Novo Resources is looking for a new Witwatersrand basin and they have found some characteristics similar to it on their property in Australia.
- Newmont Mining is at the very least very curious, and during the worst year for gold in 30 years took an extremely large 35% stake in the company.
- The company CEO is very familiar with the area, is PHD level geologist, and has been looking at this land package for years before he started the company.
- The CEO's large personal financial investment in the company allows investors the comfort to know that he has a lot at stake in the company succeeding.
- Upcoming drill results and a PEA on the Beaton's Creek project provide for some near-term catalysts during a traditionally catalyst-slow Northern Hemisphere winter season.
Afraid Of The Plummeting Gold Price? Russia Certainly Is Not
- The Russian Central Bank recently added 300,000 ounces of gold to its reserves in August.
- This large gold purchase came despite a falling Ruble and a weak gold price.
- Russian's September gold purchase numbers will be very interesting for investors as the gold price has dropped another 5% since August.
- Russia has recently warned it may unload its Western debt securities and investors may get an early sign of this if Russia increases the pace of its gold purchases.
Commitment Of Traders Report Offers Investors Much Optimism On The Gold Price
- Latest Commitment of Traders report shows that short positioning by Managed Money traders has increased for a fourth straight week.
- Based on the current gold price, by this Tuesday's release we expect that positioning to increase for a fifth straight week.
- The last time we saw five straight weeks of Managed Money short increases was in December of 2013, the bottom of the gold price.
- The gold price is set to decrease for five straight weeks - it has never decreased for six straight weeks in our data set (going back to 2006).
- It seems this would be an excellent time for short-term investors to build a gold position based on this and the great bearish interest by gold traders.
Update: Goldcorp Denies It Is In The Acquisition Market
- Goldcorp CEO Chuck Jeannes stated that investors would be wrong to assume that the company was poised for an acquisition.
- Coupled with other thoughts from the company CEO, we believe this statement to be accurate and not a simple smokescreen.
- Investors owning potential Goldcorp targets should remove any premiums attached to their investments based on a possible Goldcorp acquisition.
Complete Second Quarter Gold All-In Costs Show That 'Peak Gold' May Be A Reality
- Total industry gold production has remained flat over the first half of the year and expected FY2014 production is lower than 2012 and 2013.
- Second quarter core costs remained flat sequentially, but this was a result of a large write-down experienced by Barrick which resulted in a tax break that lowered costs.
- Despite industry efforts to aggressively cut costs, second quarter core non-tax costs continued to rise and are actually higher than 2012 and 2013.
- Cuts to exploration and the high grading of existing mines have led to temporary relief for miners, but this may result in a large drop in future gold production.
- Investors that are patient should be looking to acquire gold as supply seems to have peaked.
What It Really Costs To Mine Gold: The SilverCrest Mines Second Quarter Edition
- SilverCrest’s costs on a core basis have fallen on both a sequential and year-over-year basis, which is very good as the company continues its underground mining transition.
- The company's core non-tax costs have risen though as the new Mexican tax law takes effect.
- The company should continue to see lower costs through the second half of the year as capital expenditures drop and production increases.
COMEX Gold Inventories May Have Increased, But Are Still Way Below Pre-2013 Levels
- COMEX gold eligible and registered inventories have increased since the beginning of 2014, which is generally a bearish development.
- We believe this increase is primarily due to re-stocking, as non-Western demand has been lower than demand seen in the second half of 2013.
- When compared to the pre-2013 gold plunge, inventories are still down significantly and that suggests that much of the gold that left Western warehouses won't be back.
- With dollar values of available gold at the COMEX way below pre-2013 levels, an increase in physical demand will absorb available COMEX inventories, which are only $1.3 billion.
- Investors should be looking to increase their gold positions while others aren't interested in gold.