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  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    What I would be interested in knowing is in general why copper/nickel/iron is such a large part of the commodity financing schemes in China. These are metals that require vast storage facilities (compared to gold or silver) and I would imagine they would thus have large carrying costs.

    Ignoring 2013, why wouldnt these deals have been using gold as the collateral since it takes up much less space / storage and should be much easier to unload?

    If anybody has any insight (especially if you're based in the Asia markets) i'd love to hear it.
    Apr 20 02:57 PM | Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    Yeah I found that very interesting too. China imports over 1000 tonnes (a lot of disagreement about the exact amount), so stagnant imports in 2014 mean imports remaining at all-time highs.

    But yet negative headlines? Beats me but it sure does give credence to those that believe financial media has an anti-gold agenda...
    Apr 20 01:40 PM | Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    Excellent point and something that most investors miss - missing the forest for the trees. The continuing polarization of the world into West and East (yeah I know i'm simplifying it) is extremely bullish for gold because of exactly what you've mentioned.

    I haven't had a chance to read it yet, but a relatively new book called "Treasury's War: The Unleashing of a New Era of Financial Warfare"(http://amzn.to/1pjumN5) discusses these concepts.

    The goal of new-age warfare is to bring a country to its knees without firing a single bullet by completely destroying its economy. Ostracize a country's banking and financial system and you can do exactly this - its becoming clearer to countries that they need to prevent this type of attack and thus the move away from a hegemonic financial system with one reserve currency. The recent issues between Russia and the US will simply hasten this move.

    In that world you better own some gold...
    Apr 20 01:02 AM | 5 Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    <<It remains negative for gold as the narrative of gold marketers (China buying hand over fist!) again deflates pitifully.>>

    Again I have to disagree with you here. Let me respond with two questions:

    (1) Why would these deals be using gold all-of-sudden in 2013 (as the report suggests) when they've clearly been using copper in much greater volumes and have access to plenty of other commodities in-house (iron, rubber, aluminum, etc)? Why pick gold all of a sudden after its volatility, high premiums (yes even internationally), and prominent coverage? There are much better collateral options that are nice, boring, and previously used collateral.

    (2) Chinese premiums were hitting extremely high levels compared to historic norms in 2013. This obviously suggests that there was significant NON-FINANCIAL COLLATERAL interest (i.e. private citizens), because as you've already mentioned, these financing deals were bought on the international market (no premium would be found in the Chinese market if these deals increased). If all this gold was simply being used to finance deals then Chinese premiums should NOT have increased - but they DID.

    That is a bit of a hole in the argument that 2013 Chinese imports was simply due to commodity collateral financing.

    If large amounts of gold were being imported simply to finance
    Apr 20 12:56 AM | 2 Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    Thanks for the comment Surely. I agree with you that the WGC has a lot of clout because of its name, but I think it is really not an organization that markets strongly for the gold market (GATA is clearly much better). Instead, I think they are an organization that is trying to please too many players and thus waters down its efforts.

    A strong gold advocacy organization would pull no punches in pushing gold as both an investment and a store of long-term value. From all that i've heard from the WGC, I dont think they do a good job of that.
    Apr 20 12:47 AM | 5 Likes Like |Link to Comment
  • Does China Really Have 1,000 Tons Of Gold Locked Up In Shadow Financing Deals? [View article]
    Thanks Tao for the comment.

    <<Few facts and a lot of guesswork: That applies to any conclusion on the issue, as indeed there is no clear-cut data from China.>>

    Actually this is the most important point of all - that it is a lot of conjecture. There are no firm numbers on any of this stuff (no surprise since it IS shadow-banking) and that's why I find it quite surprising that the WGC could make the assumption that up to 1000 tonnes have been used in these financing deals. There needs to be more credible evidence for an organization like WGC to come out with a report dignifying that data - let alone the mainstream press taking and running with it.

    <<2) Commodity Financing Requires Stable Assets: The deals are structured around physical imports hedged on the future market, hence ZERO NET demand and insensitivity to price changes. When the underlying is hedged, price volatility is irrelevant.>>

    This is similar to the Zerohedge discussion released a month ago. My point had nothing to do with whether deals like this are hedged - its about whether or not this gold could be unloaded into the market as the current narrative suggests.

    Remember the press took this report and ran with it assuming that "if gold has been financing these deals and not going to private hands as assumed, then that means as these deals unwind that physical gold will be released into the market." If that gold was hedged then we would see exactly the same amount of paper gold being bought for the physical gold that was sold.

    May or may not be the case, but would pretty much make the narrative wrong - which was my whole point.

    <<3) Good Collateral is Not Bought at a Premium: Collateralized gold was IMPORTED gold, so not bought at a premium, but at international prices. Furthermore, in a commodity financing deal, the haircut easily takes care of this if needed. Which in this case it is not.>>

    Do you really think international premiums weren't spiking after the April 2013 sell-off? Why pick the asset that experienced the most volatility, physical premiums, media attention? It doesnt make a lot of sense in terms of good collateral to pick gold as the WGC report suggests. Personally, I think gold is great collateral for any long-term deal, but these are SHORT-TERM deals and the report suggests that in 2013 they spiked (i.e. gold was used even more than before as collateral) - why go through that trouble?

    Assets experiencing volatility, high premiums, and intense media coverage do not make good collateral, especially given that there are many other assets to use.

    <<I’m amused at the length to which gold marketers will go to ensure a steady flow of suckers keeps gobbling up the shiny rock…>>

    I'd respond in a similar fashion:

    I'm amused at the lengths with which people who have an irrational hatred for gold will go to discredit gold as an asset despite the fact that it has held up the best over all other financial assets over long periods of time. It baffles me...
    Apr 20 12:43 AM | 9 Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    I havent gone into a lot of the details of SA's KSM project, but I think PVG would be much more attractive first b/c the KSM project is double the capital costs (I think $1.5 billion if I recall correctly) and at current gold prices has a much lower IRR. Brucejack has a much better return at currnet prices and is less capital intensive - though we will have to wait until the updated feasibility study to see that.

    So in terms of strategic planning, it would make more sense to start with the Brucejack project that is more profitable and cheaper at current prices, and then 5-10 years look at the KSM project if gold prices are much higher - especially b/c KSM would provide much higher leverage to higher gold prices.
    Apr 18 09:44 AM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    Why do you think GG is going ot underperform its fellow majors? They've actually had much lower costs than ABX/NEM and their balance sheet is much cleaner
    Apr 18 09:28 AM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    Actually I like Premier Gold a lot - its one of our top names. They have a dynamic CEO who is buying up shares, and three very interesting projects that all have buyout potential. They are already partnering up with GG and NEM one two of those projects, so there is definitely a relationship with the majors.

    I'm not sure it would be a big enough acquisition for GG with current data, but their JV at Red Lake may be very interesting, and if upcoming drill results are encouraging, that may be the needed kicker. But Premier has enough cash to push development and really doesnt need to be acquired at this point/price.
    Apr 18 09:27 AM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    We may do a piece soon on ANV, but I haven't had a chance to analyze their Q4 report yet. My concerns previously were the high levels of corporate debt and the high production costs - if those are remedied (or at least mitigated) then ANV would be interesting.

    But I just havent seen their recent reports yet so I dont want to venture anything more than that until I have that chance
    Apr 17 05:03 PM | 1 Like Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    I'm not very familiar with Torex, but I do know they just got approved for their project financing to production - an obvious positive. Having said that, it is a Mexican jurisdiction and is outside of the scope of Canadian acquisitions
    Apr 17 05:01 PM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    Fair enough - and that's pretty much the consensus on gold and the miners.

    But if you do have a gold catalyst (and I think there are a number out there) there won't be much time to jump onboard because the upside may be quite violent. I think there are plenty of opportunities for that catalyst besides Ukraine (which is not a minor deal), including the Chinese Credit Crunch, EU anti-Euro parties gaining strength, extremely high levels of margin debt while the Fed unwinds, and a US economy that is not recovering despite historically low interest rates.

    None of those include the gradual structural shift in the monetary system as the world begins to move away from dollars.

    There are plenty of reasons to own gold, but in the short-term you are absolutely right that the bears are in charge
    Apr 17 05:00 PM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    Thanks Greaves for the comment.

    I believe RBY's plan is an underground mine, i'm not aware of anyone mining 1.5 g/t without doing it via Open pit - so I dont think we're talking about a 5 million ounce project. Of course, they can expand reserves but thats a differnet conversation. I think the 2M oz estimate is low, but I dont think you can assume its going to be 5-6M
    Apr 17 04:56 PM | 1 Like Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    Thanks CanadaPhil - appreciated.

    <<1) Why is Detour Gold not mentioned as one of the possible candidates to replace Osisko? It's got a producing Canadian mine of similar size.>>

    Detour Gold is an interesting option because the size sure is large enough to warrant interest from GG. They do have a debt load ($500+ million), concerns about high mining costs, and the cost of acquistion would probably be $2 billion or more - but the jurisdiction is pretty decent and the size of the reserves can't be ignored.

    I'm not as familiar with Detour (we dont invest in higher debt companies), but I think they would be an extremely interesting option for GG especially if Goldcorp thought they could lower costs by corporate efficiencies. I would agree with you on Detour being an interesting option for GG.

    <<2) I haven't followed Argonaut Gold closely so could you quickly explain why it seems to be dropping like a stone these days?>>

    To be honest with you, i'm not exactly sure why Argonaut has been dropping so hard. Their San Antonio project has had some permitting issues, but I dont think it warrants the drop we've seen especially b/c it isn't the major valuing factor for the company. The CEO owns a fairly large amount of shares, and the company is a gold producer priced around $500 million with potential at Magino.

    Maybe somebody knows something here that hasn't been publicly revealed (so I'd be hesitant to put too much into the company), but i'd love to see management start buying shares. It COULD be a liquidation by Libra Advisors LLC (a large ARNGF holder) and in the case that the liquidation ends may be a buying opprotunity.

    Unfortunately, its all conjecture and I dont have a good answer for you - but I am still interested in the company
    Apr 17 11:53 AM | Likes Like |Link to Comment
  • Goldcorp Is On The Prowl: Other Attractive Targets For A Failed Osisko Acquisition [View article]
    I'm not sure why GG would acquire AGI - they dont have a presence in Canada.

    RBY could be a potential target, but I think GG has already had plenty of opportunity to acquire it (they are neighbors in the Red Lake district) and since RBY's recent capital raise they are pretty much funded for construction. Management includews ex-GG folks, but I think the projects size may be too small for GG (2 million ounces - though that could increase). A possibility but I think they are looking for bigger options and RBY is pretty fairly valued
    Apr 17 11:31 AM | 1 Like Like |Link to Comment
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