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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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Correlation Economics
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  • World Gold Council Gold Supply And Demand Q3 2015

    A new gold supply and demand report is out from the World Gold Council for Q3 2015.

    (click to enlarge)

    Demand has been very high in Q3 2015 at 1120.9 tonnes. Supply has declined year over year to 1100 tonnes. This created a rise in the gold price in Q3.

    Demand will be subdued in Q4 because investors already bought their share in Q3.

    Supply decreased due to lower mining production and lower recycling of gold. The majority of increase in supply was due to net producer hedging, which basically means that miners sell their future production to bullion dealers in exchange for cash. Bullion dealers get their cash from central banks who sell their gold into the market. So the bullion dealer actually borrows gold from the central bank and will return it in the future, when the mine produces it.

    Of course, mines selling production now or selling production in the future has no net increase in supply eventually. A mine can only sell so much gold as its capacity allows. So basically, supply is drying up if we don't take into account net producer hedging.

    Tags: GLD
    Nov 12 3:31 AM | Link | Comment!
  • CME Protests At COMEX Gold Stock Lows

    What a coincidence that we saw protests at the CME, which had a halt in its trading platform, at the same time that COMEX registered gold stock hit a new decade low. Registered gold is now so low, that we can actually just stop reporting on it. Are we finally seeing the final nail in the coffin? Did somebody not get delivery? I have no idea. Note that Bitcoin is at the same time starting to move up which means something is going on.

    New lows in registered gold (see blue chart) at 151384.629 troy ounces.

    (click to enlarge)

    Record leverage at 45 eligible to registered gold.

    On another note, repatriation of gold from the U.S. is gaining pace and gold imports to Asia are accelerating. Premiums have gone down a bit, but are still robust. U.S. mint silver sales are still on track to hit records. U.S. mint gold sales were weaker.

    Nov 03 6:13 PM | Link | Comment!
  • Stock Screener: Take 7: GIMB: Gimv

    Remember my post on KYN, SIMO, TAICY, TYG, EWZ, XIN? All have been doing well. XIN has given a handsome dividend of 6% while appreciating 15%, I'm amazed how well this stock screener idea works. I'm still keeping this stock in my portfolio as it is undervalued and can double in no time, but let's go to another stock for our readers.

    Track record 6-0.Time to move on.

    If I don't have any ideas anymore what to buy, I use the stock screener.

    What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change.

    1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion.

    2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth.

    3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money to pay out dividends on a regular basis. I'd go for companies with dividends between 3% and 7%.

    4) Volatility: don't choose companies that are so volatile. Maximum year over year change should be between the 20% range.

    We use the exact same parameters as above and our next winner is: Gimv (GIMB). This time I took a stock from the Brussels Stock Exchange, because I want to diversify into Europe. Very nice earnings 135991000 euro in the last year, which means a P/E of 8, not too shabby but it's ok in this world of high equity valuations. I will make an exception on the P/E ratio today (outside the range of 2-5). Market cap is at 1 billion euros. Equity has risen very well in the past year. Dividend is increasing in time, it is 2.45 euro/share, which is a whopping 6% gross dividend. Dividend is also stable, they started to pay out already many years ago. Is trading at book value, so valuations are normal. I'm buying it. Technically, the stock is in a very stable uptrend. This is a nice dividend generator. Let's go for 7-0.

    Oct 30 6:19 AM | Link | Comment!
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