Seeking Alpha

Barrick Gold, Newmont target prices raised as Credit Suisse but shares tank

  • Gold prices tumbled nearly 2% to settle at five-week lows as investors continued to take profits against the metal's YTD surge with an eye toward an improving U.S. economy and the possibility of an interest rate hike as soon as early next year.
  • So Credit Suisse's move today to lift stock price targets for Barrick Gold (ABX -4.1%) and Newmont Mining (NEM -2.1%) was ill-timed as gold miners (GDX -4%) fall sharply across the board.
  • On ABX, the firm raises its target to $21 to reflect the company's relatively conservative $1,100/oz. gold price assumption for reserves, exploration upside potential within its asset base (demonstrated by its 15M oz. Goldrush discovery) and strong base of low cost assets.
  • On NEM, the firm ups its target to $26 on higher forecast operating cash flow and a higher NAV target multiple, but a resolution of the ore export ban in Indonesia is necessary to become more constructive.
  • Also: AU -4.3%, NG -4.9%, GG -3.6%, KGC -4%, NGD -4%, IAG -3.8%, GFI -1.9%, HMY -3.2%, SLW -6.5%, ANV -6.7%, BTG -4.9%.
Comments (24)
  • dancing duke
    , contributor
    Comments (77) | Send Message
     
    what does this article have to do with slw.Kindly get you headline correct
    24 Mar 2014, 04:21 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    March 24, 4:41,
    Wonderful opportunity to buy the Juniors. The fundamentals for Gold are very strong. The market is over due for a correction. Two Jrs. that come to mind are AXU and LSG. they got massacred today. I will be increasing my positions tomorrow.
    Love Gold long term.
    24 Mar 2014, 04:49 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    The long term, up to 5 years, is stable to downward trending gold prices if government banks have their way; and they almost always do; at least for the time being.

     

    The junior gold suppliers are probably a terrible bet, being undercut by the large
    cap gold miners with better and greater production efficiencies. There is always an exception somewhere if you like high risk.

     

    We can probably agree the gold price is at least stable to slightly downward trending over the next 5 years favoring the large gold producers. As cut throat
    competition takes over the rest of the government bank mandated slow growth economy, gold should still be looking relatively stable with average to above average revenues and income.

     

    Or the place to be to earn at least an average to decent return is large cap gold miners/suppliers over the next five years or so.
    24 Mar 2014, 05:36 PM Reply Like
  • james.
    , contributor
    Comments (767) | Send Message
     
    The P&F Chart on NEM has a Price Objective of $32 per share, not the mere $26 per share given by Credit Swiss Bank, who deliberately understates because their clients own DJIA type of stocks ! March 24, 2014 at 11:28 pm PST.
    25 Mar 2014, 02:28 AM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    With the central banks starting to accumulate gold, instead of selling; the Chinese buying gold and accumulating at record pace and the Indian government intervening to keep citizens from buying too much gold, indicates to me that gold needs to move in an upward direction. It is too darn cheap when you compare it to the fiat currencies floating around the globe.
    25 Mar 2014, 10:39 AM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To Mr Lujan. Sorry. That is not what is going on. Government banks are buying on reduced gold prices and selling on increased gold prices to try and keep the gold price as stable as possible to protect their currencies.

     

    Government banks goal is stable to downward trending gold prices to keep
    or increase the value of their currencies.

     

    So your partial information is giving you erroneous conclusions.

     

    This above scenario will likely not change much if at all in the next
    five years.

     

    Of course there is always the chance of a market blip, up or down,
    too quick for the government banks to react to.

     

    Or the super quick traders likely engineer these blips to make
    a buck when they think they need to.
    25 Mar 2014, 01:53 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    I read where China is cornering the gold market, that they are buying all they can get ahold of. They are also, are not discouraging their citizens from buying gold. Whereas the Chinese back their currency with gold, no other nation that I know of does. It boils down to supply and demand, when there is of shortage prices rise. I see a shortage for gold arising from the fear of worthless paper money that is back by nothing, but B/S.
    29 Mar 2014, 01:57 AM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To Mr. Lujan. So the Chinese are betting against the rest of the government banks that they will not be able to keep their currencies stable by intervening in gold markets whenever they need to. Or it is simply insurance for the Chinese against a worst case scenario of government banks temporarily losing control of gold markets. Or a combination of both.

     

    It is difficult to place odds on the above scenarios. Best estimate: government banks temporarily losing control of gold markets: less than 15% chance, probably less than 5% chance. So to protect their civilization, China is buying gold as insurance against the worst case scenario of other government banks losing control or temporary control of gold markets.

     

    The Chinese have the organizational skills from over 3000 years of civilization
    to continue to out produce the rest of the planet and pay the figurative gold insurance premium against the worst case huge sudden world wide currency
    debasement scenario by holding more gold than any other country. Or and
    also, the Chinese government is probably the only government that can
    afford to pay these figurative economic gold premiums; which of course
    help prop up gold prices as you have asserted.

     

    Though you can be certain the world wide gold market is bigger than any
    individual government to control; and probably bigger than a group of
    governments to control in a worst case scenario; at least in a temporary
    situation. Where a catastrophe or a gold market run a way occurs,
    you can bet in days to no more than a week or two, government banks
    working together will stop any run a way inflation, or gold prices going
    into orbit; to protect their currencies.

     

    Based on my last readings, Chinese gold inventories are the lowest of any
    industrial or large country. So yes, the Chinese will be buying gold on the sly
    for the foreseeable future; a permanent new gold demand source.

     

    What you have not accounted, gold supply, probably for the first time in history
    can and has outpaced gold demand, due to the temporary large recent upward price trend to over $1600 per ounce.

     

    The net supply demand adjustment will occur with small gold miners adjusting
    production up and down with gold pricing; or idling operations when or if demand falls suddenly. And the large cap gold miners holding the main stream gold market with their low supply gold costs will continue to make a good
    return.

     

    So the probability of a history repeat of temporary and sudden worthless government currency anywhere due to some market catastrophe is probably
    less than 5%; I believe based on all the presented facts here less than 1%.

     

    The above is the most realistic amalgam (a gold term with generic meaning) assessment of gold market facts and why your conclusion of any worthless paper currency anywhere is probably erroneous.
    30 Mar 2014, 01:19 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    @tdw, I sure hope you are right. We will all be better off. In my life time, I have seen the US dollar depreciate on an average of 3% per year. When Jim Carter was in office we took about a 25% wack in one year. Like the Chinese, if I am going to error, I will go to solid asset companies and keep a minimum amount of cash in the bank invested in fiat paper currency. Right now, the gold and silver producing companies are special situations. they are highly depressed and their product in short supply.
    31 Mar 2014, 11:56 AM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To Mr. Lujan. Yes sir. Sounds like we are on the same page. Probably most
    of the market is on this same page by now.

     

    Short supply is a relative term though. Only the large resource holders are buying into gold in a big way and on the sly to minimize price increases; to purchase at
    stable prices. Large resource holders to me are governments and multi billionaires.

     

    Which dove tails into governments need to keep gold prices stable to keep
    currencies stable. And gold purchasing consumers like stable gold prices
    knowing they can purchase next week or next month at about the same
    price as they have been.

     

    So nearly everyone except speculators and traders are happy with stable
    gold prices.

     

    Based on this, especially government banks and their constant currency stability concerns, gold prices will stay stable, with price blips of course, but stable
    and probably trending downward to keep consumers and large resource
    holders buying gold as a permanent long term hedge against fiat currency;
    since the planet is drowning in fiat currency compared to gold availability.

     

    Ask the average person on the street if there is enough cash around,
    the answer 90% of the time is an emphatic no. So wall street hoarding
    of cash with the U.S. Federal Reserve feeding them through bond buying
    appears highly misdirected; as a corollary of the supposed gold shortage.

     

    With the past surge of gold prices to over $1600 per ounce brought a lot of
    start up gold miners and new gold mines. So supply is ready to meet any
    surge in demand; which has probably never before previously occurred with
    gold.

     

    So your short supply, while it may appear that way, is probably not true.
    And the small cap miners will continue to feed spot gold markets to prevent
    any large gold price rises; most likely.

     

    This is the closest situation to a goldilocks scenario I have seen in my life time.

     

    It will be interesting to see how long it lasts. My best current guess is around
    five years, give or take a year.
    1 Apr 2014, 03:19 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    How can they keep gold stable when every central bank is trying to outdo one another to see who can print more fiat money? It is becoming pretty obvious to most of those that keep up with news that is quite risky to put much faith in the politicians who control what the bankers do. That is why a lot of people are buying gold. Did you notice that Gold Bliped up today? If the supply is short the price will climb until it reflects demand. I for one, will be investing as if supply is low at this time.
    2 Apr 2014, 12:50 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To ted lujan. What you have described is the external, unreal picture no one at any of the those government banks will admit to. It is the extremely old saw, say one thing, do another, and never admit to it, because their
    stability goals demand it, however convoluted that appears to be.

     

    The largest government banks and bankers are independent of the government; at least politically. With outrageous government spending,
    the source of inflation, it is government banks job to smooth out
    all the economic lumps the politicians create with their outrageous,
    currency devaluing spending.

     

    So government banks are the glorified lap dogs of the governments they
    support; with an extremely large amount of power to maintain stability to
    the point of covering up government largesse if it will prevent any kind
    of large economic instability.

     

    I do not blame you for buying the gold commodity at this time. The appearance is the price is low compared to the price over the last 2 to 4 years. The probability is high though that gold prices will stay in a trading range the next 2 to 6 years, with few if any real breakouts, daily upward price movements over 2% or 3%. Meaning the gold companies pumping out that gold will be the real source of investment returns.

     

    My assertion for the last 6 to 12 months has been gold stocks are a better value and better investment than gold itself for the long term, at least 3 years, probably 5 years or more because the firms that mine and refine gold are much more scarce than the gold commodity itself.

     

    I define scarce as: 8 maybe 10 large gold companies on the planet.
    20 to 40 medium size gold companies, and maybe around 500 plus
    new and small start up gold companies, 2 to 10 years old. Gold companies
    are the single most scarce commodity base in existence; except for maybe
    platinum miners & refiners; which I also hold a large cap platinum stock.

     

    And most gold commodity price changes are magnified in gold stocks, but with a variable time lag; which is nearly unpredictable, but known to happen with most gold price swings; especially over the long run,
    which is what matters to me.

     

    Why I hold gold stocks and mutual funds.

     

    If my rationale and logic fit your investment profile, you may want to add it to your portfolio.

     

    It is always critical to remember, timing is nearly everything. Or keeping a close watch on the market to move in and out at desirable pricing, buying low and selling high is nearly everything.
    3 Apr 2014, 10:41 AM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    TDW,
    In completely agreement with you. I hold a slug of Juniors. LSG, BDG, TC , AXU. KGC and HL. Lake Shore Gold just about doubled production Q to Q.
    Gold Bliped again today, If it holds, maybe the start of a turn around for P/M stocks
    4 Apr 2014, 01:11 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To ted lujan. I do not think you completely agree with me. Small cap gold stocks are too risky for me; having to move in and out of spot gold markets in order to make a return. Spot markets of any kind can dry up over night and for an extended period of time.

     

    Meaning any small cap gold miners could go idle or out of business over night or nearly over night, depending on spot market gold demand. If this happens to a stock you hold, it could become worthless over night, or nearly over night; or more likely plunge to the asset value, which is probably negligible compared to the operating investment return stock price; and stay there permanently or near permanently.

     

    Only the large cap gold miners, with their lower costs, higher efficiencies, more stable balance sheets, and access to large and mainstream gold markets appear attractive to me.
    4 Apr 2014, 02:07 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    My deepest apologizes, you are right they are risky, but to a degree all investments do have risk. I invested in Kinross gold because I thought it was less risky they were diversified with huge assets. Then Putin invades the Crimeria and now I am carrying it at 12% loss. Helca has worked out OK. I have been trading it for small profits. but it is starting to accumulate. Still have it in my porforlio. Although it is not a popular stock it would meet all your criteria. Rest of the Jrs have good prospects and the assets are good.
    Keep an eye on them as an exercise. 
    5 Apr 2014, 05:46 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To ted lujan. Also, I do not trade, or avoid it like the plague. Any stock turn overs less than a year are called trading.

     

    I have a life and a profession. Trading is not a profession. Trading is gambling, trying to the beat the market at its own game. Or just plain gambling with your money, a big no, no.

     

    Other people see it differently. Appears you do since you keep writing and talking like a trader.

     

    I only mention this because this is another area where we apparently do not agree and need to agree to disagree.

     

    Or another place or method where you are placing your money at unnecessary risk.

     

    I take the time to say something here so when the big trading loss hits
    you from circumstances out of your control engineered by other people, you can not say you have not been told. At least some traders spend their lives thinking up and executing on these kinds of scenarios to steal from investors and anywhere else they can.

     

    So I have done my duty here informing you of the real risks of trading as I know it. All the best in any case. I hate seeing anyone lose their money. Another reason why I take the time to say something.

     

    Traders are the zero sum game players, meaning the only way they can make money is to steal it from someone else. Another consideration for why being a trader is so second class and so low life. But it is still a choice,
    but a very, very bad one.

     

    Trying to outlaw immorality and personal unlawful acts has been tried numerous times in the past without success. Why traders can still trade.

     

    Of course traders will tell you they provide market efficiencies. Which of
    course is true except they are almost always at the expense of investors.
    Or unless there is a true market clearing necessity; which is incredibly
    rare, the trader market efficiency notion is the biggest bunk ever passed on
    or around.

     

    As I have mentioned other places, I find traders entertainment and nothing more. And as Paul Harvey used to say, now you have the rest of the story.
    I urge you to use this info to minimize your risk in every practical way you can by making your investments as trader resistant and trader proof as you can.

     

    And one last critical point, market makers, those people who facilitate trades, the stock market floor people and their computers, erroneously call themselves traders when they are not. They are market facilitators only.

     

    A trader is someone who buys and sells in the short run, less than a year, for their own self interest or betterment on their own account; almost always at someone elses or an investors (holding for a year or more) expense; creating and taking advantage of any price blip and in any particular stock or commodity.

     

    Contrary to popular belief, trading only magnifies market deviations.
    Or creates additional volatility, again at the expense of investors most
    of the time.
    6 Apr 2014, 07:25 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    TDW, what can I say other that I am a Trader by choice. I used to be an Investor a long time ago and I never did real well at it. No matter how you slice it, every time we make a trade some one will always be wrong. We all have free choice on our decisions. I have two long term holdings, Ford and Alcoa, I still trade the up and down cycles but never all my holdings. AS for the long term, we all will be dead. I need to subsidize my retirement now. I will leave my kids what ever is left over. AS for market participants, the more the better. it adds liquidity to the market place. What I hate the most is people that want to control the market place usually at some body else's expense, other then their own. Long or short, the market is no place for some one who is unwilling to take risks. The bank is a much better place, that way you only lose a little bit each year through inflation or by governments manipulating currencies at the expense of all savers.
    7 Apr 2014, 12:44 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1307) | Send Message
     
    @tdwelander
    First of all I don't like labels and under your definition I am a trader. I have always viewed myself as an active investor. I also have a profession but like many of us who reached a certain age where savings and wise investing have given us some assets I take a very active approach in managing all of our assets.
    Many times things change both macro and micro and I will trade a stock in a heartbeat for many reasons. These trades can take many forms and be for many reasons but personally I think if an investor does not want to be an active trader he should invest in index funds or hand the assets to a professional and do other things with his time.
    7 Apr 2014, 02:33 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To jjmc2001. Thanks for the perspective. Index funds mimmicks markets. Or are generally as volatile as any market. Or index funds tracing markets over all are more risky than individual stocks well researched. Or index funds are for traders only.

     

    Your suggestion a well rounded person should be both an investor and a trader, I do not find practical. I have had conversations with at least two dozen either financial planners, or stock market agents over the years. And currently have two stock brokers I rely on for back up.

     

    With an MBA, and having mostly observed the stock markets over the last 20 plus years, and having constructed several different models for investing and used them for a time, I have found the stock markets appear fundamentally manipulated, going places no rational person would go at the most unrealistic times.

     

    Or the con game element, which appears to be mostly from traders,
    though a very small minority, is alive and well; and stealing from as many investors as they can.

     

    So while I know you likely represent the vast majority of traders, actual stock market activities and results nullify your simplistic view of investing.
    With the minority trader/speculators ready to sack any part of your assets they can get their hands on.

     

    It is nice to see you have been so lucky. I do not rely on luck, ever, if I can help it. I know you will tell me you do not rely on luck either. Your
    simplistic investment model and the treachery of the minority of the market says otherwise.
    8 Apr 2014, 12:58 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1307) | Send Message
     
    @tdwelander,
    I am not going to waste our time debating you. Please don't misquote me as I won't be drawn in. Best of luck in your investments.
    9 Apr 2014, 01:00 AM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To jjmc2001. Thanks for the reply. I have no reason to quote you.
    You have not provided any info of substance or use. As mentioned,
    your perspective is appreciated. And as you say, all the best
    in your endeavors.

     

    I have never ever asked, suggested or inferred to anyone to
    waste their time ever, in any way or circumstance in my career.
    How you could make such an outrageous inference is bizarre.
    But, it is not the first time, and most certainly will probably
    not be the last.

     

    Meaning logic matters. I am here to challenge your thinking
    through your logic as an avenue to examine my own thinking
    and logic; to find new avenues. You have not given me
    anything.

     

    So there is no doubt in your mind, I utilize the advanced math
    logic of Sir Isaac Newton and German Math Professor Liebnitz;
    taught in every college math department on Earth. I have
    found it life savingly useful. You may want to check it out.

     

    My bet is it will keep you out of trouble if you take the time
    to learn and apply it everywhere you need to make a serious
    decision. Elemental parts of this advanced math I have
    found can be utilized to ferret out unreal or less than
    optimum information avoiding bad decisions; all for your
    real use; should you have an interest in what appears to
    be a needed expansion in your thinking. Or no debates,
    just the facts, thanks.
    9 Apr 2014, 03:29 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1307) | Send Message
     
    @tdwelander
    Thanks for the response. I frequent this site for different perspectives on investments. I happened upon this thread as I am interested in the mining industry as I was CFO of a mining company back in the 80s. Prior to that I also was a project finance banker and analyzed and financed many mining projects. Later I did the same in the E&P oil business. With that experience I follow those industries and look for opportunities.

     

    For some reason you took one of my comments and inferred this:

     

    "It is nice to see you have been so lucky. I do not rely on luck, ever, if I can help it. I know you will tell me you do not rely on luck either."
    Additionally you said: "Your suggestion a well rounded person should be both an investor and a trader". I don't think I said either of those things.

     

    Additionally you said:
    "should you have an interest in what appears to
    be a needed expansion in your thinking."
    I don't think you know me well enough to infer that. Perhaps we all need expansion in our thinking so I will take your point in a positive way and disregard my first reaction that you were calling me obtuse.

     

    I do think I was lucky to have been born among family members who taught me to learn, work hard, and help others when we can. I value those traits in others and hope that those traits will be carried on by my children.

     

    I think a well rounded person should be knowledgeable in art, philosophy, literature, history and many other things not specific or relevant to investing. I would prefer to talk about any of those subjects rather than investing.

     

    In my humble opinion I have worked hard and invested carefully. I am trying to keep my assets increasing in value at a greater rate than inflation will deplete them. I continue to use fundamental financial analysis when looking at individual stocks and invest using that analysis among other things. Luck, chance or a "black swan" event may occur at any time which can affect an investment outcome. Such is life and that is why despite our best efforts in analyzing risk we are not always correct. That is why I rely on diversification as my fundamental premise now. I suggested index funds as an alternative for people who have neither the skill nor the patience to do their own research. There are many such investment vehicles that can be used either long, short or situation specific. Those people should probably not be choosing that course without professional assistance.

     

    I further pointed out that under your definition of traders that many of us conservative investors might fit your rigid criteria. Again I don't like labels. Put quite simply if the facts change (macro or micro) I may change the makeup of my portfolio and I may do it quickly. For example, I have followed the coal industry for many years but I am not an investor in that industry now. I am also long OLN. Not coincidentally the current US President influenced both of those decisions. (Thank you Mr. Obama for letting us know your stance on coal, guns and the Keystone pipeline.)

     

    In the spirit of full disclosure I have had some success in my portfolio management but far higher returns in real estate that I could actively develop, manage and occasionally sell. I rarely give advice but I do comment (on SA) on specific companies that I have researched. The junior miners have intrigued me for years but are not for most investors (including me). Getting back to the specifics of this thread I am long NEM but have sold covered calls against my long common position. I like NEM fundamentals but the Indonesian situation is worrisome right now so I am watching that stock closely.

     

    Again best of luck in your endeavors.
    9 Apr 2014, 05:47 PM Reply Like
  • TDWelander
    , contributor
    Comments (639) | Send Message
     
    To jjmc2001. Thanks for giving me info I can probably use. I did not expect it based on your previous blogs. Thanks.
    9 Apr 2014, 06:10 PM Reply Like
  • ted lujan
    , contributor
    Comments (860) | Send Message
     
    I like the junior P/M's. Today . As I write. Gold spot up $7.03: .73%: Silver up to $20.10: 1.64%. It appears like gold might have turned the corner and is heading to the 1400 range. Might not be a bad time to check Alexco (AXU) this is very interesting stock with a lot of potential that is dirt cheap. Zero Debt.
    10 Apr 2014, 01:25 PM Reply Like
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