Randgold (Nasdaq:GOLD) says it should beat its gold production for 2009, which came in at 488.255 ounces, although they didn't give specific numbers or guidance to where they think production could rise to.
But looking into the years ahead, Randgold said they estimate by the end of 2014 gold production should reach about 1.2 million.
This isn't a bad outlook when you consider some of the recent challenges they've had, including higher costs at their Loulo, Mali flagship mine, production issues and other significant setbacks.
Production is the strength of Randgold at this time, as the gold miner is increasingly find quality deposits, which point to more grams of gold found per ton of ore they mine.
So if they can get things under better control operationally and with costs, they could be a solid company in the years ahead.
Saturday, May 29, 2010
Randgold (Nasdaq:GOLD) says it should beat its gold production for 2009, which came in at 488.255 ounces, although they didn't give specific numbers or guidance to where they think production could rise to.
Gammon Gold (TSE:GAM) (NYSE:GRS) has reportedly invested $7.57 million in Golden Queen Mining (TSE:GQM) (OTC:GQMNF.PK). That'll give them a 6.1 percent stake in the company.
Golden Queen issued 5 million shares priced at $1.51 each, equal to an 8 percent premium over where it closed on Friday.
They are also issuing 1.5-year warrants to acquire 1.25 million shares for $1.66 a share, and another 1.25 million shares for $1.89 a share.
Golden Queen said they're raising the capital to help fund the operations at their Soledad mining project, located in Mojave, California, as well as working capital.
For Gammon, this continues their expansion strategy of investing in what they identify as quality companies with assets based in North America.
Citigroup (NYSE:C) said if continual concerns over the sovereign debt crisis with Greece and much of the European Union continues to weigh on investors, gold could reach as high as $1,500 an ounce by year's end.
Analyst Alan Heap said, “Certainly $1,500 an ounce is possible. Gold’s rallying despite dollar strength and it’s rallying because investors are once again concerned about sovereign risk.”
Even so, Citigroup is officially on record as saying gold will go to $1,250 an ounce.
Seems they're hedging both sides. Either way, if investor fears ease, the latter figure is expected, if they increase, we could see $1,500 and ounce, or possibly higher, depending on what happens over the next several months.
Strong gold prices has helped Centerra Gold (TSE:CG) reach the enviable position of being debt-free and flush with cash, which allows them to search out some quality acquisitions.
After the first quarter, Centerra had cash and short-term investments valued at $384.2 million, and adding to it on a consistent basis.
According to CEO Stephen Lang, he doesn't see it as absolutely vital to the company, but admits there would be value in adding a project which would bring them up to two million ounces a year.
“I don't think that with the projects we have in front of us that acquiring a third one is a necessity. However, we see value in getting up to a critical size of a million-and-a-half, two-million ounces a year,” Lang commented in an interview.
Lang added he would prefer a project in the later stages of exploration or early stage of development, and which would be located in Asia generally or central Asia more specifically.
Friday, May 28, 2010
Fitch Ratings reaffirmed their BBB ratings on Goldcorp (TSE:G) (NYSE:GG), with their Issuer Default Rating, $862.5 million senior unsecured convertible notes, and $1.5 billion senior unsecured revolving credit facility, all retaining a BBB rating.
Goldcorp ratings are largely reflected in their mining locations, which are considered as being low in geopolitical risk; their strong project pipeline and large reserves, and their low-cost production, all of which produce the solid rating from Fitch.
A press release stated, "Fitch does not expect Total debt/EBITDA to exceed 2 times (x) when borrowing is at its peak and generally expects leverage to be below 1.5x. Should internal cash generation fall behind expectations, Fitch expects expenditures to be cut or to be supported by new equity issuance or asset sales."
Goldcorp guidance for gold production for 2010 is 2.6 million at a cash cost average of $350 an ounce.
Even with the massive correction in the third week of May, gold prices rose for the fifth day in a row, and in May have increased by 3.1 percent.
Gold prices Friday added another $1.11, or 0.1 percent, ending the day and week at $1,214.14.
For the month of May, gold prices rose $36.24, and for the year are up 10.9 percent, or $118.81.
Even if the sovereign debt crisis in Europe hadn't happened, the economic conditions would have still been right for gold to have continued on its upward run, but now with that enormous threat hanging over the market, it should spur it on even more, possibly at quicker rates than expected, depending on how the crisis unfolds.
Fitch Ratings just downgraded Spain debt from AAA to AA+, generating more concern, which should cause investors to pour more money into gold to protect their capital.
After attending the Investor Day of Newmont Mining (NYSE:NEM), a number of analysts were impressed, but Citigroup (NYSE:C) said even after the positive outlook, their top pick among gold miners is Barrick Gold (TSE:ABX) (NYSE:ABX).
While reiterating their "Hold" rating on Newmont, a Citigroup analyst said, "our top pick in gold is Barrick."
Barrick was down in New York and Toronto before the onset of Memorial Day weekend, usually considered the start of summer vacation time in the U.S.
In New York Barrick closed at $42.08, down 36 cents, or 0.85 percent, while in Toronto they closed the day at $44.30, down 31 cents, or .69 percent.
Volume for Barrick Gold on both exchanges was far below their 3-month average.
At a Thursday analyst day, Newmont Mining (NYSE:NEM) confirmed its 2010 production guidance of 5.3 million to 5.5 million ounces of gold at a cash cost of $450 to $480 an ounce.
Gold production at the gold miner will be maintained at levels of over 5 million annually, generating speculation as to whether the company may be looking to increase its acquisition activity.
Being flush with cash, Newmont is also may increase its regular dividend, and possibly issue a special dividend which would give more cash to the company's shareholders.
Analyst Tanya Jakusconek, from National Bank, increased her price target on Newmont Mining from $60 a share to $66 a share, while maintaining a “Sector Perform” rating.
Barrick Gold (TSE:ABX), Red Back Mining (TSE:RBI), Iamgold (TSE:IMG) were all down today, as Candian stocks fell, led by commodities producers and banks. This is the first drop in the Canadian market in three days.
This follows gold investors again selling off some of their gold and other precious metal holdings in order to cover equity losses.
The dollar also rose in value, which put some downward pressure on gold futures, which are down slightly on the day.
All three gold miners remain down as of 1:00 p.m. EDT.
Thursday, May 27, 2010
SPDR Gold Trust (NYSE:GLD) has filed with the SEC for a follow-on offering of 239.3 million shares, a huge 57.5 percent increase in shares of the gold ETF.
Shares available now are 416.4 million, and after the offering, would increase to 655.7 million.
This could temporarily dilute the share value in the company, but the extraordinary demand for gold should help balance that off and overall increase the value of the company, and it shouldn't take long for the added number of shares to retain and increase in value.
SPDR ended Thursday session at $118.69, up $0.22, or 0.19 percent.
Jaguar Mining (TSE:JAG) ,Gabriel Resources (TSE:GBU), Greystar Resources (TSE:GSL) Down, on Otherwise Good Gold Day
While most gold miners continue their upward climb, that was unfortunately not true for all of them, as Jaguar Mining (TSE:JAG), Gabriel Resources (TSE:GBU) and Greystar Resources (TSE:GSL) all bucked the trend in negative way, at least on the Toronto exchange.
Jaguar was in the positive side in New York, ending the session up by $0.06, or 0.66 percent. They closed at $9.16.
There was no apparent reason for the drop in the price of these gold miner's share, as no news came out which would have caused the share prices to fall.
In Toronto, Greystar closed at $3.83, down $0.02 or 0.52 percent; Gabriel closed at $3.94, a loss of $0.19 or 4.6 percent; and Jaguar closed at $9.64, down $0.12, or 1.23 percent.
Silver Standard Resources (SSRI) announced today they appointed John Smith as Chief Executive Officer of the company, with his official starting day August 6, 2010.
Until the time Smith assumes his responsibilities, Interim President and CEO Mike Anglin will continue to serve in that capacity. At that time, Anglin will resume his role as director.
Smith comes from BHP Billiton (NYSE: BHP) where his last position was as Vice President, Resourcing and Development.
He was also CEO of BHP Billiton Mitsubishi Alliance, which operates a large coal operation in Queensland, Australia.
SSIR finished the day at $18.14, an increase of $0.35, and a 1.97 percent rise.
Today Seabridge Gold (AMEX:SA) said it has started to drill at its KSM project in the Stewart, British Colombia, Canada area.
KSM, which is 100 percent owned by Seabridge, said the purpose of the drilling will be to convert its existing mineral resources to proven and probable reserves to a larger amount.
The Iron Cap zone of the project will also resource definition drilling conducted in it, in areas where previous drilling had identified the possibility of a fourth significant deposit at KSM.
Seabridge ended the session at $35.14, up $0.73, or 2.12 percent.
Rubicon Minerals Corp. (AMEX:RBY) (TSE:RMX) is up over 10 percent today as they announced a gold discovery in the Red Lake Gold District of Ontario, at their Phoenix Gold Project.
The Phoenix Gold Project is 100 percent owned by Rubicon, adding to the potential value of the discovery for them.
They desribed the actual discovery this way: "...results from drill hole 305-05 at its 100%-owned Phoenix Gold Project. Reported lengths are thus interpreted to be true thicknesses. The hole intersected 1.24 oz/ton gold over 22.6 feet (42.5 g/t gold over 6.9 metres) part of a broad vein zone grading 0.59 oz/ton gold over 49.2 feet (20.1 g/t gold over 15.0 metres).
"This is a very important as well as impressive drill hole. It demonstrates excellent horizontal thickness and outstanding gold grade in the F2 Core Zone and is significant from a potential mining standpoint. Drilling to date extends the F2 Core Zone vertically for at least 1968 feet (600 metres). This suggests significant tonnage potential can be developed in this zone alone, which is only one of numerous zones we have discovered to date within the F2 Gold System. We are excited to have commenced drifting and we look forward to seeing the F2 Core Zone up close underground. In the meantime, we have a total of six rigs exploring the F2 Gold System" said David Adamson, President and CEO, in a press release.
Although gold futures have been quiet and level today, gold miners Freeport-McMoRan (NYSE:FCX) and Newmont Mining (NYSE:NEM) are up, with Freeport rising almost five percent and Newmont increasing by a little over 3 percent as of 1:00 p.m. EDT.
These are evidently investors and not speculators and traders mostly driving the prices, as volume was about normal for the 3-month average for both companies.
A growing number of analysts are recommending larger gold miners for investors, even though it seems the junior gold miners will make investors more money.
But the large miners like Freeport and Newmont are much safer and have a more predictable future, whereas junior miners will continue to be all over the place until they receive the type of financing which brings them to more stable players.
Watch the investment money in the companies to see who will emerge in the case of the miners, as if the projected resources their mining can be confirmed as real, then it's just a matter of finding those willing to invest in them to bring the resources out.
Wednesday, May 26, 2010
David Einhorn, hedge fund manager of Greenlight Capital, said he's increasing his exposure to gold, and has bought African Barrick Gold (LON:ABG) shares, primarily because they're lower priced than other miners.
Einhorn recently said at an investment meeting of Greenlight Capital, that 'We tend to think of gold as a currency, I think there's going to be a lot of inflation."
Citing the sovereign debt crisis in Greece, and by extension, the overall European Union, Einhorn added that Greece could be the initial signal that the "sovereign debt bubble" is bursting, and it could easily expand to the United States.
One problem Einhorn recognizes correctly, is the difficulty in finding out the real conditions of American banks, which he says in many cases are nowhere near capitalized enough.
That was pointed out recently in an article in the Wall Street Journal, which noted that even the usual practices of hiding the real numbers before a quarterly report seems to have prolificated with some of the major banks in the country, making it even harder to know they're real level of health.
All the more reason to invest in gold and gold miners.
NovaGold Resources (AMEX:NG) (TSE:NG) President and Chief Executive Officer, Rick Van Nieuwenhuyse, seems to have a gift for attracting big players and big money to invest in the company, and that has paid large dividends for them at crucial times of their growth cycle.
Some of those investing in NovaGold Resources include billionaire Thomas Kaplan through his Tigris Financial Group, John Paulson with his Paulson & Co. hedge fund, and George Soros with Quantum Partners Ltd.
In the early part of 2009 they also reached a financing agreement with Electrum Strategic Resources, which saved their major Donlin Creek and Galore Creek projects.
Assuming good gold finds, the secret to success for junior gold miners really isn't a secret, it's who can secure financing for their projects in order to bring them online.
With the track record of Rick Van Nieuwenhuyse and his team, it looks like NovaGold will have a long and successful run, as he recently stated they have enough financing for the next three years.
If they're operationally sound and focus on cutting costs, once they are in strong gold production they should get some great returns for their shareholders.
In addition to gold, they also have copper, silver and zinc resources.
AngloGold Ashanti (NYSE:AU) and Newmont (NYSE:NEM) will not be immediately affected by the increase in royalties from Ghana, the second-largest gold producer in Africa, behind South Africa.
Royalties for other gold miners in the country have been increased from 3 percent to 6 percent, with some like AngloGold Ashanti and Newmont Mining receiving temporary exemptions.
Gold production in Ghana stood at 2.9 million ounces in 2009, with gold prices increasing from $930 at the end of 2008 to $1,100 at the end of 2009, a 11.5 percent rise.
Ghana Chamber of Mines Chief Executive Joyce Aryee said this to Reuters about the situation, "Ghana does not have all the infrastructure in place ... so the government signed such stability agreements with the mines to promote their investment and also to ensure that too many goal posts will not be changed too quickly."
It's unclear as to how long AngloGold Ashanti and Newmont Mining will be exempt from the increased royalties, as official stated the stability agreement is under review in order to see if the exemptions need to be changed in any way.
I haven't heard anything, but I'm sure their competitors are putting pressure on Ghana officials to change the exemptions.
About a third of future cashflow for Goldcorp (TSE:G) (NYSE:GG) is projected to come from Mexico, which is ramping up its latest project in Mexico, the Penasquito mine, in the third quarter.
Goldcorp invested about $1.7 billion in the project, which is expected to produce close to 1 million gold equivalent ounces a year for the company.
By the early part of 2011, the company should be working 130,000 tons a day.
Penasquito will match the largest existing gold project of Goldcorp, their Red Lake project in Ontario, which includes the expansion they're doing there over the next two years.
Investors are excited about Goldcorp because of their growth profile, which is estimated to bring up to 2.6 million ounces of gold in 2010, at a cash cost of $350 an ounce, an increase from the 2.4 million ounces produced in 2009 at $295 an ounce.
For the next five years the company is projecting a 50 percent increase in production, based for the most part on the Penasquito project, although they have other mines scheduled to come on line, like the Pueblo Viejo in the Dominican Republic, where gold production should launch in 2011, and estimates of 400,000 ounces of gold produced in the first five years.
Rising costs have put some pressure on margins and earnings, but the company still looks very solid, and with gold prices sure to continue rising, that'll be largely widened.
Costs have come under better control at Goldcorp and the gold mining industry in general, as energy and equipment costs has risen in response to growing demand.
Going forward, analysts are looking for profits for the year to grow 46 percent over 2009, to $1.17 a share, and another 41 percent in 2011.
Tuesday, May 25, 2010
Hecla Mining Company (NYSE:HL) announced their Board of Directors has declared a regular quarterly dividend for their Series B Cumulative Convertible Preferred Stock.
For each share of those shares, the owner will receive $0.875, equivalent to about $138,000.
Shareholders of record as of June 15, 2010 will be paid on July 1, 2010.
Total shares outstanding of Preferred B Stock is 157,816.
Also declared was the regularly quarterly dividend on the outstanding 6.5 percent Mandatory Convertible Preferred Stock. That amount will be $1.625 a share, which the dividend will be paid in common stock of Hecla. That comes to about $3.27 million, in addition to cash for fractional shares.
Hecla has a 52-week range of $2.26 - $7.47 a share, and recently plunged, as did most mining stocks, with the correction in gold and metals emerging last week.
As confidence in paper currencies continue to wain, sales of gold coins in the U.S. has soared in May, already twice what it was in May 2009, with several more days to go before the month ends.
So far in May, 158,000 ounces of gold coins have sold in the U.S., according to the U.S. mint.
Gold coins aren't used primarily for investment purposes, but for an alternative currency for those who believe geopolitical events, or the debasing of the currency could render paper money worthless, or at minimum, of little value.
When news of the bailout of Greece was agreed to by German officials, the people of Germany bought up all the available physical gold they could, and there wasn't near enough to go around, and supply wasn't close to meeting demand.
Germany has experienced the failure of their currency in the past, and the people of Germany know it could happen again, the reason why they ordered or bought every coin available.
Gold coin demand will continue to soar, as there's nothing out there that will change the direction we're going, and politicians have committed to extraordinary debt and printing of money in order to keep their jobs at all costs, as the general public still doesn't realize what the endless bailouts, government debt, and printing of paper money is going to them in the long run.
That is slowly changing, and hopefully enough will learn to not only make it through this crisis, but to help change things forever.
At this time, all of us should have some gold coins put away somewhere in case of emergency, and it'll hold its value no matter what happens to the existing currencies.
Make your decision before it gets impossible to acquire gold coins. If things continue to get worse, it'll get harder and harder to get hold of gold coins, and a lot more expensive as well.
SPDR Gold Trust (NYSE:GLD) continues to increase their holdings at a record level, as each time the add to their physical holdings, they are now breaking a record, although occasionally they do divest of gold for a variety of reasons.
I doubt if we'll see much of that going forward though, as demand for physical gold continues to go up in the face of the devaluing of currencies around the world and potential social unrest, which has already begun in some nations.
For SPDR, they continue to move in step with gold prices, and there was also an increased short interest in the gold ETF in the first half of May, with close to 29 million shares being shorted, up from around 14 million shares from the last reporting period.
Physical holdings in gold as of about 6:50 p.m. EST, stood at 1,267.32 tons, or 40,745,654.26, another all-time record.
The value of the gold at today's gold prices is $48,806,853,742.68.
Almost everything happening in the world today lends itself to gold continuing to rise, and even when traders and speculators enter the market (or leave it) like they did last week, the strength of gold is such that even now it's poised to resume its upward run, as gold prices today close just beloew $1,200, and have surpassed it in after-hours trading.
With the end of the recession nowhere in sight, sovereign debt crisis in Europe, China dealing with inflation, and now the psychotic North Korean leaders rattling their sabers again, this time beyond what they've done in a long time, gold is becoming the place to be, and those companies connected to the gold market, like gold miners and ETFs, etc, will continue to rise, as the only surety we have now is that there will continue to be volatility across all of life, which makes gold the only reliable source of safety left for people to put their money in.
Once gold breaks $1,200 an ounce again, there shouldn't be much resistance to it approaching its previous high, and test the $1,250 mark again.
The only thing that kept it from soaring past that already was the covering of positions speculators did last week, which made them sell off their gold assets in order to do that, as well as some taking profits as well from the prior runup in prices. Absolutely nothing has changed since then, and economic and geo-political situations are even more concerning in the last few days, with Spain taking over their first bank in the country over the weekend, reinforcing the legitimacy of concerns over the region.
In the gold mining space, Newmont Mining (NYSE:NEM), along with major competitor Barrick Gold (NYSE:ABX) (TSE:ABX), are considered the top gold companies for value investing, with expectations they'll outperform rivals Goldcorp (NYSE:GG) and Kinross Gold (NYSE:KGC), according to Deutsche Bank (NYSE:DB) analyst Jorge Beristain.
Deutsche Bank retained its "Buy" rating on Newmont, which Barrick Gold was upgraded to, while Goldcorp and Kinross have "Hold" ratings on them now.
Newmont fell last week as speculators and traders had to sell off some of their gold to cover losses elsewhere, but they will rebound with the price of gold, and volume of trading shows that investors have re-entered the market, while the speculators and traders - at least for now - seem to have stayed on the sidelines.
Goldcorp (NYSE:GG), Kinross (NYSE:KGC) Should be Outperformed by Barrick (NYSE:ABX), Newmont Mining (NYSE:NEM) says Deutsche Bank (NYSE:DB)
Deutsche Bank (NYSE:DB) analyst Jorge Beristain probably didn't win any friends from Goldcorp (TSE:G) (NYSE:GG) and Kinross Gold (NYSE:KGC) today, as he upgraded major rival Barrick Gold (TSE:ABX) (NYSE:ABX), and reiterated their "Buy" rating on Newmont Mining.
What he added I'm sure ruffled their feathers, as he said Barrick and Newmont should outperform Goldcorp and Kinross in the current economic environment.
Beristain also said the changes in the macro economic picture makes the gold situation even more compelling, as he raised his price targets for gold in 2011 to $1,450, and in 2012 to $1,600 an ounce.
His price target was raised on Barrick from $45 to $53.
Monday, May 24, 2010
Golden Star Resources (AMEX:GSS) had a big day today, along with other gold miners and gold futures as well, ending the session up 4.2 percent, or 17 cents, closing at $4.22.
Volume was down from the 3-month average of 3,488,360, with 2,437,232 share changing hands.
Many of the gold miners acted this way today, and it's probably from the exit of traders and speculators from the market, and investors moving back in to grab up some bargains.
Last week they took their profits or sold their gold to cover losses in other markets, which brought down the price of gold and gold miners significantly, as most of you know.
That should change this week, but there are so many economic variables again out there, we'll have to wait and see. Overall though, I anticipate better upward movement in gold prices and gold mining stocks this week.
After last Friday seemed to indicate speculators and traders had pretty much left the gold market, as gold prices began to rebound then, that continued on today, with gold futures prices moving up nicely, with Eldorado Gold (NYSE:EGO) and Iamgold (NYSE:IAG) joining in the rebound.
Eldorado finished the session at 16.10, up $0.37, or 2.35 percent. Volume was about level with the 3-month average.
Iamgold (NYSE:IAG), coincidentally, was up the same $0.37 Eldorado was, a 2.3 percent gain for them. They finished today's session in New York at $16.45.
Volume for them, like a number of gold miners today, was off, down to 3,173,540, from the 3-month average of 4,289,440.
Barrick Gold (TSE:ABX) (NYSE:ABX) and Newmont Mining (NYSE:NEM) rebounded with gold prices today, which reached toward the $1,200 an ounce mark again, before falling back some later in the day.
Barrick pushed hard during the day, but dropped in the latter part of trading as well, although though still finishing the session up a little, and increasing more in electronic trading. Barrick finished at $41.12, up a dime or 0.24 percent.
Volume plunged from its three-month average in New York, with 6,721,617 share trading hands, far below the average 11,310,300. In Toronto Barrick finished down by a little over 1 percent, ending the trading day at $43.48.
Newmont had been up most of the day, but also dropped near the end of the session to break even, closing at $52.34. After hours they started up again, hitting $53.40 a share at 5:30 p.m. EST.
Glenn Beck in an interview with Bill O'Reilly made New York congressman look just what his names says he is, a big "Weiner," as proof of the quality gold company Beck represents was given, and obviously this clown is running for cover.
The worst thing about it is that Anthony Weiner may have been backed by some higher ups to make Beck look bad, and he's the typical leftist, socialist who believes he has the right to tell Goldline, the company in question, how much profit they should make on their antique coins.
Since when did the big Weiner get some expertise in business and the gold market? All types like him can do is push to tax the productive to redistribute their money in the usual socialist wet dream of a utopian society.
So what type of rating does Goldline have in the industry? According to the New York Times, it is A+.
This was a stupid move by Weiner, who is losing all credibility in the attempted oppresion of Beck, and is looking unusually stupid, even for an anti-business liberal, socialist like he is.
Fronteer Gold (AMEX:FRG) has made a nice move this year, with a 52-week range of 2.85 - 6.37, and as of today standing at $5.57 a share, a gain of 26 cents, or 4.90 percent. That was as of 1:05 p.m. EST.
A number of analysts and investors think Fronteer has a lot of upside to it, and that could be the case.
Fronteer reported a new resource estimate for its Long Canyon Gold project last week:
-- A Measured and Indicated (M&I) resource of 672,000 ounces at an averagegrade of 1.71 g/t gold (12,240,000 tons); and,-- An additional Inferred resource of 552,000 ounces at an average grade of1.65 g/t gold (10,394,000 tons).
A couple of good things Fronteer has going for them is their projects are primarily located in stable regions, including Turkey, and in the U.S. - California and Nevada.
They're also in a strong cash position, where they won't have to incur any more debt, with cash and Short-term deposits coming to $147. million, as of December 2009.
According to Fronteer, this should provide the majority of, if not all, cash they need for operations, exploration and acquisitions for a least a year, and probably longer.
Gold futures prices are on the rebound today as a demand for a safe haven again has dominated the market, and investors invest to preserve their wealth. This was the highest gain for gold, which may be at the end of the correction, after speculators took their profits after a strong increase in price.
Another reason for taking gold profits last week was investors had incurred losses in other markets, so they had to cover those losses with the strong profits they received from gold, which had been on a roll. Gold ended the week down by 4.2 percent, the deepest plunge since December.
Continued economic concerns in the European Union are also contributing to today's rise, making gold again the choice as the most safe place to stash our money.
The market is still regurgitating the news that the Bank of Spain has taken over a major savings bank in the country, CajaSur, which has experienced major defaults because of the ongoing recession. Most believe this is just the first of many which will fail, with the depth of the failure an unknown, but one that will continue to rock the markets, and drive up the price of gold.
Gold was up to $1193.50 an ounce, or $16.50 as of 12:30 p.m. Est.
Saturday, May 22, 2010
Gold miners are probably all glad the brutal gold correction of last week seems to have taken a breather, as gold prices, along with the price of gold mining shared plunged, and gold miners like Alamos Gold (TSE:AGI) and Agnico Eagle Mines NYSE:AEM)(TSE:AEM) participated strongly in that drop in share price, along with most of their colleagues.
Alamos Gold ended their week on the upswing, gaining 0.41 percent, or 6 cents a share in Toronto. Volume also fell, seeming to imply traders may have taken their profits during the last week, and are for the most part out of the gold market temporarily. That would be good news overall for gold prices and gold miners, which should start to move upward again now that speculators, for now, are largely gone.
Alamos finished the week at $14.87 a share.
Agnico Eagle (TSE:AEM) had a tougher week, dropping 0.35 percent in New York, or $0.20 a share. As usual, volume as measured by percentage and numbers was higher in New York for Agnico, finishing Friday with 3,956,943, up from the 3-month average of 2,994,710. Share price closed the week in New York at 56.56.
In Toronto, Agnico was also down, dropping 1.22 percent, or $0.74 a share. Volume by percentage was much lower than the 3-month average, ending the day at 576,366, down from the 3-month average volume of 821,027. Shares finished the week at $60.09.
Friday, May 21, 2010
Ivanhoe (TSE:IVN) (NYSE:IVN) is close to securing financing for its Oyu Tolgoi project, one which will bring them into the top tier of mining companies in the world.
On Friday they signed a preliminary agreement with the World Bank Group's International Finance Corp. and the European Bank for Reconstruction and Development.
Each financial institution could provide up to $300 million each to finance the project, while also working to garner another $1.2 billion from commercial lenders.
The package with the two financial institutions would be offered in two stages.
Other financing for the $4.6 billion project could come from export credit agencies, which could bring another $500 million for the project.
Ivanhoe is partners with the Mongolian government, and Rio Tinto (LON:RIO) (ASE:RIO) in the venture.
Novagold Resources (AMEX:NG) (TSE:NG) ended the week with a nice gain, as it partook of the brutal week for gold prices and gold mining stocks, which got hammered after a strong run-up, which set record gold prices levels.
This wasn't unexpected, as speculators took profits after the extraordinary increase in gold prices.
Novagold ended Friday up by $0.12, or 1.82 percent in New York, finishing at $6.72 a share. They did lose some of that in after hours trading. They almost mirrored that in Toronto with gains of $0.11, or 1.55 percent.
Volume in New York was well above the 3-month average of 2,974,610, rising to 4,595,657.
Kinross Gold (NYSE:KGC) (TSE:K) finished the Friday session slightly up in New York, as a number of gold miners began to rebound a little after a brutal week where they were down, as speculators took profits after a stretch where gold prices surged to record highs, reaching the all-time high of $1,249.70 an ounce before the sell-off.
The gold producer didn't do quite as well in Toronto, but that was the pattern for Friday.
In New York, Kinross ended the day up 4 cents, or $0.24 percent higher.
After a large number of gold miners had volume much higher throughout the week, things settled a little back more toward normal, and that was the case with Kinross, which was a little above the 3-month average of 6,162,850, ending at 7,040,665 for the day.
Barrick Gold (NYSE:ABX) (TSE:ABX) was able to end the week on a positive note, after a tough week of following the price of gold down, dropping to $39.95 today before rebounding to close at $41.02, small increase of $0.02, or 0.05 percent rise.
That was a significant move in that the price of gold continued its correction, dropping $6.31 to $1,177.65. For the week gold was down 4.3 percent, or $52.78, after breaking an all-time high last week of $1,249.70.
This could be a sign that things are beginning to level off as speculators and traders take profits.
We may see gold begin to rise again next week, as the fundamentals causing the rise haven't changed, and there's nothing to indicate they'll change anytime soon.
With Barrick being a bellwether of the industry, it probably signals a rebound in gold prices and gold mining stocks is about to begin, but that assumes nothing unusual happens over the weekend that could change that outlook.
Gold prices today dropped another $6, bringing the ending total $1,177 an ounce, after falling as low as $1,176.10 on the Comex in New York. For the week, gold prices fell by 4.2 percent, the worst decline since early December.
There were a variety of reasons for the fall, with some of it being traders had large losses in equities, and had to cover the losses by selling gold.
A correction in gold prices was expected, and the metal had been surging for some time, and after reaching an all-time high of $1,249.70 on May 14, it was inevitable it would have to correct, and the correction has been steep because of other factors like the EU debt debacle and rising inflation in China.
But for the most part, this probably not much more than the speculators taking profits after the big run-up in gold prices, and once that settles, we'll see gold prices resume their upward climb, as nothing in the fundamentals has changed.
It's also a good time to take a larger position in gold with the prices down so much.
We continue on in the gold correction, and it of course generates the question of how low gold prices will go before they start their move upward again.
The best thing to consider at this time with gold prices is not how low they will go, but using it as a buying opportunity as it falls, as there's absolutely no doubt gold will rebound, and when it does, those getting in on the lower prices will benefit strongly from it.
In other words, resist the temptation to try to time the gold price drop in the sense of how low it will go, trying to get in at the absolute bottom, and instead buy in at a good point, which now has already dropped from the high which reached just under $1,250 an ounce, to $1,183.70 an ounce as of 12:00 p.m. EST today.
How long that kind of fall will continue is unknown of course, but when you have a correction of almost $50 an ounce, you want to take a seriously look at buying more gold for sure, as the plunge can't continue with the favorable conditions for gold we're in at this time.
Thursday, May 20, 2010
NovaGold (AMEX:NG) CEO and President Rick Van Nieuwenhuyse said earlier in the month that the company has reversed its setbacks over the last three years and is now set financially for the next three years, referring to the financing secured by the gold miner.
Much of the financing required by NovaGold was secured through investment from hedge fund Paulson & Co. and Quantum Partners, which brought them $175 million to help with their capital needs.
Another strategic and important source of financing came from Electrum Strategic Resources in the early part of 2009, which allowed NovaGold to retain its interest in important assets of Donlin Creek and Galore Creek. They also had enough to deal with operational issues at its Rock Creek project, which they should be able to comply with regulations and get it back up and running.
Although the company is going through a correction related to the overall gold price correction, it is close to increasing production and getting going on all cylinders, which should make shareholders happy, and the company very profitable.
Just about every gold miner has been experiencing the correction in gold prices, and Iamgold (TSE:IMG) (NYSE: IAG) was no different, taking it on the chin Thursday, dropping 6.14 percent in New York, or $1.05, and 4.04 percent in Toronto, or $0.72.
Volume didn't swing as much as it did with other gold mining stocks, as they were relatively within their 3-month range, up to 7,439,012 in New York, compared to the 3-month average of 4,280,140, and in Toronto it was real close, increasing to 3,685,424, while the 3-month average volume is 2,659,430.
On the NYSE, Iamgold finished the session at $16.05 a share, while in Toronto they were down to $17.11 a share.
Recent good news for the gold miner is they're ahead of schedule on their Essakane project, now close to half a year ahead of the original projected start-up, and now from four to six weeks ahead of the revised start-up estimate.
Projections for Essakane are to produce about 500,000 ounces of gold by the end of 2011 from the startup date, with cash costs of between $400 an ounce to $410 an ounce.
Goldcorp (NYSE:GG) (TSE:G), Barrick (TSE:ABX) (NYSE:ABX) and Newmont Mining (NYSE:NEM) continue to follow the price of gold down in the midst of a temporary correction, as increased worries over the debt crisis in the European Union, consequences from banking regulation, and China inflation weighs on the market.
All three of these major gold miners are now down over 10 percent each since Bear Stearns ceased to exist, but I look at this as a great time to prepare to buy, as gold will come roaring back, as the fundamentals are too strong for it to linger lower for a long period of time.
It has been a while since a significant correction, so we need to watch and be ready to enter back in, while not waiting too long in an attempt to bottom feed too much, i.e., try to time our entry as the lowest price level.
Goldcorp closed in New York, down by 3.56 percent, or $1.51. Barrick Gold was down 3.98 percent in New York, or $1.70, while Newmont dropped 4.48 percent, or $2.44.
Almost all gold mining stocks are trading at a much higher volume than normal, especially in New York.
South African miners Gold Fields (NYSE:GFI) and AngloGold Ashanti (NYSE:AU) continued their plunge, along with the prices of gold today, as the gold correction continues, and investors put their money into what they consider safer investments.
Many investors have also been taking profits from the recent soaring gold prices, as well as the shorts have been betting against it, pushing down prices even more.
In New York, Anglogold was donw 3.72 percent of $1.52 with volume at 3,167,022, far above its 3-month average of 1,978,980.
Gold Fields ended the session down 2.62 percent, or $0.34, also in New York.
Volume on the day was 9,511,019, up from their three month average of 6,013,870.
At a gold mining summit in Peru this week, heads of Barrick (NYSE:ABX) (TSE:ABX), Gold Fields (NYSE:GFI), Newmont (NYSE:NEM.N) said they're looking to increase exploration close to their existing mines (brownfield exploration) as a way increase gold production at lower costs. There is also much less risk, as they're in a proven find area.
The reason for this, while for the reasons above, is also to quickly take advantage of the soaring demand for gold, which will surely continue on, but when it takes about 10 years to bring a new mine online, it's impossible to project out where gold prices may be at that time, and what the demand will be also.
It's highly probable gold prices will continue to rise for several years out, and could extend longer. That's why the gold miners want to quickly get as much out of the ground as they can in order to tap into this high prices and demand at the peak of the ongoing gold bull market.
Wednesday, May 19, 2010
Kinross Gold (NYSE:KGC), Goldcorp (NYSE:GG) and Hecla Mining (NYSE:HL) Plunge - Traders Take Profits
Kinross Gold (NYSE:KGC), Goldcorp (NYSE:GG) (TSE:G) and Hecla Mining (NYSE:HL) all plummeted today as traders took an opportunity to take their profits as gold prices surged over the last couple of weeks.
Hecla Mining was down the most by percentage, with a decline of 5.59 percent, or 33 cents. Volume for them, like the other gold miners, was up way above the 3-month average, increasing from 11,059,600 to 17,830,378.
Next in line for falling the most by percentage was Goldcorp, dropping 4.89 percent, or $2.18. Volume for them was up in New York and Toronto, with New York volume increasing from 8,855,830 for the 3-month average, to 14,062,060 for the day. In Toronto volume increased from 2,873,010 for a 3-month average, to 4,062,060 on the day.
Right behind Goldcorp was Kinross Gold, which fell by 4.67 percent, or 85 cents. Volume for them wasn't as dramatically up as their competitors, but did rise from their 3-month average of 6,115,340, to 8,951,447.
NovaGold Resources (AMEX:NG) (TSE:NG) was punished hard today, dropping 9.51 percent, or $0.76.
Funds and ETFs which had Novagold as one of their components also went down with them, although they were far from the only drag on the market.
Trading volume for NovaGold was higher than usual reaching 5,803,181 for the day, while normally averaging 2,848,640 over the last three months. The stock also dropped below its 50-day moving average of $7.78 a share.
Novagold ended the day at $7.32 a share, and has stayed there in after hours trading as of 7:30 p.m. EST.
There's no doubt we're in a short period of a correction of gold, which is always going to be inevitable as the gold bull market continues.
All this means is those selling the gold aren't investors but traders, and they're foolishly selling their positions to draw out a little of the profit coming from the quick rise in gold prices over the last week or two.
Gold is now well off its recent record all-time high of $1,249.50, down and hovering around $1,191 an ounce off and on during the trading session.
This is a good thing in my view, as it gets rid of the players, while leaving the gold investors in the market. It's also a great opportunity to buy some more gold with the decline, although some think it could drop by another $20 an ounce before it begins its upward climb again.
We don't worry about trying to exactly time the bottom though, as it's a good way to lose a lot of money when the price of gold starts to rise, which will cost you more if it's too late. It's better to just invest when it's dropped a good amount like now, than attempt to squeeze out every penny you can from the downward move.
Either way though, this correction was expected, and you should expect more as players enter the market and bid up the price over a relatively short period of time. They will eventually exit the market, and we go back to the underlying fundamentals, which will continue to drive the price of gold up for a long time to come.
Gold futures prices have been getting hit hard today, and to of the largest gold miners are sliding with them, as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) have dropped significantly by midday, while gold prices plunged by over $32 an ounce by 12:00 p.m. EST.
After hitting their highs earlier in the month, both companies have fallen off by about the same percent, between 5.8 percent and 5.9 percent, depending on how the prices are fluctuating at the time.
This isn't much to be concerned about, even with gold prices falling by over $50 an ounce since their Friday record high of $1,249.50. This was inevitable with the quick upward gold made, so it should be considered a buying opportunity rather than a bubble bursting.
The reason why is we're not even close to entering bubble territory yet, and the economic news coming out continues to be contradictory; the reason why so many ups and downs are and will continue to be experienced.
Even so, gold prices and gold mining companies, for the most part, will continue to rise, although the journey will be one filled with a lot of bumps along the way.
Gold prices today will get hit hard, but it won't be long before they begin to climb again.
Tuesday, May 18, 2010
Novagold (AMEX:NG) Iamgold (TSE:IMO) Barrick Gold (NYSE:ABX) (TSE:ABX) Randgold Resources (Nasdaq:GOLD) Added by Paulson & Co
John Paulson continues to like the gold market, and he backed that up with four new positions for his Paulson & Co. hedge fund, adding Novagold (AMEX:NG), Iamgold (TSE:IMO), Barrick Gold (NYSE:ABX) (TSE:ABX) and Randgold Resources (Nasdaq:GOLD), growing the number of gold investments to his already-significant gold positions in SPDR Gold Shares (NYSE:GLD), which is the largest holding in the fund, Kinross Gold Corp. (NYSE:KGC), and AngloGold Ashanti Ltd. (NYSE:AU).
Competitor George Soros, in my opinion, wrongly, reduced his stake in SPDR Gold Shares (NYSE:GLD) by just under 10 percent.
I believe we are far from any type of gold bubble as Soros has stated in the past, and think he's misreading the market by only measuring the idea of a bubble by the price of gold going up, rather than who it is that is investing in it.
There won't be a gold bubble until a huge number of non-institutional investors enter the gold market, and then the underlying fundamentals will have to had reached their full play before a bubble can be formed, let alone burst.
A bubble happens when there is no reason for the price of something going up. If there is a reason, it doesn't matter if the price is bid up, as it is based on fundamentals, whether or not the investors know it or not.
Not only is there very little to cheer about in the global economy, including the U.S., but there is more pressure and danger now than there ever was with the housing bubble and banking bailouts.
Now we're talking of entire countries being bailed out, and inflation in China being a real threat to demand for raw materials, which many around the world have been counting on for growth and an eventual and sustainable economic recovery.
All that may be off the table, and consequently, gold and gold mining companies should continue to go up in value and price as people continue to look for a safe haven outside of paper currencies.
Barrick (TSE:ABX) (NYSE:ABX), Newmont (NYSE:NEM) and Gold Fields (NYSE:GFI) all reiterated their commitment to plans to continue expanding existing projects in Peru, or to launch new mines in the South American country.
Barrick Gold is looking to expand the life of their Lagunas Norte mine, by going under the oxide ore to tap into the sulphide deposits. Barrick also continues to actively explore the country for new opportunities, as well as look at their existing gold mining projects as well.
Barrick has been able to mine their Lagunas Norte gold at a low cost of $138 an ounce.
Newmont (NYSE:NEM) executive vice- president Guy Lansdown, said they should produce from between 750,000 ounces to 810,000 ounces of gold from between $360 an ounce to $400 an ounce at their Yanacocha mine, which they have a majority stake in.
The Minas Conga project is on course to produce about 700,000 ounces of gold in 2010 at an estimated cost of $300 to $400 an ounce. There is a lot of copper at this project too. It should be fully operational by 2014 or 2015, said Lansdown.
Two projects Gold Fields is high on in Peru is its Cerro Corona mine and its Chucapaca project.
At Cerro Corona, the company should be able to produce about 400,000 ounces of gold in 2010 at a cash cost of around $300 an ounce.
The Chucapaca project will begin construction sometime in the next two and a half to three years.
The goal of Gold Fields, according to their CEO, is to produce about 1 million ounces of gold there on an annual basis.
Peru is the No. 6 country in the world for gold production.
Teck Resources (NYSE:TCK) (TSE:TCK-B) has gained back about two thirds of yesterday's 6 percent loss, as growing concerns over how China's battle with inflation will affect commodity demand.
The EU debt crisis has also generated a lot of questions as to how commodity demand will be impacted by the austerity measures many of the countries in the euro zone will have to take, as well as the enormous debt to again be incurred by those countries.
Strong exposure to copper and coal by Teck has shareholders and investors closely watching the large mining companies with exposure to those commodities which could struggle the most in a low-import environment.
China raising interest rates to combat its rising inflation will probably cause a decline in raw material demand, as the loose monetary policy getting tightened should cause construction to slow down some in the country.
Even relatively small decline in growth in China could cause major ripples, because of the enormous volume of imports the country uses to expand their economy.
Teck Resources will respond to the demand of raw materials, no matter which way it goes, and the EU debt Crisis and China inflation battle could continue to put downward pressure on the share price going forward.
Gold prices are falling today as some gold investors take profits and others with long positions get out of the market on fears the general public is entering into the fray, which could create a gold bubble which will burst.
I'm not sure that the person on the street has become engaged in the market yet, as they hadn't as of just recently, but it is a real concern to take into consideration when it does happen.
But even so, because gold has a reason for going up, the fundamentals will support those who don't understand why they're entering the gold market, even if they bid up the prices higher.
Gold has a lot of room to move higher, and the economic conditions, inflation, the EU debt crisis and China inflation, will ensure gold has a lot of room to rise.
Even so, we're always going to have corrections when gold, or any investment, soars quickly, but in the case of gold, there's no fears that it's a bubble about to burst; it simply hasn't reached that level yet.
For example, when the housing market went into a bubble, it was when the general public entered into buying home as outrageous and above-market prices which ultimately led to it bursting. But there was no known or existing reason for the price of houses to go up that high, and it was predicted by many watching the situation that it was going to collapse.
With gold it's different, because the underlying fundamentals warrant an ongoing increase in prices, even if many of those investing don't understand why.
We're far from a gold bubble, or a gold bubble bursting at this time, although eventually that will happen, but it's probably years away. The majority of ordinary investors still say they have no position in gold, and until that becomes a reality rather than an unproven fear, we will be okay.
Monday, May 17, 2010
Earlier in the year George Soros had mentioned gold was a bubble ready to burst, although he failed to include the idea that he had made a huge investment in gold interests, including SPDR Gold Trust (NYSE:GLD).
In a recent required 13F filing, Soros revealed that his Soros Fund Management had cut back on his position in SPDR Gold by 9.6 percent, probably from concerns over the high rise in price of the safe haven metal.
This is probably a mistake on Soros part, but we'll wait and see.
I think the thing that Soros misses is the regular guy on the street hasn't entered the gold bull market yet, and that should protect the upward movement in the gold prices from being a bubble.
A bubble usually occurs in any investment sector when those that don't understand the fundamentals of an investment finally decide to invest in it when it is already full priced.
This normally shoots the price of an investment up, when the support for it isn't there, ultimately creating a bubble. That's what happened in the housing market, as people continued to bid the price of homes up thinking there's no such thing as a ceiling on value.
It doesn't seem that gold has entered this phase at all yet, and even if it did, the fundamentals are there to justify it. There will of course be many corrections on the gold bull market journey, but that won't be a bubble.
Market conditions and the unprecedented spending of money and budget deficits ensure gold will continue rising in price for years to come, with the occasional correction along the way.
Eventually there will be a bubble in gold, just like anything else that has gained favor over a period of time before those that are clueless enter into the fray.
Gold is probably years away from that happening, and the economic conditions will ensure it won't be bursting for any time soon, and will continue on its upward climb.
Giant gold mining companies Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX) (TSE:ABX) look like they'll continue to perform strongly going forward, as Newmont not only has three solid quarters in a row under their belt, but analysts think they're going to almost jump in earnings in the current quarter by just under 100 percent, looking for profits to grow by 93 percent.
Last quarter Barrick also had great earnings, increasing by 115 percent during that time, and that should continue on in this quarter as well.
Of course with any company generating earnings like that, it's hard to repeat it at that pace over any extended period of time, but there are sure to be some solid quarters into the future, as there are few barriers to keep gold from increasing in price going forward.
The only thing that could happen would be a correction whose timing could temporarily drive down earnings. That may be precipitated by those investing in gold that are jumping on the bandwagon without knowing what is driving the gold market.
In the long term, once gold investors enter the market after a prolonged period of upward price movement, they could drive prices up to speculative levels, which could cause a bubble.
The underlying fundamentals for gold are so strong though, that even that will be tempered when it happens, which is probably years away, although gold corrections will be part of the experience off and on while gold prices continue to move up overall.
Commodities investing expert Jim Rogers continues his mantra on being a bull for most commodities for the next decade or so, and he reiterates that position with gold, which he says will continue to be considered a safe haven again inflation from the weakening of paper currencies.
With faith in fiat currencies continuing to weaken, gold has reached record levels against a number of currencies, including the euro, US dollar, Swiss franc and British pound.
In a recent interview with Reuters, Rogers said this about his outlook for gold: "I certainly expect gold to go much higher over the next few years. Paper money is going to be debased and the price of real assets will be enhanced."
Rogers doesn't just believe this about gold, but many of the other raw materials as well.
Along with a growing number of analysts and economists, Rogers knows the extraordinary and unprecedented level of debt being incurred by nations will be devastating to currencies and result in strong inflation.
Once the overall market begins to understand how large the credit expansion has been, we could see commodity and gold prices surge beyond levels some that are optimistic even think they will.
As reports from companies come in from filings, expenditures on lobbying efforts accompany them, and for Barrick Gold (NYSE:ABX) (TSE:ABX), they revealed they spend about $261,000 in the first quarter lobbying various elements of the U.S. government.
This is quite a bit higher than what Barrick spent last year, which was relatively small, spending only $90,000 in the first quarter of 2009.
Some of the issues of importance to Barricks included taxes, mining reform and clean energy legislation that would have an effect on mining and manufacturing.
Teck Resources (NYSE: TCK), Barrick Gold (NYSE: ABX), Lundin Mining (TSE:LUN) Down as Gold Falls in Price
Teck Resources (NYSE: TCK) (TSE:TCK-B), Barrick Gold (NYSE:ABX) (TSE:ABX) and Lundin Mining (TSE:LUN) are all down today as gold prices drop.
Even when gold prices were up earlier in the session, these gold miners struggled, seeming to point to traders taking profits after a nice run last week.
As of 12:50 P.M. EST, gold prices were at $1,225.10, a decline of $6.30 an ounce.
This isn't a surprise to see the profit-taking, and traders are also looking to see if there is going to be a correction in order to catch gold on its temporary way down, if that's the direction it goes.
Gold does have good support either way, and no matter what happens in the short term, it's going to continue its upward climb.
The major question is who is investing at this time, and if it's extended to the regular, small investor. When it does, that's when legitimate concerns over a gold bubble will apply.
Most investors have been institutional investors, and while that continues to be the case, we're not in danger of a gold bubble occuring.
Teck Resources (TSE:TCK-B) was down a little over 9 percent in New York, while Barrick Gold was down in New York by a little over 3 percent. Lundin Mining was off by just under 7 percent in Toronto, all at 1:00 P.M. EST.
Saturday, May 15, 2010
AngloGold Ashanti (NYSE:AU) has waited two years to resume exploration at its $2.7 billion La Colosa gold project in Colombia, ant that seems to be close to happening, as the effects froms El Nino, which dried up the area, are receding, and it looks like they'll be awarded water permits sometime in July to resume operations.
President of AngloGold’s Colombian division, Rafael Herz, said this about the water situation, “The next step with Colosa is to have water available in order to restart exploration.”
Estimates are the mine will produce as high as 800,000 ounces of gold in its lifetime, which at today's prices would be about $950 million worth of gold. But with gold prices sure to rise over time, that will surely rise above $1 trillion, assuming the estimates are close to being accurate.
AngloGold will invest close to $200 million to explore the gold mine over the next three years.
They also could resume exploration at their Gramalote gold project, also in Columbia, which they joint venture with B2Gold Corp on.
Get these two mining projects going and AngloGold has a solid source of revenue and profits for years into the future, even above their present sources.
Newmont Mining (NYSE:NEM) said on its website that they will host an Investor Day on Thursday, May 27, 2010 at the Intercontinental Hotel in Boston, for those who want to meet there.
Others who can't attend will have access to a real time web cast of the event, where you can go to the Newmont website and tune it to it as it happens.
For those who can do neither of the two, Newmont will archive the event for a limited period of time for those who need to view it at a different time.
Investor Day will start at 8:30 a.m. Eastern Time (6:30 a.m. Mountain Time).
Coeur d'Alene Mines (NYSE:CDE) announced last week that metal sales for the company has skyrocketed by 94 percent last quarter, generating an increase in operating cash flow of 308 percent as a result.
The Palmarejo mine in the Chihuahua State of Mexico led the company's increase in gold production for the quarter, gaining from 3,791 ounces in 2009 in the same quarter, to 25,792 ounces in the first quarter in 2010. Palmarejo generated 22,577 ounces of that.
In its first year full year of operation, Palmarejo is expected to produce about 109,000 ounces of gold.
Silver production was down slightly in the first quarter, dropping from 3,533,233 ounces in 2009 to 3,432,157 ounces this year.
Coeur d'Alene had a net loss of $8.02 million or a loss of ten cents a share. Last year in the same quarter the company had earnings of $6.06 million or 10 cents a share.
The losses included the retirement of $7.9 million in debt, and fair value adjustments of $4.3 million, among other things.
Coeur d'Alene CEO Dennis Wheeler said in a news release that the company is positioned to generate record metal sales and cash flows for its shareholders, based on production starting in July at Kensington, one of three "new, large long-life mines."
Allied Nevada Gold (AMEX:ANV) had tremendous sales grow over their last fiscal year, leading gold companies when measured in percentages, increasing by 632.2 percent during that time.
Sales for the last year have come to $63.5 million for the gold miner, with estimated sales in the next fiscal year expected to reach about $166 million.
Allied recently said they're going to sell 13 million shares of their stock, which caused the price of the stock to decline quickly from its yearly high of $22.92 a share.
They've dropped down to $19.88 a share as of 5:30 P.M. EST.
As the price of gold continues to rise, SPDR Gold (NYSE:GLD), the largest gold ETF in the world, has increased in value with it, now holding 38.9 million ounces of gold, worth over $48 billion.
The price of gold increased to almost $1,250 an ounce in the early part of the trading day on Friday, although it plummeted just before noon, and has fallen down near $1,231 an ounce on Saturday.
With the SPDR Gold Trust being a simple investment which moves in unison with the price of gold, investors have been pouring money into it as confidence in paper currencies wane, and government have their central banks printing out money at unprecedented levels, which will ultimately lead to inflation as their currencies are debased.
It is also having an impact on exports from countries whose currencies are strengthening against the euro, and that has caused problems as well.
Either way, gold will flourish because of the endless printing of money and politician refusing to stop offering bailouts to every large business or nation that gets in trouble.
Gold is considered the reserve currency of the world by many, and safety and a hedge against inflation will keep that the case for many years.
Friday, May 14, 2010
Eldorado Gold (TSE:ELD), Yamana Gold (NYSE:AUY), AngloGold Ashanti (NYSE:AU), All Close Session Higher
It was interesting watching gold mining companies like Eldorado Gold
(NYSE:EGO) (TSE:ELD), Yamana Gold (NYSE:AUY) and AngloGold Ashanti (NYSE: AU) rose uniformly with the price of gold today, and they weren't the only gold miners doing that.
I checked out about 15 gold miners, and everyone of them moved in sync with gold prices throughout the day.
It went like this. First there was a huge increase in the price of gold, rising to record levels again, reaching just below $1,250 an ounce. Then right before noon there was a quick downward plunge, and not too long after noon, gold prices started upwards again.
Go and look at the charts of the companies listed above, and a number of others like NovaGold Resources (AMEX:NG), Apollo Gold (AMEX:AGT) Iamgold (NYSE:IAG), Barrick (NYSE:ABX) and Newmont (NYSE:NEM), and you'll see the same behavior. Pretty interesting.
That brings me to the conclusion that gold miners in general are starting to finally move in step with gold, and that gold prices have now seemingly taken them under their wing so to speak, and are driving the gold miners along with it.
A lot of gold mining investors have been waiting for this to happen on this large scale, and now it seems to be locked it; at least for a period of time.
Obviously fundamentals will be significant in the long term, but for now, it seems like this is going to be the trend, albeit one that could change just as quickly as it began.
Two things are driving this now, the fears over the repercussions of China dealing with their inflation problems, and the European debt crisis which will drag on for many years, and of which there is no way of knowing where it will all go or end.
A growing number of analysts and economists believe this is the end of the euro, as Europe didn't have the will to defend it and not bail out their socialist, welfare neighbors.
To the contrary, they're encouraging the behavior by bailing them out, although in reality they're directly bailing out the banks which hold the debt or bonds which have provided the good life for the socialist, who continue spending and consuming, using other people's money.
For gold investors this is good news, as there is absolutely no short-term fix for this, and no matter how much money is ended up thrown at it, it won't solve the problem, only extend it down the road, and how far down the road will only be determined by how many trillions they end up throwing at it.
So maybe the socialists will get there way (for a very short time), but sooner or later the bill will come due, and if this goes like I think it will, with the Federal Reserve, central banks and governments around the world still drunk with spending from the bailout of banks and businesses around the globe, we'll probably see the most extraordinary and outrageous behavior from these people that will be unprecedented in history as to its scope, and gold and well-run gold mining companies should continue to flourish as this plays out over the years.
AngloGold Ashanti rose by $0.19, Yamana Gold increased $0.13 and Eldorado Gold was up $0.25, all in New York.
While I believe gold will continue on its upward trajectory for many years to come, there are going to be seasons of volatility and corrections on that journey, and gold mining companies such as NovaGold Resources (AMEX:NG), Apollo Gold (AMEX:AGT) and Iamgold (NYSE:IAG) can be expected to move up and down with those gold prices.
For the day, all three companies ended slightly down, as gold prices exploded upward in the early part of the day, pulled back right before noon, and then regained some throughout the rest of the session.
Traders were obviously part of those seesaw results, but that doesn't account for all of it.
Part of this is the consequence of media reports which are conflicting with one another. The usual mainstream media story is that we're in some type of economic recovery and they don't seem to understand anything about Europe especially, which they just view as a positive if trillions more are thrown at it, as their steeped in Keynesian theory, even though most don't even know it.
But when you hear the extraordinary and almost unprecedented situation in Europe (at least for most of us reading our lifetimes), the fallout from it could be catastrophic, and most of that is if they decide to bailout the banks, er, I mean countries.
If the socialist, welfare countries weren't bailed out, it would mean they would be forced to change their ways and quit redistributing money from the productive to the unproductive. It is so bad now many countries from around the world are going to have to bail them out for the extravagant lives they've lived, but which they couldn't afford.
The point is all of this news is being mingled together, and because it's extremely one-sided as usual from the mainstream media, it gives the appearance of chaos and unsurety, when in fact it's an economic mess, and there's no conflict there at all, no matter what data they want to massage to make it look to the contrary.
For gold mining companies like NovaGold Resources, Apollo Gold and Iamgold, I think they are going to start moving closely with the price of gold, and so while they should continue to move upwards in price, there will be some major swings and corrections along the way, and as long as they have good fundamentals and good management in place, should do as well as gold prices in general should do.
Barrick Gold (NYSE:ABX) (TSE:ABX) and Newmont Mining (NYSE:NEM) ended the week up strongly, as Newmont rose by 8 percent on the week and Barrick wasn't too far behind at a gain of 6.5 percent.
Newmont also reached a 52-week high of $59.57 a share this week, although it pulled back a little since then. In electronic trading on Friday it was $58 a share at about 5:00 P.M. EST.
Barrick went as high as $46.05 on Friday, not too far from its 52-week high of $48.02. It shouldn't be long before they break through that and then they'll be shooting for $50 a share.
We are probably going to see some big swings in the days, and possibly weeks ahead for gold and gold mining prices, as we're facing extraordinary times in Europe, and increasing inflation risks in China.
Investors are starting to understand the propping up of the positive financial news by mainstream media outlets is only telling a small part of the economic story, and we are at as grave as economic risks as we've ever been in most of out lifetimes, and it has yet to be seen and played out as to how deep and far the consequences will go concerning Europe and their failed socialist, welfare practices.
The threat is real, and the Federal Reserve and central banks are already talking in a way that says the $1 trillion offered to the failing socialist nations in Europe aren't going to be near enough to stem the tide sweeping across the continent.
Gold will respond accordingly, and the European bailout will probably end up in the multi-trillions, making the bailout of the banks seem like a drop in the bucket. Oops. I forgot, The European bailout is just another bailout of the banks.
Amazingly, that's what the Federal Reserve is using as an argument that Americans won't have to bail out the socialist countries of Europe. Rather they say, we're bailing out the banks. At least they're being honest this time around.
Either way, these are going to be extraordinary times, and gold should be in a bull market for years, possibly extending far beyond what was originally thought.
Newmont Mining (NYSE:NEM), Barrick Gold (TSE:ABX), Kinross Gold (TSE:K) and Goldcorp (NYSE:GG) All Up
Barrick Gold (NYSE:ABX)(TSE:ABX) Newmont Mining (NYSE: NEM) Kinross Gold (NYSE:KGC) (TSE:K) and Goldcorp (NYSE:GG) (TSE:G) all moved with the price of gold futures today.
The gold prices today started off surging in a big way, and the gold miners followed suit, all rising strongly, and then right before noon, all of them, including gold futures prices, plunged.
Right after noon they all started climbing again, with the gold miners all ending the day in positive territory.
Kinross, Barrick and Goldcorp have all moved down a little in electronic trading, but not much. They will probably remain somewhat level throughout the weekend.
Freeport-McMoRan (NYSE:FCX) is down about $2 a share, a $2.80 percent drop at 4:12 P.M. EST today, as gold prices made some huge swings throughout the day as the market continues to digest the threat emerging from the announced bailout of the socialist, welfare countries in Europe.
The euro plunged in response to ongoing EU debt crisis, as growing concern over whether or not the euro or the European Union can survive the crisis is growing.
Gold almost broke through the $1,250 an ounce barrier early in the trading session, fell back, then rebounded again and fell back again, showing the uncertainty among gold traders and investors on how to respond to all this.
Gold mining companies like Freeport-McMoRan will move in unison with these factors which are affecting gold futures prices, and will continue to do so for some time.
Even so, there is support under gold, and even though there is a lot of emotion in the gold market now, which will always cause huge fluctuations in the price, there are fundamentals in place which will continue to offer support to gold for a long time to come.
From the standpoint of gold, the EU debt crisis could extend the gold bull market even further into the future, depending on how the moves toward austerity measures pan out.
That, more than anything, will determine much of what happens in that region, as riots and protests are beginning to spread and it remains to be seen if political leadership there has the will to take the steps needed to save the economically dying region.
I don't feel sorry for these nations, as the people received the handouts as the government fed them to them. They haven't been able to afford them for some time, and now they are being exposed for the socialist and welfare states they've been for a long time, and Keynesianism is revealed to be a failed theory whose time should be over; meaning government spending and central banks printing money can't create wealth or build capital.
All of this is good for gold investors in the long term, as there is decreasing faith in paper currencies of any type, and even when the U.S. dollar is considered a safe haven, it's not because it's strong or unique, it's just not as bad as the other currencies.
The Canadian dollar actually has a good chance of being one of the stronger currencies in the world, but that will demand that Canada continues on doing some of the good things they've been doing, and don't go down the route Europe and increasingly the U.S. is going.
Gold prices have been swinging wildly today, as traders seem to be having some influence there, and the seemingly endless news concerning the EU sovereign debt crisis continues to move the metal up and down, along with other precious metals as well.
Gold prices today had reached almost $1,250, before pulling back to below yesterday's record. Now they've moved back up in the positive again, as the gold price swings continue.
Gold mining companies like Barrick Gold (NYSE:ABX) (TSE:ABX) and Newmont Mining (NYSE:NEM) have moved in tandem with gold futures prices, something that has started to happen more often after gold broke its all-time record on Wednesday.
For some time, gold mining companies in general had been lagging behind the price of gold, and now for some, that time seems to have ended after gold broke through, and the news concerning European debt and China inflation continues to be a huge impetus behind the price of gold.
Gold traders bid up the price of gold today, reaching almost $1,250 before pulling back in the afternoon. At 1:30 P.M. EST, gold prices stood at $1,227.8.
This is attributed to the traders pulling out profits after driving the metal up in morning trading.
All of that is just part of normal activity, but doesn't have much to do with the support or underlying fundamentals of gold, which are primarily safety, inflation hedge and an alternative currency.
Paper currencies have lost a lot of trust from people, and when that happens, being fiat, there is nothing left to shore them up.
Macro-economic issues continue to be the European sovereign debt crisis and the decision to bail out the socialist, welfare countries, along with inflation challenges in China, both of which generate questions on demand for raw materials and other products, which have been putting tremendous pressure on the stock market, and will continue to do so.
All of that is good news for gold and some gold mining companies, who will ride upwards with the price of gold, although they will also partake in the inevitable corrections as well.
Thursday, May 13, 2010
Gold Wheaton Gold (TSE:GLW) ended the session slightly up today, while Kinross Gold (TSE:K) (NYSE:KGC) and Barrick Gold (TSE:ABX) (NYSE:ABX)
Gold Wheaton finished the day up 0.03 or 1.12% on the Toronto Stock Exchange, while Kinross Gold was down 41 cents and Barrick Gold down 79 cents at the end of the day.
Gold futures for June delivery dropped to $1,229.20 on the Comex in New York today, after breaking records for the last couple of sessions.
Some profit taking was inevitable, but gold miners will rebound with the price of gold futures, as safe haven and inflation fears permeate the market.
Newmont Mining (NYSE:NEM), Kinross Gold (NYSE:KGC). Agnico-Eagle Mines (NYSE:AEM) and Yamana Gold (NYSE:AUY) Expected to Rise
Newmont Mining (NYSE:NEM), Kinross Gold (NYSE:KGC). Agnico-Eagle Mines (NYSE:AEM) and Yamana Gold (NYSE:AUY) look like they're set to rise, based on call buying.
Aggressive calls by traders shows they believe in the short term that these particular gold mining stocks are going to go up.
Because of the aggressive rise in the price of gold futures, there will no doubt inevitably be a correction, and gold mining companies, for the most part, will participate in that correction, even so, gold has support now, and even when gold corrects, there will be a continuation of the gold bull market well into the future, no matter what the short term swings are.
Fronteer Gold (TSE:FRG) reported a profit for the first quarter, largely on the back of selling two of their gold projects based in Turkey to Alamos Gold Inc (TSE:AGI).
Earnings came in at C$9.8 million, or 8 Canadian cents a share for the quarter as a result, beating analysts' expectations, who had been looking for a loss of 1 cent. Last year in the same quarter the company posted a loss of C$5.5 million, or 6 Canadian cents.
The sale of the two gold projects in Turkey brought the company C$18.4 million. Fronteer had a 40 percent interest in the two mines.
Over the last three months Fronteer has made a nice upward move of about 30 percent.
Gold futures prices have been moving slightly up and down today, and it seem gold mining companies like Kinross Gold (TSE:K) (NYSE:KGC) and Goldcorp (NYSE:GG) (TSE:G) Eldorado Gold (TSE:ELD) (NYSE:EGO) are moving in unison with them.
As the day is going on, gold prices have started to fall a little more, dropping by $3.50 at 12:30 p.m. EST to $1,233.60.
Other gold miners such as Freeport McMoRan (NYSE:FCX), Newmont (NYSE:NEM) and Randgold (Nasdaq:GOLD) have also moved down, giving back some of the last couple of days increase in share price.
This breather should be temporary, as it looks like gold mining companies have finally been taken notice of by the market, and are now performing in a way which mirrors more closely the movement of gold futures prices.
Freeport McMoRan (NYSE:FCX), Newmont (NYSE:NEM) and Randgold (Nasdaq:GOLD) were all down just after mid-day, as gold futures prices have fluctuated back and forth above and below $1,237 an ounce.
This isn't anything to be too concerned about, as there was no way they could continue to explode at a sustainable level at the pace of the last couple of days.
But I do think the gold mining sector should enjoy some good times overall going forward, as the gold mining companies haven't moved in unison with the price of gold futures, and they seem to be ready to do just that.
Some junior gold miners that haven't received much interest should especially do well, although the large ones should have some nice movements too.
Gold prices today as of about 12:00 P.M. EST, are pretty much level, standing at $1,238.00 after two days of soaring to record highs, as the mulling over of the consequences of Europe's almost $1 trillion bailout offer to irresponsible countries has investors concerned.
Most people are starting to understand that you can't spend more money to take care of a situation where people are already spending too much money. It makes no sense, and over the last couple of years as governments and central banks around the world have been printing money non-stop, and the value of paper currencies continue to plunge.
And it's also understood that this is far from only a Greece sovereign debt crisis, it's a crisis which could, and probably will, spread across all of Europe, and possibly worse.
Either way, gold will be a strong performer for some time because of the misguided responses by politicians and central bankers to the economic crises we've been experiencing, and they're only pushing the inevitable pain down the road, but we'll ultimately have to face it, and gold will continue to move up as investors have very little safe havens to put their money in.
Wednesday, May 12, 2010
The fairly new Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) may be a great way to play the gold sector now, as gold is about to take off as most barriers have been removed, and even more important, gold mining companies look like they're finally going to start moving up with gold futures' prices, which Market Vectors Junior Gold Miners ETF could strongly participate in.
Why this is important at this time, or any time market conditions are like this, is the majority of large gold miners have most of the value they represent built into the share price of the stock. While they will definitely improve in value as gold prices rise, they are mature companies that won't move quickly.
On the other hand, junior gold miners are ready to break out, and it's quite possible more than one will skyrocket as a result, which will strongly benefit anyone who has invested in the Market Vectors Junior Gold Miners ETF.
A number of those following the gold industry believe the junior gold miners are the ones with tremendous upside potential, and because they have been held back for some time, as gold continues to move up, a lot more notice will go toward the junior gold miners and their fundamentals, which in a number of cases are underestimated.
Eventually they'll move to their true value, and when they do, as long as they're represented in the Market Vectors Junior Gold Miners ETF, it will rise with them.
Of course if you prefer to play it safe, you can always go the route of the Market Vectors Gold Miners ETF (NYSE: GDX), which moves in accordance with the large cap miners.
Either way, they're both positioned strongly, but the Market Vectors Junior Gold Miners ETF is probably about to take off, and it's a solid bet those investing in it won't be sorry they are.
Aurizon (TSE:ARZ) earnings in the first quarter dropped, citing lower reserve grades in the particular section of its Casa Berardi mine, located in Quebec.
Profits in the quarter were down to C$2.2 million, or 1 Canadian cent a share, less than half what it was the same quarter a year ago when they generated earnings of C$5.0 million, or 3 Canadian cents a share.
Taking away an unrealized gain on derivatives, Aurizon losses came in at C$141,000, which was about level a share, while last year profits were C$5.8 million, or 4 Canadian cents a share.
Revenue in the quarter also plunged by 7.1 percent to C$39.8 million.
Guidance for gold production remained on target, with expectations of 145,000 to 155,000 projected for 2010. Hopefully the grades will improve or they're going to struggle for the rest of the year, not matter how much gold they extract from the mine.
For 2011 through 2013, guidance was for the company to produce 160,000 to 170,000 annualy at a cash cost of $425 an ounce.
Ivanhoe Mines (TSE:IVN) (NYSE:IVN) announced today that they've appointed a Chairman of the Board of Directors of Oyu Tolgoi, their giant copper-gold project in Mongolia.
Mongolian diplomat Galsan Batsukh was nominated for the Chairman position, and is expected to be confirmed in an upcoming confirmation meeting of the first meeting of the board of directors.
Ivanhoe has a 66 percent stake in Oyu Tolgoi LLC and the Mongolian government has acquired a 34% stake.
Oyu Tolgoi LLC has the mining licenses for the project, which they will use to build and operate the huge mine in the southern part of the country.
Production is scheduled to begin in 2013. Rio Tinto (NYSE:RTP) is a strategic partner for the development of the mine.
Eldorado Gold (TSE:ELD) announced today it will acquire Brazauro Resources (TSEV:BZO) for about $122.4 million, in a straight stock sharing deal.
The major property Eldorado is getting in the deal is the Tocantinzinho Project in Tapajos, Brazil, which they will get full control over.
Other exploration projects involved are Agua Branca and Piranhas, which are nearby the Tocantinzinho Project.
At this time the Tocantinzinho Project has a measured and indicated resource of 1.9 million ounces of gold.
Eldorado offered 0.0675 of one share for each share of Brazauro. That is a hefty 76 percent premium over its Tuesday closing price.
Goldcorp (TSE:G) (NYSE: GG) and Barrick Gold (NYSE: ABX) (TSE:ABX), among the largest gold mining companies in the world, didn't partake in the surge in gold mining stocks, as they responded to record gold futures prices over the last couple of days.
This isn't a surprise of completely unexpected, as the junior miners and mid-level gold mining companies like Eldorado Gold (TSE:ELD), Apollo Gold (AMEX:AGT) and NovaGold Resources (AMEX:NG) are being looked to as companies that will move up strongly in response to rising gold prices.
Depending on which stock exchange you view the companies at, Goldcorp and Barrick are either down, or barely above level, and that seems to imply investors think they're valued at what they should be, and the gold prices are already figured into the share prices of the giant mining companies.
But the junior and mid-level gold mining companies should shine going forward, as they've been sitting around not doing much, and now that the limits seem to be taken off the price of gold futures, gold mining stocks are starting to draw interest of investors, and they're finally starting to move up to more accurately reflect the markets they're in.
Newmont (NYSE:NEM), Freeport-McMoRan (NYSE:FCX), Harmony Gold (NYSE:HMY) and Gold Fields (NYSE:GFI) Rise with Gold Futures Prices
Gold futures continue to rise into uncharted territory, and gold mining companies are finally starting to rise with them as Newmont (NYSE:NEM), Freeport-McMoRan (NYSE:FCX), Harmony Gold (NYSE:HMY) and Gold Fields (NYSE:GFI) all ended the session with gains.
Newmont was up 51 cent, an increase of .88 percent; Gold Fields moved up 13 cents, or .95 percent; Harmony Gold rose .19 cents, or 1.86 percent; and Freeport-McMoRan enjoyed gains of 2.76, or 3.93 percent.
Gold mining stocks hadn't been moving up with gold futures prices, and it was only a matter of time before they responded and increased along with gold prices.
Now that there are few, if any, barriers to the rise of gold prices, it's impossible to estimate or predict where things are going from here, as the path has never been traveled before, and the sovereign debt crisis in Europe, along with the inflationary pressures in China guarantee we're not going to see a correction in gold any time soon, and even when it does eventually come, gold will continue to march up for a long time to come.
Kinross Gold (TSE:K) (NYSE: KGC), ELDORADO GOLD (TSE:ELD)(NYSE: EGO), PC Gold (TSE:PKL) are all up today as pent up demand for gold miners and other mining companies has been sitting around for quite some time, and the recent outbreak of gold to new record highs has brought the gold miners into the picture in a big way, as they've overall lagged the price movement of gold futures for a long time, and it seems that period of time has ended as money flows into the miners.
Gold futures prices today continued to surge, up to $1,237.7 as I write, generating more interest in the companies pulling the gold out of the ground.
This is largely based on the promise of almost $1 trillion offered to countries struggling with sovereign debt in Europe, as investors seek safety in the midst of the eventual consequences of the endless printing of money from central banks around the world, which is debasing paper currencies everywhere.
Now that gold has broken through barriers, we are now at a place we've never been before, and so there is no road map as to where it all will end, and many expect gold to continue on in its upward climb, as there's no foreseeable barriers that can be erected at this time.
Out into the future is the evenutal interest rate hike by the Federal Reserve, but the changing global conditions, including the inflation challenges of China, make that an increasingly irrelevant factor in the overall economic picture.
In the face of all this, gold has no known resistance, and when the nations of southern Europe are discovered to be worse off than we all know, it's hard to know how far gold will increase.
Even so, we still live in a real world, and while the largest gold mining company in the world, Barrick Gold (TSE:ABX) was up earlier in the day, they have come back down into negative territory, showing we still have to watch and wait for our best opportunities, especially as gold grows in favor and those who don't understand why it's happening enter the market and push it up beyond levels that even these conditions may not be able to justify.
That's a long way off though, but we do need to watch the gold miners carefully and take into account their business models, cost management, and long-term futures.
In other words, fundamentals still matter, especially in times of fear and chaos, which we're facing now.
The SPDR Gold Trust (NYSE:GLD) was created to move in step with the price of gold bullion, and it continues to do that, moving in step with the increasing price of gold, starting the year at about $88 a share, and now over $121 a share as I write.
Now that sPDR has broke through the $120 mark, and with the sovereign debt crisis in Europe and China inflation, gold is sure to continue up its upwards trajectory, and SPDR Gold Trust will respond accordingly.
Gold ETFs continue to be an important part of investors' portfolios, and SPDR is extremely simple, inexpensive and in the right place at the right time for those wanting to protect their assets from the enormous risks in the market.
Gold prices today have risen to another record level, as investors flee to the safe haven to protect their assets in the midst of economic turmoil.
Another high was reached with euros, British pounds and Swiss francs, as gold denominated in those currencies exploded to record highs.
As of 12:15 P.M. today, gold rose to $1,241.40, a $10 gain. Gold surged even more in electronic trading yesterday when the markets closed, continuing its impetus today.
Concerns over the fall in value of the euro and economic slowdown in the region is a major factor in the rise in gold prices, along with the news that China will be even stronger in its fight against inflation, which could slow down demand for raw materials in that region as well.
Gold should be as strong as ever for some time as these scenarios play themselves out, which in the case of Europe, could be many years.
Tuesday, May 11, 2010
Ivanhoe Mines (NYSE:IVN) released its estimates for their Oyu Tolgoi project in Mongolia, and the numbers are staggering, and will position Oyu Tolgoi as one of the largest mines in the world.
Estimates for annual copper production at the mine is 1.2 billion pounds, while gold estimates are for production to reach 650,000 ounces annually. Gold production is projected to be at that level for a decade.
There is an estimated 46.4 million ounces of gold at Oyu Tolgoi, and an enormous 81.3 billion pounds of copper. That could extend the life of the mine to 59 years, according to Ivanhoe, who is working with Rio Tinto (NYSE:RTP) in the development of the giant mine.
Rio has a 22.4 percent stake in Ivanhoe.
Gold futures and gold mining stocks exploded upward today, as gold companies like Yamana Gold (TSE:YRI) (NYSE:AUY), Goldcorp (TSE:G) (NYSE:GG) and Kinross Gold (TSE:K) (NYSE:KGC)made strong moves, possibly signaling a major upward surge by gold mining companies, who have largely lagged behind gold future prices, which have been increasing non-stop, and probably will into the future.
Increasing concerns over China inflation, the European sovereign debt crisis, and reports today from the commerce department that wholesale prices rose by 2.4 percent, and wholesale inventories increased as well, telling us spending declined in March.
Sovereign debt is the short-term catalyst of ongoing gold prices going up, and that's could end up being a long-term problem, when using Germany as a bellwhether from its past experiences when they took austerity measures and applied them to themselves, while also moving toward a more market economy. It took them 15 years to do that, and they were committed. What will happen with these entitlement thinking, socialist countries of southern Europe when they don't get to have the money keep flowing in, as it's run out, and there no one else to take it from. Well, other than the foolish EU and IMF, which many countries will be helping these countries through.
China is also a major story, although temorarily eclipsed by the sovereign debt crisis. Many countries are basing their domestic growth on their exports to China. If China takes major steps, which it is already doing, to cool off their economy, that will result in less imports, and even a small decrease could have an enormous impact.
The secondary part of the EU sovereign debt crisis is the inevitable cut back in spending, which is part of the requirements for countries in the euro-zone receiving aid. It's unclear how that could affect exports from other countries and companies, but add it together with China and it will probably be dramatic.
Add to this inflation increasing in the United States and the news just keeps getting worse, although that is good for gold prices and gold mining companies, who should be the beneficiaries of all this for many years.
Apollo Gold (TSE:APG) generated a profit in the first-quarter of $6.5 million, or 2 cents a share, much better than the $28.4 million, or 2 cents a share loss last year during the same quarter.
Gold revenue was $17.6 million for the quarter, with gold production of 14,175 ounces.
Guidance for gold production for 2010 was set at about 90,000 to 100,000 ounces for the entire year.
Profits came from a non-cash realized gain on financial instruments by the company.
Margins should also improve in the next couple of quarters the company said, as cash costs are expected to decline in the last half of 2010.
Gold Fields (NYSE:GFI) and Buenaventura (NYSE:BVN) announced they have discovered a major gold deposit at their Chucapaca project in Peru.
There is an estimated 5.6 million gold equivalent ounces found, in the joint venture where Gold Fields holds a 51 percent stake and Buenaventura 49 percent.
The estimated amount of the deposit could be much larger, as there's a lot more exploration needed to cover the project area.
Pre-feasibility studies could start as early as July 2010.
The Chucapaca project or Canahuire deposit also holds a large amount of copper and silver, according to the companies.
Newmont Mining (NYSE:NEM), Hecla Mining (NYSE:HL) and Barrick Gold (NYSE:ABX) were all up at about the 5 percent mark today, as gold mining shares soared along with gold futures, which ended the day at a record $1,220.30, and after hours has surged to over $1,231.
This is good news for gold mining stocks, if they can find support, as they've widely lagged the price of gold futures, and if they start to respond as they did today, will make gold investors a lot of money going forward.
These weren't the only good gold mining performers today, as others like Eldorado Gold (NYSE:EGO), Allied Nevada Gold (AMEX:ANV), Jaguar Mining (NYSE:JAG) and Iamgold (NYSE:IAG) were almost twice as high, with all of them over 9 percent, and some up over 10 percent on the day.
Most of this is based on the implications of the bailout of countries in the European Union, which after the euphoria of yesterday was over, investors digested and realized the potential long-term consequences, especially inflation, but also tremendous unrest which will inevitably rear its ugly head as forced austerity measures are put in place for a people who feel they are entitled to their outrageous and above-market wages and perks they've been used to for so long, but the country can't afford.
As Margaret Thatcher has famously and rightly noted, the trouble with socialism is you eventually run out of other people's money. Many countries in Europe are doing just that, and now they're going to have to pay the price for their misguided practices for many years into the future.
Gold and gold mining companies should be the beneficiaries of this debacle for a long time.