While gold has been hobbling along throughout July, the lower than expected numbers of the GDP report caused it to surge in the last trading day of the month by 1.1 percent, reaching $1,183.90 an ounce on the COMEX division of the NYMEX for December delivery.
Even so, it still finished July down 5 percent, falling $62.68. Spot gold price increased to $1,180.97, rising $12.20. This was the worst month for gold since December.
Gold surged on the day because gold investors rushed to cover their short positions in response to the GDP numbers.
Nothing has changed in the fundamental reasons of why gold has continued to rise over the last decade, and that will continue on.
Even the government attacks on the alleged fear-mongering of those pushing gold coins over gold bullion won't deter the rise of gold. The government attack is to shut up the voices of those who rightfully point out the risks related to the governmental policies around the globe which have brought to the economic catastrophe we're now experiencing.
Using Glen Beck as a focal point and the gold company he works with to sell gold coins and bullion, the government is using a few complaints (assuming they're even legitimate) to make it look like the reason gold is going up is because of unwarranted use of fear to sell gold coins rather than gold bullion.
The idea is to make a connection between gold and fear in a way that makes it seem like a bunch of hype. Don't think this isn't being orchestrated, even if a few innocent dupes are being used by the government to attack people investing in gold, which is a daily reminder of the failed and irresponsible policies of the government and Federal Reserve.
Giving the advice to acquire gold coins rather than gold bullion has been one that has been offered by many advisers for years, and it will continue to be because it's much more portable and easier to hide than bullion. Of course how many people can even afford to buy gold bullion in the first place, making this even more suspect.
Anyway, back to the fundamentals. Gold will continue to rise because of the practices attempted to be hidden by the government and Federal Reserve of continuing to print money and "stimulate" the economy, the ongoing sovereign debt crisis in Europe, and increasing and dangerous government deficits which are becoming more risky by the day.
Investors have been caused to dangerously relax because of the so-called banks stress tests in Europe which made it appear as if the majority passed with flying colors, while experts said they were in reality a joke. Even Citigroup (NYSE:C) noted, of the banks tested, 24 should have failed rather than only the seven asserted to have failed.
Even the downgrade of Ireland's debt recently was shrugged off as irrelevant by investors, who seemingly have swallowed the kool-aid.
The economic condition of the United States is dismal, China is being forced to slow, and Europe is in shambles, yet nobody seems to have remembered these things.
Maybe the BP (NYSE:BP) fiasco temporarily got their attention off of the ball. But that is close to being over as far as permanently plugging the oil well goes, and people are getting interested in other things again.
The fact that gold moved nicely today on just missing the GDP numbers by a small amount, shows investors are looking for a reason to push prices up again, and I don't think it'll take that long before it happens.
Friday, July 30, 2010
While gold has been hobbling along throughout July, the lower than expected numbers of the GDP report caused it to surge in the last trading day of the month by 1.1 percent, reaching $1,183.90 an ounce on the COMEX division of the NYMEX for December delivery.
Haywood Securities reiterated its "Outperform" rating on Barrick Gold (NYSE:ABX) while keeping a price target of $56 on the gold miner.
Analysts from Haywood said this about the valuation of Barrick, “Our $56.00 target is based on an 11.5x multiple to our 2011E cash flow of US $4.70 per share at a 2011E gold price of US $1,250 per ounce. The Company’s peer group currently trades at an average of 9.8x 2011E CFPS, a multiple we expect to expand as gold trends higher in the fall, and stocks recover from the recent sell-off.”
Even with their cash costs per ounce higher for the most recent quarter, where it cost $457 an ounce to produce, the company was still able to beat earnings estimates.
Production levels are still expected to come in at from 7.6 million to 8 million ounces of gold.
With attention being fixated on gold and gold mining companies, a number of firms have made changes to attract investors and gravitate toward being run like a company people understand.
Centerra Gold (NYSE:CG) has responded in that regard by announcing their first dividend payout in the history of the company,.
Starting on September 1, shareholders will receive a dividend of 6 Canadian cents a share, payable on September 8.
This comes off a return to profitability by the company, which generated profits of $29.8 million, or 13 cents a share for its latest quarter. That is in contrast to the loss last year of $79.6 million, or 26 cents a share, last year in the same quarter.
That exceeded analysts' expectations of 5 cents a share.
Centerra Gold (TSE:CG) has returned to profitability this quarter, as stability in Kyrgyzstan helped the gold miner to increase production, along with higher gold prices, helped them to a solid performance.
For the quarter, Centerra exceeded expectations, generating earnings of $29.8 million, or 13 cents a share. Last year in the same quarter the company had a loss of $79.6 million, or 36 cents. That was related to higher costs and diminished recovery of gold. Analysts had been looking for 5 cents a share on average.
Revenue increased to $152.2 million, a gain of 46 percent.
The flagship of Centerra is its Kumtor mine in Kyrgyzstan, and it operates a second mine in Mongolia - the Boroo mine, which is much smaller than Kumtor.
Gold production increased from 110,457 ounces in the second quarter of last year, to 121,728 ounces the last quarter.
Thursday, July 29, 2010
After solid earnings for the second quarter were reported by Barrick Gold (NYSE:ABX) and Agnico-Eagle (NYSE:AEM), executives at both companies said they see gold going to $1,400 an ounce by the end of 2010.
Agnico CEO Sean Boyd said this in an interview concerning how people are viewing gold at this time:
“I think a lot of people are jumping to the conclusion that it's over, it's run its course.
“But I would not count gold out. We are going into a period, September/October, which is traditionally strong, let's see how things go there.”
The major reason behind the drop in gold prices is the easing of concerns over the sovereign debt crisis in Europe, said Boyd, and I agree with him. That and the typical slow summer gold season.
Much of this came about from the stress test bank results in Europe which gave the illusion all things were well. Many people that understand how it works said the tests were really a joke, and follow-up research revealed that far more than seven of the banks are under stress; up to 24 of them, according to Citigroup (NYSE:C).
No matter what gimmicks and tricks are attempted to fool people, there is no way you can hide the disaster that Europe is, and it's only a matter of time before conditions worsen and people look for a safe haven for their money again.
News from China continues to confirm they're slowing things down there, and the United States is far from any type of sustainable recovery.
In other words, conditions that caused gold prices to skyrocket in the first place haven't changed, and even though people are in denial and shrugging off what is right in front of their face, won't change what the reality is, and these conditions will continue to contribute to the rise in gold prices, even as Ben Bernanke reiterates he'll do what he needs to do to prop up the economy, i.e., print more money. All of this offers support to ongoing increases in gold prices, and people and institutions who ignore that will do it to their loss.
Eldorado Gold Corp. (NYSE:EGO) (TSE:ELD) joined the parade of gold miners who performed strongly in the latest quarter, as earnings more than doubled and revenue was up 158 percent.
For the second quarter, earning soared to $60.5 million, or 11 cents a share, way up from the $25.9 million, or 7 cents a share in the same quarter of 2009.
Revenue also exploded to $207.8 million, an increase of 158 percent.
Analysts were looking for revenue of $185.2 million and earnings of 8 cents a share.
Gold production in the quarter almost doubled, with the number of gold ounces produced exploding to 167,940 ounces, just short of doubling last year's 84,572 ounces.
Cost on average were up this quarter though, rising from $303 an ounce last year to $357 an ounce this year in the same quarter.
The average price of gold sold by the miner was $1,195 an ounce, selling a total of 172,826 ounces during that time.
Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Agnico-Eagle (NYSE:AEM) have all reported this week, and have performed strongly.
Newmont (NYSE:NEM) was the only slight disappointment, as there earnings were good, but revenue failed to meet expectations.
As expected, Barrick Gold (NYSE:ABX), the largest gold miner in the world, had a great quarter, exceeding analysts' expectations for earnings and revenue.
Earnings for the second quarter reached $759 million, or 77 cents a share. Last year in the same quarter Barrick generated $492 million in profits, or 56 cents a share.
Analysts had been looking for earnings of 72 cents a share on revenue of $2.61 billion. Revenue came in at 2.64 billion, so that was pretty close to expectations, although exceeding them by a little.
Gold production and higher gold prices led the way, even with the increased costs of mining. Gold production increased to 1.9 million ounce, a gain of 4.2 percent.
Guidance remains in place, where production estimates are expected to stay on target, with 7.6 million to 8 million ounces of gold produced in 2010. Cash costs are estimated to be from $425 to $455 an ounce during that time.
The board of directors of Barrick also declared a quarterly dividend of 12 cents a share, an increase of 20 percent over the previous dividend. Annually that translates to 48 cents a share.
Barrick will also move from their existing dividend payout structure of semi-annual to a quarterly payout structure.
Wednesday, July 28, 2010
Goldcorp (NYSE:GG) (TSE:G) performed as was expected from large gold miners today, as Newmont (NYSE:NEM) earlier in the day reported lower-than-expected earnings in the last quarter, generating doubts as to how other gold miners had performed.
That concern is off the table now, as Goldcorp report net earnings of $198.8 million, or 27 cents a share. That is in contrast to last year, where profits were at $99.2 million, or 14 cents a share.
Revenue surged to $844.3 million, a gain of 34 percent over last year, on higher gold prices and increased sales of gold.
Gold production in the quarter was 609,500 ounces, which brought operating cash flow to a record level of $382.6 million.
Agnico-Eagle Mines Ltd. (NYSE:AEM) (TSE:AEM) released its second quarter numbers, and they have a lot to celebrate, as they generated $100.4 million in earnings on revenue of $394.9 million.
Last year in the same quarter the company only had a profit of $1.2 million, or 1 penny a share. Revenue in the second quarter of 2009 reached $133.1 million.
Gross mine profits and increased gold production were the keys to the turnaround, with gold production rising 116 percent in the quarter, while mine profits rose 151 percent.
Chief executive Sean Boyd said in a statement, "Four of the mines are now operating at steady state with the other two in the late stages of optimization.
"Further increases in gold production and lower cash operating costs are expected in the second half of 2010 as we continue to optimize all our mines and focus on driving down the unit costs at our Kittila and Meadowbank mines."
Full year gold production guidance was maintained at from 1 million to 1.1 million ounces.
The average realized price for gold in the quarter was $1,222 an ounce, far above the $962 from 2009.
Hecla Mining (NYSE:HL) reported earnings of $13.7 million, or 6 cents a share for the second quarter, beating estimates of 4 cents a share.
Revenue increased to $88.63 million, from $74.61 million in the same quarter last year. Last year Hecla had a loss of $0.9 million for the quarter.
Hecla Mining Company President and Chief Executive Officer Phillips S. Baker, Jr., said, “Our mines, operating management and orebodies combined with current prices allowed Hecla to generate an extraordinary amount of cash flow for the amount of production. With very low operating costs per ounce, our margin was in excess of $20 per ounce of silver which drove cash flow of $54 million in the quarter, the second highest in Hecla's history. This cash flow enabled Hecla to deploy financial resources to support larger exploration and development programs to build for the future. Importantly, we increased our cash balance during the recent quarter by more than $80 million to almost $200 million."
By-product credits allowed the company to have negative cash cost in the quarter, the reason margins were over $20 an ounce. Costs were a negative $2.41 an ounce in the first half of 2010.
In somewhat of a surprise, Newmont Mining Corp (NYSE:NEM) failed to meet analysts' estimates, although they did enjoy solid earnings for the quarter.
With gold prices soaring for the quarter, expectations were high that the company, and the overall industry, would have extraordinary results. It wasn't gold prices, but rather declining copper prices which caused the company to miss estimates.
Earnings for the quarter came in at $382 million, or 78 cents a share, more than double the $162 million, or 33 cents a share generated in the same quarter last year.
Minus impairments and asset sales, earnings were 77 cents a share. Analysts on average were looking for 84 cents a share, so it was a pretty big miss by the world's second-largest gold mining company.
Revenue for the quarter was $2.15 billion, up from the $1.6 billion last year, but again, missing estimates of $2.2 billion.
Guidance for gold production remains on target, as Newmont said they're still looking at a range of 5.3 million to 5.5 million an ounce, at a cost of between $460 and $480 an ounce.
Newmont increased its quarterly dividend from 10 cents a share to 15 cents a share.
Tuesday, July 27, 2010
Teck Resources Ltd. (NYSE:TCK) (TSE:TCK.B) improved over the second quarter last year, as they generated earnings of $260 million, or 44 cents a share, and revenue grew to $2.11 billion, up significantly from $1.7 billion last year during the same quarter.
Earnings were down in constrast to last year because of some favorable foreign exchange gains which pushed profits up in 2009. "Earnings in the second quarter of 2009 included a $413 million after-tax foreign exchange gain on our US dollar denominated debt compared with a $42 million exchange loss in 2010," the company said in a press release.
Teck president and chief executive Don Lindsay said in a statement, "Our second quarter benefited from a substantial increase in coal sales to 6.4 million tonnes and the higher benchmark prices negotiated for the second quarter.
"In addition, in the quarter we re-established our investment grade credit ratings from all of the major rating agencies and declared a semi-annual dividend of 20 cents per share."
Teck sold its Araguaia nickel project in Brazil to Horizonte (LON:HZM) while taking a 50 percent stake in the company.
African Barrick Gold (LON:ABG) generated earnings of $99.2 million in the first half, a gain of over 200 percent over the first half of 2009, where they had a profit of $31.3 million.
Revenue for the quarter also has significant gains, reaching $423.8 million, or 68 percent. Last year they had revenue of $258.8 million.
The bad news is production guidance was lowered for the entire year, based on delays in accessing higher-grade primary ore at its Buzwagi project, in Tanzania.
Consequently, they lowered the production range from 800,000 to 850,000, to 750,000 to 800,000. Operational cost estimates were also raised from $450 to $500 a ton, to $500 and $550 a ton.
This will cut into revenue, earnings and margins for the rest of the year.
African Barrick Gold was spun off from Barrick Gold (NYSE:ABX) earlier this year.
Monday, July 26, 2010
NovaGold Resources (AMEX:NG), IAMGOLD Corporation (NYSE:IAG) and Ivanhoe Mines Ltd. (NYSE:IVN) all fell Monday, as gold tested the $1,180 an ounce mark, ending at $1,183.10 an ounce on the Comex division of the New York Mercantile Exchange.
With most economics seeming to be going against gold's grain, the relatively slow decline in price reveals the uncertainty of the market, and even though there is some risk appetite out there, it's not necessarily robust, for obvious global economic reasons.
Although investors were hailing the strong earnings and better-than-expected housing numbers, it isn't convincing, as there is nothing that is really surprising anyone, as the numbers for last quarter were expected to improve over their recessionary numbers from the year before, making everything look good this time around.
The current quarter is different, and we should see some weak numbers next time, although we're in the midst of this reporting season, so many investors aren't discounting that yet as it pertains to gold and equities.
Speaking of gold miners reporting for this quarter, the majority of them will be very strong, based on the strong gold prices last quarter, just like other commodity prices as well.
One thing I think will happen, and it could be any time, is gold prices are looking for an excuse to run, and investors are looking sideways at them, ready to plow money in them as soon as the negative news continues, which it will.
For now though, until investors realize the extraordinary threat the sovereign debt crisis in the European Union really is, and the joke that was the bank stress tests (which were a public relations ploy, not a true test), gold will continue to experience downward pressure, although probably at the incremental moves we've been seeing recently.
Gold miners like NovaGold Resources, IAMGOLD Corporation and Ivanhoe Mines Ltd. will perform in a similar fashion, although some, like Ivanhoe Mines, should do better than many of their peers.
Silvercorp Metals Inc. (NYSE:SVM) plunged in New York and Toronto as the company projected a 10 percent drop in production as a result of abnormally heavy rains at their China "Ying" silver/lead/zinc mining camp.
Over a period of three hours, 217 mm of rain deluged the mining location, flooding three tunnels even with flood control measures in place.
Silvercorp said this in a statement:
“Mining facilities and equipment, such as such as compressors, power switchboards, and transformers at four sites were either flooded or buried by debris washed down from upslope.”
Silvercorp will have to put about $1 million into cleaning up the mess and to repair damaged machinery. The cleanup will take up to 30 days to complete.
The company has four mines in the Ying camp.
UBS (NYSE:UBS) via UBS Investment Research, said they like the overall mining and metals sector, and within the gold segment, Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX) are their top picks.
UBS analysts cited these as the reasons for their positive outlook on gold:
"We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years," the analysts advised. "We expect that this background will remain very supportive for gold prices over the period, and that informs our above consensus gold price outlook and our inclusion of two gold stocks in our top ten picks..."
"The fear of further debasement of fiat currencies follows closely. And in turn we expect the fear trade-very apparent through heightened physical demand for small bars and coins and rising ETF creations-will escalate in H2 2010 and into 2011."
UBS has also increased their estimates of gold prices, saying they're looking for an average of $1,205 an ounce in 2010, and in 2011 it'll pick up to $1,250 to $1,295 an ounce on average.
It's somewhat puzzling as to why the price of gold hasn't surged up again, as the economic news released over the last week should have pushed prices up.
There are several things are probably holding it back, and those are simply the usual summer period where suddenly things slow down for gold, which could be people acting like usual, no matter what the news.
Secondly, and possibly more important, is the so-called stress tests on European Union banks which gave the appearance of there being little in the way of risk there.
Finally, low inflation in the U.S. has investors abandoning gold for other investments.
This is even after the downgrade of Ireland debt last week and Ben Bernanke committing to print as much money as needed to prop up the U.S. economy if he has to.
Add to that the ongoing story of China slowing their overheated economy down, especially in regard to the urban property market, and the price of gold should be skyrocketing.
The conflicting events and stories have investors somewhat on the sidelines and unsure as to where it will all lead to; the reason for the drop in prices, but also why the prices are dropping precipitously, like some on the other side of the equation have predicted.
Investors seem to be holding their breath some to see what the economic narrative really is, and until they make a decision there, gold will continue in its current pattern of going up and down, with a slight gravitation to the down side.
Once it is understood the bank stress tests in the EU were dubious at best, we could see a rebound, although it could take the usual fall season to get investors interested again.
Today's spot gold price was at $1,185.20 at 12:26 PM EDT.
Last week, investment banks UBS (NYSE:UBS), CIBC World Markets and TD Securities all increased their outlook on gold prices, will all of them looking for around $1,300 an ounce or more going forward.
UBS was the last of the three during the week to upwardly revise their numbers, increasing their outlook from $1,129 an ounce to $1,205 an ounce for 2010, and up to $1,295 an ounce, from $1,250 an ounce in 2011.
The dubious stress tests and their results didn't impress UBS, as it didn't many others, as the bank noted that "ongoing pressure on sovereign debt markets, combined with persistent concern over private sector credit contraction will raise the specter of debt monetization repeatedly over the next few years.”
TD Securities increased their gold price estimates in 2011 from $1,100 to $1,300, and from $1,000 to $1,400 in 2012. They also cited global economic uncertainties as the impetus behind their changes in viewpoint concerning gold.
For CIBC World Markets, their changes were the largest, increasing their outlook in 2012 to $1,500 an ounce. Over the long term, they see gold leveling at from $1,000 to $1,200 an ounce.
The fall season is historically a big mover for gold prices, and with prices continuing to find support a slightly below $1,200 an ounce, gold could make a big move starting in September.
Saturday, July 24, 2010
No matter how you look at it, Kinross Gold (NYSE:KGC) (TSE:K) made a super deal with Harry Winston (NYSE:HWD) for the Diavik Diamond Mine, when they acquired from them in March 2009 for $150 million, and now are turning around and selling it back to them for $220 million.
Kinross, which also owns a 19.9 percent stake in Harry Winston, will sell that as well to an unnamed consortium of financial institutions.
The diamond industry was slammed hard during the harder parts of the recession, and Winston need the influx of capital to shore up its balance sheet, which Kinross wisely offered them.
Since it began operations in 2003, Diavik has produced over 50 million carats of rough diamonds.
The industry seems to be turning around now, as demand has surged from Asia, specifically India and China.
Major competitor De Beers increased sales by over 80 percent in the last half, and believes things will continue to improve.
Assuming the diamond industry has in fact turned around, it would make sense to Harry Winston to re-acquire the mine, even though they had to pay a premium to do it.
Although terms weren't disclosed, based on the closing on Thursday, the 15.2 million shares exchanging hands are valued at approximately C$200 million.
Kinross closed in New York at $16.43, gaining $0.10, or 0.61 percent.
Friday, July 23, 2010
Gold futures and spot gold prices have held their own so far after the release of the stress test results of 91 banks, while the U.S. dollar rose against the euro immediately afterwards.
Results found that of the 91 banks being tested, seven totally failed the test, and were found they couldn't survive losses incurred from sovereign-bond holdings.
Gold dropped right after the results came in, but had rebounded slightly, and are holding level for now.
The U.S. dollar gained 0.8 percent against the euro.
Over the short term, how traders interpret the data of the banks will determine the volatility of gold prices.
Gold may be on its way to the negative for the first time in four days, as concerns over the response of investors to the results of the stress test of European banks as they come in.
At about 1:30 PM EDT, spot gold had dropped $5.10 to $1,189.40 an ounce.
Traders have been lowering their exposure to gold as a result, and so the prices have dipped slightly, although they could rebound, depending on what the results of the stress tests are on the 91 banks in Europe that have been subjected to the tests.
Expectations are if equities fall once the data are released, gold prices will probably come under even more pressure because investors will have to sell their positions to cover losses.
The opposite for gold prices today, as mentioned above, would be true on the other side of it.
Eldorado Gold Corp. (NYSE:EGO) had their rating cut by CIBC World Markets, while Barrick Gold (NYSE:ABX) was upgraded to "Sector Outperformer."
The rating of Eldorado was slashed from "Sector Outperformer" to "sector performer," as maintance costs and other factors keep the company from a strong performanc.
The maintanence elements refers to the Kisladag mine, where they'll doing work going forward, while the producton factor is the lower grade ore found by the company.
Eldorado closed Thursday at $16.03, up $0.34, or 2.17 percent, in New York.
Volume was 2,787,579, about half the 3-month average.
Citigroup Inc. (NYSE:C) increased their guidance for Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) for 2010, raising estimates from $7.15 to $7.20.
"Copper remains our favored base metal because of high industry utilization rates, declining exchange inventories, and rising merchant premiums that signal improving demand. As a low cost producer with good execution history, we believe FCX's valuation multiple can re-rate if copper prices average $3.29/lb in 2011 as we expect and the company continues to generate free cash," said Citigroup's Brian Yu.
Freeport is the top pick of Citigroup at this time, which the company affirmed again.
For 2011, the company lowered its outlook, dropping it from $7.90 to $7.50, and also cutting the price target of the miner from $93 to $92.
Thursday, July 22, 2010
After the Democrats snuck the provision for gold coin dealers to have to provide a 1099 for every investors they acquire over $600 in gold from, it was only a matter of time before the upped their attacks on the alternative investment and currency, and that has come in their ferocious and unwarranted attack on Glenn Beck and Goldline, through the investigation of alleged "sales tactics" which are evidently too aggressive for Democrats' tastes.
How this requires an investigation is so dubious you have to dig some before you find out that the person leading the probe of Beck and Goldline is an Obama campaign contributor - Adam Radinsky.
Another Democrat, of course from New York, Anthony Weiner, has been leading the questioning and assertions concerning Beck and Goldline.
What is the big deal about? This horrible company is encouraging customers to acquire gold coins rather than gold bullion. Really! That's it.
A tiny group of customers alleged they were "coaxed" into buying coins instead of bullion, which have been harder to sell at a profit. There's not one thing in the world someone couldn't say the same thing about, so this is a non-story created by the Democrats because of their hatred of Beck.
What company in the world doesn't attempt to sell their more profitable products, which gold coins definitely are. But bullion has a lot of risks, due to its size, and the fact of how much it would cost, which the average person obviously couldn't afford.
Gold coins are recommended, for the most part, by most in the gold industry, and their portability and lower costs are a major reason for that. How that gets turned into an investigation is beyond the scope of a healthy human being and the way they think.
Democrats, who own the health bill, also hid a provision to force gold coin dealers to have to provide a 1099 for each person they pay over $600 to for gold they acquire. That will devastate many of the small business owners dealing in gold because of the shear volume of paperwork required.
Gold continues to expose the policies of the governments and central banks around the world as crooked and devastating to the value of the currency. This is why they act stupid and clueless when people ask them questions as to why gold prices are going up.
Freeport McMoRan Copper & Gold Inc. (NYSE:FCX) said they are looking into the possibility of expanding the processing capacity at their El Abra mine in Chile.
Yesterday, Chief Executive Officer Richard Adkerson said they could work with their Chile partner Codelco, the state-owned copper firm, to build a new copper mill at the project.
Also concerning the El Abra mine, the company said they're going to spend about $725 million through 2015 to extend the mine's life, as there's significant resources to still access. That would add about 10 more years to the life of the mine.
Freeport owns 51 percent of El Abra, while Codelco owns the remaining 49 percent.
Normally 1099 forms are used for those self-employed or contractors.
This will not only increase the price of gold coins, because of the added employees needed to perform the paperwork, but will be an additional tax to people selling their gold.
The Industry Council for Tangible Assets has come out against the outrage perpetuated on them by the Democrats and Obama, with ABC News reporting Diane Piret, industry affairs director of ICTA, saying this, "Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public. Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."
Piret added, that every time someone sells over $600 in gold to a dealer, they'll have to fill out the paperwork to report it to the government.
Some dealers point out they could fill out up to 20,000 forms a year just to comply with the new law. This would require additional employees to keep up with it.
Ultimately this cost will be passed on to customers.
The provison, scheduled to be implemented in 2012, is being opposed also by Rep. Daniel Lungren, R-Calif., who has introduced legislation to repeal that particular portion of the health care bill.
Sellers of gold could also experience a nightmare if they don't understand what's going on, and the gold is considered revenue, as federal and state taxes would have to be paid, and FICA taken out after the fact.
Even the IRS admits it could be a nightmare concerning the volume of paperwork which would increase.
Wednesday, July 21, 2010
Ivanhoe (NYSE:IVN), Paramount (AMEX:PZG), Northgate (AMEX:NXG), Aurizon (AMEX:AZK) Finish Positive on Down Day
Ivanhoe Mines (NYSE:IVN), Northgate Minerals (AMEX:NXG), Aurizon Mines (AMEX:AZK) Paramount Gold and Silver Corp. (AMEX:PZG) all managed to finish positive on an otherwise slow day, as most gold miners and miners in general were down.
Gold prices have been under pressure because of low inflation and the silly notion the European sovereign debt crisis is under control. People will find out about that soon enough, just like the recent reminder when Ireland debt was downgraded.
Some are attempting to prop up the euro, but over the long-term, and probably short-term, it is unlikely to work. Gold had been moving up as the euro went down.
Gold miners and other metal producers have declined with gold prices, but the companies listed here were all able to buck that trend on Wednesday.
Topping the list is one of my favorites for the long term, Ivanhoe Mines, which closed at $17.02 a share, gaining $0.29, or 1.73 percent. Volume was above the 3-month average for the day.
Paramount Gold and Silver Corp., as measured by percentage, was up the most of these four, ending the day at $1.33, gaining $0.06, or 4.72 percent. Volume was just above average for them.
Northgate Minerals finished the session at an even $3.00, increasing $0.09, or 3.09 percent. Northgate traded far above the normal 3-month trading average.
Aurizon (AMEX:AZK) ended the day at $4.90, gaining $0.05, or 1.03 percent. Trading volume for them was below the 3-month average.
Freeport McMoRan Copper & Gold Inc. (NYSE:FCX) enjoyed a 10 percent increase in earnings in the second quarter, as higher copper and gold prices helped them to a strong showing, even though production numbers were down.
The miner earned $1.49 a share after excluding one-time items, far above the $1.34 a share analysts had been looking for.
Copper prices surged 38 percent higher on average during the quarter, leading the earnings gains. Copper entails about 75 percent of all sales by Freeport.
Gold also helped the company, as prices were at $1,234 an ounce on average during the second quarter. That was up by 32 percent over last year, which averaged $932 an ounce during the same quarter.
Revenue grew to $3.86 billion a gain of 5 percent, from $3.68 billion last year. Analysts had been looking for $3.66 billion. Again, this was led by higher prices and not increased production.
To get an idea of how the stronger prices helped the company, production last year for copper during the same time period was 1.1 billion pounds, while the most recent quarter was 914 million pounds.
Gold production was at 298,000 for the most recent quarter.
Guidance for the year remained the same, with production of copper estimated at 3.8 billion pounds, and gold production expected to reach 1.8 million ounces. Molybdenum, which could perform strong if the demand for steel increases, which is expected, has an estimated 63 million pounds to be produced for the year.
Freeport was up to $66.74 in New York as of 1:26PM EDT, gaining $2.42, or 3.76 percent.
Tuesday, July 20, 2010
As we gradually sift through the economic data and news, confirmation we are far from any type of recovery continues to emerge, as the latest data in new housing starts confirm once government props are removed it falls apart. Gold companies like Iamgold (NYSE:IAG), Goldcorp (NYSE:GG) and AngloGold Ashanti (NYSE:AU) will continually be the beneficiaries of the weak economy, as gold prices resume their upward climb.
Gold prices finished above $1,190 an ounce today, and the majority of gold miners climbed with it, as housing starts dropped another 5 percent in June, following the 15 percent drop the prior month.
Among the group of gold miners mentioned here, Iamgold performed the strongest of the three, ending the trading session in New York at $16.21, gaining $0.65. or 4.18 percent. They did decline after hours to $15.99 a share.
Next was Goldcorp, who had a nice upward move of $0.60, to end the day at $40.35, or 1.51 percent. They were level in after hours trading.
AngloGold Ashanti moved the lowest of the three, reaching $39.53 by close, a gain of $0.43, or 1.10 percent.
There is nothing that points to any of this changing, as the job market would have to completely turn around, which it hasn't, as consumers continue to hold back on spending as the economy continues to sputter.
Gold investors will be a happy lot going forward, as there will be a big move once the reality is digested by the market.
Although it'll take a little time to sort out because of conflicting economic reports which attempt to mask the extremely weak U.S. and global economy, the weak housing report again reminds us of the importance of holding gold in the face of major risk associated with the economy.
The appearance that there is uncertainty as to which direction the economy is going is exasperated by news reports that imply this is the case, when in reality, now that the faux recovery is exposed as soon as the government props are lifted away from various sectors of the economy, gold will again be seen as the one place investors can place their money and retain it.
If you have trouble believing that, just look every time the data come out and the ubiquitous and dishonest word "unexpected" is added to it. Every single time we get down economic news the financial press, especially mainstream financial press, somehow can't ever figure out what's going on, and they are caught off guard by the "unexpected" economic news.
How could anyone be that ignorant, for example, concerning the housing market in the U.S. As soon as the tax credit was ended housing started predictably plummeted, as they did again in the latest data, where they were down another 5 percent in June, which was the lowest in eight months. How can that be unexpected?
Now they're saying there will probably be a double dip recession in housing if the job market doesn't improve any time soon. We also know that's not going to happen, as the wasted 100s of billions allegedly already spent has done nothing to create jobs, as government money never can.
All we've got from that, for the most part, is more government employees feeding off the hard work of the private sector, and which they can't afford to do any longer.
How that all affects gold is this: housing starts plummeting, and if no jobs are created, we're going into another recession. Unless you think a miracle is going to happen or spending another $1 trillion or so will solve it, you're in for a world of hurt as the "unexpected" circumstances overcome you. Gold will explode upward again as the realization comes that we've been lied to again. There never has been prospects for a recovery, there has never been a recovery, and there isn't going to be a recovery for a long time. Gold will be the beneficiary of that as the realization grows on the investing community.
Eldorado Gold (NYSE:EGO), Gammon (NYSE:GRS) and Agnico-Eagle (NYSE:AEM) were all up over 2 percent today, as gold rose on disappointing earnings from some companies, along with the euro dropping early in the trading session.
The majority of gold miners were up on the day.
Eldorado topped the three as of 1:14 PM EDT, standing at $15.76, gaining $0.38, or 2.47 percent.
Agnico was at $56.57 as of 1:13PM EDT, just behind Eldorado as measured by percentages. They gained $1.31 a share, or 2.37 percent.
Even as I am writing Gammon Gold made a nice move, and are at $5.49, gaining $0.19, or 3.58 percent, as of 1:18 PM EDT.
Gold is expected to be volatile during the short term, but should rebound nicely and continue its upward move.
Although many were looking for Alcoa (NYSE:AA) to give some guidance as to economic conditions, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will probably be a more accurate measure, although combined with Alcoa's numbers, could give a snapshot of where the economy really is at, against the numerous assertions and conflicting reports out there.
Tomorrow morning Freeport gives its earnings report, and it'll be especially important to see the copper numbers, although the secondary molybdenum and gold numbers will be important as well.
But taking into account the importance of copper in the global economy, that is the primary measure to look for from the point of view of economic conditions and where they have been at.
Just like the economies of Europe and the United States, China will be found to have slowed down some after the stimulus money wound its way through the system. Copper in the first quarter was up based on that, and the sales in the second quarter should give a real reading, or at least, more accurate reading of economic conditions when they're not being propped up by governments.
As far as sales goes, Freeport is expected to have sold about 830 million pounds of copper, 15 million pounds of molybdenum, and 270,000 ounces of gold
Analysts are looking for earnings of about $1.32 a share on $3.56 billion in revenue.
After Goldman Sachs (NYSE:GS), IBM (NYSE:IBM) and other missed earnings estimates, or confirmed weak quarters, gold prices today increased by almost $8 an ounce at mid-day.
On the Comex division of the New York Mercantile Exchange, gold for August delivery increased $7.80 to $1,189.70 an ounce, while spot gold was up by $7.90, to $1,192 an ounce, as of 12:52 PM EDT.
Another factor was the fall of the euro, which dropped to $1.29 against the U.S. dollar, or 0.15 percent.
While gold will resume its upward march, short term it does look like there'll continue to be some volatility as conflicting economic news keeps investors in other assets like Treasuries and the U.S. dollar.
Monday, July 19, 2010
Gold companies continue to slide on the weakening demand for gold, and Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) were all down in New York today as gold prices continue to drop.
Spot gold was at $1,184.10 at 4:00 PM EDT, rebounding some after plunging earlier in the day, down about $8.90 at that time.
Other than the usual downturn in gold during the summer months, some of the reasons for the gold miners to fall, along with gold prices, is that inflation seems to be very low, and investors aren't taking into account the sovereign debt crisis in Europe, even though it's as bad as ever, contrary to mainstream media accounts.
Today Moody's (NYSE:MCO) downgraded Ireland government bonds, a sober reminder of the crisis still going on in Europe, and which is far from being under control.
Gold has just about everything going against it right now, but still remains resilient with prices when taking everything into consideration.
One of course is the historical lack of gold demand in the summer, which usually drives the price of gold down some.
That doesn't explain the overall correction in gold prices though, and that is related to inflation, which for now in the united States, has been pretty much kept under control. At least that's the perception.
What hasn't changed, as evidenced by Moody's (NYSE:MCO) downgrading Ireland's government bonds today, is the safety factor. Mainstream media reports have given the illusion we're still solid economically around the globe, but that's far from true, and with the European Union being the largest economy in the world, it's a good reminder for investors to keep their eye on that region, as the sovereign debt crisis is far from being over there.
As of 2:17 PM EDT, spot gold was at $1,180.80, dropping $11.20. Gold futures for August delivery were almost the same, coming in at $1,180.40 earlier in the trading session.
Friday, July 16, 2010
Gold dropped for the fourth straight week, as investors look elsewhere for safety, albeit, it won't last too long. Consequently, Allied Nevada Gold (AMEX:ANV), Iamgold (NYSE:IAG) and Yamana Gold (NYSE:AUY) got hit hard Friday, as did most gold miners.
One of the worse performers in the sector for the day was Allied Nevada Gold, which plunged almost 7 percent to $17.25, losing $1.24, or 6.71 percent.
Next was Iamgold, falling to $15.91, a drop of $0.71, or 4.73 percent.
Yamana followed, ending the session and week at $9.53, a $.37 decline, or 3.74 percent.
The US dollar and euro were both higher, and the inflation picture looking pretty level in the U.S., at least for the short term.
What has skewed the picture some is the illusion in Europe by some investors that they've got back on track and are doing okay. That's probably the major factor that will unhinge all this optimism, and when Europe comes into the picture again, it will remind investors why gold will continue to go up over the long term.
Gold prices today fell again this week, dropping $20.10 for August delivery, to $1,188.20 an ounce. Spot gold prices ended at $1,193.00, A decline of $15.40.
Several factors play a part in the gold price fall. First, the misguided idea that the sovereign debt crisis in Europe has been handled, or at least improved, mostly based on Greece begin able to sell bonds to the private sector. Second, inflation remains relatively mild in the U.S., and with recent data showing core consumer prices rising only 0.2% in June, had traders looking elsewhere for safety.
Finally, the U.S. dollar strengthened more, while the euro also made gains, seeming to imply that gold is unwinding against the euro.
With these various factors in play, investors are, for now, looking elsewhere to put there money, even though the sovereign debt crisis in Europe is, the American economy is in shambles, and safety should continue to be on the minds of investors.
This is the fourth week in a row the gold price have fallen, although it is still finding support in difficult circumstances.
Gammon Gold Inc. (NYSE:GRS) (TSE:GAM) announced today is has closed its private placement with Corex Gold (CDNX:CGE.V).
Gammon acquired 4,706,000 units of Corex at a price of C$0.68 a unit, for a total investment of C$3,200,080. That gives them close to a 12 percent stake in the junior gold miner (14 percent on a fully diluted basis).
Included in each unit acquired is one common share of Corex, along with one half of one share purchase warrant exercisable at C$0.90. That will apply over a 24-month period from the date of close.
In order to maintain its current percentage of stake in the company, Gammon also has the right to take part in every future financing of Corex.
Corex was at $0.68 a share as of 2:25 PM EDT, gaining 2 cents, or 2.99 percent.
Gammon was down to $5.38 a share, dropping 35 cents, or 6.11 percent at the same time. Most of that is attributed to falling gold prices.
Gold futures plunged to their lowest level in two weeks as traders speculate the gold and the euro have decoupled, and inflation may be under control for now, as economic weakness continues to hinder growth.
The euro will finish higher for the third week in a row as the illusion the debt crisis in Europe isn't a concern, mostly on the ability of Greece to sells bonds in the private market.
As long at that is thought to be taken care of concerning the overall European Union sovereign debt crisis, we will probably see downward pressure on gold prices, at least in how it responds in relationship to the euro.
Under normal economic conditions, gold will move in unison with the euro as an alternative investment and place of safety against the US. dollar, but that changed in light of the sovereign debt crisis, and now that the perception it is no longer as threatening as it had been, gold appears to be unwinding against the euro. That could of course change if and when things in Europe get worse, but until then, this should be the way things go.
Now we'll see how gold responds to the US dollar and its movement, as well as the possibility there will be very low inflation for some time to come.
At 1:45 PM EDT, gold was down $18.30, to $1,190.10 an ounce.
Goldcorp (NYSE:GG) (TSE:G) said Thursday that it wouldn't oppose the acquisition of all outstanding common and preferred shares of Terrane Metals Corp. (NYSE:TC) by Thompson Creek Metals (NYSE:TC).
The stake held by Goldcorp in Terrane outstanding shares is 58 percent; owning 240 million preferred shares and 27.3 million common shares in the company.
Once the deal is completed, Goldcorp will own 13.9 million common shares of Thompson Creek Metals, an 8 percent stake, and receive C$240.5 million in cash as well.
Goldcorp is one of the largest and low-cost gold miners in the world, only recently surpassed in costs by Newmont Mining (NYSE:NEM).
Thursday, July 15, 2010
Carlos Slim, who has been named the richest man in the world, and is among the top five every year since he broke into the upper group of billionaires, is increasing his gold production through his mining company Grupo Frisco, which is a division of holding company Grupo Carso SAB.
Grupo Frisco acquired a mine just this month, and has plans to open up more mines in 2010. Gold production is up nine times what it was in 2009 already.
Some projects in development include the El Porvenir mine, which they acquired from Goldgroup for $25 million, along with Concheno and San Felipe. The latter two should produce about 68,000 tons of gold and silver ore on a daily basis. The Porvenir mine should produce about 50,000 ounces of gold annually, according to prior Goldgroup estimates.
The challenge for Slim and Frisco is they have their production spread out, which results in higher costs to mine the gold and other precious metals.
Goldman Sachs (NYSE:GS) upwardly revised its 12-month gold forecast to $1,355 an ounce, an increase of 1.5 percent.
Most of the change was based on the threat of the sovereign debt crisis in Europe, and a long period of low interest rates.
Goldman still adheres to the idea gold prices will fall sometime after 2011, once the Federal Reserve tightens the money supply. Consequently they recommended gold producers to sell their production forward.
The banking giant increased their estimates for every base metal with the exception of zinc, which they cut to $2,225 a metric ton, a decline of 18 percent.
How long can the narrative of potential be applied to Gammon Gold (NYSE:GRS)? It's not an easy question to answer, but the beating it's been taking lately shows investors aren't believing the story anymore, especially after completely shutting down their El Cubo mine from labor unrest.
Consequently, whether you use Toronto or New York as a measure, the stock has been hit hard and at similar levels at either exchange.
The P/E on Gammon is a huge 93.16 as well.
Interestingly, Scotia Capital upgraded the beleaguered stock from "Underperform" to "Sector Performer" last week, and the share price has risen a little since then.
One potential positive for the company is they can now focus primarily on their Ocampo mine, which had been generating 77 percent of the reserve base of the company, and which resources formally used at El Cuba have now been transferred there.
While this could be a buying opportunity after the stock has plunged, the overall story still must make sense, and Gammon has yet to prove their narrative and the reality are one and the same.
Ivanhoe Mines' (NYSE:IVN) shares continue to shoot up, gaining over $3 a share over the last five trading days. This week it's already up over 22 percent.
Although the future success of Ivanhoe centers on their Oyu Tolgoi mine in Mongolia, it's short term success does as well. The news that they are abandoning their agreement with Rio Tinto (NYSE:RTP) which had restricted them from bringing in new investors was behind this most recent surge in share price, especially over the last couple of days.
The Oyu Tolgoi mine is considered among the three most important in the world, and is the largest that hasn't been worked yet.
Ivanhoe is expected to become one of the major miners as production begins at the site, propelling them into the elite group, but more importantly, generating a lot of revenue and profits for shareholders.
It remains one of the major mining stories now, and should be for years into the future.
Liberty Media Corp.'s Chairman John Malone was talking about his investment strategy recently, and said the strange statement concerning gold and why he wasn't investing in it.
Malone said this, “I’m not a gold bug. There’s just something about gold that seems artificial to me.”
Both assertions show his ignorance. First of all, being a gold bug has absolutely nothing to do with investing in gold. This reveals Malone doesn't even know what the historical definition of a gold bug actually is.
But his second statement is even more strange to me. How can gold be considered artificial? Someone must have instructed him with those words and outlook, as they make no sense whatsoever.
Someone has access to Malone who trumpeted in his ear that gold has no real role other than making jewelry. That would mean that there is no significant demand from that point of view, which of course is completely false.
Now there is little industrial demand (although there is some), but that has nothing to do with the artificiality of gold, from the way Malone is saying and viewing it.
He doesn't understand economics and central banks and what the effects of policies and actions has on the markets, and ultimately on the price and value of gold.
Things like the amount of money being printed by central banks, inflation, debasing of currencies, this are the more important factors in gold, of which safety is a key factor.
Malone obviously has a hard time understanding or grasping this, so he simply calls it seemingly an "artificial" commodity.
Maybe he's just irritated he hasn't been invested in it over the last decade, and has missed out on making millions.
Wednesday, July 14, 2010
Now that NovaGold (AMEX:NG) losses have mounted over the last quarter, they are getting more aggressive in pursuing capital to work on their Donlin Creek project, which is by far their most important mine. They are in a 50/50 partnership with mining giant Barrick Gold Corp. (NYSE:ABX) in the project.
Either the costs at the project are increasing, or NovaGold is pushing harder to get it going, as the proven gold reserves of 34 million ounces, valued at about $41 billion at today's gold prices, has them salivating over the prospect of getting gold production going.
Marc Faber recently joined the board of the gold miner, and financial giants like John Paulson and George Soros have invested millions into the company.
At this time all the appropriate studies are being conducted, which take time, and the gold production may not start until as late as 2017.
With NovaGold having to pay close to $2.2 billion in capital costs for Donlin, you can see why they need more capital to operate until production begins.
This is of course nothing new to the industry, but if costs do increase, NovaGold faces challenges over the long term. Having Faber on the board and a resume of Paulson and Soros investing about $175 million in them, they do have a solid foundation and argument to work from.
Now they will attempt to battle to keep their 50 percent stake while raising capital, as their giant partner could easily take up the slack if problems arise, which NovaGold wouldn't want to allow to happen.
Over the long term this is a sure thing, now NovaGold has to raise the needed and significant amount of capital to last long enough to cash in, without giving up anything else.
Shares of Ivanhoe (NYSE:IVN) soared 14 percent Tuesday as they battled Rio Tinto (NYSE:RTP) over their stake in the gigantic Oyu Tolgoi mine in Mongolia.
The battle between Ivanhoe and Rio began when they notified Rio they were going to exercise their right to issue more shares to investors besides Rio Tinto. This would allow Ivanhoe to sell over 5 percent of its common shares to another mining company.
Rio is fighting this because they say it breaches its private placement agreement, which Rio claims gives them the right to increase their stake in Oyu Tolgoi to 46 percent.
This would obviously change if Ivanhoe sold over 5 percent of common shares, as it would cause them to lose control of the project and the company if a bloc was created which owned over 50 percent of the shares.
Oyu Tolgoi is one of the most significant mines in the world, estimated to be among the top three, and the largest not being mined at this time.
Ivanhoe is doing this to raise more money, and said they will continue to seek other financial options going forward to bring the copper-gold mine online by 2013.
There have been rumors for some time that other mining companies have been wanting to buy a stake in Ivanhoe since they have controlled Oyu Tolgoi. One name in particular that has been coming up a lot lately is China-based Chinalco.
NovaGold (AMEX:NG) (TSE:NG) had a poor second quarter, with losses coming in at $15.8 million, over three times the $4.8 million in losses last year.
Revenue for the quarter also plunged, dropping to only $100,000, down from $300,000 in the same quarter last year. The company said that was due to declining gravel and land sales.
Losses came in at seven cents a diluted share for the latest quarter, compared to 3 cents a diluted share in the same quarter in 2009.
Near term the best project for NovaGold is its Donlin Creek property in Alaska, which it has a 50 percent share in with gold mining giant Barrick Gold Corp. (NYSE:ABX) (TSE:ABX).
That project should produce about one million ounces of gold on an annual basis over a 20-year period or more. It's now in the pre-permitting phase of development.
The shareholders meeting of Augen Gold (CDNX:GLD.V) has been postponed from July 13, and has been rescheduled for July 23. The cut-off date for proxy votig was also changed to July 21, according to the company.
Irregularities with a number of proxies was the reasoning behind the change, as a large block of shareholders, representing 39 percent of issued and outstanding shares, submitted proxies, naming a director leaving the company as proxy. Others submitted blank proxies as well, generating unsurety as to what they wanted.
The company did say this, “The directors of the company are concerned that the dissident shareholders seek exclusive control of Augen Gold despite representing just 39% of the shares outstanding.”
Evidently the group of shareholders involved had said they might hold their own meeting in an undisclosed location with only them present.
It's hard to believe the company has no idea what the shareholders want other than an attempt to take over the company. Something must have led up to that, and that's what the real story probably is, unless it's just a power grab.
With owning 39 percent of the shares though, it would have made more sense for them to acquire enough shares for control of the company before making their move. Doing it this way is strange indeed, which would seem to be an attempt to draw attention, but so far no message or release has been forthcoming.
Tuesday, July 13, 2010
Moody's (NYSE:MC) did some surgery on the sovereign debt rating of Portugal today, taking the scalpel to the country by cutting the rating by two notches, reminding people the sovereign debt crisis in Europe remains, and is a threat to the global economy. Investors flocked to gold for safety, and gold prices today have already risen by $18.30, to $1,215.40.
Portugal's government bonds were cut from A1 to Aa2.
Moody's said there is little hope for economic growth in the country at this time, the reason for the downgrade.
I laugh now that a couple of days ago some analysts were quick to jump on the idea that the gold rally was over because of its temporary correction.
Nothing has changed economically around the world, and we're a far way from things turning around in a sustainable or meaningful way.
Gold will continue to rise as reports of the real economic condition are revealed from time to time.
Monday, July 12, 2010
Stifel Nicholas Initiates Coverage on IAMGOLD (NYSE:IAG), Eldorado (NYSE:EGO), Kinross (NYSE:KGC), Others
Stifel Nicholas initiated coverage on a large number of gold mining companies today, including IAMGOLD (NYSE:IAG), Eldorado (NYSE:EGO), Kinross (NYSE:KGC), Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG), Osisko Mining (TSE:OSK), European Goldfields (TSE:EGU) and Newmont Mining (NYSE:NEM).
Eldorado Gold, Barrick Gold, Kinross Gold and Goldcorp were all started off with "Holds" by Stifel.
While Iamgold, European Goldfields, Osisko Mining and Newmont Mining received a "Buy" from the financial institution to begin with.
Even though Stifel was bullish over the gold sector, only two of these companies were in the positive Monday, Goldcorp in New York and European Goldfields in Toronto.
Gold prices were down again today, as they continue to linger at about the $1,200 an ounce mark.
Ivanhoe (NYSE:IVN) has been approved by the Foreign Investment Review Board (FIRB) of Australia to acquire the Osborne copper and gold project in Queensland, owned by Barrick Gold Corporation (NYSE:ABX).
Approval from the FIRB was required because Ivanhoe has an 81 percent stake in Ivanhoe Australia.
Other than approval from the FIRB, the remaining condition to complete the deal would be approval to transfer an exploration permit, which is part of the deal. Ivanhoe Australia is deciding on whether or not to waive that condition.
Also in the Cloncurry region, where Osborne is located is Merline, a high-grade molybdenum and rhenium mine, which CEO Peter Reeve said lower capital costs to develop that mine with the acquisition of the new mine.
Ivanhoe was at $14.50 a share in New York, as of 1:13 PM EDT, a $0.50 gain, or 3.43 percent upward move.
Barrick was slightly down in New York, to $43.46, losing $0.10, or 0.25 percent.
A stronger US dollar has some investors looking to the greenback as an alternative place of safety rather than gold, and gold prices today have fallen by $11.60, to $1,199.80 an ounce, as of 12:20 PM EDT.
The US dollar has risen today against a basket of six major currencies.
Gold is holding better against foreign currencies today than it is against the US dollar, so some have recommended selling the euro, for example, and invest in gold. That has been a practice for some time now as the sovereign debt crisis in Europe became known.
So at this time the dollar is holding gold prices down today, as fear has shrunk and investors look to other places to put their assets.
Friday, July 9, 2010
The major gold miners ended the week and trading session on a high, after a poor showing early in the week, although Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) were more volatile than Newmont Mining (NYSE:NEM), which had a nice upward move since Wednesday, as did some of the smaller miners.
Newmont broke their all-time high on Friday, which had formerly been reached in February 2006, when they hit $62.80. They pulled back later in the trading day to end at $61.92, gaining $1.59, or 2.64 percent. That brought their market cap to $30.43 billion.
Barrick climbed $0.99 on the day, finishing at $43.57, a 2.33 percent increase. Their market cap is $42.90 billion.
Goldcorp, along with Barrick were performing more erratic for the week, and did end at $41.59, a gain of $0.98, or 2.41 percent. Goldcorp's market cap was just above Newmont at $30.52 billion.
Newmont has overtaken Goldcorp as the low-cost gold producer, positioning them to be profitable in most economic conditions, although Goldcorp still maintains solid cost controls too.
Freeport-McMoran (NYSE:FCX), BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) Vale (NYSE:VALE), all moved up nicely in the trading session, ending a week which started slow, but picked up strong on Wednesday and continued on through the week.
Freeport ended the session at $65.98 a share, up $2.82, or 4.46 percent.
Rio came in at $48.29, gaining $1.01, or 2.14 percent.
BHP finished the day at $67.84, rising by $1.09, or 1.65 percent.
And finally, Vale had a more modest gain of $0.59 a share, bringing them to $26.31 on the day, or 2.29 percent.
Goldman Sachs (NYSE:GS) downgraded Randgold (Nasdaq:GOLD) and AngloGold Ashanti (NYSE:AU) today, both from ""Neutral" to "Sell."
The reasoning behind the downgrades are the shares already have priced into them the value of the increase in gold prices, so they don't have a lot of room to grow.
Goldman's downgrade did have a negative impact on Randgold, as it dropped almost 1 percent to $93.30, falling $0.87, or 0.92 percent.
AngloGold Ashanti on the other hand, ended the day in positive range, finishing the trading session at $40.96, gaining $0.29, or 0.71 percent.
Even though the pressure was on for gold throughout the last week, gold prices today finished at their highest level in four days, and didn't move much below or above the $1,200 an ounce mark.
Gold futures for August delivery on the COMEX increased by $13.70 to end the week at $1,209.80 an ounce.
So continued support at around $1,200 an ounce either way continues, and that's a good sign going forward, flying in the face of the clueless commentators that attempted to paint the economic condition as rosy as the reason gold prices have plunged, even though the underlying fundamentals haven't changed in any way.
What is interesting for gold prices at this time, is it has found resistance going up or down right around $1,200 an ounce, and when it attempts to move either way beyond around $10, it seems to pull back and swing with that range.
In other words, gold prices have leveled, and this indicates in the short term that there's nothing really happening to give guidance to the price movement of gold, even though in the long term economic weakness, government policies, and central bank practices will continue to drive up the price of gold.
Now that gold has taken a hit and seemed to have leveled off, it looks like it'll be close to another buying opportunity, as we had to wait to see how far it would correct before rebounding.
With none of the underlying fundamentals changing in any way, it's only a matter of time before gold surges again.
Even though summer is the typical slow season for gold, I don't think that pattern is going to continue to hold, as the situation we're in is one that comes along very few times over the period of a lifetime, and we're in one now.
Some are even acting like the euro is going to continue to strengthen because the EU central bank head made the irresponsible and dishonest comment that the Euro Zone was in an economic recovery. I guess it's a miracle! It would have to be if you were to believe that nonsense.
The sovereign debt crisis hasn't been solved in Europe, and the European economy isn't recovering because Trichet says it is.
Although no one can be certain, it does seem gold has taken this hit well again, and should be poised for another push upward.
That doesn't mean it won't fall further, just that seems to have found support just under $1,200 an ounce, and from there it won't take much to make it surge forward, which should start happening soon.
Goldcorp (NYSE:GG) (TSE:G) has acquired 19,047,721 Shares of Evolving Gold (TSE:EVG) in a private placement for $0.82 a share.
In a press release, Evolving Gold said they raised $15,619,131.22 in the private placement, which they'll use "to explore the Company's major exploration properties, the Rattlesnake Hills project in Wyoming and Carlin and Humboldt projects in Nevada.."
Evolving Gold CEO, Robert Barker, said this about the deal, "We are extremely pleased to establish a strong relationship with Goldcorp. We view this placement as a major vote of confidence in our two key exploration properties, Rattlesnake Hills in Wyoming and Carlin and Humboldt in Nevada, and in the quality of our exploration team. This additional funding places Evolving Gold in a solid position to continue to aggressively explore these projects, which are both characterized as large scale gold systems. We focus our exploration on large systems, with potential for the discovery of large gold deposits. Success when exploring these large systems requires a high level of geological expertise, perseverance, commitment to drilling, and solid financing. This latest addition to our treasury comes at a critical point in our exploration program. We now have the financing to continue to support our exploration team as we drive toward creating new value for our shareholders with major new gold discoveries."
The total investment represents about 15 percent of all outstanding and issued common shares in the gold miner.
Closing of the deal is expected on July 9, 2010.
Thursday, July 8, 2010
Marc Faber has been appointed to the board of NovaGold Resources (AMEX:NG) (TSE:NG), according to a company press release today, along with Igor Levental.
Faber is of course the publisher of the popular The Gloom, Boom & Doom Report, and ubiquitous in the financial media, who love to get his contrarian view on all things economic.
"Dr. Faber and Levental are among the brightest minds in the business and bring extensive experience and expertise to NovaGold. We are truly delighted that they have joined NovaGold's Board of Directors," said Rick Van Nieuwenhuyse, NovaGold's President and CEO in the release. "Their credentials and their extraordinary wealth of market and industry experience will be invaluable as NovaGold advances its portfolio of world-class projects along the value chain for shareholders."
NovaGold has struggled since May, dropping from just under $9 a share to Thursday's close of $6.28 a share, a loss of $0.13, or 2.03 percent.
Kirkland Lake Gold Inc. (TSE:KGI) missed its numbers for the quarter and is getting hammered today as a result. It also missed its numbers for the fiscal year ending April 30.
Concerning the fourth quarter which ended April 30, the company had a net loss of C$1.7 million, or 3 Canadian cents a share, compared with a net profit of C$2.3 million, or 2 Canadian cents a share, the same time last year.
Minus special items, analysts were looking for the company to earn 1 Canadian cent a share for the quarter.
For the fiscal year ending the same date, Kirkland lost $12.2 million, or 20 cents a share. Last year the company had a net loss of $10.5 million, or 19 cents a share.
In a statement, the company said production didn't meet expectations because of "unavoidable conflicts with some project work which interfered briefly with production."
Production for the quarter plunged 7 percent to 14,995 ounces.
Guidance for 2010 gold production in the fiscal year is from 90,000 ounces to 100,000 ounces.
On a daily basis, the company stated they have a goal of reaching 1,200 to 1,400 tons by November 2011.
As of 1:16 PM EDT, the company stood at $7.85 a share, falling $0.74, or 8.61 percent.
Gold futures look like they'll fall for the third week in a row, as a rally in the euro has resulted in traders moving their money out of the yellow metal.
There has been a furious effort by officials in the European Union to prop up the euro, and it is working at this time, even though there is little to justify the optimism some are putting in the failing currency.
Just like his American counterpart, European Central Bank President Jean-Claude Trichet has announced the so-called economic recovery is gaining momentum, and this fantasy has been latched onto by the clueless who humorously believed his assertion.
Or at least, they knew others would believe it and put there money temporarily in the euro to take advantage of the temporary favor it is enjoying.
Some strategists and analysts have drooled over the assertion there is an economic recovery in Europe, and have announced the fear that had driven people to gold has been removed from the equation.
To believe the sovereign debt crisis in Europe is over, the American economy is recovering, and China isn't dealing with urban property challenges, is faith, not something based in reality.
Everything that drove investors to gold is still out there, and once that is again taken into consideration, gold prices will rise again.
Wednesday, July 7, 2010
Severstal announced today it has increased its stake in Crew Gold (TSE:CRU) to over 36 percent, after buying about 10 percent of the outstanding shares in the company.
Severstal, which is a Russian-based steelmaker, responded in this way because they are battling Endeavour Financial Corp (TSE:EDV) for control of the company. Endeavour owns close to 43 percent of Crew, and has been buying more recently. Endeavor also holds tree board positions in the company.
Total shares bought by Severstal this time around were about 206 million at C$0.2887. That's a premium of close to 18 percent over Tuesday's close.
Crew was at $0.2650 a share in Toronto at 1:00 PM EDT.
New Gold (AMEX:NGD) (TSE:NGD) said today it has had its appeal concerning the revocation of its environmental permit at its Cerro San Pedro mine, denied by a Mexican court.
This evidently reverses an injunction they won in December against the original ruling which force operations at the mine to be suspended, but which freed them to continue production to this point in 2010.
For New Gold this is a big deal, as the Cerro San Pedro mine accounts for 30 percent of the overall annual gold production of the company, and if it is forced to stop production again, it will make a huge impact on their bottom line.
It isn't clear if a complete shutdown is in the works, as the full decision hasn't been received by New Gold as of this writing.
In New York and Toronto New Gold was down over 10.00 percent, as of 12:57 PM EDT.
The battle by China against property inflation in the first half of 2010 has increased demand for gold in the country, according to the Shanghai Gold Exchange.
For the first half of the year, the amount of gold traded on the exchange increased by 59 percent, equal to about 3,174.5 metric tons.
It's cousin silver also performed much stronger, increasing by five times over last year.
“I expect China’s gold demand to rise by 11 to 12 percent this year to 440 to 450 tons because Chinese investors have shown their willingness to buy more when prices are on the rise,” Hou Huimin, deputy secretary-general at the China Gold Association, said today. “I expect prices will rise over the remainder of this year and next year.."
Song Yuqin, vice general manager at the Shanghai Gold Exchange, said along with property markets, other reasons for the increase in gold investing was the sovereign debt crisis in Europe and the volatility of the financial markets.
Royal Gold (Nasdaq:RGLD) (TSE:RGL) announced it has acquired rights to over 1 percent more for net smelter return royalty on the Pascua-Lama project of Barrick Gold (NYSE:ABX) (TSE:ABX) in South America.
The acquisition included three separate deals with individuals who held the stakes in the project, which they paid $68 million combined for.
Royal paid $40 million upfront for an immediate 0.6 percent royalty, and will pay $28 million before or on October 9 to secure the other 0.4 percent.
Total royalty interest for Royal in the project will grow to 5.23 net smelter at gold prices over $800 an ounce.
Also included in the transaction was a 0.2 percent fixed-rate copper royalty which kicks in after January 1, 2017. That will bring the total copper royalty to 1.05 percent in the project.
Production from Pascu-Lama is projected to begin in the first quarter of 2013, according to Royal Gold.
In somewhat of a past pattern, gold prices today have been moving downward, mostly on what is perceived as slowing demand in India.
Recent lower gold prices has began to create demand in physical ownership in gold rather than investing in the yellow metal.
Typically this part of the summer is considered a slow time for gold prices, and they usually will rebound later in the year.
I don't really think this is how it will play out this year, as they are too many variables, especially the terrible shape of the economies in the U.S. and Europe to think gold won't continue to be a safe haven factor throughout the summer months.
Nothing has changed there, and once this irrational optimism passes in equities, we'll see the underlying fundamentals return to the minds of investors, and gold resume its upward price movement.
This isn't to say there won't be temporary corrections, as we're experiencing now. But as soon as the latest negative economic news returns, investors will pour money back in gold again, and the prices will consequently rise with that.
Tuesday, July 6, 2010
Randgold Resources Ltd. (Nasdaq:GOLD) is going against the grain of gold price movement today, as it up at a time most gold miners are down, and as gold prices plummet with investors looking to get into equities in what they hope is a market rebound after last week.
What's a little surprising about Randgold is about $1.74 million was taken out of the company on Monday, giving the impression investors may have been viewing the stock bearishly.
So it's somewhat of a surprise the share price of Randgold is up today in light of what appeared to be a negative move yesterday, and the plunge in gold prices today.
The share price as of 1:34 PM EDT was $94.08, a gain of $0.95, or 1.02 percent.
Gold was at $1,194.20 an ounce, or down $14.70 at that time.
Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) are all down in today's trading session as investors move their money into equities, hoping for what some believe will be a rally after stocks got pummeled last week.
The three giant gold miners are participating in the drop in gold prices, with investors ignoring risk and safety today in hopes of making some quick gains.
Nothing has changed to warrant this other than the stock market plunging on weak economic news, so we can expect this to reverse itself once the idea making a quick buck on what is hoped to be a temporary rebound plays itself out.
It'll be interesting to see how long it continues before stocks get hit again and gold resumes its upward journey.
Crocodile Gold (TSE:CRK) (OTC:CROCF) announced its original projections for production in 2010 remain on track, and the company should meet their gold production target of 100,000 ounces for the year.
Chief Operating Officer, David Keough, said in a press release, "We have seen a steady month by month improvement in mill availability, recovery and ounces produced. We are finding that improved grade control and mine planning processes as well as preventative planned maintenance practices are allowing us to more accurately predict production but also to achieve our targets. In the coming months we expect to see continued improvement in overall production as we expand production to 200,000 ounces in 2011."
In their first month of commercial production, the company milled 174,000 tons of ore at an average grade of 1.57 g/t Au. Gold poured in June totalled 8,700 ounces.
So far in 2010, the company has sold 32,300 ounces of gold, with production the third quarter expected to come in at 30,000 ounces, and in the fourth quarter increasing to about 40,000 ounces.
Gold futures dropped below the $1,200 an ounce mark early in the trading day, as the euro and equities strengthened.
Investors aren't as concerned about risk aversion today, the reason for the downward pressure on gold prices. Prices fell as low as $1,191.90 an ounce early in the trading session, as American returned from their long holiday weekend.
The euro was the primary factor so far in the day, as recently gold has traded inversely to the euro because of the sovereign debt crisis in the European Union.
This should be a temporary sell-off, being the third day in a row gold has fallen, as the market digests the implications of the sovereign debt crisis in Europe, the weak US economy and the Chinese urban property inflation challenges.
Goldcorp (NYSE:GG) (TSE:G) declared its seventh monthly dividend so far in 2010, saying they'll pay out $0.015 a share this time.
Those qualifying for the dividend will shareholders of record as of the close of business on July 15, 2010. Payment will be distributed to them on July 23, 2010.
Goldcorp shareholders who have received dividends after 2005, and who are residents of Canada, are allowed an "enhanced gross-up and dividend tax credit on such dividends."
Aurizon Mines (AMEX:AZK) (TSE:ARZ) has increased its gold resource projection at its Hosco deposit, based on infill drill programs in the fall of 2009 and winter of 2010.
An estimated increase of 35 percent over the Pre-Feasibility Study of a cut-off grade of 0.5 grams of gold a ton, measured and indicated gold resources rose 446,000 ounces resulted from the drilling.
Vice president of operations, Martin Bergeron, said in a press release, “As the updated mineral resource estimate has substantially increased the Hosco mineral resources, this should have a positive impact on the feasibility study that is in progress.”
The total amount of ounces of gold at Hosco now stands at approximately 1.7 million ounces.
Newmont Mining (NYSE:NEM) via its joint venture partner Alkane Resources (ASE:ALK) in the Orange District Exploration has defined the McPhillamys gold discovery, which is located in South Wales, Australia.
One sources say that Alkane Resources has inked a maiden resource estimate of 2.96 million ounces of gold for the McPhillamys gold discovery, located within the Orange District Exploration Joint Venture with Newmont.
An independent resource assessment by Richard Lewis of Lewis Mineral Resource Consulting Pty Ltd in Sydney. defined an initial Indicated and Inferred Resource at a 0.3g/t gold cut-off of 91.94 million tons grading 1.00g/t Au and 0.07% Cu for a cumulative total of 2.96 million ounces of gold and 60,000 tons of copper.
The bulk of the Resource is located within an Inner Ore Zone with dimensions of 600 metres by 200 metres.
Newmont has a 75 percent stake in the joint venture through its subsidiary Newmont Australia Limited.
They increased the stake from 51 percent in August 2009 to 75 percent in March 2010 after the completion of a Bankable Feasibility Study on the McPhillamys Project.
Australian gold mining is looking better after the recent deal with the goverment which left gold untouched by the new taxes on coal and iron ore.
AngloGold Ashanti Ltd. (NYSE:AU) announced it'll begin working on its Tropicana gold project in Western Australia, now that a deal has been reached with mining companies in Australia over the super tax.
The new so-called resources tax will entail only coal and iron ore, making the company change its mind over the project.
Many mining companies had decided to stop, delay or ignore Australia when they proposed the supertax on miners in the country, which left them with a bad taste in their mouth over the 40 percent tax on profits for raw materials.
After the changes, a spokesman for AngloGold Ashanti said they'll now continue on with the project on the prior schedule it had planned.
AngloGold has a 70 percent stake in Tropicana. The project will produce an estimated 400,000 troy ounces of gold a year starting in 2013.
Monday, July 5, 2010
Centerra Gold (TSE:CG) announced it has completed the sale of its 64 percent stake in the REN joint venture they had with Barrick Gold (NYSE:ABX) subsidiary Homestake Mining Company.
The 64 percent stake was sold by Centerra for $35.2 million.
Centerra was down in Toronto on Monday by $0.12, or 1.06 percent. The stock was trading at $11.24 as of 2:32 PM EDT.
Barrick was at $45.75, a $0.20 fall, or 0.44 percent as of 2:35 PM EDT in Toronto.
Friday, July 2, 2010
Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) were all down again the last week, as gold struggled to find support with conflicting economic reports having investors moving from Treasury's to gold during the week as they fled to safe havens.
Gold prices for the week ended at $1,211.30, finishing the Friday session up $11.90.
Only Barrick benefited of the three gold mining giants on the day from that upward movement in gold prices, increasing slightly to $43.24, gaining $0.14, or 0.32 percent, although they were still way down for the last 5 trading days.
Goldcorp didn't fare as well Friday, dropping to $41.40, a loss of $0.27, or 0.65 percent. Goldcorp was also down significantly in the last week.
Newmont has been doing fairly well on the week until the bottom fell out of gold prices on July 1, when they plummeted by over $4 a share. They had been level until then. They ended the week and Friday at $58.76 a share, down $0.23 on the day, or 0.39 percent.
I expect the week after the Fourth of July weekend in the U.S. to rebound for gold prices in general, and these three major gold miners. We'll see if that is true.
But with most economic data now in, there's not too much going forward in that regard which will push prices down that we don't already know.
In other words, there shouldn't be any surprises. But we'll see.
Azteca Gold (VAN:AZG) (PK:AZGFF) said it has agreed to acquire the rest of the 50 percent stake in the Two Mile Property joint venture it has with Silver Royal Apex.
Terms of the deal will be for $6.1 million in stock.
To pay for the acquisition Azteca said they're going to issue 128 million in restricted common shares to Silver Royal Apex. Those shares won't be allowed to be traded until four months after the deal is closed.
Azteca Chief Executive Matthew Russell gave the reasons for the acquisition as this, "Challenging market conditions and other factors prevented SRA from meeting its financial obligations under the joint-venture, despite several extensions of time, as well as an agreed-upon slower exploration program."
Azteca has also settle outstanding debt it has with drill contractor Ruen Drilling, for $3.03 million.
With the upcoming equity offering Azteca will pay Ruen $1.63 million over an eight-week period, and what is owed after that will be paid at an annual 6 percent finance charge.
Per the terms of the settlement, Ruen will start drilling at the Two Mile Project site the week of July 12 .
Azteca also said they've acquired another 15 unpatented mining claims, this time from Shoshone Silver/Gold Mining Company, which brings their total on the Two Mile Property project to 725 unpatented mining claims.
Northgate Minerals Corp. (AMEX:NGX) (TSE:NGX) said they've received approval from regulators to start development on the Young-Davidson gold mine in northern Ontario.
Construction is scheduled to being in the early part of August, with the main process building being the first structure to go up.
Reserve at the mining project are estimated to be about 2.8 million ounces, although additional drilling this year should result in those numbers being bumped up.
As of now, the gold production over the 15 year life expectancy of the mine is expected to be an average of 180,000 ounces, at a cash cost of $350 an ounce during that time.
It wasn't a surety which way gold prices were going to go today, as investors sold gold off yesterday as continual bad economic news hit the market, and uncertainty as to whether or not there may be some deflation weighed on investors.
Today that has changed dramatically in the first part of the trading day before the long Independence Day weekend in America, as gold has rebounded some and is moving in positive territory.
Austerity moves in Europe in response to the sovereign debt crisis could result in some recessionary pressures, although in the long run it's far better for the region if it's to survive as the European Union.
Data coming out from America is just as bad, and generates the question of whether or not we've ever emerged from the recession, as once the government gimmicks and props were removed, the reality of the true condition of the economy was seen again, and it doesn't look good.
China's battle against inflation in its urban property markets will slow down the growth there, although it will still be robust when measured against the majority of other economies in the world.
All of this is good for gold, although if there are some major drops in prices, and deflation, to some degree, becomes a reality or perceived as a reality, it could change the gold landscape to some degree, although it still has support and the fundamentals will remain the same for the long term.
Several executives at Midway Gold (AMEX:MDW) have been buying up large swaths of the stock since early April, and the latest to invest is COO and President Kenneth Arnold Brunk, who acquired 19,000 shares on June 28. He paid $0.53 a share.
Owner Matthew Sheerin and director Roger Newell were the others to buy shares, with Newell acquiring 100,000 shares on April 9 of 2010.
Sheerin has acquired well over 400,000 shares from April 12 through June 10.
With most gold miners plunging on Thursday, Midway actually enjoyed moving upwards, gaining $0.04, or 8.70 percent. The stock closed at $0.50.
IAMGOLD (NYSE:IAG) Drops Over 5 Percent, Even with Starting Production at Essakane Mine Six Months Early
IAMGOLD Corporation (NYSE:IAG) participated in the gold sell-off Thursday, as their recent good news of beginning production six-months ahead of schedule at their Essakane gold mine wasn't enough to overcome the punishing trend.
Gold prices fell below $1,200 at one point in the trading session as investors decided to go with Treasury's for a safe haven, although that is sure to change soon.
Earlier in the week IAMGOLD announced they were far ahead of schedule in opening the mine, which will produce about 500,000 ounces of gold through 2011.
IAMGOLD owns 90 percent of the mine, while the government of Burkina Faso owns the other 10 percent.
The miner ended Thursday's session at $16.77 in New York, dropping $0.91, or 5.15 percent.
Rio Tinto (NYSE:RTP) exercised $393 million in share warrants in Ivanahoe Mines (NYSE:IVN), increasing their stake in the miner by 7.3 percent, now owning 29.6 percent of Ivanhoe.
The two companies are partners in the mineral-rich Oyu Tolgoi mine in Mongolia, which will be among the most productive and lucrative in the world once production begins from it.
Rio made the investment at this time in order that the project can remain on schedule, which is projected to begin production in 2013.
Estimates on gold and copper production are for copper to produce about 450 tons on an annual basis, and gold 330,000 ounce annually over a period of 35 years; a long time for a mine.
If Rio ends up converting all securities and warrants in Ivanhoe, they'll end up owning close to 44 percent of the miner.
Gold prices corrected big today, dropping as much as $46.45 at one point to $1,197.19, a 3.7 percent plunge.
Most of this is on continuing weak economic data and news, which is another way of saying investors are concerned over deflation at this time, rather than inflation, which is one of the major, underlying reasons for gold prices going up.
Depending on the economic news today, we could see another sell-off in gold, and gold prices will plummet again if that's the case.
It doesn't matter though, as nothing in the fundamentals for gold has changed, and even if we have a couple more days of dropping prices, they'll definitely come back, and probably even stronger, as central banks and governments have ignorantly confirmed they're going to use quantitative easing (printing more money) to keep their respective economies from entering into another recession.
Printing money is also a good sign for gold investors, as it debases currencies and sets up gold as the safe haven of choice and ultimately the best place to be when inflation soars from the endless printing of paper currency. It's not a question of if, it's only a question of when.
So deflationary fears will result in the unfortunate printing of more money, which will result eventually in gold prices surging to new record-breaking levels.
Thursday, July 1, 2010
As mentioned on Everything Gold recently, this week promised to be a volatile one for gold prices, and that's turned out to be true, as gold miners like Newmont Mining (NYSE:NEM), Goldcorp (NYSE:GG) and Barrick gold (NYSE:ABX) are all down big, as gold prices today continue to plummet, down by $41.40 as of 2:44 PM EDT.
That brings gold prices almost down to the psychologically significant $1,200 an ounce mark, now standing a $1,201.
Investors in major gold mining companies do need to watch the situation carefully, as it could offer a good entry point, especially in regard to Goldcorp, if you like them as an investment opportunity.
Investors today, who have been extremely fickle lately, have chosen to go to Treasurys as a place of safety rather than gold, driving the price of gold today down by $34.70, or $1,207.70 an ounce, as of 1:03 PM EDT.
Economic data has painted a ominous portrait of economic conditions, and it's weighing strongly on investors.
Uncertainty about inflationary or deflationary pressures also influences the price movement of gold on a daily basis, as economic data and reports have it potentially going either way, or at least it's perceived in that way.
One thing most people agree on, is the alleged economic recovery isn't, and it's increasingly doubtful as to whether or not we've ever left the recession, only having temporary respite because of massive amounts of money being infused into the economy from government policies.
Gammon Gold (NYSE:GRS) is taking a big hit on its production estimates for 2010, as closing the El Cubo project will result in approximately 25 percent less production for the company overall.
This is the second time in 2010 Gammon has had to downwardly revise their production estimates.
Before the turmoil, the mining company had estimated it would produce from 150,000 to 160,000 ounces of gold for the year, and about 6.1 million to 6.85 million ounces of silver.
Now they've lowered those estimates to 100,00 to 110,000 ounces of gold and 4.4 million to 4.95 million ounces of silver.
Rene Marion, Gammon CEO, said they'll focus primarily on their gold-silver Ocampo project in the near term, while increasing the pace of their exploration.
"Management focus for the balance of the year will be on expanding productivity at our Ocampo mine as well as bringing new discoveries into production in 2011 and the acceleration of exploration programs at our properties," said Marion.
BlackRock (NYSE:BLK) recently announced they're adding a couple of changes to their gold offerings to help meet the increasing demand of investors for gold products.
The first of the two changes was the creation of a new U.S. mutual fund developed to focus on gold-related equities.
This fund, named the BlackRock World Gold Fund, will invest in "equity securities of gold-related companies from around the world," while attempting to maximize overall return.
For the second initiative of the company, this one will involve the existing iShares COMEX Gold Trust (NYSEArca:IAU), which will include a couple of enhancements to help gold investors.
First, they'll be able to have a broader access to the gold market, and second, investors will have increased flexibility in making adjustments to their gold allocation throughout their portfolio.
This should help investors lower overall costs while increasing their liquidity, according to BlackRock.
“Given the increasing interest for gold among all investor types, our strong leadership in the sector, and the significant opportunities for growth we see in the U.S., we are taking steps to continue building out the investment opportunities available to our clients,” said Robert Fairbairn, Vice Chairman of BlackRock and Head of the Global Client Group in a press release. “BlackRock has long been a leader in gold investing — with a wide range of investment solutions around the globe and a leadership position outside the U.S. And, these two product offerings are an ideal example of how we can leverage the breadth and depth of BlackRock around the world to deliver the best possible solutions for our clients.”