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EDITORIALS
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How Gold Demand Remains Resilient Vlad
2012-05-18 06:35:41.0
Demand for gold was relatively resilient in the first quarter of 2012, with global demand falling 5 percent on a year-over-year basis, says the World Gold Council.
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Ghanaian government causing headache for mining companies Gold Money
2012-05-18 06:35:41.0
Ghana is one of the most resource-rich countries in West Africa, and is especially well-endowed as far as gold is concerned.
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Turkish gold sales to Iran soar as sanctions bite Reuters
2012-05-18 06:35:41.0
Turkish gold sales to Iran in March soared over 30 times and gold companies said Iranians were turning to gold for savings and possibly trade as Western sanctions tighten.
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Crisis Imminent: Prepare for a Return to 2008 Chris Martenson
2012-05-18 06:21:13.0
Why Greece is just the start.
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MAJOR LONG-TERM BOTTOMS FORMING IN GOLD AND COMMODITIES goldscents
2012-05-17 21:27:29.0
Once every year gold and stocks form a major yearly cycle low.
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Run, Saverin! Run! Joel Bowman
2012-05-17 17:35:40.0
Run, Saverin! Run!Were it not for the fact that you'd still have to suffer the eternal torment of actually living with your wicked, miserable little self, life as a willing and active member of The State might be pretty tempting.
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Charles Schumer Tells Americans They Can't Leave So Easily Jeff Berwick
2012-05-17 17:35:40.0
We wrote about Facebook co-founder, Eduardo Saverin, defecting from the US last week ("
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Today's Winners Raychel O'Byrne
2012-05-17 17:21:05.0
GDX gained by??4.
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Brazil and the Spirit of Liberty Jeffrey Tucker
2012-05-17 17:06:27.0
My most surprising findings in Brazil, aside from the amazing fruits that I didn't know existed because the US government doesn't think I need them, were the young American kids who have moved here to find economic opportunity.
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Youth Unemployment: a Looming Societal and Economic Problem That Will Adversely Affect Us All Editor
2012-05-17 14:15:26.0
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Immune to the Financial Crisis Bill Bonner
2012-05-17 14:10:23.0
Attention: Our 'Crash Alert' flag is flying.
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China's Q1 Gold Demand Hit Record Highs Reuters
2012-05-17 13:41:14.0
China's gold demand hit a record high in the first quarter on investor worries over inflation and property market curbs, the World Gold Council said on Thursday, bucking a lower trend in global consumption driven by higher gold prices.
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Hedging for Profit Eric J.Fry
2012-05-17 13:33:56.0
Don't understand 21st century finance? Don't worry.
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In The News Today Jim Sinclair
2012-05-17 13:33:47.0
Dear CIGAs, It is the OTC derivative position of both European and US banks that guarantees QE to infinity regardless of the daily denials still to come.
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Jim's Mailbox Jim Sinclair
2012-05-17 13:33:47.0
Stay Balanced And Employ Discipline of Thought CIGA Eric I absolutely agree, Jim.
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Data Show US Economy is Improving Chris Gaffney
2012-05-17 13:26:42.0
Good day.
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Recovery: True or False? Doug Casey
2012-05-17 13:26:41.0
The big question for all investors, not just those
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Greece, Financial Drachma & the Gold Price Julian D.W. Phillips
2012-05-17 13:19:29.0
What Greece's new June elections mean for the
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Good & Bad Gold Stories The Gold Report
2012-05-17 13:19:29.0
Bob Moriarty of 321gold walks through his latest
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Understanding Risk in the 21st Century bullionbullscanada
2012-05-17 12:35:48.0
The mainstream (corporate) media is nothing less than the unofficial accomplice of the banking crime syndicate which is running/ruining our markets and economies.
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LATEST NEWS
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Gold demand subdued as price rises
Fri, 18 May 2012 03:58:18 -0700
MUMBAI (Reuters) - Gold traders in India, one of the world's top consumers, stayed on the sidelines on Friday as prices rose more than a percent, tracking the overseas market and a falling rupee, dealers ...
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Fresnillo: Gold, Silver Price Uncertain But Committed To Projects
Fri, 18 May 2012 03:55:29 -0700
The chairman of Mexican precious metals producer Fresnillo PLC (FRES.LN) said Friday that it remains committed to investing in exploration and new projects despite uncertainty regarding gold and silver price forecasts for the remainder of the year.
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Dollar-Wary China Soon To Be World's Top Gold Buyer
Fri, 18 May 2012 03:20:11 -0700
China drives up gold demand, followed by ETFs like State Street's SPDR Gold.
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Gold Fundamentals Strong, Price Action Ugly
Fri, 18 May 2012 02:59:34 -0700
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Silver Wheaton's Worth $37 Despite Slump In Silver Prices
Thu, 17 May 2012 14:47:17 -0700
Silver Wheaton saw its stock slump after earnings Monday. The company reported a 25% increase in revenues and net income rose by 20% f0r the first quarter. In the past month, the stock was heavily battered as rising concerns about euro zone sent precious metal prices south. Silver Wheaton, the world?s largest silver streaming company, purchases silver from mining companies that produce silver as ...
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Oremex Silver Announces Application to Extend Warrants
Thu, 17 May 2012 14:46:00 -0700
TORONTO, ONTARIO-- - Oremex Silver Inc. announces that it has made an application to the TSX Venture Exchange to extend the expiry date of 2,347,326 outstanding common share purchase warrants of the Company ...
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Silver Wheaton Announces Filing of NI 43-101 Technical Report for the San Dimas Mine
Thu, 17 May 2012 14:00:00 -0700
Silver Wheaton Announces Filing of NI 43-101 Technical Report for the San Dimas Mine
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The next big wine country? (Hint: It starts with 'c' and ends with 'a')
Thu, 17 May 2012 12:09:37 -0700
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Wine shop to have tasting event
Thu, 17 May 2012 10:55:14 -0700
The Wine Shop at Capitol Market will have a wine tasting at 2 p.m. Sunday led by Steve Hedberg. The price to sample seven European wines is $10. The next Evening at The Wine Shop event will be at 6:30 p.m. May 23. The event features more than 20 wines, ...
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Gold Price Jumps, Will Disappointing Data Lead to QE3?
Thu, 17 May 2012 08:33:09 -0700
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Research and Markets: Research Report on Chinese Wine Industry, 2012
Thu, 17 May 2012 07:30:00 -0700
Research and Markets has announced the addition of the "Research Report on Chinese Wine Industry, 2012" repor
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Gold Higher as France Refutes EU Fiscal Pact
Thu, 17 May 2012 06:44:34 -0700
The wholesale market gold price jumped at the start of New York trade on Thursday, cutting the week's previous 3.3% dive to 5-month lows in half as the euro fell and euro zone stock markets slumped once again.
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Silver Jeans Co. Expands Brand Into US Retail Roll Out
Thu, 17 May 2012 06:00:00 -0700
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High gold price fails to dent ETF enthusiasm
Thu, 17 May 2012 04:37:51 -0700
The survey found that less gold was sold last year, but at a higher price.
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Riesling Wine Fan Gets A Taste For Kiwi
Thu, 17 May 2012 04:35:11 -0700
America?s great partisan of Riesling wine, New York restaurateur Paul Greico, made a swing through the Antipodes recently.
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Thai-ASEAN News Network - Gold Price on the Decline
Wed, 16 May 2012 22:30:38 -0700
The Gold Traders Association has revealed a gold price drop of 2,000 baht since the beginning of the year and the likelihood that the price will continue on a decline. Buyers are then advised against long term investments in gold at this point.
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LATEST FROM BLOG
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Finding a Floor for Silver and Silver Miners
Thu, 17 May 2012 15:37:00 GMT
Since silver reached our target of $50 last year it has been in a treacherous downhill descent. The depth of the decline in precious metals is approaching 2008 levels, and many mining stocks are at 2009 price levels. While it has been painful for bullion investors, it's been even more disastrous for silver miners and their investors. Now we must revisit our analysis to determine if silver and miners are near their trading floor.
We've seen a lot of bearish reports on silver including a comparison to the Nasdaq bubble crash, which overlays a projection of silver to continue falling to the $6-$8 range. Is it possible for silver to reach or hold at those levels?
Using earnings data for PAAS, SSRI, EXK, and AG from the first quarter of 2012, we divided earnings by actual silver produced, giving credit for gold and other base metals, in order to determine the actual break even cost of production. Gold sales averaged $1700 and silver averaged $33 for the first quarter. Despite this SSRI wasn't profitable. EXK had the lowest breakeven point of $14.68 per ounce of silver, followed by AG at $18.33 and PAAS at $23.87. The average breakeven production cost was exactly $24 per ounce. Even excluding SSRI, the average was $21.50. Over the past 11 years, silver has risen by nearly 10 fold; however production costs have almost risen just as much. Silver's price is approaching its long term cost of production level, and given the depletion of silver stockpiles of the last 3 decades, we don't anticipate silver's price holding below that level for long - if at all. If you're somehow able to buy silver for less than $21.50 to $24 an ounce we'd argue that miners are literally paying you to buy it. Given that over the long run miners need a healthy profit margin as an incentive and buffer against their depleting resources, we'd argue that $26 to $30 is the long term nominal floor for silver.
Interestingly, when we began accumulating silver positions at the onset of the bull market in 2001; our target price was $30. A lot has changed in the last decade. At that time silver was in the $3 range and its production costs were in the $3 to $5 range. We anticipate that this nominal $30 range will be the floor not only for this bull market, but also for the aftermath of the expected silver bubble in coming years. Just as $3 was the floor after the hunt brother debacle, $30 will be the floor of silver's next secular bear market.
We're unable to generate a realistic scenario where the cost of production significantly declines from current levels. Wage costs aren't expected to recede, and materials and energy costs will remain near these levels as their own production costs have increased. Furthermore, we're confident that governments won't stop regulating, and taxing mine output. As such, we believe that unleveraged, allocated silver below $30 has very little risk, and its upside potential remains.
Another significant change since the bull market began is the health and profitability of silver miners. When the bull market began silver miners were breaking even at best, and for many years these companies had to resort to dilution in order to raise capital for development and ongoing operations.
Now, the leading primary silver producers have significant cash reserves, mature developed properties generating sizeable earnings, and many are giving back to their shareholders via dividends and buybacks. Over the last year the prices of miners have declined, however their earnings and financial stability has increased substantially - which has led to a shocking compression in PE ratios. Typically, silver miners have traded at premiums in relation to base metal producers however they are now at a discount. The expected forward PE ratio for 2013 from analysts is 7.2 for PAAS, 12.1 for SSRI, 6 for AG and 6.9 for EXK, giving an average PE ratio of 8. This has setup a scenario where these companies could increase by multiples if silver tops its high of $50 and PE ratios expands to match the S&P.
Given the limited downside potential, and our inflationary expectations that we don't believe our priced into the market, we believe that silver and silver miners are very close to an important floor with substantial upside.
For more precious metals analysis visit tradeplacer.com
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PAAS Acquisition of MFN is Highly Dilutive
Fri, 27 Jan 2012 20:54:00 GMT
As long term shareholders of Pan American Silver, who've held it for more than a decade, we were surprised to hear that its management has decided to purchase Mine Finders ??? whose PE ratio is roughly twice that of PAAS's. We've taken a closer look at the proposed financials, and the deal does not add up.
On August 26th, 2011, PAAS shares were low enough that the company initiated a stock repurchase program for up to five percent of the stock. At the time it was stated that "in the opinion of its board of directors, the market price of its common shares, from time to time, may not fully reflect the underlying value of its mining operations, properties and future growth prospects." The price of PAAS closed that day at $31.72. It's rather dubious that a stock price which was considered cheap at $31.72 is now considered well priced to use as buying collateral at $23.
Generally, acquisitions are accretive when a company with a large cash balance uses it to purchase a profitable business in cash, or when a fair to highly priced company trading near the highs of its PE range uses its stock as collateral to purchase a business with a lower price and higher growth rate. In the case of PAAS buying MFN, neither of these conditions apply. PAAS has proposed to make a stock purchase using its shares with a PE in the 7-8 range of MFN whose PE is in the 15-16 range. Furthermore PAAS earnings are projected to grow faster than MFN.
| PAAS | MFN | Combined | | total shares MM | 107.3 | 96.3 | 160.265 | | price | $23.18 | $14.40 | $23.18 | | mkt cap | $2,487.21 | $1,386.72 | $3,714.94 | | 2011 e/sh | $2.3 | $0.86 | | | 2012 e/sh | $2.85 | $0.95 | | | 2011 pe | 10 | 16.7 | 11.27 | | 2012 pe | 8.1 | 15.1 | 9.35 | | 2011 total e, MM | $246.79 | $82.818 | $329.608 | | 2012 total e, MM | $305.805 | $91.485 | $397.29 |
Based on the data above, we estimate that due to the proposed acquisition of MFN, PAAS shareholders will suffer an immediate loss of $1.11 per share for the cash payout, and an additional 15 percent dilution in earnings. We estimate that instead of trading at $23.18 today, PAAS would be trading at $27.77 implying a total dilutive loss of 20 percent.It is worth noting that PAAS's massive Navidad project in Argentina is not currently priced into either the earnings projections or price of its stock. As a result, Navidad is an effective call option which could potentially double the production from roughly 22 to 44 million ounces of silver per year. Since this isn't priced into the stock, the dilution of current shares could prove to be even more folly pending approval of Navidad by the Argentinean government.
At the end of 2011, Bill Fleckenstein resigned from the board. While we don't know the reason for sure, we now know that this directly preceded PAAS's dilutive bid of MFN. Perhaps Mr. Fleckenstein opposed the dilutive action.
It's difficult to buy and hold a stock which is underpriced by the market. It's even more difficult to learn that management of the company attempts to justify the low price by diluting the company's value. We expect PAAS to underperform its peers going forward as it consolidates the dilutive loss.
The largest winners of this deal will be the management teams of PAAS and MFN. The largest losers will be PAAS shareholders. One year ago, MFN stock was trading in the $11 range and PAAS was above $40. Had they purchased MFN then, it would have been far less dilutive. Now, PAAS shareholders are paying almost twice the price for the same acquisition. We plan on voting against the acquisition, and would support an effort to replace current board management.
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Precious Metals Investments Have the Most Bullish Fundamentals than Anytime During the Entire Bull Market
Mon, 26 Dec 2011 16:04:00 GMT
2011 was a volatile transitory year for most markets as the primary monetary concern shifted from asset inflation to asset deflation. Sentiment in gold and silver trended lower throughout the year as speculative positions were liquidated and money managers poured money into US government treasuries yielding record low interest rates both nominal and real. This trend can easily be seen in the under performance of platinum, which price has fallen below the price of gold despite the fact that it is 30 times more rare.
Gold has been up every year since its bull market began in 2001. Gold is the most stable of the precious metals. Takedowns are limited as central banks compete in bidding to accumulate it.
Silver had an intermediate top in the end up April, and suffered from several massive engineered hits. In addition, nearly 600,000 ounces of silver was stolen from small investors by MF Global, and transferred to JP Morgan. The result has been a collapse in open interest, as investors abandon the idea that paper silver can protect them from pending global hyperinflation. The default by the COMEX to protect investors using the exchange has proven that money invested in futures and even exchange allocated gold and silver is not safe.
As of last December 20th, the well documented net commercial short silver position was a mere 14,825. As we anticipated earlier this year, the commercial short banks have covered nearly all of their short position in the $26-32 range. They will soon convert to net long in anticipation of the next round of dollar devaluation.
Silver is not the only market that commercial traders have dominated. The commercial banks were massively short the Euro this spring prior to its collapse. Now that the collapse has occurred, commercial traders are now massively long the Euro as dumb money piles into the US dollar and treasuries that pay zero or even negative interest rates. The prevailing belief is that a further collapse of the Euro will lead to a deflationary crisis in which the US dollar trumps all assets. Commercial banks, which almost always win, are strongly betting against this belief as they pile into the Euro and precious metals.
While physically owned precious metals have held their value, leveraged speculators in futures and options have been demolished. If three-day take downs and volatile price movements didn???t ruin them, outright theft of their assets from MF Global and the COMEX did. Silver and junior mining stocks suffered a similar fate and are now swinging in the desert wind. If mining itself wasn???t risky enough, 2011 proved that everything from government confiscation of mining assets, illegal shorting selling attacks, naked shorting, to outright theft qualify as categorical risks. Producing silver miners such as PAAS, SSRI, and SVM lost roughly half their value during the trading year. PAAS and SSRI were plagued by socialist policies of Argentina including new capital controls, and an illegal short selling scheme lead by an anonymous trader known Alfred Little attacked SVM. In the meanwhile actual earnings and cash flow for these companies grew at double and triple digits. The result has been a massive PE compression in which companies growing at double and triple digit rates now have PE ratios of less than 10 ??? which are based on the current low metals prices. Many of the miners are also using part of their cash flow to increase dividends and stock buy backs in addition to their operational expansion programs.
| | PAAS | SSRI | SLW | SVM | AUY | | EPS | 2.68 | 0.03 | 1.63 | 0.56 | 0.98 | | Revenue Est | 894M | 181M | 767M | 271M | 2.2B | | year ago revenue | 632M | 112M | 423M | 167M | 1.7B | | 2012 Est | 3.11 | 1.06 | 2.43 | 0.72 | 1.27 | | price | 22.33 | 13.46 | 29.58 | 6.42 | 15.08 | | pe | 8.33 | 448.67 | 18.15 | 11.46 | 15.39 | | pe 2012 | 7.18 | 12.70 | 12.17 | 8.92 | 11.87 | | yoy earnings growth | 16.04% | 3433.33% | 49.08% | 28.57% | 29.59% | | peg | 0.52 | 0.13 | 0.37 | 0.40 | 0.52 |
While the timing can???t be predicted, confidence in the global financial system continues to wane. Guaranteed negative interest rates for at least the next two years, also guarantees positive fundamentals for precious metals. Gold and silver are clearly in multi-month consolidations, which is natural given that they were the best performing assets of 2010. The inevitable further devaluation of global currencies will continue to facilitate a bullish environment for the metals. Investors with a long-term outlook have an excellent opportunity to accumulate gold, silver, and especially profitable dividend paying gold and silver producers that must increase by multiples to fulfill their potential value.
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