Are the big gold miners cheap or a disaster waiting to happen?

[rigger]

As per title.

 

They certainly seem a very cheap way to buy gold.However,costs have risen,debt has risen and gold has pulled back.They seem good value beside physical.

[drbubb]

Either is possible ... and it depends on the gold price.

 

If you want to be safer, look for those with little debt, and low cash costs.

 

Some big mines (such as Barrick), are looking to sell off marginal mines, to get their debts down

 

 

(You have a similar name to one of our old posters, have you re-launched.)

[rigger]

No I haven't relaunched.I remember the other poster but it wasn't yours truly.

[drbubb]

Thanks for responding to that. And resolving my confusion

 

Here are some threads I would recommend, which better answer your questions:

 

ABX : http://www.greenener...showtopic=18046

MUX : http://www.greenener...showtopic=18056

 

Mines Closing : http://www.greenener...showtopic=17980

 

GDX components : http://www.greenener...showtopic=17849

[rigger]

Thanks for those Doc.I originally found this site via your posting on HPC.

[drbubb]

Yeah.

Obviously, I stopped posting there. Too many nasty posters. Odd place

 

Here is quieter, but I can develop some more complex ideas, and others can start their own Blog-threads too,

without the HPC nonsense interferring

 

Gold stocks have made a good start, and I hope to see more follow-thru this week

 

The "disaster waiting to happen" has already happened, and they are working their way out of it

[drbubb]

Jim Puplava’s Big Picture: Investing In the Gold Markets: Mistakes Made - Lessons Learned

 

Featuring Jean-Marie Eveillard, Ronald Stoeferle, Keith Barron and other industry experts

 

 

BIG PICTURE, NEWSHOUR 27/Jul/2013

RealPlayer WinAmp Windows Media MP3

In this special edition of the Big Picture, Jim puts a capstone on his series of interviews with gold industry experts, including gold fund managers, gold mining CEO’s, geologists, newsletter publishers and gold analysts. Using audio clips from the experts for emphasis, Jim discusses the struggles of the gold industry, and lays out the mistakes that were made, and the lessons that were learned. The list of experts include Keith Barron, Robert Quartermain, Ross Hansen, John Doody, Jean-Marie Eveillard, Ronald Stoeferle, Caesar Bryan, Jeff Christian and Sean Boyd. Jim also answers your Q-Calls in this segment of the program.

 

Jean-Marie Eveillard: Gold Is Insurance Against Extreme Outcomes

 

NEWSHOUR, GUEST EXPERT26/Jul/2013

MP3

This Financial Sense Newshour program is available only as a premium, paid "FS Insider" release.

Jim is pleased to welcome Jean-Marie Eveillard, Senior Adviser at First Eagle Funds in New York City. In a wide-ranging discussion on gold and the economy, Jean-Marie explains that there are unintended consequences to a prolonged environment of negative interest rates. He also views gold as insurance against an extreme outcome. Jean-Marie notes that while Wall Street loves the easy money from the Federal Reserve, the Neo-Keynesian economic policies have not worked. He believes we are now in an undefined economic landscape never seen before. Jean-Marie also makes the distinction between physical gold, as a form of investment, and paper gold, which he views as speculation.

[jerpy]

(You have a similar name to one of our old posters, have you re-launched.)

 

Funny someone with a similar name should come up with a thread that really explains why I went largely into lurking.

 

There were so few "long" Mining and resources prospects of interest I've largely taken a time out. Have a "insurance" position and my favourite oiler, but bar an odd AIM tiddler like RST i'm hibernating waiting for a silver trade similar to Romans to come to me.

 

Would love to buy the goldies again, but other than saying they are cheap because they've been smashed so much, why would you?

 

By the way, the activity on the Mining and Oil stocks sections of boards also says a lot, so few visits or posts.

[drbubb]

that's logical, rigger-b.

 

but, i reckon that right at the low, no one will have much interest at all in these shares.

 

and it seems like that already

[rigger]

Funny someone with a similar name should come up with a thread that really explains why I went largely into lurking.

 

There were so few "long" Mining and resources prospects of interest I've largely taken a time out. Have a "insurance" position and my favourite oiler, but bar an odd AIM tiddler like RST i'm hibernating waiting for a silver trade similar to Romans to come to me.

 

Would love to buy the goldies again, but other than saying they are cheap because they've been smashed so much, why would you?

 

By the way, the activity on the Mining and Oil stocks sections of boards also says a lot, so few visits or posts.

 

I agree.I'm not in a mad rush but the prices of some of the bigger miners have sparked my interest again.I'm very wary of stock markets at the moment as I'm firmly in the 'big sell off is coming camp'.Corporate profits are up on the back of comapnies slashing costs-how many economic cycles will that last?

 

It's also your latter point that has got me thinking again.All the normal 'hot money' chasers are leaving the big gold miners alone and even in a market where the S&P is chasing new highs,they're utterly friendless.

 

 

that's logical, rigger-b.

 

but, i reckon that right at the low, no one will have much interest at all in these shares.

 

and it seems like that already

http://www.google.co...BUricKMSswAPMYw

 

Newmont plumbing five year lows at $26.50.

http://www.google.co...BUricKMSswAPMYw

 

That was a $60 share 18 months ago.If anything,I'd argue the case for it is better now.You gotta love markets.

[rigger]

http://www.google.com/finance?q=NYSE%3AABX&ei=SXEBUoj5OKmtwAPMKQ

 

Barrick.20 year lows are around $13-50.Currently $15-65 but has been $13-80 in the last month

[drbubb]

Some folks are writing negative things on Barrick, etc ... ... ...

 

Debt, Uncertain Production Outlook, Rising Costs Concerns For Barrick - CIBC - Kitco News, Aug 6 2013 9:56AM

 

Second Quarter Writedowns Worse Than We Thought: Brent Cook - Kitco News, Aug 6 2013 12:07PM

== ==

[rigger]

Thanks for those Doc.I'll reply more fully later when I've time.I would say though,that a chunk of my interest is about the ounces in the ground and not necessarily dividends or near term cashflow.I buy shares with a view to holding them for ten years plus,thus my parameters are somewhat different to a lot of people.

[drbubb]

(Duplicate post from DrBubb's diary):

 

Buy-The-Miners: A Gold Myth Debunked

 

Forbes-4 hours ago

If you believe the price of gold has hit bottom, old school logic says you should buy a whole lot of goldmining shares right now. The gold miners ...

 

If you believe the price of gold has hit bottom, old school logic says you should buy a whole lot of gold mining shares right now. Thegold miners, conventional wisdom goes, always pay off bigger than gold itself when the commodity price rises. But considering the carnage in gold markets lately, investors might want to spend more pre-buying time mulling the dark side of that equation: it’s easier to lose a whole lot of money in miners than in gold itself.

 

In reality, that little “buy the miners” ditty has long been suspect. Consider the variations in the price of gold and the Market Vectors Gold Miners ETF (GDX) between 2009 and early September 2011, a time of rising gold prices just before its price started to weaken. Gold prices rose 108%; the miners’ ETF rose 93%. If you had bought shares directly in three of the largest miners, Barrick Gold Corp (ABX), Newmont Mining (NEM) or Gold Fields (GFI), your gains were limited more, as seen in a stock chart.

Gold Price in US Dollars data by YCharts

 

We can make those mining returns look better by jacking with the dates. Between 2008 and 2010, for example, that miners’ ETF rose 81% next to a gold price rise of 62%. Overall, though, it’s hard to divine a pattern of outperformance in the miners during gold price rallies. Most of the evidence for the “miners are better” thesis appears to date back a lot further, to the days before ETFs, but it’s still a mixed bag.

. . .

If you really believe the price of gold will rally – a theory some, but not many, are buying into now – then investing in both the commodity and the mining shares both makes perfect sense, though some diligent financial analysis on the individual companies would be in order. But if you’re wrong about that? Sell the miners first.

===

/more: http://www.forbes.com/sites/ycharts/2013/08/07/buy-the-miners-a-gold-myth-debunked/

[rigger]

Newmont Up 8.69% today.Volatile times.

[rigger]

Dare I say it,but these shares are looking like they'll get cheaper yet.

[drbubb]

Dare I say it,but these shares are looking like they'll get cheaper yet.

 

Or maybe... we have just seen the "near death experience" moment which touches off a Wave 3 Up

 

Here's the chart of Newmont, which showed a nice reversal on (slightly) higher volume

 

NEM ... update

 

[wee Jinky]

Junior miners are a better option but all miners carry a high risk factor

political turmoil, nationalisation,natural disasters as we saw in Nevada

but the biggest threat is the supression of the PM market

The avg all in costs of the 12 biggest silver miners is around $27 oz ,how long can they keep operating at these

level of losses ? Would you put it past the ptb to break them so they can aquire those mines on the cheap?

I am a buy and hold advocate ,not because it is has the highest return possibilities but because it is the safest.

[rigger]

Or maybe... we have just seen the "near death experience" moment which touches off a Wave 3 Up

 

Here's the chart of Newmont, which showed a nice reversal on (slightly) higher volume

 

Nice call Doc,

 

32 bucks.

[rigger]

http://www.google.com/finance?cid=25624

 

Newmont getting near $26 again.

 

A lot of the downtrends seem intact.

 

http://www.google.com/finance?q=NYSE%3AGFI&ei=1iVXUrCiGaWkwAOPaQ

 

Gold fields :how unloved can you get?

[Van]

Would prefer just to buy the GDX ETF - saves you from agonizing over any individual component.

http://uk.finance.yahoo.com/q/hl?s=GDX

 

Goldcorp, Inc.

GG.TO

14.35

BARRICK GOLD CORPORATION

ABX.TO

11.49

Newmont Mining Corporation

NEM

9.23

SILVER WHEATON CORP.

SLW.TO

5.73

Eldorado Gold Corp

EGO.TO

5.32

RANDGOLD RESOURCES LD ADS (EACH

GOLD.L

5.18

Yamana Gold Inc

AUY.TO

5.09

AGNICO EAGLE MINES LIMITED

AEM.TO

4.47

Kinross Gold Corporation

KGC.TO

4.26

Royal Gold, Inc.

RGLD

4.08

 

[Van]

Probably a pertinent time to recite that old adage, just because they are cheap, doesn't mean they can't get cheaper.

HUI:GOLD now at 0.17. If you had though there were cheap at around 0.25 - which they seemed to be at the time - you would have been stung badly. This is a very clear example for me that you need to trade with the trend, not with valuations.

 

You have to go back to Q4 in 2000 to find the last time this ratio was lower (Bottomed at about 0.135). 3-4 Months later POG itself bottomed and then went up 700% in the next decade. I am waiting for the turnaround before jumping on the wagon in any meaningful way.

 

 

[rigger]

Probably a pertinent time to recite that old adage, just because they are cheap, doesn't mean they can't get cheaper.

HUI:GOLD now at 0.17. If you had though there were cheap at around 0.25 - which they seemed to be at the time - you would have been stung badly. This is a very clear example for me that you need to trade with the trend, not with valuations.

 

You have to go back to Q4 in 2000 to find the last time this ratio was lower (Bottomed at about 0.135). 3-4 Months later POG itself bottomed and then went up 700% in the next decade. I am waiting for the turnaround before jumping on the wagon in any meaningful way.

 

 

Thanks for that perpsective Van.That's a good gauge that I shall follow hereonin.

 

At the moment,the action in the gold stocks reminds me of the late nineties in a couple of ways.Firstly,the way so many good stocks were completely left alone as the 'hot money' chased the techies higher.Secondly,something that Rigger B highlighted earlier on about how quiet the bulletin boards are.

 

I'm still doing my research and am learning a lot on here,but at some point,the Goldies will be a raging buy.

[rigger]

I'm not a fan personally,of holding ETF's long term as a result of the expense and increased counter party risk.

[jerpy]

Junior miners are a better option but all miners carry a high risk factor

political turmoil, nationalisation,natural disasters as we saw in Nevada

but the biggest threat is the supression of the PM market

The avg all in costs of the 12 biggest silver miners is around $27 oz ,how long can they keep operating at these

level of losses ? Would you put it past the ptb to break them so they can aquire those mines on the cheap?

I am a buy and hold advocate ,not because it is has the highest return possibilities but because it is the safest.

 

Slightly off topic but having read the RUST thread elsewhere, there was a comment today on how beaten up the silver miners are and still being hit.- see some charts of our friend energyi on there.

 

Firstly made me wonder how low they will go before they either wither away or become a buy?

 

Secondly can there really be any long term silver stock holders left?!

 

Certainly not tempted yet, but maybe a few watching the silver miners wondering when they too will turn.