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rigger

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

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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.

RUST thread?

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Cheers RiggerB,Just had a look,what a maze that site is.I can see why I haven't been on there since they invented the internet.:-)

 

Can I be cheeky and ask if you can link me to the interesting thread?Please.

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A nice bounce today, but really needs to make a sustained move higher before we can look dare to start dreaming about a double-bottom and an actual reversal in trend.

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Cheers RiggerB,Just had a look,what a maze that site is.I can see why I haven't been on there since they invented the internet.:-)

 

Can I be cheeky and ask if you can link me to the interesting thread?Please.

http://uk.advfn.com/cmn/fbb/thread.php3?id=9688630

 

Good luck reading the 28,000 odd posts and it goes way off topic a lot. Some post on GEI ;)

 

p.s like many threads on advfn, inhabited by "nutters" and well you decide.

 

p.p.s the gold thread is worse!

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http://uk.advfn.com/cmn/fbb/thread.php3?id=9688630

 

Good luck reading the 28,000 odd posts and it goes way off topic a lot. Some post on GEI ;)

 

p.s like many threads on advfn, inhabited by "nutters" and well you decide.

 

p.p.s the gold thread is worse!

 

ADVFN is awful. If every BB poster was a successful speculator then any fool would be able to make money on the markets.

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http://seekingalpha.com/article/1749862-its-time-to-be-long-gold-via-newmont-mining?source=google_news

 

'The World Gold Council recently published Q2's Demand and Supply Statistics, detailing supplier and demand sources. Year over year technology is up 1%, jewelry is up 40%, central bank demand is down -57% and investor demand down a whopping -402%.

 

The cost of gold

The cost of gold isn't the spot price found on Bloomberg. It takes money and resources to get gold out of the ground and to market. That cost is around $1200-1300 and ounce. The all-in cost of gold can be found by examining a few domestic mining companies' 10-Qs: McEwen Mining INc (MUX), Allied Nevada Gold Corp (ANV), and Newmont Mining Corp. We found the all-in cost of gold was on average $1261 for the 6 months ending in June 2013. The all-in costs include direct and indirect costs attributable per ounce.

 

Putting it all together

An intelligent investor can deduce that we are likely at the end of the business cycle for the gold industry and it could be a great time to invest evidenced by the following:

1) Speculative demand is low (investor, central banks). The feedback loop has silenced leaving a clear view of what the commodity is actually worth in real demand.

2) Functional demand is healthy (jewelry, technology).

3) The average cost of gold is roughly equal to its spot price. This suggests that many mining operations are insolvent and will shut down their operations, thus consolidating the industry.

4) Post-bubbles are the best time to invest.

Investing in a stock, instead of the commodity directly, can produce steady dividends and provide fundamental measures. Newmont Mining Corp has been publicly traded since the mid-80s and has a long history of operational strength. It currently pays over a 3% dividend, trading at 1.15x to net tangible book value and has a strong outlook for the future.

A look at NEM's financials

Newmont wrote down over $2 billion in impairments due to the drop in gold prices during the second quarter. This impairment took about a 10% bite from the company's Property, Plant and Mine Development asset on the balance sheet, causing a downshift in the company's overall book value. The 10-Q breaks down the impairment by showing new assumptions for variables in a discount cash flow (DCF) analysis of mine development. The big assumption change used in the DCF analysis was a decrease in the assumption of gold prices to $1400 an ounce. Therefore, the balance sheet's asset values for Property Plant and Mine Development is being based on an assumption of $1400 an ounce. Even though spot prices are lower, we think $1400 is a healthy assumption looking forward.

Newmont did post a huge loss on its income statement for 2nd quarter 2013. The impairment used to write down its asset holdings is also deducted from income as a non-cash expense. This amount then gets to be deducted from taxable income even though no actual dollars are lost, only value. A look at the company's statement of cash flows for Q2 shows this non-cash adjustment being added back to operation cash. The net effect from this, along with depreciation and changes in operating activities, leaves the company with a positive cash flow from operational activities, even though the price of the commodity is at 3 year lows.

These types of adjustments are normal accounting activities and are transparent on its fillings with the SEC. The adjustments illustrate a downshift in the industry as a whole more so than a downshift in the company's operations and performance. At the end of the day, Newmont has productive proven mines, operational experience, and low cost (as an industry comparison) cost of revenues.'

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"

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

 

They have been a True Disaster (for a long time) -

so the question might be rephrased :

 

Will they continue to be a disaster ?

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This is the key thing Doc,these latest downdrafts confirmed my earlier hesitancy.Whilst people are piling into stocks and bloated currencies,I think they'll continue their trek down.

 

Catching a share around the bottom is a dangerous game but that's how you find the unloved value plays.

 

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.'

 

 

Bingo.The fundamentals seem irrelevant at the minute.

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They maybe cheap, but you must have patience as it could bump along the bottom for a while. I am looking for 2yr new highs before buying.

Jim Rogers said, stocks can go to zero, but the commodity cannot, and that has been invaluable advice.

 

 

Thus,

 

NEM must clear $70

 

GFI to clear $15

 

AU:NCM to clear $35

 

These "level monitors" are valid for the next three months. Judging by the distance they must go to get past these levels, there is a lot of overhanging stock to clear to get there (and thus time involved). And if these mines are losing money, they will need to issue more stock just to stay alive.

I'll be waiting for more clarity on the financial side in terms of how much more capital they're going to need,or if they'll need any.

 

A 20/50 week crossover would see me immediately buying but we're some time from that.

 

At the mo,it's all about info gathering.

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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.

 

 

 

WIse words

http://www.google.co.uk/finance?q=NYSE%3ANEM&ei=upl_VJHxHqGEwAOzw4GADA

Newmont $19-63

 

http://stockcharts.com/h-sc/ui?s=$HUI:$GOLD&p=D&yr=1&mn=0&dy=0&id=p35894892510&a=65702648

HUI:Gold .145

Looks like the bottom was 0.130 so a cracking calll there van

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TORONTO, ONTARIO--(Marketwired - Dec. 3, 2014) - Dalradian Resources Inc. (TSX:DNA)(AIM:DALR) ("Dalradian" or the "Company") is pleased to announce the Company's common shares have been admitted to trading on the AIM market of the London Stock Exchange(LSE) and that dealings commenced at 8.00am (UK time) today, under the ticker code DALR.

The admission to AIM is in addition to the Company's existing listing on the Toronto Stock Exchange and is part of a strategy to grow the business and make it more accessible to investors in the UK, Ireland and Europe. Dalradian's operations are in Northern Ireland where the Company is advancing a pre-feasibility study and other pre-productions studies at its high-grade gold deposit, Curraghinalt.

 

 

in 2012, Curraghinalt was ranked 7th highest by grade of more than 500 undeveloped deposits globally.

 

 

http://www.dalradian.com/news-and-events/news-releases/news-releases-details/2014/Dalradian-Commences-Trading-on-the-AIM-market-of-the-London-Stock-Exchange/default.aspx

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I'll be waiting for more clarity on the financial side in terms of how much more capital they're going to need,or if they'll need any.

 

A 20/50 week crossover would see me immediately buying but we're some time from that.

 

At the mo,it's all about info gathering.

 

That's right, the trend is about getting those commodities down, and affecting the nations that are not allied with the West. There needs to be some conclusion or signal to end this show.

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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.

 

 

huigold.jpg

 

0.102

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NOTE (from my broker):

 

Our top larger cap picks are:

Agnico Eagle (AEM)
B2 Gold (BTO)
Primero (P)
Silver Wheaton (SLW)
Yamana (YRI)
Endeavour (EDV)

Developers:
Belo Sun (BSX)
Dalradian (DNA)


As Martin indicates, there are several factors that may indicate that we are finally in “capitulation” mode in the gold equities sector:

- The global disinflation cycle is over
- Gold equities at an all-time low on a price-to-cash flow basis
- Gold equities at an all-time low on a price-to-book value basis
- Gold equities at an all-time low relative to the S&P/TSX and Bonds
- Gold equities underperforming bullion
- Discounts match 2000 peak technology bubble values and 2008 financial crisis values
- Gold equities seasonally bottom in July/August

July and August could be a buying opportunity in the gold equities sector.

 

RESPONSE:

Well, I hope he is right.
Right now, it seems like most potential buyers
will want to wait for the "round number" of $1,000

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Well, I am back into Gold, Silver & GDX. Of course, positions went underwater as soon as I put them on.. lol.

 

No idea when this bear will end. Brutal. We could be near a bottom, or there could be another 50% downside. The price action does not look like it's a bottom. at the moment, so it's anyone's guess.

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Well, I am back into Gold, Silver & GDX. Of course, positions went underwater as soon as I put them on.. lol.

 

No idea when this bear will end. Brutal. We could be near a bottom, or there could be another 50% downside. The price action does not look like it's a bottom. at the moment, so it's anyone's guess.

 

I bought some more gold recently also - hoping the old lows would hold

I still have some "more ammo", but I am now inclined to wait for $1,000, unless we see something dramatic

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This from Chris Weber.

 

Barrick Gold, (ABX) at Monday's close had not been so low since 1989: over a quarter-century ago.

 

Many others hadn't been so low since 2002: Kinross is just one example. The several royalty companies have held up better than the miners. But even great news for some miners has been ignored lately. Look at this news for New Gold, (NGD or NGD.TO), that came out on last "Bloody Monday":

 

http://finance.yahoo.com/news/gold-further-enhances-financial-flexibility-120000955.html

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NOTE (from my broker):

 

Our top larger cap picks are:

 

Agnico Eagle (AEM)

B2 Gold (BTO)

Primero (P)

Silver Wheaton (SLW)

Yamana (YRI)

Endeavour (EDV)

 

Developers:

Belo Sun (BSX)

Dalradian (DNA)

 

 

As Martin indicates, there are several factors that may indicate that we are finally in “capitulation” mode in the gold equities sector:

 

- The global disinflation cycle is over

- Gold equities at an all-time low on a price-to-cash flow basis

- Gold equities at an all-time low on a price-to-book value basis

- Gold equities at an all-time low relative to the S&P/TSX and Bonds

- Gold equities underperforming bullion

- Discounts match 2000 peak technology bubble values and 2008 financial crisis values

- Gold equities seasonally bottom in July/August

 

July and August could be a buying opportunity in the gold equities sector.

 

 

RESPONSE:

Well, I hope he is right.

Right now, it seems like most potential buyers

will want to wait for the "round number" of $1,000

Agree Doc I think we're gonna see <$1000 for sure and even then I'm still gonna be waiting for my entry point.The narrative at the minute is down and has been for years.I started this thread when I was beginning to run the slide rule over the miners.I generally like to buy for five years + and have learned the hard way to wait for a decent bottom to form.Still see no bottom but the value here is becoming compelling indeed.

Well, I am back into Gold, Silver & GDX. Of course, positions went underwater as soon as I put them on.. lol.

 

No idea when this bear will end. Brutal. We could be near a bottom, or there could be another 50% downside. The price action does not look like it's a bottom. at the moment, so it's anyone's guess.

 

Like your earlier quote Van 'just because it's cheap..'etc.When you see shares like Next at £65+ and then you see Barrick at 26 year lows,I know which I'd rather own.I would only trade the short side here if I was short term trading..but I'm not

This from Chris Weber.

 

Barrick Gold, (ABX) at Monday's close had not been so low since 1989: over a quarter-century ago.

 

Many others hadn't been so low since 2002: Kinross is just one example. The several royalty companies have held up better than the miners. But even great news for some miners has been ignored lately. Look at this news for New Gold, (NGD or NGD.TO), that came out on last "Bloody Monday":

 

http://finance.yahoo.com/news/gold-further-enhances-financial-flexibility-120000955.html

It reminds me of when I was buying miners eg BLT back in the late 90's.Noone wanted to know.

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This from Chris Weber.

 

Barrick Gold, (ABX) at Monday's close had not been so low since 1989: over a quarter-century ago.

 

Many others hadn't been so low since 2002: Kinross is just one example. The several royalty companies have held up better than the miners. But even great news for some miners has been ignored lately. Look at this news for New Gold, (NGD or NGD.TO), that came out on last "Bloody Monday":

 

http://finance.yahoo.com/news/gold-further-enhances-financial-flexibility-120000955.html

https://uk.finance.yahoo.com/echarts?s=AAL.L#symbol=AAL.L;range=my

 

Check out the 15 year chart.Still going south.

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http://www.telegraph.co.uk/finance/china-business/11759032/China-confident-of-steadying-turbulent-stock-market-says-vice-finance-minister.html

'Regular retail investors currently dominate the equities market, representing around four-fifths of total shareholders, he says, arguing that there is a need for China to develop more mature institutional investors.'

 

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/11759093/Gold-rout-could-turn-into-stampede-out-of-commodity-investment.html

'During the boom years of the commodities super-cycle, when iron ore traded at $180 per tonne, gold topped out at more than $1,900 per ounce and oil looked cheap at $100 per barrel, no bet on resources was too risky to take. China’s demand for raw materials, energy and food was expected to drive growth in the entire commodities sector uninterrupted for at least the next 25 years.

However, those days are over; and despite glimmers of hope that the current slowdown in Chinese economic growth may be short-lived, the crash in resource-based asset prices has turned from an orderly exit into a stampede.

The sense of foreboding hanging over resources was made worse by the big global mining giants, which are running out of options if they want to maintain their commitment to progressive dividends while boosting production against the backdrop of a falling market. In valuation terms, mining companies trading on the FTSE are now back where they started just before the onset of the global financial crisis.'

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