Credit deflation and the reflation cycle to come.

[Errol]

What does everyone think of Barrick at these prices?

[Inoperational Bumblebee]

10 hours ago, Majorpain said:

Completely agree, the market has gone a little bit crazy.  The following is very rough, but its does show what a steal some of the PM miners are IMO.

1oz gold -$1181

1oz silver -$14.64

Harmony $800m Mcap 105m oz AU Reserves - $7.6 oz gold

Sibanye $1270m Mcap 102m oz AU Reserves - $12.4 oz gold

Hochschild $1052 Mcap 351m oz AG Reserves - $2.9 oz Silver

Fresnillo $9244 Mcap 2100m oz AG Reserves - $4.4 oz Silver

And that's just the main PM each produce, you can add in and other credits for other metals they produce.  Fres gets its silver nearly for free FFS!

Great post. I've previously tried to work out these figures myself and not done very well, so thanks!

[Bear Hug]

~11% down on PM stocks/ETFs myself.  Can't say I am enjoying the ride (I know I have been warned and all that).  But the main difficulty is in holding out and not buying more just yet.

Would be interesting to know which ones are less likely to go under if shit really hits the fan (under $1k gold?).  I guess I am looking for things like Sibanye (streaming deal) and Barrick (selling non-core assets) etc.

Which miner will buy all the others when they go bankrupt? )

 

[Sugarlips]

If someone cleverer than I (not hard) has 5 minutes spare, could they run the ruler over SVL a minnow listed on the ASX ?

They are trading at about 3cents down from about 8c some years back, is this the sort of thing thats worth punting a couple grand on given the beat up silver bullion price or is there debt or some other hidden issue that is going to stop them?

https://www.silvermines.com.au

Thanks in advance!

[Lightscribe]

As I’ve mentioned here before, I’m currently investing in Hochschild mining. Reduced debt, option away from Africa, output and dividend  increase. Although much of the sector is looking value at the moment.

https://uk.finance.yahoo.com/news/ftse-100-stock-hasn-t-141014555.html?.tsrc=applewf&guccounter=1

If PMs fall further (which I think they will), then good, I’ll increase my monthly investment. if that happens the bigger players will be looking to swallow up the minnows, see Randgold article below

https://www.telegraph.co.uk/business/2018/08/09/randgold-hunt-new-gold-prices-stagnate/

[DurhamBorn]

10 hours ago, Bear Hug said:

~11% down on PM stocks/ETFs myself.  Can't say I am enjoying the ride (I know I have been warned and all that).  But the main difficulty is in holding out and not buying more just yet.

Would be interesting to know which ones are less likely to go under if shit really hits the fan (under $1k gold?).  I guess I am looking for things like Sibanye (streaming deal) and Barrick (selling non-core assets) etc.

Which miner will buy all the others when they go bankrupt? )

 

What you need to remember in gold miners is where their costs are based.$1000 gold wouldnt bankrupt the South African miners if the Rand fell to R17.00 at the same time.A month ago for instance the gold was selling at Rand 520,000 a kg,today its selling at Rand 557,000 a kg.So while gold has fallen a lot,the profits of the SA miners is going up.The same goes for Brazil,Argentina,Turkey etc.I like to see a top class chief financial officer.In this period with currency falling fast id expect the shrewd (like Frank Abbott at Harmony) to be locking in zero cost collars now in currency hedges and also buying forward contracts.As always there is a risk that the Rand keeps falling heavily,but once they lock in the currency margins if gold turns (as i fully expect) then the profits go up very fast.

Its best to simply have a good spread because all miners have huge risks,

[Castlevania]

22 hours ago, Majorpain said:

Completely agree, the market has gone a little bit crazy.  The following is very rough, but its does show what a steal some of the PM miners are IMO.

1oz gold -$1181

1oz silver -$14.64

Harmony $800m Mcap 105m oz AU Reserves - $7.6 oz gold

Sibanye $1270m Mcap 102m oz AU Reserves - $12.4 oz gold

Hochschild $1052 Mcap 351m oz AG Reserves - $2.9 oz Silver

Fresnillo $9244 Mcap 2100m oz AG Reserves - $4.4 oz Silver

And that's just the main PM each produce, you can add in and other credits for other metals they produce.  Fres gets its silver nearly for free FFS!

I’m assuming that’s excluding debt? Sibanye have a lot of debt from what I recall.

Fresnillo are one of the few silver producing majors bothering to increase their silver production, which I think will turn out to be a shrewd move going forward. Yet, most of their revenue now comes from gold despite it being a much smaller part of their business. Flip side is that the Mexican Peso is one of the few currencies to have outperformed the USD year to date; higher energy costs and Mexico have just voted in a socialist, but maybe that’s all priced in?

[Majorpain]

57 minutes ago, Castlevania said:

I’m assuming that’s excluding debt? Sibanye have a lot of debt from what I recall.

Fresnillo are one of the few silver producing majors bothering to increase their silver production, which I think will turn out to be a shrewd move going forward. Yet, most of their revenue now comes from gold despite it being a much smaller part of their business. Flip side is that the Mexican Peso is one of the few currencies to have outperformed the USD year to date; higher energy costs and Mexico have just voted in a socialist, but maybe that’s all priced in?

Market cap is a reasonable calculation of a company's true value, any debt should already be factored into it.  Sibanye do have a lot of debt, but they have just had a significant cash injection, so they are in the high risk but not disaster zone.

 

14 hours ago, Errol said:

What does everyone think of Barrick at these prices?

Big boys who your money is safe with IMO, similar to Fresnillo though their massively profitable operations are already factored into the share price so upside will be there but limited.  DYOR as always!

 

8 hours ago, Sugarlips said:

If someone cleverer than I (not hard) has 5 minutes spare, could they run the ruler over SVL a minnow listed on the ASX ?

They are trading at about 3cents down from about 8c some years back, is this the sort of thing thats worth punting a couple grand on given the beat up silver bullion price or is there debt or some other hidden issue that is going to stop them?

https://www.silvermines.com.au

Thanks in advance!

Not Earning, Small Mcap, no funds to develop mine, shareholders diluted to fund exploration.  Last time I invested in something similar within 6 months I was massively regretting it.  There are loads of companies like this around so they are far from unique, DYOR!

[macca]

On 16/08/2018 at 14:17, DurhamBorn said:

Once a bull gets going you will start to see headlines about that very thing.Instead of giving a value based on profits people will start to value at per resource ounce.I fully expect some will start to be valued at $50 an oz in the ground.Of course a lot of resources arent profitable at todays prices.Its ironic that PMs are so hated when Gold has just performed its job to perfection for Turkish people.A Turk holding gold has protected his wealth.His brother who only had currency has lost about half of his.As always the market hurts as many people as possible.

Sorry to ask something I’m sure has been discussed.. which minining stocks are available in the UK, what should I search for? What ones you recommend/risk 

i have an iWeb share dealing account already, bought Lloyd’s, rbs and Taylor wimpy in the last crash.. 

[sancho panza]

2 hours ago, Majorpain said:

Market cap is a reasonable calculation of a company's true value, any debt should already be factored into it.  Sibanye do have a lot of debt, but they have just had a significant cash injection, so they are in the high risk but not disaster zone.

 

Big boys who your money is safe with IMO, similar to Fresnillo though their massively profitable operations are already factored into the share price so upside will be there but limited.  DYOR as always!

 

Thanks for your views MP.

I'm with you,our Goldies are the big blue chips with some spread into ElDorado/New Gold/Novagold.I regard the SA miners-no matter how big-as carrying leveraged risk vs price of the yellow stuff.My investment thesis is therefore to overweight Barrick/Goldcorp/Newmont(too expensive at the mo) and then if there are big profits,they'll likely be in the SA miners.

What's your views on using market cap to revenue as a metric for gauging value? If you have any.

[leonardratso]

top sliced drax and bt today, just shaved off the profits, gonna piss it away at ladbrokes.

[DurhamBorn]

1 hour ago, macca said:

Sorry to ask something I’m sure has been discussed.. which minining stocks are available in the UK, what should I search for? What ones you recommend/risk 

i have an iWeb share dealing account already, bought Lloyd’s, rbs and Taylor wimpy in the last crash.. 

Almost all Canadian miners can be bought and almost all American and South African miners can be bought in America.A good place to start is to get a breakdown of all stocks in the fund GDXJ and go from there.My friend bought Taylor Wimpy after the last crash,he sold them a couple of months ago.

[Yellow_Reduced_Sticker]

53 minutes ago, DurhamBorn said:

Almost all Canadian miners can be bought and almost all American and South African miners can be bought in America.A good place to start is to get a breakdown of all stocks in the fund GDXJ and go from there.My friend bought Taylor Wimpy after the last crash,he sold them a couple of months ago.

 

Hey DB, your mention of Taylor Wimpy, promoted me to check Countrywide share price as ain't checked it a month or so...GORDON BENNETT ...

 

Its down to 14p

 

Countrywide looks BUST!

If it goes to 1p I may put in £100 for a gamble

 

Would of been a GREAT short from £6.00!

I wonder if sancho panza had it in his short portfolio...?

[Majorpain]

1 hour ago, sancho panza said:

What's your views on using market cap to revenue as a metric for gauging value? If you have any.

First thing i look for on a companies balance sheet is Turnover, its however a pretty useless figure as it tells you how big a company is and not how good it is IMO. Turnover is vanity, profit is sanity is a good saying.

Profit/Cashflow/Cash reserves/Shareholder equity and Dividends are indicators i use that its a well run company, which is generating value for shareholders.  If you only focus too much on the Mcap to Turnover ratio you run the risk of buying a big company which is cheap because it has issues, see Carillion!

[DurhamBorn]

5 minutes ago, Yellow_Reduced_Sticker said:

 

Hey DB, your mention of Taylor Wimpy, promoted me to check Countrywide share price as ain't checked it a month or so...GORDON BENNETT ...

 

Its down to 14p

 

Countrywide looks BUST!

If it goes to 1p I may put in £100 for a gamble

 

Would of been a GREAT short from £6.00!

I wonder if sancho panza had it in his short portfolio...?

Equity will be worth zero in Countrywide.Iv had a very poor week on reductions,plenty of fruit etc but very little main meal stuff.I got 3 big extra special Gammon joints last night for £1.90 each been £8 each,but im not a lover of it so my dad got them off me ,he said he was down 8% on Harmony so they would help lesson the pain .Lidl have their 10 pack extra special sausage in the super weekend offer though £1.99 a pack and they are really good quality so il have to be up tomorrow morning and down there.I can get two nights meals out of a pack now because iv convinced my other half two is enough for her "for her diet"

[leonardratso]

have a look at the foxt chart as well, both are a big piece of shit and deserve a big fat zero price.

[Band]

JNUG - How has this lost so much in the past year, comparatively speaking.

 

[leonardratso]

13 minutes ago, Banned said:

JNUG - How has this lost so much in the past year, comparatively speaking.

 

hmm, yeah, its well shagged, whats in it, i havent had a look.

ah, its leveraged and with junior gold miners, so volatile anyway even without leverage. I wouldnt touch it because of the leverage and volatility.

[Band]

57 minutes ago, leonardratso said:

hmm, yeah, its well shagged, whats in it, i havent had a look.

ah, its leveraged and with junior gold miners, so volatile anyway even without leverage. I wouldnt touch it because of the leverage and volatility.

Cheers didnt realise it was leveraged. Debt monkeys i shit em!

[Yellow_Reduced_Sticker]

1 hour ago, DurhamBorn said:

Equity will be worth zero in Countrywide.Iv had a very poor week on reductions,plenty of fruit etc but very little main meal stuff.I got 3 big extra special Gammon joints last night for £1.90 each been £8 each,but im not a lover of it so my dad got them off me ,he said he was down 8% on Harmony so they would help lesson the pain .Lidl have their 10 pack extra special sausage in the super weekend offer though £1.99 a pack and they are really good quality so il have to be up tomorrow morning and down there.I can get two nights meals out of a pack now because iv convinced my other half two is enough for her "for her diet"

 

@DurhamBorn Just LOVING this!

 

Actually i blanked at both tescos and sainsburys yesterday evening BUT then again the que by the freezer was MASSIVE at tesco, and i just couldn't handle it with all those repulsive DESPERATE roma-gipos!

 

Just thought i'd mention this as its NOT been mentioned on this thread and thats...CAR BOOT Sales!

 

I cylce (40mins) to a posh town near me, and this boot sale YOU can literary CLEAN-UP!

 

You've gotta get ya timing right, cos if ya don't all you're see is the weasel-sellers (traders) AND want you want to see is the posh toffs selling stuff...August bank holiday is good and anytime its NOT so HOT weather wise is great to go...I'm going this Sunday!

 

I ONLY buy socks & underwear new...anyway at this boot sale I've bought pants, shirts, near new for a quid, some brand-named ...plus numerous other bargains!  Last year picked up near NEW leather boots my size new £120 ...got them for a fiver!

 

In fact this place attracts a LOT of polish girls that stock up on cloths and send it back home, you wanna see some of these polish babe foxes, bloody difficult to keep ya eyes on the shall!

 

BTW, its 2 quid to get into this boot sale b4 11:00am...well the greedy-pig landowner ain't getting my moolah, so what i do is go to the far end where theres a blind spot no one can see ya...and get in through the fence, even if its overgrown i take along with me my small gardening Pruning Shears to cut the brambles to clear a big enough gap to get in!

 

 

 

 

[Band]

Last paragraph is apt to this thread

https://www.telegraph.co.uk/business/2018/08/17/gold-ultimate-safe-haven-asset-spiralling/

Gold, that traditional safe haven in times of stress, has just hit a two-and-a-half year low. At $1,179 an ounce, it has fallen more than 10pc since the start of the year and is 13pc lower than its 2018 high so far. From trade war to Brexit to emerging market wobbles it’s fair to say we live in uncertain times, so why isn’t gold doing better? 

It would seem investors are not are buying gold bars and stuffing them under their mattresses. They are not even buying their electronically traded equivalents. Inflows into exchange traded funds (ETFs), instruments that track the price of commodities without needing to hold the physical product, slumped 46pc in the second quarter of the year, according to the World Gold Council, pushing overall demand down 4pc. The first half of 2018 saw demand for the yellow metal fall to its lowest level since 2009.

Moreover short sellers are betting hard that the price will go lower, and profit when it does. They buy derivatives such as futures contracts and sell them with a view to buying them back cheaper at a later date. Last week short selling of gold futures on the Comex market hit a new record.

 

Gold is unlike other metals in that its price is far more closely tied to sweeping economic trends and political factors than the forces of mere supply and demand. That, for the companies that mine it, can be valuable, too: you are, after all, essentially digging pure money out of the ground.

The metal’s current woes are essentially tied to the fortunes of the dollar, which has risen strongly against most currencies through the year. Gold, like most commodities, is priced in dollars and as such becomes more expensive and less tempting when the greenback rises. Dollar strength is why emerging market currencies such as the Turkish lira and the South African rand have been pummelled this week.

Observers of the dollar don’t expect it to change any time soon. The US Federal Reserve has raised interest rates seven times since 2015, lending support to the dollar. After the most recent rise in June, markets reckon there is a 60pc chance of two further hikes this year.

But it is not quite true to say that gold has lost its lustre as a safe harbour, either. At times of high geopolitical tensions it has tracked higher; last year, for example, it peaked shortly after North Korea tested a thermonuclear missile.

Rather it is more accurate to say global investors have other, better assets to park their money in. US stock markets hover near record highs and the economy is ticking along. Better to buy into American equities or Treasuries than stick money into gold, which has no yield, and so pays no interest. Noted investor Rick Rule of Sprott Global - a long-term gold bull - admitted this week: "The fight really does seem to be between the dollar and gold, and gold seems to be losing."

That doesn’t mean gold’s story is done for this year. Stripping out the noise from ETFs and confused investors worried about the value of holding it, physical demand for the metal from jewellery makers, industry and bullion buyers is solid. Key markets such as China and India appear sound, with the latter heading into peak buying season.

The gold price just needs a trigger to kick-start its move higher. Some market watchers wonder whether the annual meeting of central bankers at Jackson Hole in Wyoming next week will provide it. They will be looking for clues as to whether the Fed will begin tightening sooner, and tapering the pace of rate rises. Will Jerome Powell, Fed chair and keynote speaker on Friday, give an indication that he’s aware a stronger dollar is causing pain in emerging markets so heavily dependent on dollar debts?
 

 

 

Powell has a critic of current Fed policy closer to home. President Donald Trump has made it plain that he is “not thrilled” with continual rate rises; the President still has the mindset of a real estate developer, thinking about borrowing at low rates. Nor is he a fan of a strong dollar, believing that it enables China to get away with having a weaker currency and thus “win” at trade.

It’s possible the dollar may weaken of its own accord if the US economy hits a bump in the road - especially if Trump’s trade war on China results in rising prices at home. This in turn may force the Fed to slam the brakes on. And Trump himself could provide a direct impetus to the gold price by taking to Twitter and calling Kim Jong-un “little rocket man” again - or worse. Though one hopes that gold bugs aren’t pinning their hopes for a recovery on this.

When gold does turn, it could be sharp. The extent of the aggressive short positions could lead to a “violent reversal”, according to one expert. “People who trade futures markets are trend followers. They’ve seen gold go down and it’s encouraged them to add short positions,” he says. The effect of all this jumping-on-the-bandwagon is that it has become a self-fulfilling prophecy. For gold, it’s a case of what comes down, must go up - sooner or later.

[DurhamBorn]

@Banned yes good to see that picked up.Net shorts from managed money has never been higher going back to 1972.Commercials (ie insiders in the industry ) have only had less shorts a couple of times.The insiders will be proved right.Managed money wrong.

[kibuc]

Speaking of insiders, Wesdome independent director Warwick Morley-Jepson recently added 20k shares @3.24cad to his portfolio. He was the one who kicked off insider purchase frenzy at WDO in May @2cad and looks like he still sees value at today prices.

Kiena drilling update - their primary price mover - is expected early Sep.

[MrXxx]

9 hours ago, DurhamBorn said:

@Banned yes good to see that picked up.Net shorts from managed money has never been higher going back to 1972.Commercials (ie insiders in the industry ) have only had less shorts a couple of times.The insiders will be proved right.Managed money wrong.

surely the insiders (shorters) are only going to be prooved right if they get out before the sudden turn/event otherwise they are going to get burnt...is it wise to short on something so volatile?

[DurhamBorn]

1 hour ago, MrXxx said:

surely the insiders (shorters) are only going to be prooved right if they get out before the sudden turn/event otherwise they are going to get burnt...is it wise to short on something so volatile?

The commercials are the people who own gold,use gold etc.So they all buy shorts to make sure they dont take a hit if gold falls while they conduct their business.They dont buy the shorts to make money,they buy them to protect their business.Someone forward buying $10 million of gold to supply others buys shorts to cover themselves.The fact that commercials are now down to the lowest shorts as far back as i can remember says they dont see much point in buying shorts.In the past the commercials ie the people inside the industry who see the demand etc every day tend to signal moves in gold much better than fund managers in an office.

The insiders have the lowest shorts i can remember,the fund managers have the highest shorts since 1972.When those shorts need covering....

 

On top of this retail bulls are down to 6% in gold (4% the lowest ever) and dollar bulls are at 95% all levels where reversals can happen quickly.