From my analysis, I'm now confident that the Obama Budget and related behavior of Ben Bernanke quite simply boils down to printing lots of money. Low interest rates are not enough to slay this recession and hopefully, flooding the monetary system with cash will move us towards recovery.
The only question in my mind is, "When will the stock markets start to seriously worry about inflation?" Right now the Federal Open Market Committee (FOMC) has assumed that for the time being, cost of living increases remain "subdued". I suspect that we are several months away from when inflation concerns become strong enough to push spot gold into record new high territory.
My portfolio has done well in the past several days but not as well as the general market which I hear has gained 20% from its lows earlier this month.
Based on the Feb. 5th benchmarks: my portfolio is today up 13.1% while spot gold and the iShares COMEX Gold E.T.F. are up 2.3% and 1.6% respectively. The Dow and TSX are at -4% and -.7% for this time frame.
I've decided to reposition some funds from senior gold holdings into silver, gold royalty trusts and junior gold holdings and will be executing changes over the next few days.
Wednesday, March 25, 2009
Thursday, March 19, 2009
Bernanke's Announcement Drives Markets, Including Gold, Crazy!
Around ten yesterday morning I was watching spot gold plunge below $885/oz. I considered this to be a serious breach of a technical floor and I had been thinking that spot gold should have been going up for the past few days but seemed determined to fall. So I decided to sell $26,000 worth of my holdings on a modest gain basis thereby substantially eliminating my margin position. Was this a mistake or what?
Jackie and I went downtown with our good friends Tom & Carol Ridout to watch the play "Spring Awakening" at the Canon Theatre. When we returned at 5:00 p.m. and I checked the market, HOLY JUMPIN XBSZHYTCXZ! spot gold was up over $55.
I'm really not mad at myself for having the discipline to sell when an important threshold is breached but I can't help but LOL...Isn't life interesting.
My other $110,000 of gold holdings did quite nicely and as of today my gold/silver portfolio is up 8.4% from the Feb. 5th benchmark. I can't help but notice that my senior gold producers (Kinross,Yamana, Goldcorp & Iamgold), which make up over 50% of my total cost base, have increased only modestly (up 1,5% since Feb. 5th)while my junior holdings (New Gold, U.S. Gold, Rubicon & Victoria) are up over 25%. My major silver holding, Coeur D'Alene, gained 33% today but my two silver holdings are up only 8% from Feb. 5th.
It's also worth noting that SPDR Gold Trust added over 20 tonnes of gold to its inventory in the past few days.
Jackie and I went downtown with our good friends Tom & Carol Ridout to watch the play "Spring Awakening" at the Canon Theatre. When we returned at 5:00 p.m. and I checked the market, HOLY JUMPIN XBSZHYTCXZ! spot gold was up over $55.
I'm really not mad at myself for having the discipline to sell when an important threshold is breached but I can't help but LOL...Isn't life interesting.
My other $110,000 of gold holdings did quite nicely and as of today my gold/silver portfolio is up 8.4% from the Feb. 5th benchmark. I can't help but notice that my senior gold producers (Kinross,Yamana, Goldcorp & Iamgold), which make up over 50% of my total cost base, have increased only modestly (up 1,5% since Feb. 5th)while my junior holdings (New Gold, U.S. Gold, Rubicon & Victoria) are up over 25%. My major silver holding, Coeur D'Alene, gained 33% today but my two silver holdings are up only 8% from Feb. 5th.
It's also worth noting that SPDR Gold Trust added over 20 tonnes of gold to its inventory in the past few days.
Thursday, March 12, 2009
SPDR Tonnes Moving Up.....GREAT NEWS
In the last 2 days SPDR Gold Trust investors have increased their inventory by 12.5 tonnes. Inventory growth had been stagnant since Feb. 19th (14 trading days) I feel that this renewed investor interest is highly important because it has occurred while the general stock market was rising sharply and while spot bullion was falling in price. Also today, the spot bullion trading volume returned to levels not seen for 8 trading sessions.
I know that I shouldn't put too much importance on this one set of indicators but I believe this signals that the recent spot gold downturn (and related gold stock sell off) are over.
I know that sell offs will reoccur but I think the gold complex will now move up and strike into a recent new high trading range based on bullion priced above $1,000/oz. I'm not willing to forecast that spot gold will move above $1,030 in this next leg up, but I wouldn't be surprised.
My portfolio is now down 5% from the Feb. 5th benchmark. My large position in Kinross has unfortunately lagged the general gold mining share recovery while Iamgold has been recovering unexpectedly well, along with Yamana. Remember that Iamgold must work thru its new share issue noted in an earlier blog.
I know that I shouldn't put too much importance on this one set of indicators but I believe this signals that the recent spot gold downturn (and related gold stock sell off) are over.
I know that sell offs will reoccur but I think the gold complex will now move up and strike into a recent new high trading range based on bullion priced above $1,000/oz. I'm not willing to forecast that spot gold will move above $1,030 in this next leg up, but I wouldn't be surprised.
My portfolio is now down 5% from the Feb. 5th benchmark. My large position in Kinross has unfortunately lagged the general gold mining share recovery while Iamgold has been recovering unexpectedly well, along with Yamana. Remember that Iamgold must work thru its new share issue noted in an earlier blog.
Wednesday, March 11, 2009
GOLD BUGS HAMMERED RECENTLY
Spot Bullion fell within $2 of a $890 technical support floor yesterday. It sure would be nice to see this turn around. My portfolio is now down 17.4% from its Feb 5 benchmark while gold futures are only off 2%.
Iamgold announced a prospectus issue of 34.3M shares @ $8.75. This was poor micro-timing I think since the general gold related market was very soft. My two silver holdings resisted the gold share sell off.
For the ascendancy theory of gold to be valid, we have to reach a turning point in the market valuation before too long (I would think well before spot gold goes back to $750/oz). We should be able to see spot gold and related mining stocks rising, even when (or especially when) the general market advances since the advancement in the general market valuation foretells the advancement of inflation. We need to see evidence of a shift in gold buyer psychology from "safe haven" to "inflation protection". I'm not sure what will trigger this.
Meanwhile it is difficult and costly to be patient.
Iamgold announced a prospectus issue of 34.3M shares @ $8.75. This was poor micro-timing I think since the general gold related market was very soft. My two silver holdings resisted the gold share sell off.
For the ascendancy theory of gold to be valid, we have to reach a turning point in the market valuation before too long (I would think well before spot gold goes back to $750/oz). We should be able to see spot gold and related mining stocks rising, even when (or especially when) the general market advances since the advancement in the general market valuation foretells the advancement of inflation. We need to see evidence of a shift in gold buyer psychology from "safe haven" to "inflation protection". I'm not sure what will trigger this.
Meanwhile it is difficult and costly to be patient.
Thursday, March 5, 2009
Fasten Your Golden Seat Belts Please
Spot Gold closed up over $20/oz, at approx. $930+/oz today amid another 4% sell off in the DOW which set a new low of 6594.
Yamana reported excellent YE results today:
Financial and Operating Highlights for the three-and twelve-month periods ended December 31, 2008 include:
- Revenues of $1.1 billion for the year.
- Net earnings of $179.4 million, or $0.25 per share, and $434.8 million or $0.63
per share, respectively.
- Total production from all mines of 254,774 gold equivalent ounces (GEO) and
982,897 GEO, respectively, in line with previously announced guidance.
- Average co-product cash cost of $383 per GEO and $384 per GEO, respectively, in
line with previously announced guidance. By-product cash costs for the year were
$136 per GEO.
Yesterday Yamana announced increased reserves: Proven and probable gold reserves increased to 19.4 million ounces as of December 31, 2008. Total new discovered proven and probable gold reserves totaled 2.5 million ounces in 2008. With approximately 1.0 million ounces having been mined in 2008, net gold reserves increased by approximately 1.5 million ounces, representing a net increase of eight percent. Total measured and indicated gold resources increased significantly to 15.7 million ounces, up 22 percent from 12.9 million ounces a year earlier. Approximately 7.9 million new ounces of gold were added across all categories before production, which exceeds the Company's previous expectation of 7.0 million new ounces. Discovery costs for proven and probable plus measured and indicated gold ounces were approximately US$12.00 per gold ounce which compares well to the industry average.
I currently own 8,000 Yamana Gold Warrants and would own more but I don't like the relatively short Feb., 2010 expiry date. I think Yamana and Iamgold are roughly equivalent in terms of their growth potential.
Yamana reported excellent YE results today:
Financial and Operating Highlights for the three-and twelve-month periods ended December 31, 2008 include:
- Revenues of $1.1 billion for the year.
- Net earnings of $179.4 million, or $0.25 per share, and $434.8 million or $0.63
per share, respectively.
- Total production from all mines of 254,774 gold equivalent ounces (GEO) and
982,897 GEO, respectively, in line with previously announced guidance.
- Average co-product cash cost of $383 per GEO and $384 per GEO, respectively, in
line with previously announced guidance. By-product cash costs for the year were
$136 per GEO.
Yesterday Yamana announced increased reserves: Proven and probable gold reserves increased to 19.4 million ounces as of December 31, 2008. Total new discovered proven and probable gold reserves totaled 2.5 million ounces in 2008. With approximately 1.0 million ounces having been mined in 2008, net gold reserves increased by approximately 1.5 million ounces, representing a net increase of eight percent. Total measured and indicated gold resources increased significantly to 15.7 million ounces, up 22 percent from 12.9 million ounces a year earlier. Approximately 7.9 million new ounces of gold were added across all categories before production, which exceeds the Company's previous expectation of 7.0 million new ounces. Discovery costs for proven and probable plus measured and indicated gold ounces were approximately US$12.00 per gold ounce which compares well to the industry average.
I currently own 8,000 Yamana Gold Warrants and would own more but I don't like the relatively short Feb., 2010 expiry date. I think Yamana and Iamgold are roughly equivalent in terms of their growth potential.
Wednesday, March 4, 2009
April Futures at $906.70 Down 10% From High
Spot Gold has continued a fairly orderly decline for the past 8 trading days (since Feb. 20th) and it's not clear when this sell off will end. It's noteworthy that unlike earlier in the quarter, gold and related stocks have declined regardless of the broader market performance. This behavior is putting my "Ascendancy of Gold Thesis" to the test.
My portfolio is now down 4.7% from the Feb. 5th benchmark. This is better that a 9% decline for the TTGD Toronto Global Gold Index but worse than Dynamic Precious Metals Fund which is only down 1.7%.
In the last few days I've added to my Rubicon Minerals position and replaced a 1,000 share holding of Iamgold Corp. I also think that Coeur D'alene, a U.S. based silver producer has good prospects. I like very much the just announced amalgamation of New Gold (NGD-T) with Western Goldfields (WGI-T) the combined production of 30,000 oz/month is a 67% increase and catapults NGD into an intermediate producer status.
Wednesday's Globe and Mail notes: "With its $280-million merger deal with Western Goldfields Inc., New Gold Inc. hopes its plans to be the dominant consolidator of the junior gold sector are back on track. The friendly agreement to combine Western's Mesquite gold mine in California with New Gold's operations in Mexico, Australia and Canada is the next step in a bid to become a one-million-ounce-a-year producer by 2012, says New Gold chief executive officer Robert Gallagher. "We're going to continue this consolidation of gold-producing assets. Others talk of it, but we've got the vehicle in place now with this combination that really is the full package - the go-to consolidator," Mr. Gallagher said in an interview. The deal announced yesterday could be dubbed "New Gold: Take 2." Ten months ago, the Vancouver business unveiled a three-way merger deal intended to create a $1.5-billion gold company backed by a group of mining all-stars."
I rate the NGD.WT.A-T an outstanding speculation. This warrant expires in 2017, trades at 40 cents, and is calculated to have a fair MV of over $2 by canadianwarrants.com/values/current.htm ..... I hold 30,000 of these warrants with an average cost of $0.275/each. I'm now out $27,000 on margin. Nothing quite matches the feeling of fear one gets when they borrow money only to lose more money!
I attended a fund seminar yesterday and listened to Alan Radlo explain why he doesn't like gold related companies because gold shares don't seem to ever steadily increase/hold their value and because gold is not consumed. Two good points. Alan manages the newly started (1 year old) $700M Cambridge Funds but formerly grew several Fidelity funds including the very successful Canadian Asset Allocation and Fidelity Canadian Growth Co. funds. With respect to gold not being consumed, I would note that as the global population expands, the scarcity of gold ensures that the amount of gold per capita is a steadily decreasing value. This is not the same as outright consumption but assuming a universal desire to hold gold, it is an argument supporting an increasing valuation, even in the absence of consumption.
Radlo was very keen on the long term outlook for oil and gas noting that supply is being curtailed and that crude shortages are sure to reoccur once consumption turns around.
Hopefully I'll be able to soon write about a turnaround in golds prospects. In the meantime I can only live in hope.
My portfolio is now down 4.7% from the Feb. 5th benchmark. This is better that a 9% decline for the TTGD Toronto Global Gold Index but worse than Dynamic Precious Metals Fund which is only down 1.7%.
In the last few days I've added to my Rubicon Minerals position and replaced a 1,000 share holding of Iamgold Corp. I also think that Coeur D'alene, a U.S. based silver producer has good prospects. I like very much the just announced amalgamation of New Gold (NGD-T) with Western Goldfields (WGI-T) the combined production of 30,000 oz/month is a 67% increase and catapults NGD into an intermediate producer status.
Wednesday's Globe and Mail notes: "With its $280-million merger deal with Western Goldfields Inc., New Gold Inc. hopes its plans to be the dominant consolidator of the junior gold sector are back on track. The friendly agreement to combine Western's Mesquite gold mine in California with New Gold's operations in Mexico, Australia and Canada is the next step in a bid to become a one-million-ounce-a-year producer by 2012, says New Gold chief executive officer Robert Gallagher. "We're going to continue this consolidation of gold-producing assets. Others talk of it, but we've got the vehicle in place now with this combination that really is the full package - the go-to consolidator," Mr. Gallagher said in an interview. The deal announced yesterday could be dubbed "New Gold: Take 2." Ten months ago, the Vancouver business unveiled a three-way merger deal intended to create a $1.5-billion gold company backed by a group of mining all-stars."
I rate the NGD.WT.A-T an outstanding speculation. This warrant expires in 2017, trades at 40 cents, and is calculated to have a fair MV of over $2 by canadianwarrants.com/values/current.htm ..... I hold 30,000 of these warrants with an average cost of $0.275/each. I'm now out $27,000 on margin. Nothing quite matches the feeling of fear one gets when they borrow money only to lose more money!
I attended a fund seminar yesterday and listened to Alan Radlo explain why he doesn't like gold related companies because gold shares don't seem to ever steadily increase/hold their value and because gold is not consumed. Two good points. Alan manages the newly started (1 year old) $700M Cambridge Funds but formerly grew several Fidelity funds including the very successful Canadian Asset Allocation and Fidelity Canadian Growth Co. funds. With respect to gold not being consumed, I would note that as the global population expands, the scarcity of gold ensures that the amount of gold per capita is a steadily decreasing value. This is not the same as outright consumption but assuming a universal desire to hold gold, it is an argument supporting an increasing valuation, even in the absence of consumption.
Radlo was very keen on the long term outlook for oil and gas noting that supply is being curtailed and that crude shortages are sure to reoccur once consumption turns around.
Hopefully I'll be able to soon write about a turnaround in golds prospects. In the meantime I can only live in hope.
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