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Aussie
18-12-2008, 11:16 PM
I thought it might be fun to open a thread specifically on gold stocks - definitely not meant to be a trading thread, more of a swapping ideas, tips and points of view on the fundamentals thread.

I'll start by saying that gold stocks seem to be really moving again. Many of the majors have moved 60% to 85% off their lows in just the past 30 days . . . is anyone out there noticing this trend?

1099

AMR
18-12-2008, 11:28 PM
Ditto with CXC which has doubled and posted a H&S bottom. Boy my strategy of waiting for pullbacks in the Eur/usd and CXC.AX has cost me big time this week...

Aussie
18-12-2008, 11:49 PM
Ditto with CXC which has doubled and posted a H&S bottom . . .

AMR, personally, COEUR D'ALENE is not one my favorites. I owned CDE last year when it was about $4.90 and managed to get out a month or so later before I lost my shirt.

My best performing stock by a mile has been Canadian miner Goldcorp (NYSE:GG). Closely followed by Kinross and Agnico-Eagle. I hold quite a bit of Yamana gold (NYSE:AUY) but have been disappointed by it's overall performance. I think it has been the traders play stock. The company is great, is one of the lowest cost producer in the world and has some fantastic properties - it should be valued far, far higher that 6 and change.

I am expecting there to be a great deal of interest in the gold miners from institutions in 2009 as the gold price rises against the backdrop of money falling from the skies. The Jr's are beyond cheap.

airedale
19-12-2008, 10:20 AM
Hi Aussie, I am in Lihir Gold ...LGL... which has had a good run up lately. It is no longer just a one mine company, probably the second biggest gold miner on the ASX now.
And for a punt on the penny stocks look at Catalpa....CAH. It was formerly Westonia. With an extensive drill program at Westonia in WA they have had positive results lately. At this stage it is exploration, but should go OK when [and if] they start mining.

arco
19-12-2008, 12:56 PM
Interesting thread idea Aussie.

I'm not trading any gold stocks presently, but certainly very interested.

Perhaps when anyone posts they can also say why they like the stock so much. Fundamentals, divi's, etc.

Some of the older serving forum members may remember the days when we constantly day traded Lihir and Mincor (about 16c at the time). Plus a few others that Miner was knowledgeable about.

rgds - arco

Aussie
19-12-2008, 09:19 PM
arco, glad you are interested, I'm not a trader but I'm very interested in peoples differing takes on gold stocks whether they are in NZ, Australia or elsewhere.

I am mostly invested in Canadian miners Goldcorp, Agnico-Eagle, Kinross and Yamana. I also hold Silver Wheaton, new producer Minefinders, ECU Silver and handful of decent Jr's that have been fairly walloped! But what the heck . . . I ain't selling, I know that they are the cheapest form of gold in the ground and one day will be 10 or 20 baggers.

JBmurc
20-12-2008, 07:50 AM
arco, glad you are interested, I'm not a trader but I'm very interested in peoples differing takes on gold stocks whether they are in NZ, Australia or elsewhere.

I am mostly invested in Canadian miners Goldcorp, Agnico-Eagle, Kinross and Yamana. I also hold Silver Wheaton, new producer Minefinders, ECU Silver and handful of decent Jr's that have been fairly walloped! But what the heck . . . I ain't selling, I know that they are the cheapest form of gold in the ground and one day will be 10 or 20 baggers.

Great post Aussie was think about doing the same My main Gold stock atm is -OGC which has lost a massive amount of market value over the last couple years still I think the core of OGC operations NZ will help put OGC back in favour certainly a longer term hold but one that will richly reward the brave-OGC potential within 2-3yrs could be producing over 400,000oz gold per ann with little dept,hedges & lowering costs well under $500usd oz with copper credits

OGC's Marketcap-30-33mill Dept-166mill hedging-241,47oz (planned to be closed out by DEC 2010)

From the OGC post-
was just talking with Darran from OGC sounds like one of their top 10 holder-Ospraie- (once the world's largest commodities hedge fund) has been the major seller of OGC for a while -Sounds like we could have some NZ exploration results out early next year
As for JV partners nothing likely in the short-term not with the current credit woes
As for hedging more to be paid-off over the next year ,Didipio costing 2mill per year to put on hold,NZ production looking at 260k-275k ,costs coming down,hedges reduced ....overall OGC sound like keeping focus on NZ operation's

JBmurc
20-12-2008, 09:29 AM
2 other goldies I'm looking atm -IGR,IAU

would be great to hear want other ST's are holding or looking at buying in the gold sector

Aussie
20-12-2008, 03:48 PM
Hi Aussie, I am in Lihir Gold ...LGL... which has had a good run up lately. It is no longer just a one mine company, probably the second biggest gold miner on the ASX now.
And for a punt on the penny stocks look at Catalpa....CAH. It was formerly Westonia. With an extensive drill program at Westonia in WA they have had positive results lately. At this stage it is exploration, but should go OK when [and if] they start mining.

airedale, I like Lihir.

It's interesting how the Aussie miners have reacted so positively to the recent USD rise in gold rather than the large AUD POG increase that was largely due to AUD currency devaluation/USD strength. I think this bodes EXTREMELY well for their future since the USD's current position is very tenuous to say the least. If gold gets to US$1,200 in '09 it says to me that these Aussie stocks will be HUGE gainers.

Newcrest has been on a tear in the last month . . . up 100% since the October low. I ask the question . . . is there ANY OTHER asset class that has produced these kind of results in the past 12 months? LOL

1100

Jess9
20-12-2008, 04:12 PM
IGR, SLR and HTM - all very cheap and each at different stages, risk/reward etc.

Jess9
20-12-2008, 04:25 PM
Each has some great permits. IGR has a lot of resource already on the books and has purchased some processing facility to date. SLR is actually producing ($$$ to self fund). HTM is about to get its mining permit early 09 to re-open the (Waihi) Talisman mine... and all were beaten down $$$ to hell over the last 6 months ; )

Jess9
20-12-2008, 04:33 PM
IGR - http://www.integramining.com.au

SLR - http://www.silverlakeresources.com.au

HTM - http://www.heritagegold.co.nz

Have a bit of a read...

Dr_Who
20-12-2008, 06:41 PM
You guys interested in gold stocks should have a look at IRN. They have one of the largest mines in SE Asia and the cheapest cost of mining. Xstrata and one other firm tried hostile T/O at $1.28 and did not succeed. Have cash of over $80m in the bank which is 20 cps, sp trading at 30 cps. The mine has over 2.2 billion tons with some 16 million ounce of gold. One of the cheapest junior miners on the market.

Pls DYO research

disc: Doc is a shareholder of IRN

arco
20-12-2008, 09:39 PM
Anyone have a view on Lion Selection Group LST.ax

http://www.lionselection.com.au/index.shtml

Lion’s vision is to be a diversified mining company with a portfolio of high quality junior resource investments, which will complement and drive development of a core holding of larger investments and operations to provide capital growth and cash flow.
Lion provides venture capital to carefully selected mining and exploration companies with outstanding management and development projects.
Lion’s objective is to create long-term value to shareholders through capital growth and cash flow.



Investment Summary Table

At 31/10/2008 Code Country/Commodity Lion Selection
Holding
% Investment
$m Market
Value
$m Lion Direct Investments (Direct or Indirect)
Exco Resources EXS Australia – copper/gold 10.4% 6.6 2.9 Havilah Resources HAV Australia – gold/base metals 18.6% 4.3 6.0 Indophil Resources IRN Philippines – copper/gold 6.8% 10.4 15.7 Catalpa Resources CAH Australia – gold 44.4% 14.6 4.9 Other (Investments less than 2% of Net Assets) 27.6 8.2 African Lion Funds Albidon ALB Zambia –nickel 5.3% 3.3 4.2 Sphere Investments SPH Mauritania – iron ore 1.8% 1.4 2.3 Other including cash
7.3 Asian Lion Fund Total invested (including cash) 5.0 2.8 Cash committed 10.2 10.2 Total Investments 64.5 Operations – 30% Cracow 59.7 Net Cash 168.8 Net Tangible Assets (NTA) ($m) 293.1 NTA before tax & diluted for options (cents per share) 158.5c NTA after tax & diluted for options (cents per share) 158.5c

JBmurc
21-12-2008, 12:42 PM
You guys interested in gold stocks should have a look at IRN. They have one of the largest mines in SE Asia and the cheapest cost of mining. Xstrata and one other firm tried hostile T/O at $1.28 and did not succeed. Have cash of over $80m in the bank which is 20 cps, sp trading at 30 cps. The mine has over 2.2 billion tons with some 16 million ounce of gold. One of the cheapest junior miners on the market.

Pls DYO research

disc: Doc is a shareholder of IRN

sounds to good to be true will have a closer look do you know if they have any hedges in place

AMR
21-12-2008, 01:07 PM
Chart shows some serious dumping over the last 3 days. This is despite the rally in gold lately. Smells like fish.

JBmurc
21-12-2008, 01:14 PM
---off hotcopper--
In the December 18 session on the TOCOM Goldman Sachs COVERED an absolutely gob-smacking 1,307 gold short contracts which reduces their short position to just 495 contracts and leaves their long position unchanged at 1,337 contracts and makes them NET LONG – REPEAT, NET LONG 842 contracts. This is an absolutely stunning development! This is the largest net long position they have held ever since I have been tracking the TOCOM data which is almost 3 years. Considering Goldman’s role in the Cartel and links to the Treasury this is of earth shattering significance. It should also be noted that for ANY trader to be buying 1.3 tonnes of gold in a single day it deserves attention, when it is Goldman Sachs it has special significance.
There are more and more signs that the gold market is about to make a very big upwards move.

--Yeah just seen the IRN chart been falling large when it should be rising on the back of the Gold price ????It's hard to find the perfect Jnr Goldie should have held on to my CXC :(

Jess9
22-12-2008, 12:07 PM
JBMurc, are the above your words/analysis? Gold well through 1,500 USD would be a great kick-start for the juniors and get t/o and JV interest going again quickly. 2009 could be alot better for this (gold) industry.

Mick100
22-12-2008, 12:45 PM
I'm not expecting gold to put in new highs until end of 09 to beginning of 2010. Nevertheless I expect gold shares to outperform during 2009
Relative to the price of gold they are way undervalued - they have a lot of catching up to do

arco
22-12-2008, 01:08 PM
Nevertheless I expect gold shares to outperform during 2009
Relative to the price of gold they are way undervalued - they have a lot of catching up to do


Which are you favorites Mick?
and why?

Mick100
22-12-2008, 01:47 PM
Which are you favorites Mick?
and why?

Hi arco
I currently hold CXC, OGC and CQT

CXC is a silver miner (it's the only silver producer listed on ASX)
Once paljamaro is on line early nexy year CXC will be a genuine low cost silver producer - will be quite prfitable at $10-11/oz with gold credits.
They seemed to have scraped enough money together to complete the project.

OGC - main operations in NZ (GOLD), doing about 275000 ozs per yr
They should have been making big money at this point but they put in place some terrible hedges in NZD. They have half of next two yrs production hedged at NZD$775 while by my reckoning they have cash costs of NZD$900/oz
So with current hedging and current gold price they are a marginal producer - but I'm assuming that they will survive. I expect gold to go to US$1500-2000 in 2010 in which case OGC will fly

CQT- silver , gold and copper exploration co (OPEN PITTABLE)
Proving up what appears to be a large deposit - have about 3m ozs (gold equivilent) of proven, probable and infferred so far. They have $28m cash which will be enough to see them through to development phase

Personally I fell more comfortable putting money into cashed up explorers like CQT than marginal producers like OGC

Aussie
23-12-2008, 08:41 PM
Personally I fell more comfortable putting money into cashed up explorers like CQT than marginal producers like OGC

Mick, I've gotten pretty burned on my Canadian Jr's. Almost all are great companies with terrific deposits and bright futures, so haven't sold any but boy. . . have I have taken a whipping. However, I think their time is coming very, very soon. IMO, the major producers will benefit first as the POG rises.

Personally, I would not chase the minnows right now. When the big money comes looking (which it will soon) it will flow into the big name miners first. Barrick, Newmont, Anglo, Goldcorp, Yamana, Newcrest. (NYSE:GG) is the pick though, my best performer by a country mile.

Mick100
23-12-2008, 08:53 PM
With the economic hardship ahead there is likely to be an increased nationalist attitude in many countries. ie, they will discriminate against foreign companies especially those involved in extraction industries such as the miners.

If gold miners begin to make large abnormal profits then country risk is very likely to become a problem in many parts of the world - south america, africa, russia and indonesia come to mind. In fact it's a much shorter list to think of the safe countries in which to operate mines which, IMO, would be US, canada, australia and mexico

Mick100
23-12-2008, 08:59 PM
Mick, I've gotten pretty burned on my Canadian Jr's. Almost all are great companies with terrific deposits and bright futures, so haven't sold any but boy. . . have I have taken a whipping. However, I think their time is coming very, very soon. IMO, the major producers will benefit first as the POG rises.

Personally, I would not chase the minnows right now. When the big money comes looking (which it will soon) it will flow into the big name miners first. Barrick, Newmont, Anglo, Goldcorp, Yamana, Newcrest. (NYSE:GG) is the pick though, my best performer by a country mile.

Yes aussie, the big ones will move first but a good explorer will move alot more later on as the money moves down the food chain. I'v had money in PM miners since 2002 - I can wait another couple of yrs

PS, i'V only bought into CQT (EXPLORATION STOCK) over the past 6 months - ave price around 30c. I know these stocks have been hammered but they look as if they are stabilizing now

Aussie
23-12-2008, 10:03 PM
If gold miners begin to make large abnormal profits then country risk is very likely to become a problem in many parts of the world - south america, africa, russia and indonesia come to mind . . .

You are dead right Mick, and don't forget to add Venezuela to your list. I've lost 90% of a small investment in Las Christinas thanks to Mr. Chavez via Crystallex. Ouch!

http://www.crystallex.com/Projects/VenezuelaOperations/LasCristinas/default.aspx

Timo
04-01-2009, 08:51 AM
Glass Earth Gold (TSX/NZAX- GEL)looks interesting.Biggest explore portfolio onshore in NZ and some JV's with Newmont.

Disc.GEL/HGD/OCG

JBmurc
04-01-2009, 11:02 AM
Saturday, January 3, 2009

Barrick Gold, JP Morgan Chase Sued for Gold Fraud
by BLANCHARD & CO.

NEW ORLEANS, La. -- An anti-trust lawsuit filed today accuses
Barrick Gold Corp., Toronto, and J.P. Morgan Chase & Co.,
New York City, of "unlawfully combining to actively manipulate
the price of gold" and making (US)$2 billion in short-selling
profits by suppressing the price of gold at the expense of
individual investors.

The suit was filed by Blanchard and Co. Inc. of New Orleans,
the largest retail dealer in physical gold in the United States,
and by Blanchard clients who bought gold bullion. Blanchard
(www.blanchardonline.com) is paying the costs of the suit,
which asks the federal court to terminate the trading
agreements between Barrick and J.P. Morgan Chase and
other, as yet unnamed bullion banks. Blanchard believes
its clients have suffered substantial losses as a result of
Barrick's and J.P. Morgan Chase's unlawful price
manipulation, anti-trust violations and unfair trade practices.

Dr_Who
04-01-2009, 04:41 PM
How does one take on the market and manipulate the gold price? You must have to have one huge cash reserve to hold down the gold price? This is just amazing!

airedale
04-01-2009, 04:47 PM
Hi JB, your post sent me on a trawl....consider this...

http://news.silverseek.com/GoldIsMoney/1206572052.php

Aussie
04-01-2009, 04:53 PM
How does one take on the market and manipulate the gold price? You must have to have one huge cash reserve to hold down the gold price? This is just amazing!

. . . and a lot of physical gold reserves.

http://www.sharetrader.co.nz/showpost.php?p=238453&postcount=138

JBmurc
04-01-2009, 06:31 PM
http://rs6.net/tn.jsp?e=001U8KvBethNw9qJPT7_WX93XMx2GiA6Ja-SqEDtybOrgi2V3Z63p8_3Qsx1IdWXboWj1p_ougR4L-_UiP78B3QCUxNhRiiJ8GMZroStgAlsnxTrNp8y9GKhAZwN08pz FY7mvZl_CncNUTbOCX0qbdYI07hpQJavbWHUZeePScUHdM=

Some much imfo out their these days with the internet(word will spend quick if the big US shorters default) ,IMHO PGM's will go through the roof there's just going be to much demand esp. silver to hold the price down for much longer.

Aussie
05-01-2009, 12:10 AM
Good article JBmurc, thanks for posting.

Couldn't agree more. Keynesian economics has killed us all. Keynes, when questioned about the ultimate outcome of his deficit spending theology, actually said "in the end, we're all dead". Well, he's dead, we're not!

Of course the Austrians were right.

'07 was the awakening, '08 was the panic and '09, '10 and '11 will be the ultimate years of decline as the derivative bombs and insolvent banks and corporations around the world detonate one by one. There will be significant bear market rallies - starting with the coming "Obama" rally, but IMO the overall trend will be down. PM's will go to the moon.

The criminal enterprise that is the nexus of Wall St. Banks, the US Fed and US Treasury will hopefully be exposed for what it is - the ultimate organized crime outfit - the international banking cabal that has controlled world events for the past 250 years.

JBmurc
13-01-2009, 04:15 PM
Hi arco
I currently hold CXC, OGC and CQT

CXC is a silver miner (it's the only silver producer listed on ASX)
Once paljamaro is on line early nexy year CXC will be a genuine low cost silver producer - will be quite prfitable at $10-11/oz with gold credits.
They seemed to have scraped enough money together to complete the project.

OGC - main operations in NZ (GOLD), doing about 275000 ozs per yr
They should have been making big money at this point but they put in place some terrible hedges in NZD. They have half of next two yrs production hedged at NZD$775 while by my reckoning they have cash costs of NZD$900/oz
So with current hedging and current gold price they are a marginal producer - but I'm assuming that they will survive. I expect gold to go to US$1500-2000 in 2010 in which case OGC will fly

CQT- silver , gold and copper exploration co (OPEN PITTABLE)
Proving up what appears to be a large deposit - have about 3m ozs (gold equivilent) of proven, probable and infferred so far. They have $28m cash which will be enough to see them through to development phase

Personally I fell more comfortable putting money into cashed up explorers like CQT than marginal producers like OGC

Yeah been looking for a another share that had some decent silver exposure CQT 25c sp does look very nice any Idea when they will look to produce the goods

Conquest Mining is a Perth-based mining exploration company focused on discovering low cost
gold and silver resources. Exploration at Mt Carlton has delivered resources at a cost of $10 per
ounce of gold compared with an Australian average of $60 to $70 per ounce for grass-roots
exploration. Conquest Mining has $28 million cash reserves, and a backing of 10 cents per share

Aussie
24-01-2009, 11:58 PM
Gold Producers May Exploit Share Rally to Boost Cash Reserves

Jan. 23 (Bloomberg) -- Gold producers are likely to follow the lead of Kinross Gold Corp. and take advantage of their rising shares by selling new stock to bolster cash reserves as the global economy slows, investors say.

"Whoever can raise equity capital, even if it's expensive, is going to do it," Tom Winmill, manager of the $75 million Midas Fund, said in a telephone interview from New York.

Gold prices had their eighth straight annual gain last year as fears the economy would melt down fanned investors' demand for bullion as a safe-haven investment. While debt markets remain frozen, Kinross, Yamana Gold Corp. and Agnico-Eagle Mines Ltd., all based in Toronto, have announced plans to raise as much as $810.6 million since November to replenish capital reserves.

Kinross, Canada's third-largest gold producer, said Jan. 21 it would raise as much as $414.6 million to shore up its balance sheet. That followed share sales late last year that generated about $110 million for Yamana and about $286 million for Agnico.

The 16-member Philadelphia Stock Exchange Gold & Silver Index, a measure of the world's largest bullion producers, has jumped 61 percent in the past three months. In that period, the benchmark Dow Jones Industrial Average declined 4.7 percent, while the Standard & Poor's 500 Index fell 7.7 percent.

"There's an opportunity for gold companies in particular to raise capital," Bill Hunter, managing director of Jefferies Group Inc.'s mining investment-banking unit, said in an interview. Gold "has unique qualities -- its store-of-value properties have real appeal to money managers."

Economic Slowdown

U.S. builders broke ground on the fewest houses in December since record-keeping began in 1959, unemployment is rising and concerns remain about the solvency of some of the world's largest banks. Gold producers, meanwhile, are enjoying a period of stable metal prices and falling costs as prices tumble for crude oil, steel and chemicals used to process ore.

Gold futures for February delivery climbed $8.70, or 1 percent, to $858.80 an ounce yesterday on the New York Mercantile Exchange's Comex division. Gold rose 5.5 percent last year as the S&P index fell 38 percent.

"Everybody wants to buy gold, and these have been very healthily subscribed issues," Michael Pento, who helps oversee $1.5 billion at Delta Global Advisors in Holmdel, New Jersey, said in an interview. "If you're a bank, you have to go to the government for funding; if you're a gold company, you have no trouble raising cash."

BAPP
25-01-2009, 06:35 AM
For anyone interested in gold stocks... this is worth a read

http://www.investorsdailyedge.com/Article.aspx?Id=1840

... and check out the 'Demand For Gold' link also!

Cheers
BP:)

Aussie
25-01-2009, 11:17 AM
For anyone interested in gold stocks... this is worth a read

http://www.investorsdailyedge.com/Article.aspx?Id=1840

... and check out the 'Demand For Gold' link also!

Cheers
BP:)

Yes, great article BAP. Peak gold combined with slowing or no central banks sales in the future and the physical metal will be harder and harder to get.

IMO, in the near future, most people who want exposure to gold will have no other options besides shares in gold mining companies and proxy vehicles like ETF's. This will drive share prices sky high. The physical metal will be too expensive and too hard to come by.

Aussie
29-01-2009, 01:13 PM
The Ongoing Manipulation of the Gold Shares

Gold today is very slightly below the price it was last year on Jan 26/08 when it closed at $910. The Gold shares, you would assume, would be trading higher benefiting from a 50% drop in the Oil price over the year given that fuel is a major cost. However the HUI is struggling to stay above the 300 level compared to 461.58 a year ago. There were comments at the time about how poorly the Gold shares were trading. They were not exhibiting their usual leverage to the then new record high bullion price. This, it was said, was due to the Oil price which was rising faster than Gold.

So here we are a year later the Gold shares are trading at a 34% loss. The juniors are down double that if not more. The Dow was 12,400 a year ago. Today it is just above 8100, a 35% loss. The HUI is tracking the DOW rather than the Gold price. Understanding the Purpose of the Manipulation

The Gold shares are exhibiting negative leverage even though input costs are much lower. Why is this? The answer is easy. The Gold cartel does not want to give us a way out. As Greenspan said "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold."

Dan Norcini writes a daily wrap-up of the Gold market for Jim Sinclair at http://www.jsmineset.com

Today he said this about the Gold shares (my underline):

“Both of the mining indices, the HUI and the XAU faded well off their highs after punching through horizontal resistance near the December highs and triggering buy stops in the process. A close above those levels would generate buy signals on many of the technical charts particularly the old Point and Figure style charts that were once widely used by longer-term oriented investors. I sometimes wonder if anyone even uses those things anymore since they were primarily trend identifying charts and today’s crowd of money throwers are momentum oriented. I must say that I do not like what I see taking place in these indices today as it shows a potential short term buying exhaustion pattern. Tomorrow’s session will be important in determining what we get in there.”

In other words Dan the Trader is becoming cautious because the Gold shares are not confirming bullion’s advance. Once again a breakout has been thwarted. Dan also commented on trading Gold on the COMEX

“You cannot hope to beat opponents who never have to meet a margin call nor have trading practices put in place that would force them to liquidate losing positions to prevent major losses as most responsible commercial firms currently have in place.”

Gold bullion is the safest place to store one’s wealth. By buying Gold one exits the System. The Gold cartel, to protect their money printing monopoly, cannot allow this to become common knowledge. So today, to prevent too much excitement building in the Gold market after Friday’s dramatic rally they attacked the shares which initially shot higher. At noon with Gold still up almost $14 or 1.5% the Gold shares had already given up most of their 5% gain. So we saw Agnico Eagle give up a 5.3% gain and lose 2.4% on the day. Newmont was up 2.2% and ended down 2.4%. Kinross was up 4.6% and lost 3.5%. Goldcorp was up 5.1% and lost 1.2%. This drained any enthusiasm out of Gold which ended $15 off its high of the day.

The Cumulative Effect and Unintended Consequences

I first noticed these patterns about six years ago. Norcini says that “today’s crowd of money throwers are momentum oriented”. Not so in the Gold market where breakouts are sold and the shares always seem to know when Gold is going to be hit. This counter intuitive action must be a very profitable trade for those who have advance knowledge. It is certainly discouraging for those who buy the breakouts. This manipulation has made the Gold shares too volatile for the average investor. Many have left the sector for good.

Last September I wrote an article about Bob Moriarty which included the chart below. I wrote this at the time:

“This chart plots the ratio of the XAU Gold Index and the Gold Price. The chart is divided into high and low zones and is useful for those who like to switch back and forth between holding Gold or Gold Shares. So when the ratio is very high you sell shares and buy bullion and vice versa."

Moriarty presented this chart to show his readers how cheap the shares are. He points to the low of .1561 which was hit on Sept 5th 2008 and correctly states that it is a new record going back 25 years.

1219

“However Moriarty misses the most important information I see in this chart. Take a look at the period 1993 to 1998 and compare that to the current bull market 2001 to present. Notice the blue line showing the 25 year average. Why is it that the Gold shares, except for three brief periods, have been below the 25 year average during Gold’s best years? Earlier this year Gold hit its highest price ever yet the ratio could not even get into the Average Zone.”

In other words, the cumulative effect of the manipulation of the Gold shares has been a lower and falling XAU/GOLD ratio. There are two important consequences that I’m sure were unintended. The first is that it makes no sense to take the extra risk that the shares entail. Those who avoided the miners and instead sold their shares to buy bullion saw their Gold portfolios rise 5% last year compared to the 30-50% loss the shares made. So the manipulators, by hitting the shares, unintentionally increased demand for bullion. Secondly, the lack of capital in the Gold mining sector has postponed the development of new mines, unintentionally decreasing the amount of Gold that will be mined in the coming years.

Well a lot has happened since Moriarty created that chart In September. For one thing the 25 year low of .1561 was smashed in October when the ratio hit a new record low of .0866. The Gold shares were trading at just over half their previous all time low. Since then both the XAU and HUI have doubled but the ratio (today at .1378) is still well below the low of .1561 that Moriarty highlighted.

I’ve brought the Moriarty chart up to date:

1220

Ending the Gold Manipulation

The manipulations of Gold and the Gold shares are linked. We understand why Gold is controlled. It must be to maintain the fiat monetary system. Why the shares are manipulated is less clear. It may have started to discourage investors in the sector or it may have been simply motivated by a quick profit based on inside information ahead of a an official sale of bullion. Stealing candy from babies is hard work compared to what these guys are doing. The result is that the Gold shares are trading at half where they ought to be given the current bull market.

All manipulations eventually end and these will be no different. It all depends on the availability of Official sector Gold. When that flow stops the Gold price will quickly rise and most likely overshoot to the upside. The shares would first have to double to where they should be today and from there the increases could be quite spectacular as all those momentum traders Norcini mentioned join the Gold Rush. Imagine Gold at $2000/oz and Kinross or Goldcorp or Newmont with $2 Billion or $3 Billion or $5 Billion in extra profits.

Cheers from Auckland, Ed Wener ed.na@xtra.co.nz

peat
29-01-2009, 02:18 PM
i find it pretty hard to swallow all the manipulation/conspiracy theories

perhaps its just simply that there is no 3rd party or business risk in owning
the physical metal compared with owning the shares, and that currently theres a huge amount of resistance to risk.

stevo1
29-01-2009, 02:32 PM
i find it pretty hard to swallow all the manipulation/conspiracy theories

perhaps its just simply that there is no 3rd party or business risk in owning
the physical metal compared with owning the shares, and that currently theres a huge amount of resistance to risk.
et the deflation bogeyman
TOP News
Obama welcomes passage of $US825bn stimulus plan through House of Reps 9:32 AM
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Swan says govt ready for whatever action necessary 9:37 AM

The Spectators
MAKE AUSTRALIA WORK: Forget the deflation bogeyman
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Gottliebsen: MAKE AUSTRALIA WORK: A wealth of ideas
MAKE AUSTRALIA WORK: More jobs at Woolworths


There is a lot of fear in the market, and certainly a lot of that fear is justified. Markets have tanked and the recession call is looking all too real. Yet one of the fears flying around – specifically the talk of deflation – is perhaps less justified.

Put simply, the probability of a broad based fall in prices is minuscule. That’s not to say that deflationary forces can’t build, they certainly can – yet under a fiat currency system it is theoretically impossible for deflation to take hold.

Fatalists will pipe up that the world is littered with deflationary episodes and that, indeed, is the truth. For instance, during much of the 19th century many nations experienced deflationary periods and prior to that, history shows that prices were just as likely to increase as decrease. Yet there is one fundamental difference between those periods and now – money isn’t backed by anything, such as gold or what have you. In other words, money has no intrinsic value and this is called a fiat currency system.

This is a crucial difference. Under the gold standard and similar systems, monetary authorities were constrained by how much they could expand the money supply without a serious devaluation of currency. That was a bad thing, because if people lost faith in the value of the currency they might start demanding something valuable – like actual gold – and that would never do because gold is finite – nations can run out of it and become bankrupt! Anyway, previously the constraint on money supply growth was the amount of gold at hand. The adoption of the fiat system removes that obstacle and allows central banks potentially an unlimited expansion of the monetary base.

The use of fiat currency isn’t new. Throughout history, many governments at one stage or another – typically during a war – would decouple from gold or silver or whatever was backing their currency, so they could pay their debts. This is why we often saw deflationary and inflationary periods – as governments first inflated their economies during a war by decoupling from gold and then imposed some discipline afterwards, bringing with it a bout of deflation.

So, fiat currency has provided policy makers with a lot of flexibility and, used wisely, is a great system. As an aside, the gold standard has been cited as one of the factors leading to the Great Depression, so I’m certainly not advocating it. The point I’m tying to make is that, freed from the shackles of backing our currency with anything valuable, governments can print money at will. If you doubt the truth of my argument, then I urge you to take a sabbatical to Zimbabwe.

In this current crisis, if the US monetary base was shrinking and the Fed was doing nothing about it, then deflation may have some credibility. Yet the Fed isn’t doing nothing – interest rates are at zero and ‘credit easing’ is in vogue. The US monetary base has consequently expanded at its fastest pace in modern economic history.

References to Japan at this point aren’t accurate. There are sizeable differences with that experience, such as Japan’s shrinking population, massive capital overhang and shambolic corporate sector etc.

Which brings me to the Australian response. With global monetary stimulus so exceptionally high, looking forward inflation is a much more probable scenario than deflation. Consequently, the global policy repose eases the pressure on small open economies like Australia to cut as aggressively. The stimulus provided by the major central banks is in effect a stimulus for Australia. In this environment, the greatest risk for domestic policy-makers is that they are caught short on any global inflationary pulse that we get over the next couple of years.

We need to realise that if a recession is inevitable, then cutting rates further won’t help. Think about this. If we do go into a recession, it’s because monetary and fiscal polices are not working. Not that they’ve been given any time to work. If business investment has collapsed in the face of a global slowdown, rate cuts aren’t going to stimulate it. Moreover, if rates at 4.25 per cent aren’t encouraging new lending and home building, then what makes people think that rates at 2.5 per cent will?

That being the case, it seems to me that the greatest error the RBA could make right now would be to cut too aggressively and so be ill-prepared should the economy (global and domestic) turn out to be stronger than everyone is forecasting.

Think back to the conversations we were all having this time last year. Everyone was forecasting a stronger-for-ever Chinese growth cycle and permanent inflation pressures. That consensus was wrong last year and while things are very uncertain now, it’s not beyond the realm of possibility that the consensus is wrong again. The consequences of this are very serious and would necessitate a destabilising series of rate hikes as the pendulum again swung to inflation hysteria.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.


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What even after the sub-prime,wall st. debacle? which was a gargantuan manipulation/conspiracy.
Central bankers now are attempting to manipulate currencies/economies.
Geez Peat your a hard man to convince.
(Is that a bullet in your head or have you just got a bit of a headache?)

arco
29-01-2009, 03:55 PM
i find it pretty hard to swallow all the manipulation/conspiracy theories

perhaps its just simply that there is no 3rd party or business risk in owning
the physical metal compared with owning the shares, and that currently theres a huge amount of resistance to risk.

When everyones telling you to buy gold, its maybe the time to sell gold.

:)

Aussie
30-01-2009, 09:21 PM
i find it pretty hard to swallow all the manipulation/conspiracy theories . . .

Peat, for me and many other gold investors out there, there are no conspiracy theories when it comes to gold. The truth is there for those who care to look with open eyes. GATA has been collecting information for a decade now and their case for the manipulation of the gold market is overwhelming. Have a look at their website.

http://www.gata.org

Manipulation of the gold market (price) is by extension a manipulation of the gold shares and is illegal under US anti-trust laws - except if the manipulator happens to be the US Government itself.

Add to this the incredibly destructive practice of naked shorting, which is only made possible by the collusion of the very government agencies that are charged with the responsibility of market oversight, and blind freddie could tell you that the game is rigged in favor of the banksters.

Have a look at the evidence that GATA has discovered including a recent top secret document from the archives of the St. Louis Federal Reserve that is the virtual blueprint for the modern day scheme that has depressed gold, kept US interest rates artificially low and has become the cornerstone of the Rubin "strong dollar policy".

http://www.gata.org/node/7095

One has to ask the question . . . who stands to lose the most from a rising gold price and why? Now there is a rabbit hole if ever there was one . . .

Cheers :D

Aussie
21-03-2009, 11:08 AM
It's been a while since anyone posted in this thread so I thought I would bump it up with this commentary from Bill H at Le Metropole today. My gold stock portfolio is starting to come along again. Goldcorp is back well into the green and doing well, Yamana not far off.


_____________________________________


Bill H…

It is 1930 all over again, except...

To all; as the title suggests, 1930 is exactly where I believe we are. If you overlay a chart of the Dow from 1929-1937 with a current chart of the Dow, they are almost exact in their timing and rate of decsent. It has been over 100 years [1871] since we have witnessed an earnings decline equal to the current episode. If you go back and look at a chart of Homestake mining you will notice that it bottomed in the 1930-31 time period and then went ballistic for 5 or 6 years. I believe we are looking at a replay of this action.

Back in the 1930's, the Dollar was backed by Gold. People routinely would enter their bank with Dollars and exit with Gold coin, that was changed by FDR and Gold became "illegal" to own after 1933. His "illegal" proclamation did not make Gold worth less however, in fact shortly after the Gold was called in, the Gold price was marked up from $20 per ounce to $35 per ounce. It was for this reason that Homestake exploded upward. Their mining costs declined greatly because of the "deflationary conditions" and the "money" they produced [Gold] became worth more, thus leaving much more left over for profit. The only difference today, is that the Dollar is backed by nothing except a bankrupt government that plans to "fix everything" by borrowing more. What a concept!

The inflationary actions by the Federal Reserve will serve to propel Gold much much higher in Dollar terms simply because the promised future over supply of said Dollars. I believe very strongly that Gold shares will equal and surpass their 2006 and 2008 highs before or during summer proper. The shares should have the help of course from a higher Gold price but the real kicker should be the shorts (both legal and illegal) being run in. I believe that the carnage we witnessed amongst miners was an "operation" to create a false panic and to dislodge as many longs as possible. Remember, every share that was sold in the downdraft had a buyer on the other side. My bet is, the "other side" were the "operators".

If correct about this hypothesis, we will have a mark up in mining shares by the very same entities that created the waterfall. When all else is failing, investors will flock to what is perceived as a safe haven. When banks and financial institutions are failing, when the Treasury bubble is bursting, what better place to have your capital than the very entities that produce money, GOLD and SILVER. This is the way I see it, the "games" that have been played are about over. The world's central banks will (are) no longer playing the patsy and funding U.S. financial lunacy. Central banks will be buyers of metal instead of sellers, quite the recipe for a moonshot that will make the Dot-Com bubble look like child's play. It is now time for our rewards. Have a nice weekend and don't bother picking up the $100 bills being launched from helicopters, they will become worthless.

Regards, Bill H.

airedale
21-03-2009, 11:17 AM
G'day Aussie, very pertinent article. You don't have to be a Rhodes Scholar to to realise that the US peso is becoming less valuable with every truck load printed.;)

JBmurc
30-05-2014, 11:18 AM
Anyone that has ever or continues to follow Gold/Silver shares should well look how dire the ASX PM sector is currently ....really blew my mind how hard hit the Share prices have been since 2010-11 .....just a few producers short SP history..Marc Faber stated he believed it to be a good time to buy....well you certainly buying at their lows

TRY -hit a high of $5 2012 today 94.5c

NCM -$40+ 2010-11 today $9.84

KCN -$11 2010 today 74.5c

SBM-$2.80 2010 today 16c

CCU-$1+ 2011 today 0c (admin at 5.8c)

RSG-$2+ 2012 today 56.5c

RMS-$1.60 2011 today 10c

Now to put the above into perspective GOLD-ETF asx =$175 2011 to $129

the same for Bullion I paid average $25-26oz NZD 2009-10 for Silver bullion today much the same with the cheapest I've found $25.80oz

Joshuatree
30-05-2014, 03:58 PM
Very int thanks JB ; .some quality lower cost producers in there ,smashed down.I agree re value but have already caught the knife. Im not ready to top up atp will watch for a trend change; keep thinking its bottoming and keep being wrong but there is amazing val in some selected Goldies a few paying divs too!

Joshuatree
31-05-2014, 07:48 AM
just saying ... its a moose mashup special:). Generallist covering.

A lot of gold producers will be put on care and maintenance at this rate which will bring a few shiners to the div paying foreground.

JBmurc
31-05-2014, 10:53 AM
Past highs do not guarantee a return or surpassing of such levels. Remember, there are those that have called gold a bubble (rightfully imho) and the Nasdaq,which hit giddy heights in 2000, has yet to touch them again, even without inflation adjustment! Could be a looooooong time before the economy starts chugging through commodities like it used to. Just when you thought it couldn't go any lower...

Just saying...

Well thats the funny thing when it comes to the PM's you wouldn't say that demand has falling off a cliff anywhere like the traded price

Just look at Jewelry demand over the years ...for 2013 =3863 ton
yet during 2013 with the latest tech the world Producers could only bring out 2770-2800 ton from the ground .....Recycling would have likely filled the gap ....then of course you have Industry demand / Bullion etc ....the Idea that the demand isn't there is just pure fiction



5883

Joshuatree
31-05-2014, 01:33 PM
Yeah a mashup putting commodities and PM's in the same basket. as i said a wide confused generalised rave up but not pertinent to Gold.

JBmurc
31-05-2014, 10:25 PM
Problem is that gold is a commodity! I agree that demand is rising and has been fot awhile (there's no use debating cold hard stats!), but what most miss is the fact that the price is artifically controlled by institutions which should have nothing to do with the commodity. As we have learnt over the past few years, their interests trump any price relative to classic supplu/demand. The sooner we learn this, accept it (and I'm not condoning it at all!) and learn to profit from it the better we will be. Like falling in love with a stripper; it feels great, but you know it ain't real and yet you chuck more money at it pretending it is!

Got to love the free market eh? ;)


Yeah I have to agree ...But............With so many major changes in the PM landscape ...we may well see the once master of control loose some control ...just like GFC ...some points to think on...


-The end of the London silver fix AUG14,,,,,After the London silver fix shuts down, investors can expect “volatility, volatility and more volatility,” said Andrew Chanin, chief executive officer of PureFunds, which offers the PureFunds ISE Junior Silver ETF

-Shanghai Gold Exchange (SGE) will launch an international board in the Shanghai Free Trade Zone (FTZ) for investors worldwide to trade gold spot contracts denominated in renminbi.

-The unprofitable of the majority of the major PM producers + the ongoing lowering of the average grades mined...(somethings got to give here we need a MAJOR to hit the wall before the General media WAKE up to this farce of a so called free market pricing)

-Demand is and continues to be Strong.... “In week 21 (May 19 – 23) Chinese wholesale gold demand, measured by SGE withdrawals, was 36.4 metric tonnes, up 22.98 % from the week before. This is the highest weekly demand since week 9 (February 24 -28).”

-Many of the Bullion Banks are looking to exit from their commodity desks ..

-Oil hitting higher highs ...PM going the opposite way unlike recent history...?

-T/A wise the PM heading towards a major Triple Bottom ??

-India’s central bank, the Reserve Bank of India (RBI), eased tough gold import rules recently