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| 0.00 | 0.00% | 8.88 | 01:00:00 |
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Posted at 20/6/2011 12:11 by share_shark Dear Minesite subscriber,Weekly Review My old friend David Hargreaves, the gemstone specialist, also writes a weekly comment on the mining sector which is well worth reading. It will now get a wider circulation since brokers XCap Securities decided no actual recommendations on shares to buy or sell are included, like the weekly note from Ocean Equities. Common sense is now starting to pervade the world of compliance and private investors will welcome additional background information. Last week David wrote about political risk and as it would be difficult to cover this subject better, I got his permission to quote it extensively as political risk should be at the forefront of the minds of all investors. As David points out, not too many nations are close to the top of the investor-friendly league nowadays as most of the competition seems to focus on the bottom slot. A year or three ago, no one would have questioned the credentials of Australia, Canada, USA, Chile, Peru, Bolivia, Namibia or Botswana just for starters. Good kindergarten reports were also pouring out for Tanzania, Mozambique, Colombia, whilst the '-stans' of central Europe were still having their nappies changed. In detention, and rightly so, were Angola, DRC, Venezuela and much of West Africa. So, could an investor-explorer-de South Africa is on the ropes. Its black empowerment policy is in tatters and there is a growing threat of nationalisation. Despite acute, long term power shortages, the call is for smelting at source. This is capital intensive and creates only a modicum of jobs. Peru, huge in copper, silver and zinc has just elected a left wing ex-soldier as President, Mr Humala. The local stock exchange dropped 12.5 per cent with incumbent foreign miners leading the landslide. Word is he might nationalise or at least tighten the screws. Venezuela, Angola, DRC can be taken as read. So who remain as safe havens? Namibia shot itself in the big toe by launching an unfunded State company to hold all essential mineral licences, whilst there are reports of Botswana doing similarly. Tanzania was being smiled upon until rumours of a super-tax began to circulate. It was enough to drop the shares of its major miner, African Barrick Gold by 7.8 per cent at the time and, though there have been denials since, the atmosphere has been poisoned. Then there is the good news, at least for now. That emerging Indian Ocean-bound developer Mozambique has made no nasty noises. Zambia has stated unequivocally it will not move the goal posts and Chile is far too busy expanding other than to tinker around the edges. So investors are hardly spoilt for choice are they? Then for how long will those few choices remain sound? Until the next change of government or until the budget deficit becomes untenable probably. Pity the poor miner, who stares at a ten-year time gap from exploration to production, knowing he cannot pick-up his shaft and take it home. Good stuff, David. Could not have put it better myself. But a little light creeps round the corner in the shape of the report by Adam Cooke , published today on Minesite, about a visit to Guinea and Mali where small explorers have done a bit of historical research. They know that mining companies in the past exploited countries in which they operated to the limit, while offering little in return. Now the realization has dawned that education by funding schools will help underwrite careers for the younger generation at the relevant mine or elsewhere in the world. So much more constructive that paying off local politicians in cash, which is then put to dubious use, as it also helps to promote more friendly attitudes towards the companies themselves. The world moves on and the crucial initiative, as so often , comes from the juniors. |
Posted at 06/5/2011 10:27 by share_shark Just for old times sake too. Have you seen this?.The Glencore float is huge As Alex Brummer notes in the Daily Express, "everything about the Glencore float is whopping". The prospectus, he says, "weighing in at 1,637 pages, is so big that it even dwarfs the stack of budget documents issued when Gordon Brown was Chancellor". Of course, the investment bankers who are selling the shares probably want to be seen to be providing some good value for money. They are, after all, trousering a colossal £264m in fees. The Glencore IPO (initial public offering) is aiming to raise almost £7bn. Right now we don't know exactly what the firm's starting market cap will be. But taking the mid-point of the indicated 480-580p per share price range, the overall value will come out at around £36.5bn. That means a certain entry ticket into the FTSE 100 index. The company has already lined up enough 'professional' buyers to take up all the IPO stock. As many UK pension, tracker and exchange-traded funds will have to buy automatically afterwards, those investment bankers have more than enough firepower to ensure this is a successful float. Should you buy in? What really fascinates investors about Glencore is that it doesn't just trade commodities. It also owns a near-35% stake in Xstrata, the world's fourth-largest copper miner and fifth-biggest nickel producer. With China's economic growth in particular going gangbusters, commodity producers have been one of the hottest parts of the market in the last two years. Since its December 2008 lows, the FT Mining index is up by more than 200%. But here's where we come to the major jitter about the Glencore IPO. The firm makes more than half its profits from its mining activities. That means its earnings are highly geared to the level of demand for raw materials particularly from the likes of China. And the Chinese authorities are becoming ever more worried. The country's inflation rate, at over 5% and rising, is getting out of control. So they're slamming on the monetary brakes by both cutting back the amounts that banks can lend and also by raising interest rates. The eventual effect on the economy could be nasty a sharp slowdown could be on the way. Jeremy Grantham of GMO who predicted both the 'Great Recession' and the rebound reckons there's a high chance that "at least one wheel" will fall off China's economy over the next year, "and then commodity prices will decline a lot". Nor is China the only worry. Other emerging economies such as Brazil and India are also in rising interest rate mode. If this works in slowing their economies too, demand for raw materials would be hit even harder. Clearly this would all add up to bad news for Glencore, both for the firm's revenues and also its stock market rating. Further, lower metal prices would be likely to hit trading profits a bit too, although the company is a bit cagey about giving too many details on this score. What does this all mean? Right now, Glencore is privately owned. It has 485 partners who'll all do very well indeed from the IPO. It could increase boss Ivan Glasenberg's worth to as much as £6bn. And there's no doubt that the firm "is certainly plugged into far better information than virtually any other commodity investor", notes Devon Shire on Seeking Alpha. "They wouldn't be selling a portion of the company if they thought it'd be worth twice as much a year from now. So if it's trying to cash in before [the boom] breaks, investors would be silly not to pay attention". It looks like Glencore may have marked a top in commodities In other words, as John Stepek pointed out in Money Morning last month, it would be no surprise if the Glencore IPO marked the near-term top of the commodities boom. And in fact, it looks as though the IPO announcement may have marked it to the day yesterday commodities suffered their biggest plunge in two years. Sure, in the long run, as Grantham argues, resource prices look likely to climb even higher than their recent peaks as supplies run lower while the world's population climbs. And Glencore could prove to be a great way of playing this. But for me, Damien Hackett at Canaccord Genuity summed it up best. The IPO may be "spectacularly successful", he says, but "not too many people have made money out of dealing with Glasenberg". Yet now "the market is going to do a deal with him". In summary: if you have a stomach for it, you could make short-term money by buying in when the shares start trading and there's a rush to get into London's hottest new company. But don't fall in love with your profits take them off the table while they're still there. |
Posted at 13/10/2010 07:40 by share_shark My other friend BB. ;-)melfaraj - 13 Oct'10 - 07:12 - 558 of 558 jill, achl, asian citrus this stock was championed by fingers a few years back when he resided in this thread and i certainly followed it avidly. i had looked at the chart and would say yeas, it is a confirmed breakout by any measure. this stock has the ability to rise well. for the benefit of all here are the charts. note the recent volume rises, the rising indicators and the huge vs of the past. also note the long black candle stick of the last trading day and the short boddied candle stick. there seem to be much intraday volatility on this stock to say that investors are interested but cannot quite make their minds |
Posted at 01/10/2010 12:30 by share_shark BP.Investors' eyes on BP as Dudley enters the fray Bob Dudley officially steps into the breach at BP today, with hopes high that his appointment as chief executive marks the dawning of a new era. >> Read more... |
Posted at 01/7/2009 11:52 by haydock Now if the management want another template for the type of company they could develop:June 29, 2009 Altius Minerals Widens The Reach Of Its Royalty Portfolio, And Steps Out Beyond Eastern Canada By Chris Cann At the beginning of the year, frightened investors were piling into risk-averse Altius Minerals in some numbers. Many had lost a small fortune on classically risky, early stage exploration plays. Many had been taken to the cleaners despite a promising discovery, because of waning cash reserves. Some lost money on companies with producing assets that either became marginal or because the companies themselves had been caught at the wrong time in the refinancing cycle. For these investors, Altius, with its simple royalty business, no debt, and US$160 million in cash and liquid assets, offered an oasis of calm in the storm. And by mid-April this year the company had restored more than 80 per cent of the value it had lost since mid-2008, and was sporting a handsome-enough share price of C$7.56. But now the landscape has changed again, and investors want to know how Altius will use its strong cash position to create further value for them. That's fine by Altius. According to corporate development vice president Chad Wells, the current market environment represents the ideal opportunity for the directors to build on the company's asset base. "We're long-term", he said. "I'm not worried about the share price performance next week or next month, I'm worried about building up a stable of assets in a downturn in the industry. This is a fantastic opportunity for a cash-rich company business to build up its basket of goodies so that when the market truly cares again in two, three, five years time we'll see the fruits of our efforts." Chad Wells said Altius had assessed "hundreds" of opportunities over the past few months in the search for opportunities that fit within its low-risk royalty business structure. Altius is a simple company but it is not a typical resources company by any stretch. By way of an explanation, Wells describes the company as a "royalty creation business". The business model is straight forward enough: the exploration team identifies opportunities within far-eastern Canada for discovering potential base metal or gold deposits and through various stages of negotiations it then passes the risk, capital obligations and most of the upside on to joint venture partners in exchange for equity and royalties. It's not always done this way but that is the basic model that the company's 14 joint ventures are operating on at the moment. The principle is that if you have enough rods in the water then you increase your chances of catching that truly big fish, one which will deliver royalties for decades. The only royalty purchased by the company so far is its prized Voisey's Bay nickel royalty. And that delivered almost C$700,000 into the Altius coffers last quarter, even with the struggling nickel price. Wells said the company was divided into two distinct businesses today: the existing business with established joint ventures and Voisey's Bay royalty, which needs only C$2 million each year to maintain; and the growth arm. The growth arm plans to take the company's successful business model beyond its current jurisdiction within Newfoundland and Labrador into other world class mineral addresses in search of new opportunities. Wells said the amount of cash at the company's disposal and the depleted value of many companies and projects in the market place meant it was able to target more advanced projects and royalty opportunities as opposed to the usual grassroots exploration plays. Altius' first foray outside of its familiar surrounds was a strategic alliance with fellow Toronto-listed company, Millrock Resources, earlier this month. Under the agreement, Altius will invest just under C$1 million in Millrock for an 11 per cent stake in the company, with the funds earmarked to help advance five gold-prospective tenements in Alaska to the point where they can be joint ventured to a third party. Altius of course maintains a royalty option, in keeping with the business model. Wells said this deal was typical of the company's growth strategy, in that Alaska is a well-established and well endowed mineral address, gold is a mainstream commodity capable of attracting a variety of suitors, and the exploration team within Millrock looks more than capable of delivering on the investment. Altius is hard at work looking for more deals such as this throughout North America and beyond as well as any later stage opportunities, such as its successful Voisey's Bay acquisition from 2003 which could offer a more near-term return for investors. |
Posted at 29/5/2009 23:09 by share_shark Gold.Long article but is does sparkle. Home > Investing > Value Sponsored By The Ultimate Safe Haven Investment By Alex Dumortier, CFA May 29, 2009 | Comments (0) Recs 1 Motley Fool Stock AdvisorTry Stock Advisor free for 30 days. Since 2002, David and Tom Gardner are up 27.87% vs. a -11.03% return for the S&P 500. Learn More Gold. It's been an object of fascination since the beginning of recorded history. Even today, the Indian wedding season creates a spike in demand for this commodity since wealthy brides wear it for their nuptials. Indian households hold more than $460 billion worth -- about $395 for every inhabitant. Compare that to India's GDP per capita ($1,078), and it's equivalent to the average American family of four hoarding over $65,000 of the yellow stuff. However, some Indian brides will have to make do with imitation gold this year; as one bride-to-be explained: "Gold is too hot right now." Too hot? I have an inkling it could be about to get even hotter. Will gold break $1,000 (again)? "It's not a question of if, it's a question of how soon," said Peter Munk, back in January. Normally, I don't pay too much attention to market predictions, but Munk is the chairman of Barrick Gold -- the gold producer with the world's largest reserves. Investors aren't only buying gold exchange-trade funds (ETFs) such as the SPDR Gold Shares ETF. Munk also said that he's been taking calls from wealthy investors asking him how they can get their hands on the actual, physical commodity. Is $1,000 per ounce just a step in a long climb? Barely three weeks after Munk's call, gold broke the $1,000 barrier, closing just shy of its all-time high. Although it has since fallen back below $1,000, gold is still up more than 11% year-to-date against less than a 2% gain for stocks. However, some strategists are looking well beyond the $1,000 level for gold. Citigroup recently said that gold prices would reach $2,000 per ounce. CLSA strategist Christopher Wood, who predicted Japan's "lost decade" in 1993 and the U.S. housing crisis in 2003, now says gold is likely to more than triple from its current level, to $3,500 per ounce in 2010. Those numbers may sound fanciful, but Wood believes that policy reactions to rampant deflation will ultimately devalue the dollar. Moreover, there is a compelling case for a supply/demand imbalance that could drive gold prices substantially higher. After all, gold is in relatively fixed supply; as legendary value investor Jean-Marie Eveillard put it: "The market for gold bullion [is] a small market, so it could go very high." Indeed, if investors were to shift even a small part of their portfolios from financial assets into gold, it could have a big impact on gold prices. According to Schroder Investment Management, the total value of gold above ground is an estimated $4.8 trillion, or less than 4% of the total value of global equity and bond markets. For these reasons, and because of my deep misgivings about the way in which the government is taking on the current crisis, I think gold is an attractive choice as a portion of one's investable assets. I believe conditions look very favorable for gold to outperform the U.S. stock market in 2009 and over the next three to five years. Still, investing in gold isn't without its challenges. "The people involved with [gold] seem to be slightly insane" That's just one of the problems Societe Generale investment strategist James Montier has with gold. The other? "I don't know how to value it," he says. As a value investor, Montier is used to valuing assets in terms of the stream of cashflows they produce. Unfortunately, you can't draw cash from a gold ingot -- its value is determined wholly in terms of the vagaries of supply and demand. With stocks, you don't have that problem. With some expertise, you can derive reasonable estimates of their intrinsic value, based on the cash flows the companies generate. And despite gold's attractiveness right now, there is no need to abandon stocks altogether. Some sectors are well-positioned to ride out a recession ... and the future wave of inflation. Combine that with valuations that are lower than they have been in years, and you get what I call gold-standard stocks. Seven potential gold-standard stocks The stocks in the following table were selected from four defensive sectors: utilities, health care, consumer staples, or aerospace and defense. All are trading at an adjusted price-to-earnings (P/E) ratio of less than 16 -- i.e., their earnings yield exceeds 6% in a world in which Treasury bonds are yielding less than 3%. (I calculate the adjusted P/E ratio by using the average earnings-per-share for the prior 10-year period.) Stock 10-Year Average EPS Adjusted P/E* Cardinal Health (NYSE: CAH) $2.44 14.3 American Electric Power (NYSE: AEP) $2.36 11.0 CIGNA (NYSE: CI) $2.14 10.2 Sara Lee (NYSE: SLE) $0.97 9.3 Coventry Health Care (NYSE: CVH) $1.97 9.3 Ameren (NYSE: AEE) $2.98 7.8 Centerpoint Energy (NYSE: CNP) $1.62 6.2 *Adjusted P/E based on closing prices on May 27, 2009. Sources: Standard & Poor's Capital IQ and author's calculations. These aren't formal recommendations -- it would be misleading on my part to suggest that on the basis of a two-criteria screen. However, they do merit further investigation. |
Posted at 16/4/2009 10:43 by share_shark So many different points of view.By SARA LEPRO 13 hours ago NEW YORK (AP) - Gold was little changed Wednesday, held in check by data showing a drop-off in prices for consumer goods. Other commodities, including energy and agriculture futures, were mostly lower. The Labor Department reported Wednesday that consumer prices fell 0.1 percent last month, mostly due to a drop in energy prices. The data, which followed Tuesday's report showing a sharp drop in wholesale prices in March, is further evidence that the inflationary pressures investors long feared have yet to surface. Inflation tends to benefit gold, which investors use as a hedge against falling prices and a weak U.S. dollar. Some analysts have warned that the government's numerous measures to stimulate the economy and pump money into the financial system to get banks lending again could spark inflation down the road. But data continues to suggest that the likelihood is much farther off than originally thought. Gold prices have been largely range-bound in recent weeks as the market's optimism about the economy grows and investors shift funds into more risky assets like stocks. Following a massive rally that pulled the major stock indexes off of 12-year lows in early March, stocks have struggled this week to advance ahead of first-quarter earnings reports. Investors are in wait-and-see mode, hesitating to make big bets in any market, anxious for what the reports will say about the direction of the economy. "We're probably on hold until these earnings reports are done coming out," said Tom Pawlicki, commodities analyst with MF Global Research in Chicago, adding that investors are waiting to see whether the stock market can continue to rally. Gold for June delivery added $1.50 to settle at $893.50 an ounce on the New York Mercantile Exchange. May silver inched up 3.5 cents to $12.80 an ounce, while July copper futures rose 8.05 cents to $2.2090 a pound. On Wall Street, stocks traded mixed throughout most of the day, but moved moderately higher midafternoon following a report from the Federal Reserve. The central bank's survey of business conditions by region found five of 12 regional banks reporting that the economy's slide has slowed. The dollar was mixed against other major currencies. Energy prices fluctuated on the Nymex, as investors pored over fresh reports that signaled demand remains weak. The Energy Information Administration said crude oil inventories rose by 5.6 million barrels last week - more than double what analysts had expected. Meanwhile, the Organization of Petroleum Exporting Countries reduced its forecast for 2009 crude demand. Light, sweet crude for May delivery fell 16 cents to settle at $49.25 a barrel. In other Nymex trading, gasoline for May delivery rose less than a penny to $1.4619 a gallon, and heating oil added 1.3 cents at $1.4150 per gallon. Grain prices were mostly lower on the Chicago Board of Trade. July wheat futures dropped 7 cents to $5.27 a bushel, while |
Posted at 16/4/2009 09:37 by share_shark DWS Investments Gold Plus Fund Expands 50% as Investors Return Share | Email | Print | A A A By Chanyaporn Chanjaroen April 16 (Bloomberg) -- DWS Investments GmbH, the mutual- fund unit of Deutsche Bank AG, said assets in its gold fund expanded 50 percent this year as investors sought to diversify portfolios and hedge against inflation. The DWS Gold Plus fund now manages about 600 million euros ($797 million) of assets, compared with 400 million euros at the beginning of the year, said Stephan Werner, who helps manage the fund at the Frankfurt-based company. "In the past couple of weeks, we've seen constant inflows of investments into commodities, compared with declines in the second half of last year," Werner said by phone April 13. "There is an expectation of inflation and gold has been bought in advance." Investors favored mutual funds over hedge funds for commodity investments in the first quarter, seeking the protection of regulated money managers, data from EPFR Global and Gardner Finance AG show. New money into exchange-traded commodities betting on higher gold prices rose 53 percent to $1.4 billion from a year ago, according to Jersey, Channel Islands-based ETF Securities Ltd. The DWS gold fund, which has gained an average of 5.3 percent a year since it started in 1994, invests in products tracking gold prices, and futures and options based on fixed- income securities. DWS Investments manages about 1 billion euros in commodities. Gold has advanced 1.2 percent this year, extending eight consecutive annual gains. Governments and central banks around the world are spending trillions of dollars to revive their economies out of the worst slump since the World War II. 'Short-Term Negative' Still, Werner said he is "short-term negative on gold" and expects inflation to return only in the second half of 2010. "When you look at data, we have the U.S. increasing the saving rate, consumers are buying less and the unemployment rate is rising all over the world. That's not a good environment for inflation," he said. Werner said he favors oil over gold and copper in 2009, expecting the fuel to add to this year's 11 percent gain. New York-traded oil has risen 47 percent from last year's low of $32.40 a barrel in December after the Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world's oil, agreed to trim output three times since September. DWS joins Bank of America Corp.'s Merrill Lynch unit and U.S. Global Investors Inc. in forecasting higher oil prices by the end of this year. Gross domestic product in the U.S., the world's largest oil consumer, will end four consecutive quarterly declines in the third quarter by expanding 0.5 percent, according to economists surveyed by Bloomberg. Copper's 59 percent rally this year, leading gains in industrial metals on the London Metal Exchange, is "too much and too fast," Werner said. Some of it was probably caused by investors having to buy contracts to close out earlier bets that prices would decline, he said. To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomber |
Posted at 16/3/2009 07:56 by share_shark Gold has reclaimed its reputation as a haven in uncertain times and is set to runText size + Text size - By Jan McCallum | 16.03.2009 After failing to shine for 25 years, gold has reclaimed its reputation as a haven in uncertain times and looks set to run for a while. Australian producers are benefitting not only from renewed interest in the metal but also the fall in the local dollar against the US currency. An Australian dollar gold price of $1400, compared with $900 in US dollars, has thrown a lifeline to many smaller local producers and the stampede into gold stocks means that companies that were struggling six months ago are now able to raise equity and attract investor interest. But like all booms, this one has its pitfalls. Some of those companies have high costs or are mining projects that have previously been worked and have little upside. "There are a lot of ragtag stocks that call themselves producers," warns BGF Equities analyst Warwick Grigor who in his latest gold sector review says the price could reach US$1300-$1400 this year. Grigor contends the bull run will continue for the foreseeable future because gold has become the defacto currency of choice. He argues the US dollar is overpriced but there is no confidence in other currencies. "The only alternative currency is gold; that is why we are seeing the gold price rising. Gold is the only credible currency right now." As opposed to the euphoria of previous booms, Grigor says the rise of recent months has been a "strong and well behaved market responding to the real demand for gold as opposed to a speculative bubble" and says the price will rise as long as the recession continues and liquidity is pumped into economies. The problem for stock investors has been a dearth of choice. The sector is dominated by the big cap. stocks of Newcrest (market cap. $15 billion), Lihir ($7.4 billion) and the Sydney-based Chinese producer Sino Gold at over $15 billion. South Africa's AngloGold has a listing here and market cap of over $800 million then it's then a big step to St Barbara at $590 million and Dominion at $547 million. The three majors were the first to move on the gold price as institutions and investors jumped into the known, producing companies. Having had early runs, there is a view they are now marking time while interest moves onto the smaller and emerging producers. But Macquarie Research Equities gold analyst Jim Copland says although the larger companies are pricey now, institutional investors are still ignoring the smaller companies because they rate liquidity over valuation and only want to buy stocks they can quickly exit if they need to. He can see this changing if the gold sector moves into a medium term phase and the funds become more confident that the price will remain higher, but until then says the funds are sticking with the known despite outstanding valuation at the smaller end. Copland likes St Barbara, as a locally-listed domestic producer with an Australian-denominat Warwick Grigor also likes Kingsgate, which has forecast production of 100,000 ounces a year from its Chatree North mine in Thailand, and Intrepid Mines on its new mine potential. He also likes Perseus Mining, which has deposits in Ghana, Ivory Coast and Kyrgyzstan and is a possible takeover target as it does not have a controlling shareholder. Grigor sees best value in companies that will become producers of virgin deposits in the next one to two years. "A lot of the brown field operations out there are high cost and have limited upside on the exploration front." He suggests a conservative investor might consider Newcrest, Lihir and Kingsgate while someone wanting to be more aggressive could go for Kingsgate, Perseus and Intrepid. Other stocks on the radar of brokers who spoke to TheBull were Alkane, considered interesting for its copper-gold projects in central New South Wales and Centamin Egypt which last month began mining the Sukari Gold Project in Egypt. Gold stocks can be highly volatile so are not for setting and forgetting. Apart from reacting to volatility in the metal's price, they can also be subject to three phases of investment: the price jumps when a discovery is announced, trades sideways while the resource is proved up and the company raises money to get into production, and then jumps again as the company moves towards commissioning the mine. The skill for investors is to get in at the right phase and monitor the stock so as not to get stuck in a price lull. Newcrest is Australia's largest producer, at over 868,000 ounces last year and Lihir mined 882,000 ounces, principally from its Lihir island mine in Papua New Guinea, but it should be noted that BHP Billiton is also a significant gold miner at 80,000 ounces, and sits on the world's fifth largest gold deposit at Olympic Dam. Gold comes under BHP's base metals division along with uranium and copper and did not rate a mention in the last financial report. That might change in coming months when it is one product that gives a lift to the bottom line. |
Posted at 03/2/2009 20:07 by share_shark robbi. Seems that it has been cancelled. My apologies.The golden future: gold miners to own for 2009 Dear UK-Analyst. Financial instability and the efforts of state authorities to correct it usually lead to a flight to gold among investors. Yet although we are currently in the middle of one of the greatest financial crises the world has ever seen, the response from gold has thus far been strangely muted. Why? Since flirting with prices of around $1,000 in March 2008, gold retraced as economic conditions steadily worsened. The main reason behind this can be put down to the simple fact that it is an exceptionally liquid asset - there is always a market for gold - and those individuals and institutions that found themselves in financial difficulties during the hectic months of the second half of 2008 were offloading it simply because they had to. There is also the point that the threat from inflation was abating as the global economy began to slow, and it was inflation that was behind the recent rally to $1,000. Top small cap trading tips from WatsHot.com WatsHot.com is THE website for investors wishing to profit from fast-moving small cap stocks. Edited by James Faulkner, the site includes daily columns featuring some of the most exciting small cap plays around. To get the low-down on HOT stocks that can make you money, click HERE! The value of investments can go down as well as up. Past performance is no guarantee of future success. Investing in equities can lose you part or all of your capital although the potential returns are theoretically unlimited. The tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Watshot.com is website is owned by t1ps.com Ltd which is regulated by the Financial Services Authority and can be contacted at 2/3 Floor, Henry Thomas House, 5 - 11 Worship Street , London , EC2A 2BH or on 020 7562 3370. However, gold prices are now beginning to recover, and it is likely that gold will be one of the star performers among commodities in 2009, with many commentators predicting prices in excess of $1,000 by the end of the year. It is clear that the concerted fiscal and monetary stimulus undertaken by governments throughout the world will have huge inflationary consequences over the longer term. Indeed, quantitative easing (printing money in layman's speech) is already prompting many wealthy individuals to scramble for the yellow metal to protect their wealth, according to Merrill Lynch. The US bank, which is predicting that gold will hit $1,150 by June. Apart from holding the physical asset, which increasing amounts of investors are demanding they do, there is the option of buying into ETFs (Exchange Traded Funds) or funds which hold the commodity for you. However, savvy investors are waking up to the potential benefits of holding stock in the actual gold production companies. If gold does continue to rally in 2009, then the holders of shares in gold miners stand to gain exponentially due to the wonders of operational gearing. Put simply, this means that any given rise in the gold price will have its effect amplified when it comes to the firm's bottom line. For example, if a miner produces 100,000 ounces of gold at a production cost of $500 per ounce and the gold price is $800, it stands to make a gross margin of $30 million. However, if gold prices rise to $1,000 per ounce, at the same levels of cost and production the firm stands to make a gross margin of $50 million, thus increasing profits by two thirds compared to a mere 25% rise in the gold price. Peter Hambro Mining (POG) |
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