Medusa Share Discussion Threads

[chipperfrd] 25/11/2016 18:15

CC,

Given the large amount of debt across most of the major producers, I suspect that their ability to step outside agreements with the bullion banks regarding sales is limited.

Many countries require ALL production to be sold to their Central Bank or, in the case of China, to the SGE. So one has to discount quite a lot of global production that just does not circulate onto the general market.

Of those that are not otherwise beholden to some institution for their sales, yes you would think it would be in the best interests of their shareholders to find the best price for every oz refined. Supposedly, the ABX was aimed at these producers but I have no idea if it has gained traction in that respect.

Chip

[chipperfrd] 25/11/2016 17:58

Hi Deka, hope all is well with you.

You are largely correct. The very few banks at the heart of the COMEX go short against a rising PoG/PoS and then cover shorts (buy) once the have got the price moving down as the mass of the speculator Longs close (sell) their positions.

I have been recording the COT reports for nearly 6 years and seen this cycle repeat multiple (30+) times.

I record the NET short positions of, what are termed, the Commercials (bullion banks). The lowest level was seen at 9.1 tonnes gold in week ending 1/12/2015 and the highest level (an all time record) was 1,058 tonnes gold net short on 14/6/16.

For silver the minimum commercial net short was 637 tonnes (26/6/13) and the maximum was 16,970 tonnes (2/8/16). In that same week the total open interest on COMEX (ie Total Contracts) was an unbelievable 34,920 tonnes, way more than a full year's production.

But 2016 has definitely been different on COMEX. The Open Interest in both gold and silver has reached far higher levels than previously seen. Also, the actual number of contracts standing for delivery has been very high compared to earlier years. And on top of that, the actual withdrawal of metal from COMEX vaults has been running high and, I suspect, forcing the import of metal from overseas to replenish.

Quite possibly the 'game changer' has been the arbitrage offered across to the SGE physical price, the premium to which has multiplied in recent weeks. This has been apparent since the SGE price was globally reported in April. Arbitrage would require prompt settlement in physical and then transport to the East.

Perhaps there is some light at the end of this tunnel - but quite when is the question!
Chip

[charles clore] 25/11/2016 17:45

chip - good posts and thanks for doing the research. I have a simple question open to all which is - knowing that there is a strong demand for precious metals why don't the producers themselves develop a system outside of COMEX and LBMA that would allow them to sell their product at a fair market price? Surely that would make more sense than being constantly battered by the corrupt paper derivatives market.

[deka1] 25/11/2016 15:57

hi chip good posts, what I cant accept is the premise that the longs in the PM markets are any other than the same corrupt set up that plays the short end, imo they have to be one and the same,because who in there right mind would try to win in a rigged game,and this game has been rigged for many years,there is no free market of true price discovery,the price goes where the rotten banks send it.
so the money used to control the prices just moves round in a circle back to where it started ,and they keep the PM prices lower that it should be , or would be in a free market based on supply and demand.
Sorry to say my opinions again ,you and I have talked about the state of corruption a few times over the years, but I just cant see how they could keep this up,without any instis taking the long side in the PM markets, and as I said before ,who would want to play it, for any length of time anyway.

[abacus23] 25/11/2016 14:47

Polaris,

I will watch and wait. (and read this thread) :)

[polaris] 25/11/2016 14:39

abacus,

Could gold reach $1000? why not?

It's all about the strength of the dollar index. If you really want to see the purchasing power of gold then you need to look at a basket of currencies rather than just $. It could also go a lot lower or might head off across the horizon in the New Year.

At this point in time the PMs are really taking a beating in dollars and the share price of the miners are suffering accordingly.

When will it end? pfff....

Will there be an opportunity of a decade when the current run is finished? absolutely.

Have we been here before? yes, we have.

Is it cyclical? yes, it is.

What do you do? If you are a trader then you trade the direction, which is currently long indices and short PMs and miners. If you are LTBH then you just sit it out i suppose as things will turn. If you cannot do that then selling out and conserving cash is no bad thing as you live to fight another day.

regards,

Paul

[chipperfrd] 25/11/2016 14:13

abacus,

It's your last comment that I am trying to address. I accept that most people don't care about the LBMA or COMEX, that is why I 'bang on about them', because they are totally at the root of PM pricing.

I find it a bit frustrating that there are very few (if any) comments arising from posts about this derivative price-setting, yet it is the main reason why the stock prices of equities in the PM sector rise and fall.

Obviously, all companies have differing fundamentals and investors in the sector must make their own decisions regarding the value that they ascribe to stocks in the sector - fair enough!

But daily price moves are, in general, prompted by PM price movements, which in turn are based on exceedingly high volumes of derivative paper transactions. Hence my attempts to try and shine a bit of light on what I see.

Best I leave it there.
Regards
Chip

[abacus23] 25/11/2016 13:56

Chip,

I have been waiting months for the fundermentals to work for Medusa and decided that it doesn't ever seem to happen.:(

I still believe MML is undervalued, but if gold keeps dropping, I believe Medusa will. I won't now turn into a Medusa basher.

I don't think normal people care about comex and every day man can't stop it.

[chipperfrd] 25/11/2016 13:31

Amazing how the sentiment on PMs has shifted. It's one thing to be bearish on a gold stock, everyone is entitled to their own opinion, so fair enough if that applies to an individual's view of MML.

But to see such bearish views being expressed about gold and silver when they have so clearly been smashed by purely paper supply irrespective of physical demand is truly a victory for the powers that be.

The last figures seen for Open Interest on the COMEX (Tuesday) were 1,434 tonnes for gold and 26,385 tonnes for silver (about 1 year of global production!). One can only assume that on the totally opaque LBMA a similar (if not worse) situation also exists. So paper derivative supply is truly enormous yet backed on those paper exchanges by trivial amounts of actual metal.

I don't know how much actual metal is being withdrawn from the LBMA (because it's hidden) but judging by the UK gold importation figures over 2016, it is high (probably largely due to the high premiums available for arbitrage across to an actual physical exchange (ie the SGE).

But COMEX does release withdrawal figures and they are running high for an exchange that traditionally does not actually supply any metal to the market.

For November, 19.7 tonnes gold has left the vaults and YTD 42.58 tonnes have been withdrawn. For silver, 210.5 tonnes have been withdrawn over November and YTD 1,471 tonnes have left the vaults. Just like the UK we have seen the US sharply importing silver contrary to historic norms - presumably, largely to meet the self same physical withdrawals from the Futures exchange. And on top of that it can hardly be a pure coincidence that the US Mint ceased production and sale of American Eagle coins on the 18th November and will not resume production until late January, in spite of a (legal/constitutional) requirement to make them available to the public. Does it not actually make more sense that access to actual physical supply is deemed a problem?

In India, with an escalated 'war on cash' being elevated to severe levels, the demand (and price) for gold has gone through the roof, if one is to believe recent reports. Yet the published global prices, which are actually based on paper derivative transactions, have dramatically sunk over the same period.

These events certainly prove the power that can still be deployed to move the PM market at critical times. And given such a demonstration of that power it might also be rational for people to give up and accept that they cannot win against an establishment dedicated to keep PMs from providing an alternative to their debt-based fiat currencies.

Rightly or wrongly I certainly cannot accept such a capitulation and intend to plod on in my own way.

Good luck to all.
Chip

[abacus23] 25/11/2016 12:31

alquid1, I've sold out as well. :(

Medusa and Gold looking weak, broken through $1200, next stop $1150. (MML Nice hammer of 52c last night, not a big support through, hammer of 50c would have been better, but there is still buyers)

Polaris, do you think gold could get to $1000?

Gold chart

[arja] 25/11/2016 11:15

broken 60cents chart support and might even get as low as 40 cents . However , a gold price recovery soon might turn it around .

[ilostthelot] 25/11/2016 10:03

All the best aliquid it's been a tough 6 months holding these.
On reflection my valuation is way to high.
I tend to agree with CNC venture- medusa is more likely to get cheaper than go up in the short term.

Right now they're really isn't many catalysts that'll move this higher , id say the time to buy will be after the quarter 3 results if they hit 30,000. Hopefully by then the drill results are out and the resource is replenished.

Maybe even a good buying opportunity ,for the brave, after the quarter 2 results we'll see a low when the market values as loss making.

[atlantic57] 25/11/2016 07:41

Liquid you should be safe ,regardless of the merits of medusa unless gold can consistently trade at nearer 1500 plus dollars an ounce , I can't see medusa rocketing.

In January 2016 it looked like we were off to the races.

[alquid1] 24/11/2016 23:33

Well, I've sold out of MML now, so watch it rocket !!

[deka1] 24/11/2016 08:28

From Hard assets



Russia gold buying accelerated in October with the Russian central bank buying a very large 48 metric tonnes or 1.3 million ounces of gold bullion. This is the largest addition of gold to the Russian monetary reserves since 1998 and could be seen as a parting ‘gift’ by Prime Minister Putin to his rival ex-President Obama.

The Russian central bank gold purchase is the biggest monthly gold purchase of this millennium. Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and China.

Clearly the central bank was taking advantage of the stronger ruble – which has made gold cheaper in local currency – to buy more gold.



“By contrast, the Chinese central bank bought only around four tons of gold last month – the second-lowest gold purchases since China began publishing monthly figures back in June 2015. The currency is likely to have played a role here, too – the yuan has been depreciating noticeably since the end of September.”

However, the Russian Central Bank has quietly been buying huge volumes of gold over the last 10 years. This diversification into gold accelerated since the financial crisis and since relations with the U.S. deteriorated in recent years. Russia bought gold systematically both when the ruble was strong and when it was weak.

In 2015, Russia added a record 208 tons of gold to her reserves compared with 172 tons for 2014. According to the World Gold Council, only the central banks of the U.S., Germany, Italy, France and China currently hold larger gold reserves than Russia.

The Central Bank of Russia has outpaced the People’s Bank of China (PBOC) by nearly 150 tonnes in the last seven years, and has been the world’s largest central bank buyer of gold reserves for some time. This trend is expected to continue.

Total gold mining production globally is around 3,200 metric tonnes per year. Thus, Russia’s purchase of 48 metric tonnes is around 1.5% of total annual global gold production. This is a very large amount for one country to buy in just one month.

Some of the gold bought will have come from Russian gold production which is currently at about 26 metric tonnes per month. In 2014, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place.

The Russian central bank is buying all of Russian gold production and sometimes buying gold on the international market. This demand is solely from the Russian central bank. There is little data regarding investor, high net worth (HNW) and ultra high net worth (UHNW) individuals including family offices who are diversifying into gold in Russia.

Russia is an increasingly wealthy nation with thousands of millionaires and hundreds of billionaires including mega rich oligarchs. It seems likely that some of these Russian investors are also diversifying into gold.

Clearly, Russia puts great strategic importance on its gold reserves. Both Prime Minister Medvedev and President Putin have been photographed on numerous occasions holding gold bars and coins. The Russian central bank declared in May 2015 that Russia views gold bullion as “100% guarantee from legal and political risks.”

[roguetreader] 23/11/2016 16:33

Niels
re Gold going West to East, hopefully this will now speed up, given the increasing price differential. It's about the only activity that I can see that does actually have the propensity to put a stop to the COMEX and LBMA paper game. However, I'll believe it when I see it.
RT

[nielsc] 23/11/2016 15:36

Sorry to go on about this. Is relevant in a macro way.

Gold and silver differentials are now almost $37 and $1.72.

Watch that gold flow out of the west to the east.

Cheers,
Niels

[nielsc] 23/11/2016 14:56

andrewsr:

The bullion banks. They waited until US data was released then dumped gold to start the downward movement. Longs then capitulate on the way down as their stop losses are hit and that is when the bullion banks relieve them of their holdings. Crazy to play this paper market as you will get fleeced.

However with a $30 differential between the SGE physical exchange, where buying and selling is accompanied with depositing and receiving actual gold, and the paper based COMEX there is a good arbitrage opportunity.

I am guessing you could take out long and short contracts on the COMEX for the same amount and then stand for delivery. At the point of delivery you close your COMEX short and sell to SGE. That would mean you would make the difference between the SGE and COMEX at that point in time.


Chipperfrd:

$30 is the highest differential I have seen for gold. Silver at 10% higher on the SGE. Official gold price in India is still just under $1400. The elastic band is getting really stretched.

Very sobering point you make about people livelihoods being affected by people pressing buttons in some far of land.

Charles Ponzi's scheme only lasted a year. It helps when you are government backed and are above the law, but as with all pyramid schemes it will fail in some form eventually.

Cheers,
Niels

[polaris] 23/11/2016 14:54

hi cnc,

FY17 for MML ends June 17 and forecast is 105-115k oz. For CY17 i would expect something closer to 130k oz. For FY18, something of the order of 135-140k oz. AISC will come down at the same time, but it will be a slow road.

pog has just taken the expected hit and so we might see this trading closer to 50c in the coming days.

I agree that they need to get the drills working overtime from L8 to beef up the reserve numbers, but that is covered in the presentation. I would expect to see those numbers updated over the coming 6 months.

If we see 50c on pog alone then i'll look to buy if pog and dollar index become favourable.

regards,

Paul

[chipperfrd] 23/11/2016 13:54

True enough Niels.

That 621 tonnes of gold for December delivery just had to be severely reduced by next Wednesday.

I expect there will be huge forced Long contract closures on COMEX showing up in the numbers by the end of this week. With the Thanksgiving holiday interrupting COMEX opening tomorrow, today had to be the day to get the job done I guess!

What a sad reflection of what these markets have become and the downstream effects that then occur to real jobs and ordinary people.
Chip

[andrewsr] 23/11/2016 13:49

Excuse my naivety but who is doing the smashing and why? Andrew Maguire talked about the need for a correction in prices due to the opening of the SGE, but it seems to be a long time coming, will it ever?

[nielsc] 23/11/2016 13:38

Chipperfrd,

...and there is the smash. $30 between the COMEX and SGE gold prices now. $1.62 difference on silver!

Cheers,
Niels

[roguetreader] 23/11/2016 13:24

Cheers CNC, a reasonable overview IMO. To be fair to BT he did say production would be backloaded so I have always assumed that something around 30k in Q3 and Q4 was going to be needed. However, as you state MML have been serial disappointers in meeting targets over the last couple of years. So missing the numbers this time round in any significant way would be disaster to the board's standing, again IMO. Personally, I have a core holding that I'm sticking with subject to material updates from MML, where I may adjust according to whether the future news is positive or negative.
RT

[cncventure] 23/11/2016 12:57

Been awhile since I've posted on here, but thought I'd throw my thoughts into the mix as some have recently speculated that MML should be many multiples above its current price.

Whilst I own MML, I personally think its price about right for where it's at and I won't be surprised if it goes lower before it goes higher.

The Duterte drama, the latest R&R report and FY16 guidance really leave nothing to get excited about with MML in the short term.

I certainly don't think the market is going to pay 8 times future earnings when it only has about 3 years worth of reserves (and a bad track record of not delivering)...

I'm not saying there isn't more mineable gold in Co-O I'm just saying that after the last 5 years people won't be paying premiums because MML's CEO says "I swear there is more reserve grade gold down there"...

As for the numbers used in that forecast I'll be disappointed if they only produce 120k ounces at $950 AISC in FY17. I'm expecting at least 135k ounces at <$900 AISC in FY17.

And they will definitely need to get their reserves back above 500k ounces for investors to take them seriously.

If they acheive that and start paying a dividend again there is a chance it'll be enough to push the share price back over $1 at which point it'll get sucked back into the ASX300 and GDXJ funds (and all the buying that goes with that).

The problem is none of these positive developments are in the near future and after the Q1 results I'm quite worried that they might miss FY16 guidance completely...

Even if they do manage 25koz in Q2 that will mean they will need to do at least 30koz in Q3 and Q4 which will require high grade gold and everything to go right just to hit the LOWER end of guidance given they'll still be hoisting constrained until mid next year...

So I'm expecting that without a increase in the price of gold FY16 will ultimately be a disappointment and it has not helped that they have not capitalized on highest gold price environment in quite some time.

So I'm not expecting much movement from MML share price until the Q3 report when we get to see a lower AISC and hopefully healthy free cash flow followed by the Q1 report in FY17 when we will hopefully get to see what they can do when they can fully utilize the mill...

The only upside I can think of is some drill result announcements, but even if they have anything half decent to announce I think they'd be better off just wait until next year's R&R report when the share price hopefully has some momentum...

So for me at $1250 gold MML is a hold at 60c, accumulate at 57c and a buy at 54c (especially if they get 25k+ oz in Q2).

My FY17 price target with $1250 gold and 500k reserves is 95c.

[chipperfrd] 23/11/2016 11:42

Thank you speedsgh.