Medusa Share Discussion Threads

[nielsc] 02/12/2016 08:35

From Harvey Organs blog"i)In November, global bond loses total 1.7 trillion USA dollars. This is on top of the 1.1 trillion USA dollar loss in October. Higher rates are causing the worst monthly meltdown in history!"From memory the global bond market is worth around $100t. The global stock markets $68t. And using the estimated 171000t of total gold in the world it is worth just under $7t.The gold market is small compared to these other two markets. It will take relatively little inflow to this market to push the gold price up considerably.It certainly looks like the bond outflows have gone into the latest rise in the stock markets.Cheers,Niels

[stevea171] 30/11/2016 08:50

Chart 1: Final Two Italian Constitutional Referendum Polls
Adding to the pressure in markets, the last look at the polls before the current blackout period showed the ‘No’ vote ahead, although the large ‘undecided’ vote could still swing the vote the other way.

Poll 1.
yes 34%
no 41%
undecided 25%

Poll 2.
yes 37%
no 42%
undecided 21%

[stevea171] 30/11/2016 08:45

Gold miners are soaring as Italian banks face collapse
By James Mickleboro - November 29, 2016

They may be rarer and rarer, but today has been a positive day for shareholders of many of Australia’s leading gold miners.

The shares of Medusa Mining Limited (ASX: MML), OceanaGold Corporation (ASX: OGC), Perseus Mining Limited (ASX: PRU) and Resolute Mining Limited (ASX: RSG) have been the standouts today. All are up around 3% at lunch following a small rise in the gold price.

At the time of writing the spot gold price is fetching US$1,194 an ounce, approximately 2% higher than last week’s low.

The reason for gold’s resurgence has been put down to concerns over Sunday’s referendum in Italy according to Bloomberg.

Prime Minister Matteo Renzi has previously pledged to resign if voters reject his constitutional reforms. Bloomberg believes that if Mr Renzi does quit, the political and economic instability that it causes will put up to eight Italian banks at risk of failing.

There are fears that a failure of this kind could quickly spread across Europe and then the rest of the world in a similar way to the Global Financial Crisis.

Unfortunately for Mr Renzi, it looks as though he’ll have a big decision to make on Sunday. Following in the footsteps of the Brexit and the election of Donald Trump, voters in Italy look set to vote against the constitutional reforms according to recent polls.

This could potentially drive the gold price higher in the next few days, much to the delight of St Barbara Ltd (ASX: SBM), Regis Resources Limited (ASX: RRL), and Newcrest Mining Limited (ASX: NCM) investors.

Whilst I will happily admit that a mass bank failure in Italy would be terrible for the European economy and could send the gold price soaring, I think it is still far too early to speculate on such an eventuality.

hxxp://www.fool.com.au/2016/11/29/gold-miners-are-soaring-as-italian-banks-face-collapse/

[atlantic57] 29/11/2016 20:33

There are so many experts out there.I was bombarded with emails from Jim Sinclair in 2012 predicting that gold would bottom in March 2012 at I think it was around 1500
Dollars an ounce, he then said it would hit 3500 Dollars within 18 months.

I have no clue but I suspect nor does anyone else.

[speedsgh] 29/11/2016 17:22

This is worth a read...

A case for gold -

"... What we've seen in the past month is, therefore, something entirely consistent with both history and theory. Gold has fallen because real bond yields and the dollar have risen. And these factors are strong enough to outweigh the benefits to gold of higher inflation expectations and greater uncertainty.

This does not, however, mean investors have been wrong to hold gold. Quite the opposite.

The case for gold has long been that it is insurance. Back in February, I wrote that gold's attraction lay in the likelihood that it would do well if interest rates became more negative. Such insurance was worth having because a world in which rates fell would quite likely have been one in which the global economy was weak and so equities were doing badly.

But, of course, there's a problem with insurance: it loses you money if the risk doesn't materialise. And this is exactly what's happened recently. Mr Trump's promise of a big fiscal stimulus has reduced the risk of low bond yields, so we've lost money on insurance against that risk.

For anyone with a balanced portfolio, however, this loss on gold has been tolerable because it has come at a time when equities have done okay. Gains on shares should, therefore, have offset losses on gold.

And herein lies the case for continuing to hold gold. It's possible that real interest rates and the US dollar will fall back - either because the global economy disappoints expectations again or because investors fear that Mr Trump's anti-globalisation agenda will depress long-term growth.

In such circumstances gold might well recover. And such a recovery would be welcome for investors, because in such circumstances equities might well do badly.

Of course, this is only a risk. If global growth picks up and bond yields rise, gold would probably fall. But in such a world, gold's losses might well be offset by gains on equities, so they would be tolerable.

The case for holding gold as a means of spreading risk is, therefore, still a good one."

[chipperfrd] 29/11/2016 15:21

Niels,

Current events in the financial markets, war against cash, debt levels, derivatives and especially the use of 'paper gold & silver' to control PM prices, reminded me of Exter's pyramid, so I thought I would post it up.



Chip

[nielsc] 29/11/2016 15:13

Is the Italian referendum a black swan? It looks pretty likely that it will be a no vote, which will start a chain of events. Could be the start of the end of the Euro.

Cheers,
Niels

[nielsc] 29/11/2016 15:01

The SGE silver price has been over $1.5 higher on the SGE for some time now. So around 10% higher. So the real market with silver withdrawal and deposits is 10% higher than the paper market. Normal markets would close this gap.

It would be ironic that in trying to get COMEX prices lower to avoid losses that the bullion banks are actually encouraging more people to stand for delivery due to the greater divergence from the SGE, which they themselves have caused.

Cheers,
Niels

[atlantic57] 29/11/2016 07:01

Does anyone know whether Trump intends to use qe as part of his funding for infrastructure or is it just borrowing.i appreciate that Janet Yellen is supposedly
Independent,but at the last fed meeting a rise in fed rates looked certain.
Trumps victory has sent rates soaring so the December meeting should be interesting.

The dollars climb suggests that q e is not on the cards.

[4marlin] 28/11/2016 21:49

overall market looking very toppy imo

[ilostthelot] 28/11/2016 13:29

Thanks Steve. Yeah it is sneaky and certainly doesn't fill one with confidence they will finish it by the new revised date.

The work however will be completed next year ,at some point,around July/ August. Will the market begin to value MML higher near that time when costs should drop significantly and production rises.

The production target for this year looks hard to achieve as well.

[stevea171] 28/11/2016 12:58

ILTL. "News on the projects being completed on time and the each stage on time will help improve investors/ potential investors confidence in the management."

Unfortunately that is not the case. Not only have they added an extra year to the Services shaft project at the time they announced the redesign and extension to L10 rather than L8, they are now falling behind even on this new schedule:

June quarter RNS: "The Co-O mine remains hoist capacity constrained until the E15 Service Shaft is completed by June 2017."

Sept Quarter RNS: "Winder and stage winder commissioning and rope-up delayed by 3 weeks, as final winder electronics and componentry was impacted by transport delays (Hanjin shipping) and had to be airfreighted in site.
o Shaft stripping to start late October, not early October 2016 as planned"

November AGM slide presentation:
"E15 Service Shaft improves hoisting capacity by 20%, by Jul 2017"

So completion of this project has been surreptitiously put back a further month not in the Chairman's address to shareholders at the AGM but in the text of a slide of the presentation. How sly is that? And they wonder why they have zero trust in the market?

[atlantic57] 27/11/2016 07:54

Chip a I agree with your comments.

Each Western Democracy faces the same problem to much debt and to many unfunded promises to their citizens.

You would think that the whole financial system is rotten and at some point it must
Implode.However as I have said I have been thinking this for the last 8 years and still things carry on.

We owe heading towards 2 trillion dollars or is it pounds and the USA are heading towards 20 Trillion dollars and that excludes unfunded obligations.

Even Trump described this as Greece on steroids.
Gold must have its day in the sun at some future point but thus far I have not been able to predict the cycle upturn.

[augustusgloop] 27/11/2016 03:52

chipperfrd 27 Nov '16 - 01:17 - 36752 of 36752 0 0

The big problem with Trump's plan to borrow in order to invest in infrastructure is both the current level of Federal debt and the sharp increase in bond yields that is already occurring.

The US already run a c. US$500b deficit pa. With current debt at c. US$20T the simple maths of rising bond yields on that debt plus their deficits and the muted tax cuts, just don't look realistic at all.

---------------------

Apparently he doesn't know that the US had a period of quantitative easing, where the US Treasury bought up most of the US Government debt.

So the US Government pays interest to the US treasury - who pass the money back to the US Government.

In my book - that doesn't make rising interest rates a major problem for the US.

[chipperfrd] 27/11/2016 01:17

The big problem with Trump's plan to borrow in order to invest in infrastructure is both the current level of Federal debt and the sharp increase in bond yields that is already occurring.

The US already run a c. US$500b deficit pa. With current debt at c. US$20T the simple maths of rising bond yields on that debt plus their deficits and the muted tax cuts, just don't look realistic at all.

Fed Debt(B) 20,000
Yield US$b debt maintenance
0.25% 50
0.50% 100
0.75% 150
1.00% 200
1.25% 250
1.50% 300
1.75% 350
2.00% 400
2.25% 450
2.50% 500
2.75% 550
3.00% 600
3.25% 650
3.50% 700
3.75% 750
4.00% 800
4.25% 850
4.50% 900
4.75% 950
5.00% 1,000

It depends on duration of course. But the current debt will need to be rolled over into new bonds as they fall due (a regular occurrence). The current yield on a 10-year T-Bond is 2.36%. The 5-year is 1.84% as examples.

Chip

[atlantic57] 26/11/2016 22:15

Neil c I believe we are living at a time in history very similar to the 1930 's
The Change in political climate reflects this.
If Trump enacts the policies that he has promised then the Dow is likely to be the prettiest girl in town for a while..

However at some point I would expect a strong dollar to decimate the us economy.
I would also expect the collapse in bond prices to cause major problems in the banking sector. However I have been consistently wrong for a long time
Cheers let's see what unravels

[nielsc] 26/11/2016 21:26

Atlantic,I'm not sure MML are in the top tier. Other miners have appreciated much more. Given the narrow vein nature of Medusa's operation I think they will be priced at less than miners with longer life of mine plans.MML is quite highly leveraged now to the gold price. So a move upwards by gold _should_ have more impact on Medusa's share price, but this also cuts the other way.I was looking at the price of gold in other currencies. Many of the show gold at a high or not far off the previous high. It is the dollar price that shows gold quite a bit down from the almost $2000 price.Take gold as a currency. This is a currency battle. The dollar is the fiat currency of choice currently being the prettiest horse in the glue factory.This slump in bond prices is pushing up the yield on these bonds which is in turn making US home loans more expensive and more expensive for companies raising money through bond issues. This is will have an impact, which will make the eye watering PEs on the US stock markets even more eye watering. This money will want to exit at some point. Only needs a small fraction to enter the gold market to see gold appreciate nicely. As you say we have been waiting some time. Will keep waiting.Cheers,Niels Cheers,Niels

[atlantic57] 26/11/2016 07:55

Neilc. Excellent post.
I agree with every word you have said.
However I have been expecting things to 'blow' up for many years.

I think your analogy to 2008 and the behaviour of gold could well prove prophetic.
Maybe now a step back again ....

I think if you are in good companies you can sit it out.

[deka1] 25/11/2016 21:45

Cheers Chip , thank you I am well , hope you are too.

[nielsc] 25/11/2016 20:14

Some interesting posts this afternoon.I just have this feeling that so many things are wrong in the markets. Very little about the bond markets crashing. And these are far bigger than the stock markets. When bond markets crash stock markets are likely to follow.The stock markets are surging because Trump has said some things. Will they come to pass? Have they actually made these companies more profitable. I think the market is way too optimistic and forward looking. It just feels like a correction/crash is round the corner.I am sticking with my gold and silver holdings. Might be a little pain currently, but I feel I have some protection against the system blowing up. Look at the 10 and 20 year gold charts. Is the current drop in gold something like the movements in 2008? Cheers,Niels

[allyp] 25/11/2016 19:59

Chipperfrd - I do not post often but I do appreciate the picture you paint of what's going on at COMEX as I try to understand it. And of course your invaluable knowledge of gold miners. So thank you for that!

[alquid1] 25/11/2016 19:34

Well, some interesting posts above. Having sold out, I certainly am not going to be a MML basher. I suppose I will think twice about investing in companies that have no control over the price of their product they sell.

All this chat about manipulation is beyond me. What benefit do they get in holding down the price? How come they didn't stop it racing from less than $300 to $1900 in the space of 9 years.

I will be buying some physical if the price gets to $1000 because i do like looking at the stuff :)

Al

[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