Anglo Asian Mining Share Discussion Threads

[mattjos] 17/6/2016 21:15

Gold chart looking like a lovely C&H ..... about to break

[zhockey] 17/6/2016 21:14

If the UK votes remain, which I'm 99.9% sure will be the case, then gold will sell off a bit on the algo trade but not massively IMO as I do not think this is really driving gold's undercurrent. The bookmakers still have remain at over 60% despite the recent drift and the property owning middle class will drive this one home. A remain win should not come as a surprise, indeed remain would be negative for the dollar, the way I see this playing out is very similar to the last couple of days.

The whole brexit / gold thing is completely overblown in my view and another fine example of cycles having to have "news" items associated with them.

[jbe81] 17/6/2016 21:12

Gold rebounded well, could see 20p next week

[brasso3] 17/6/2016 19:35

Yesterday the market clearly anticipated a delay to the EU referendum. Today that does not seem to be the case. I do not think a delay would help either side anyway.

If the vote remain wins then maybe gold will settle in the low $1200s for a while. Last year AAZs CFO said that AAZ was comfortable with gold down to $1000/ oz. Last year AAZs operating costs were just above $700/ oz. With the second Manat devaluation we should expect costs in 2016 to be closer to $600/ oz. Therefore AAZ will survive with gold as low as $900 IMO.

There is probably going to be enough cash by July/ August to fund an additional flotation plant without further debt.

[jeanesy] 17/6/2016 18:07

If we vote to stay in Europe then what will happen to POG ?

[2sporrans] 17/6/2016 17:04

Thanks zhockey

"How do you see the inflation/deflation landscape playing out?"

Back around 2009-11, I thought we'd end up with global inflation.
In part, because Governments afflicted with high Debt:GDP problems, seemed hell bent on inflating the debt away; no surprise there.
Also, I thought we would see the rise and rise of new consumers in the developing world, who would increasingly [out] compete with the developed nation ones, especially for scarce resources, be that commodities or capital.

What the last few years are telling me:
1. Just about everywhere is slowing; this seems to be continuing into 2017.
2. Surprising commodity surpluses emerging.
3. Technical progress still rapid but not [seemingly] augmenting labour productivity overall which has remained stagnant. [explains much of low pay increases for all but a few.]
4. No evidence of increasing inflation - beyond financial assets and remuneration/wealth for the top 1% - in the developed world and only a few 'hot spots' in developing [India biggest].

All in all, looks like Europe [incl. UK] is going rather Japanese with the US only a rung further up the growth/inflation ladder.
A lot of developing economies continue to slow up as commodity/derived-product surpluses ongoing and manufacturing capital moves to ever cheaper labour; e.g from E. Seaboard China -> West-Inland China, Vietnam, Bangladesh......or the cheap labour is migrating to the money.
China is pursuing transition to more services/consumer driven economy but will take over a decade to turn around.

Stagflation?
Well, I'm certainly with you on the stagnation part, at least as far as Europe-UK goes.
Inflation?
Not convinced we are going to see much any time soon.
Looks like ongoing household/company debt reduction + de-leverage and fiscal austerity are Trumping QE+ZIRP; plus commodity production still exhibits considerable over capacity.

Looking at what seems to be the biggest single commodity 'story' of the past year or so: The oil-gas glut.
Thing that surprised me most was the lack of growth 'dividend' in economies that are high energy consumers but low production.
Like Europe/Japan but also say manufacturing Asia e.g. Korea...Taiwan.
I expected this to be lagged by several months.....but where is it now?
And oil/gas prices have already recovered a fair bit from Q1 2016 lows.
Was there a growth dividend and it just got cancelled out by other deteriorating fundamentals?
Where does this leave us?

[brasso3] 17/6/2016 16:49

Was expecting this to finish at 14p today so a nice end to the week considering yesterdays gold price action.

6 days to Brexit
30 days to Q2 results

[mattjos] 17/6/2016 16:41

buying already starting to eat into that 15p stock offered in the auction. Wont take long for this tranche of stock to be gobbled up in the move towards 20p.

This must have popped up on the screen of some institutional investors by now, given its move through £10m mkt cap and the gold environment

[celeritas] 17/6/2016 15:33

I don't understand this gold holding up well lark. What pressure is it under?

Currently it's 1294. I don't think people have yet realised aaz is yet to recover the Bashirov episode. New posters wont even be aware of him causing the price destruction. The mm's will slowly in my opinion wind this back up to the 20s but they'll want a cut in the mean time, hence the gyrations.

[jbe81] 17/6/2016 15:03

Gold holding up well, surprised there is not more buying, got a few more this morning.

[mattjos] 17/6/2016 13:34

zhockey .. the saving of 8.5p / share is approx. equal to the raise in the share price over last few weeks. That saving has been well known to everyone since last year!
Nothing in the rise as yet to reflect the higher price of gold, the reduced cost of production, the increase in production etc etc.

The order book has been loaded this last few auctions with 653k to sell. The seller is indicating that he'll sell in 100k chunks from 15 thru 20p. A small holding that should provide the necessary liquidity for the MM's as the rise goes on to 20p & will get snapped up quick enough

[jbe81] 17/6/2016 12:34

Should be 25++p already

[zhockey] 17/6/2016 12:21

That's £9m added to the ent value or about 8.5p/share!

[celeritas] 17/6/2016 11:53

Don't forget aaz will save approx $13m in operating costs this year due to the Manat being devalued.
AZN currently 1.52
$13 is based on 1.5

[zhockey] 17/6/2016 10:23

2Sporrans,

Nice post, I think we are almost guarenteed stagflation as governments need to inflate away debt and there is simply not enough demand side growth in the next decade. Japan is in this state but without the inflation, at some point they are going to have to take drastic action to devalue the yen.

In this sceanario I don't see a rosy outlook for equities as rising commodity prices will squeeze margins and higher rates will reduce debt driven buy-backs. Consumer spending will be interesting, I guess that depends on whether wage growth is part of the inflation profile, I think it prob has to be.

How do you see the inflation/deflation landscape playing out?

[mattjos] 17/6/2016 09:42

Was out all of yesterday and now caught up.The reported production for May was slightly better than I had expected and there is still the output from the flotation to factor in (not yet reported).By now, the heaps should all be at their optimum summer temperatures and so I am expecting the June figures, reported in mid-July to be the first time we see what AAZ can really do.The reported silver output was terrific!Quite happy to see gold consolidate just below $1,300 prior to the vote next week. If, as I hope for the sake of the uk, we vote out then, I can't see what is going to keep gold from heading towards $1,400 ... Just as we hit maximum levels of production.Meanwhile, the AIMROC assets will not be left on a shelf ... The govt will want them re-allocated and productive ASAP - Chovdar being the very obvious one. Exciting times just ahead

[golla] 17/6/2016 08:58

stock is very tight again.

[jbe81] 17/6/2016 08:47

not all trades showing up here

[celeritas] 17/6/2016 08:18

Weak pog. Its at 1283, I'd say that was super healthy for aaz. It has yet to catch up with 1200.

[jeanesy] 17/6/2016 08:06

Weak POG means a down day today with some profit taking being very likely . This may continue until we get H1 figures and news about debt

[2sporrans] 17/6/2016 00:42

zhockey

The reason why Government bonds are being bought is something ancillary to the thrust of my previous post.
The yields are fallen, regardless of why they are being bought.

In any case, I imagine that in the case of Government Bonds and especially in Europe and Japan that it's very much a case of Central banks buying [to stimulate lending] rather than other institutions, hedgies or whatever.
Accepted, the latter probably are buying with capital gains in mind.
Pension funds have to keep buying regardless. Apart from anything else they'll simply be matching their annuity liabilities and the pensioners that are suckered into buying annuities take the hit.
Ain't it much the same game with bank mortgage lending - esp. like in the USA where banks issue long term debt at a tad over Treasury rates and mark up on their 25, 30 year home loans? So banks want rates to rise and big up their margins.
Seeing we are contemplating a knock-on and knock-down blow to the EU stable virtue of a bolting UK horse, I'd guess that a growing number of the latter buyers of Bundesbunds or Swissies will be doing so to benefit from a return to national currencies if the Eurozone fragments.
Yeah, guess the prospect of Bundesbunds in Deutschmarks could be bracketed under [potential] capital gains too.

Regards the corporate bond market:
Now here, I think investors probably are hunting capital gains in force.
I was until very recently.
Spreads could yet concertina a fair bit more if default risk perceptions remain sanguine; moreso if improve e.g. oil/gas company recovery play.

Who really knows what's going to happen when rates rise.
One can safely say bond prices will fall; its a tautology.
As for other asset classes, depends on what has lead to the rates rising; also how much, over long will rates rise.
Will base rates /AAA yields have to rise even close to 50 year averages to suppress excess growth and restore overcapacity in developed economies?

Even modest growth scenarios, combined with timid-trickle up in rates may support real assets, equities included. See case for banks [lending margins] above as case in point.
Sure, if there is stagflation, looks bad for shares generally as well as property, commodities .....real assets generally.
Property could be nasty as illiquid.

Index linked bonds should be the best risk v reward asset class play approaching/during stagflation....other than this weird and I think unprecedented situation where they have been bought en-mass artificially.
In a classic downcycle situation [a la 1970s], the linkers would have been shunned prior to a descent into stagflation from either modest growth/low inflation or [moreso] high growth/high inflation [NOT where we are at/going].

Seems to me you are putting across an "only game in town" case for precious metals [and miners].
And you may well be right.
Might pan out this way, for maybe even a few years.
Plenty of fear and uncertainty to come.

My simplistic way of looking at it is that, due to sustained, extreme monetary policies [that are only suitable for liquidity support but massively over employed due to [fiscal] debt lock-down], we have experienced artificial inflation across ALL asset classes.
When all boats rise on the same tide, they will sink together as it ebbs out.
Eventually, this will come to pass.

Taking a long view vis your stagflationary prognosis though, if you hold a stash of equities that pay out high dividends [with good cover] and IF these continue to do over, say a stagflationary decade or more, then at the end of it, you will be very likely be sitting pretty regardless of how far prices fall in the interim.
Of course, much better to have cashed out and bought [back] cheap .... if you are lucky/smart enough to pull off.

Think this missive is overextending its conceivable welcome; so endeth.

[wrighty46] 17/6/2016 00:06

Matt I haven't got L2 anymore, and I don't have 653k(would be nice though) what price did they put on them if you don't mind me asking if that is indeed the case?

[ilostthelot] 16/6/2016 23:02

Happy days 30p here we come ,this year..hold on tight. If gold goes over 2000 then £5 per share easy. Imo.