Medusa Share Discussion Threads

[augustusgloop] 04/8/2015 08:47

For actual gold usage - supply is about 3 times demand.

2/3 of all the gold produced each year goes into storage. [Investment demand]

So, if the investment amount of gold held in vaults fell back to 2009 levels - then 12 years worth of usage demand would come onto the market.

Hence, it would take 12 years of zero production from mines to get rid of this surplus.

The real reason the POG falls each year = is that demand to keep gold in vaults does not meet the excess produced by the mines.

This becomes self-feeding as the POG falls.
As the POG rose - more people were willing to pay to store it.
But as the POG falls, less people are willing to pay to store it.
Thus more comes onto the market (on top of the surplus) and the POG is forced down.

When will this stop?

[arja] 04/8/2015 08:23

hit that 50 chart support level today as expected . Needs to hold that or could head for about 35 level . Quite honestly it does appear that MML needs a higher gold price to be able to make a decent profit as do most of the gold producers .

[cp42kx07] 04/8/2015 07:29

So, in GBP terms the share price is now back to where it was in October 2008 (c. GBp 25) when the PoG was USD 700 - 800 and the ASX 200 was 3500 - 4000.

I would be very interested in an explanation of the directors strategy for the next couple of years with particular reference to various levels of PoG stress testing.

Perhaps this could help to improve the view taken by ASX participants?

PHB's UK de-listing (not to mention all the other disastrous mistakes on his watch) has done the company no favours.


CP

p.s. Closed - 10%, AUc 50 / GBp 23.5. Seriously? Surely you'd only sell at these levels if you thought that the PoG was going to drop below MML's marginal cost of production?

[deka1] 03/8/2015 17:11

See the first guy to get a double figure sentence for LIBOR rigging ,got sent down today 14 years , about time the punishment fits the crime, here's hoping there will be many more,i bet a lot of buttons are nipping tonight LOL

[atlantic57] 03/8/2015 16:47

Chip thank you i very appreciate the work that you have done over many years.
i have made some very bad calls and faced the financial consequences .

However that is down to me and me alone!

i still think gold will have its day in the sun but i am not sure when !
i follow your posts with interest but having been decimated by the collapse
in the mining sector i have very limited funds now and must exercise caution

You correctly voiced cautious noises on Norseman gold ( one of my many bad calls)

All the best we hope for better days ahead.

[deka1] 03/8/2015 15:05

Chip thanks ,I guess its back to basics eventually , and genuine supply / demand will at some time come back into play to a much greater degree.

[chipperfrd] 03/8/2015 14:54

Atlantic,

Thank you for the very kind words.

I hope all is well with you.

Kind regards
Chip

[chipperfrd] 03/8/2015 14:49

forwood,

I look forward with interest to working through the 1H financials for the producers (75) that I monitor and to see just how well they have been able to cope with average realised prices in the $1200 region.

I did manage to get a few early ones done this weekend although most will report during August.

On the AISC front: I was greatly struck by the clarity achieved by ACA (Acacia) and the lack of clarity demonstrated by AUY (Yamana). Consequently, ACA was done in about an hour whereas AUY took ages and I was glad to see the back of it whilst still doubting that I had actually captured a clear set of data on it's costs.

Just for the record I will enclose below the items that ACA choose to include in order to calculate their own AISC - and I applaud them for their clarity!

AISC = Cash costs per oz sold

+ Corporate Admin
+ Share based payments
+ Reclamation & Remediation
+ Corporate Social Responsibility
+ Mines exploration & study
+ Realised gains/losses on hedges
+ Capitalised stripping & underground development costs
+ Sustaining Capital Expenditure

All divided by oz sold

Chip

ps. with so much debt hanging around the necks of the larger producers I am considering adding debt interest to my AIC results in order to get a more realistic number for many of the miners.

[forwood] 03/8/2015 12:35

Fools go where angels fear to tread? Regrettably I am more a fool...

I DO know what you mean as I am stalked and persistently bad mouthed by the advfn troll Bad Robot. I have repeatedly tried to get advfn to take action but they won't. He (and his many sock puppets) is the one person on the whole site I will respond to in kind, so perhaps I am guilty of contributing to the low tone.

[atlantic57] 03/8/2015 12:13

Forwood i am all for discussion and helpful comments the problem i have found with advn boards of late as that you cannot express any opinion on Many Boards.
They have become a place where you must only post what everyone else is posting !

[forwood] 03/8/2015 12:05

All for that, and you'll note my last line? Nevertheless, shareholders in POG and others might be grateful to see the correct info going forward. I picked this up because his list was being quoted on other threads and it was in context of a Motley Fool article posting bad info on Centamin.

Perhaps this (TCC, AISC, AIC) should be a thread in itself, sharing the effort in keeping info up-to-date. I'd certainly be interested.

[atlantic57] 03/8/2015 11:36

Forwood i think we should all give a vote of thanks to Chip for sharing the fruits of his labours! Apart from doing this he is one of the very few posters who does not indulge in Vitriolic comments and slagging other posters off ( a very rare quality on advfn now)

[forwood] 03/8/2015 09:39

chipperfd - you say you were calculating AIC but you wrote:

"I have been calculating All-Costs (ie all-in sustaining costs plus non-recurring CAPEX) ...... Dec-14 quarter AISC was $989/oz (ie cash costs [$380] x production [26,859 oz] = $10,206,420 plus Total Outflows [$16.3m] = $26.506m divided by Production [26,859])."

I assumed you were quoting AISC. Reasonable assumption I think! And at least one set of figures I quoted - for POG - were 2014 figures!

They actually quoted "a 24% reduction in AIC (US$1,088/oz in 2014 vs. US$1,439/oz in 2013", so your figure of $1,444 for 2014 looks way off.

You say these are not a standard. No, they are not an official GAAP standard but the WGC in discussion with a group of providers provided guidance on a methodology to allow consistent comparisons between companies. This note from E&Y summarises the intent and some of the challenges

In so far as companies producing these figures have their accounts produced and signed off by accountants you might reasonably expect some consistency in their production. Of course, that may not always be the case but if your figures are taken from their published accounts, they may be as subject to the variation in application of even official standard measures.

Finally it was not my intention to be overly critical but to point out that these costs are changing swiftly.

Good luck with continuing to produce these figures. Seems a labour of love and a valuable effort.

[stevea171] 03/8/2015 09:02

An example of direct action by some local dairy farmers against the supermarkets driving the price paid to the farmers for milk below the cost of production (down 32% in the past 18 months).

Meanwhile PM miners do nothing and will soon be out of business ....

Milk protest at Morrisons sees farmers clear shelves

A group of dairy farmers has bought all the milk in two rural branches of Morrisons in protest at the price the supermarket giant pays for milk.

[stevea171] 02/8/2015 20:30

And not just there .......

America Has No Way to Keep Up with Food Inflation

In calculating the overall inflation rate, the government does not count the price of food. However, there are several reliable food inflation figures and the food inflation rate is estimated to be between 19% to 22%.

Food inflation

In the article, “Food Price Inflation Scares the Fed” the commodity food costs were exploding on the upside. Calculation of the food inflation rate, given the lag in commodity costs impacting prices on grocery store shelves, we find that the annual U.S. food inflation rate is now running at a staggering +22% and the rate is increasing with no end in sight to the escalation.

[deka1] 02/8/2015 11:59

Thanks chip , so once the metal leaves the mine that's the last mml see of it.
Chip this may be a stupid question , but while we are on the subject, why don't the miners refine there own gold to the final standard,i know there is this good delivery thing, but could the miner not achieve authorisation to refine gold to the final standard of good delivery by the gov of the country of origin, in the case of mml --. the Phillipines
Or is this something that the usual suspects have a grip on .

Thanks again Chip, don't know what i'd do without your input lol

[chipperfrd] 02/8/2015 09:07

Dek,

In general terms the process would be:

- unrefined product to refiner (there may be an intermediate stage for concentrate rather than dore). Transport/insurance charges accrued.
- producer is credited for refined product less refinery charges and any deductions/additions for other contained minerals.
- credit held to account of producer until buyer takes delivery.

Chip

[deka1] 02/8/2015 07:01

Eintracht hi, hope you are well mate,
Yes you are correct re the Crimex futures ,I was thinking more along the lines of the comex partners in crime , the bullion banks -- the likes of the LBMA.
I don't fully understand the movement of the gold .
The ore is dug out of the ground by the miner,he processes it to 85% pure,it is then sent to a smelter for further processing which brings the gold to a state of 9999 pure,now does it then go back to the miner , or is it sold from the processer straight to the bullion banks , does there have to be an unbroken chain here to guarantee the safety of the purity ,or does it go back to the miner for storage before sale into the market, in short when the miner gets it to 85% and sends it for final processing is that the last he sees of it.

Cheers mate and good luck

[chipperfrd] 02/8/2015 01:34

forwood (post 34686),

I thought I had made it clear that the table you are quoting was based on 2014 financial results, ie to 31 Dec 2014. Obviously, costs may well have improved (or not) for differing companies over the intervening 6 months.

I also made clear that I am calculating AIC (All-In-Costs). This may or may not be the same as AISC (All-In Sustaining Costs) depending on the level of expansion CAPEX being expended by individual companies.

You also appear to be under the impression that AISC is an industry standard. Unfortunately it is not. And it is not an accepted measure under GAAP or IFRS accounting standards. Different companies can (and do) apply it differently.

For comparison purpose I have to stick with an 'apples to apples' approach which is why I calculate AIC. It tends to work pretty well for most - but not for all.

One of the biggest problem areas is the way in which some companies deal with revenues from bi-products (Ag, Zn, Cu, Pb) which often place their AISC figures in a more favourable light than perhaps they should.

Lastly, I do not claim to do more than attempt to arrive at reasonably accurate figures for inter-company comparison purposes. I use exactly the same methodology for all stocks and produce 116 rows of data for each accounting period - of which AIC is but one.
Chip

[eintracht] 01/8/2015 20:49

The point is Dek those American criminals don't need physical Gold to sell Gold. They just sell bits of paper. So regardless of whether the miners can stop selling to them it would not affect CRIMEX one bit. If somebody holding paper Gold insisted on receiving the "real thing" they would just be paid off in cash as in the past. I cant see an end to it while the FED is behind it unfortunately. The price of Gold is too important to them to allow it to be set by a free market.

[deka1] 01/8/2015 17:52

would it be possible for the miners to stop selling to the usual suspects bullion banks,--try and make agreements with other bullion banks,perhaps only in Asia, just trying to think of a way to cut the supply to the fraudsters, try and find other outlets for the metals, I don't know enough about the selling of bullion to banks.

[bluelynx] 01/8/2015 15:09

deka

I also cannot understand why the PMs miners CEOs do not at least ask more questions to the authorities concerning what appears to be blatant price rigging on Comex.

One CEO, who is a bit of a maverick, Keith Neumayer of First Majestic wrote a letter to the CFTC and questioned them directly about the very dubious trading on the Comex. I don't know if he received a reply but I guess not. Anyhow you can read his letter in the Zerohedge article below.



Some on the Gold Thread have said that the First Majestic share price has been on the receiving end of some special interest since Keith Neumayer penned his letter to the CFTC!

With regard to the miners setting up their own refineries and price setting, I suspect this would be regarded as a cartel and price fixing! Therefore illegal! But has you say it would be very interesting to read what others on this thread think on this matter.