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Marceau, I understand where you're coming from, and I think similar. In short, "show me the dividend!" If I am a fantastic producer with ever higher gold prices, I should be able to pay a fantastic dividend, and maybe keep some back for production growth. I hold Silver Wheaton, and might add more in the future. In the gold area, I don't hold royalties yet but as I have written before, I am aiming at producers (with a dividend to expect). I might get some Royal Gold too.

 

EDIT: Regarding catching up with bullion, I think the good companies will, and I think it won't be too long of a wait anymore. That's why I am getting active now (better late than never...). There might be some downside risks in correlation to the general markets, but I see this now as the time to average in.

 

 

Goldfinger,

 

My preference is for good quality mid cap gold producers. Imo one of the best around is Medusa Mining (MML) which is dual listed on the main LSE and the ASX. I know I have mentioned this company before and there is a board under the mining section on GEI. I have been invested since January 2009 and the management have delivered on everything they have said included production targets. They are a narrow vein miner so don’t have huge reserves, although they have just announced an increased resource of 30% to 1.9m oz. Geoff Davis, the CEO is on record as saying he believes the current mine will produce up to 7m oz and this will be revised after the recent upgrade.

 

MML has just produced 100k oz for the current year at cash costs of below $200, which makes it one of the lowest cost producers in the world. As they operate in the Phillipines, labour costs are likely to stay lowish and the use of electric machinery and high grade nature of the resource (c10g/t) should keep costs down. They produce in the Southern part of the Philippines and have a good relationship with the government and local community. They pay a dividend (yield of around 1.5%) and are looking to produce 200k oz pa in 2013, increasing to 400k oz in 2016 when their second mine comes on stream. The development of both mines can comfortably be funded from internal cashflow (so no dilutive placings). They currently have around $100m cash and also hold part of this as bullion – quite sensible given the declining value of fiat currencies

 

MML has about another 8 exploration properties (including some copper) which could add substantial value over the next few years. I attended a company presentation back in May and the CEO said that these will be monetised (ie farmed out via a JV with a major). They are spending over $20m pa on exploration. The market cap is close to £1bn so it’s not a tiddler but I could still envisage the stock being worth around £20 a share if all goes to plan and that’s not factoring in much higher gold prices.

 

I don’t want this to sound like a ramp but I have not found an established gold stock with better fundamentals. I have around 25% of my total investment portfolio in MML and know of a few other investors in a similar position. M&G and Fidelity Investments own over 25% of the company and management also have good share holdings. My one concern is that the company might be bought out before they reach their full potential

 

Here’s a link to their corporate presentation:

 

http://www.medusamining.com.au/newsroom/asx/2011/110518_presentation.pdf

 

Jim

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Interesting ...

 

Hugo Chavez Announces He Will Nationalize Venezuela's Entire Gold Industry - http://www.zerohedge.com/news/hugo-chavez-announces-he-will-nationalize-venezuelas-entire-gold-industry

 

 

That will not be healthy for the South American mining firms. I know Venezuela is an extreme example, but that's it for me, I'm going to start scaling out of any mining stock with geographical/political risk tomorrow - it's simply not worth it.

 

For those that are interested in another good warning example look at what happened to Bear Creek in supposedly stable Peru. I'm really not a fan of 'rolling the dice' at times like these.

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I am very intrigued by gold miners/explorers that are still plumbing (nominal!) 2008 depths, such as Axmin Inc. and Endeavour Mining, to mention two that John Embry had looked at 2-3 years ago. Do we have a thread that actually discusses why some of these companies are still dirt cheap while others have recovered? I am usually less into the stocks, so I am possibly not quite aware of corresponding discussions on here.

 

Related to this, I will put some money into larger producers sometime soon. Does anyone see a good reason why I should not buy Goldcorp or Yamana? Note that I am talking of larger companies here, so I know there is also less upside potential when compared with juniors.

Do you mean Endeavour Mining EDV thats used to be Endeavour financial?

 

Here's a chart of EDV which shows they aren't 'plumbing 2008 depths', although not a stella return they have been steadily climbing ( i am up around 40% in the 2 years I have owned them). Once you now a bit about EDV you can start to understand what the last to years have seen. They where a financial company providing merchant banking services to the resources sector, over the last couple of years they have transformed themselves into a producing gold miner by the purchase and optimisation of Etruscan. They also made a hefty profit out of buying and later selling a large portion of Crew.

 

20110817-krqpy1cm3i7gfxwr5tu98nqwp1.jpg

 

I own some Endeavour mining and am actually excited about their prospects (have recently doubled my holding in them), their management seems top quality to me. They have one operating mine and a load of sites in the exploration and feasibility stages. They also have a large amount of cash on hand (around $200 million) which they are looking to acquire another miner which to combine into their outfit and move them from junior to mid-tier.

 

Just from their one current producing mine, they are on track to reach a P/E ratio of 2 in 2012, which means to me they are currently very cheap and have plenty of upside to come. I don't like buying miners that have already had big moves, prefer to try and find ones that have that to come.

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back over £1800 and rising, I wonder if we have Chavez to thank?

 

It'd be nice to think it was over £1,800, give it time! In another little milestone, although the spot price touched $1,814.95 on Aug 11th, the London fix exceeded $1,800 for the first time this afternoon (Aug 18th) when it was fixed at $1,824.00.

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As the price of gold rises, the ecological cost mounts

 

perugold_4127.jpg

http://news.mongabay.com/2011/0812-gold_peru-pod.html

The Mayan leaders are saying: "Stop mining globally."

Maybe we will come to that one day

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20110817-krqpy1cm3i7gfxwr5tu98nqwp1.jpg

 

I own some Endeavour mining and am actually excited about their prospects (have recently doubled my holding in them), their management seems top quality to me. They have one operating mine and a load of sites in the exploration and feasibility stages. They also have a large amount of cash on hand (around $200 million) which they are looking to acquire another miner which to combine into their outfit and move them from junior to mid-tier.

I also added to my EDV holding recently.

Have you see the thread in the mining section

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Interesting ...

Hugo Chavez Announces He Will Nationalize Venezuela's Entire Gold Industry - http://www.zerohedge.com/news/hugo-chavez-announces-he-will-nationalize-venezuelas-entire-gold-industry

Yes, and to keep his gold from being confiscated, he is moving it to home

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I also added to my EDV holding recently.

Have you see the thread in the mining section

Yes but don't post there much, have added an interesting link recently.

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It'd be nice to think it was over £1,800, give it time! In another little milestone, although the spot price touched $1,814.95 on Aug 11th, the London fix exceeded $1,800 for the first time this afternoon (Aug 18th) when it was fixed at $1,824.00.

 

Duh, my bad :-)

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Thanks.

 

Maybe this chart will surprise some others too:

 

TLT/Bonds versus GLD/Gold ... update

TLTvsGLD.gif.jpg

 

Like many here, and like Bill Gross, I have not been a big fan of T-Bonds.

 

Guess what, since Gross was publicly knocking them back in April...

 

BOnds/TLT have performed almost the same as Gold.

How many here would have guessed that ?

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... from DrB's Diary...

 

Hardly the safe longterm store of value they claim to be though are they. Paper money always returns to it's intrinsic value, zero, while gold throughout history has preserved it's buying power.

Yes.

You say that - and I am VERY inclined to agree with you, but...

The price action is what it is: Bonds have performed as well as gold (!!)

It is true, just look at the chart.

 

What this comparison tells me is this:

Gold is not moving up on Inflation fear (or hyperinflation fear), it is moving up

because it is a secure save haven in a time of rising credit concerns.

Ultimately, we will discover that it is EVEN SAFER than Tbonds.

 

I think it is very interesting to watch Intraday: TLT-vs-GLD chart

 

With TLT give us an early warning when Gold is turning down?

Or will we see the beginning of a move towards: "Gold is the ultimate Safe Haven?"

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Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.

“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”

 

Yeah.

Healthy for Venezuelan dictators who want to confiscate miners.

Else the miners might take them to court, win, and grab the gold.

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The Chavez announcement is just a rerun of the Venezuelan central bank (along with many others) decision in 2008 to not roll over their gold deposits with bullion banks such as JPM and BarCap. It has grabbed headlines (perhaps justifiably so) because it has come from Chavez.

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Just a quickie...

 

How would POG respond to an increase in interest rates (however unlikely)?

 

Thx

I don't think it would have any effect after maybe a small correction. The graph below shows the response of gold to real rates since 1970, which you can see is positive till rates are 3% over the inflation rate. So really for gold to start turning negative we would need rates to be around 8% currently, which is miles away from the current rates.

 

20110704-nhnep1ix3kw9pmcjf2mr37t1in.jpg

 

 

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The Venezuelan gold was "on deposit" - we all know what this means: it is not there, and it has to be bought back in the open market. :)

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The Venezuelan gold was "on deposit" - we all know what this means: it is not there, and it has to be bought back in the open market. :)

Exactly what I was thinking. It's good to be reminded that this is not the mainstream impression/knowledge. I take it for granted that this is what's going on, but most don't!

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http://www.bloomberg.com/news/2011-08-18/chavez-emptying-bank-of-england-vault-as-venezuela-brings-back-gold-hoard.html

Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.

Yeah, I am sure these guys were just storing the gold, and not doing anything bad to it, like selling it at $400 into the market, or similar. :lol: :lol: :lol:

 

Exactly what I was thinking. It's good to be reminded that this is not the mainstream impression/knowledge. I take it for granted that this is what's going on, but most don't!

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