Jump to content

Recommended Posts

I am watching GOLD-$1365 - that may be a key resistance level

 

That's a little less than GLD-$132

 

8dv6.png

Link to comment
Share on other sites

  • Replies 30.9k
  • Created
  • Last Reply

Top Posters In This Topic

  • G0ldfinger

    2616

  • romans holiday

    2235

  • drbubb

    1478

  • Steve Netwriter

    1449

http://seekingalpha....rce=google_news

 

'The World Gold Council recently published Q2's Demand and Supply Statistics, detailing supplier and demand sources. Year over year technology is up 1%, jewelry is up 40%, central bank demand is down -57% and investor demand down a whopping -402%.

 

The cost of gold

The cost of gold isn't the spot price found on Bloomberg. It takes money and resources to get gold out of the ground and to market. That cost is around $1200-1300 and ounce. The all-in cost of gold can be found by examining a few domestic mining companies' 10-Qs: McEwen Mining INc (MUX), Allied Nevada Gold Corp (ANV), and Newmont Mining Corp. We found the all-in cost of gold was on average $1261 for the 6 months ending in June 2013. The all-in costs include direct and indirect costs attributable per ounce.

 

Putting it all together

An intelligent investor can deduce that we are likely at the end of the business cycle for the gold industry and it could be a great time to invest evidenced by the following:

1) Speculative demand is low (investor, central banks). The feedback loop has silenced leaving a clear view of what the commodity is actually worth in real demand.

2) Functional demand is healthy (jewelry, technology).

3) The average cost of gold is roughly equal to its spot price. This suggests that many mining operations are insolvent and will shut down their operations, thus consolidating the industry.

4) Post-bubbles are the best time to invest.

Investing in a stock, instead of the commodity directly, can produce steady dividends and provide fundamental measures. Newmont Mining Corp has been publicly traded since the mid-80s and has a long history of operational strength. It currently pays over a 3% dividend, trading at 1.15x to net tangible book value and has a strong outlook for the future.

A look at NEM's financials

Newmont wrote down over $2 billion in impairments due to the drop in gold prices during the second quarter. This impairment took about a 10% bite from the company's Property, Plant and Mine Development asset on the balance sheet, causing a downshift in the company's overall book value. The 10-Q breaks down the impairment by showing new assumptions for variables in a discount cash flow (DCF) analysis of mine development. The big assumption change used in the DCF analysis was a decrease in the assumption of gold prices to $1400 an ounce. Therefore, the balance sheet's asset values for Property Plant and Mine Development is being based on an assumption of $1400 an ounce. Even though spot prices are lower, we think $1400 is a healthy assumption looking forward.

Newmont did post a huge loss on its income statement for 2nd quarter 2013. The impairment used to write down its asset holdings is also deducted from income as a non-cash expense. This amount then gets to be deducted from taxable income even though no actual dollars are lost, only value. A look at the company's statement of cash flows for Q2 shows this non-cash adjustment being added back to operation cash. The net effect from this, along with depreciation and changes in operating activities, leaves the company with a positive cash flow from operational activities, even though the price of the commodity is at 3 year lows.

These types of adjustments are normal accounting activities and are transparent on its fillings with the SEC. The adjustments illustrate a downshift in the industry as a whole more so than a downshift in the company's operations and performance. At the end of the day, Newmont has productive proven mines, operational experience, and low cost (as an industry comparison) cost of revenues.'

 

 

Stocks looking good.....

Link to comment
Share on other sites

Nice summary of the bigger picture here from CC:

 

http://moneyweek.com/whats-next-for-gold/

 

I happen to agree with this, and I will continue to be quick to bag profits on the sign of a correction, until we re-establish a long term uptrend.

Weren't you "itching to buy" at 1255?

 

Recent lows may have been a good time to "scratch".

 

I suspect Dom's article "had" to have been written for the Monetweek masses rather than from his gut.

Link to comment
Share on other sites

I am watching GOLD-$1365 - that may be a key resistance level

 

That's a little less than GLD-$132

 

8dv6.png

 

Dominic has the same number, more-or-less:

 

13-10-23-MM-2.gif

Gold is currently enjoying a mini-surge. The implication of the above chart is that said surge will fizzle out when gold reaches that 144-DMA, currently at $1,367 and falling

> continues: http://moneyweek.com/whats-next-for-gold/

Link to comment
Share on other sites

Weren't you "itching to buy" at 1255?

 

Recent lows may have been a good time to "scratch".

 

I suspect Dom's article "had" to have been written for the Monetweek masses rather than from his gut.

 

I luckily went long a small amount right at the bottom around 1255, rode it up, got my stop taken out at in the mini-correction @1311, but I also held silver and managed to catch the most recent highs.

 

however in doing so I found myself slipping back into old bad habits and breaking my own trading rules, part of the reason I'm on a self-imposed break. I know that if I carry on like that I'm going to completely wipe out my account sooner or later - probably sooner.

Link to comment
Share on other sites

An interesting piece of speculation from a Forbes columnist: http://www.forbes.com/sites/cedricmuhammad/2013/11/01/the-worlds-next-gold-standard-will-come-through-china-and-africa-not-america/

 

"I believe by this decade’s end we’ll see a gold-backed currency in Africa in one of three ways- through a common market optimal currency area; a series of regional parallel currency regimes which will lead to single currency; or through a local gold-backed currency which becomes so attractive in a multi-currency environment that it compels regional and continental embrace."

Link to comment
Share on other sites

Leading turnaround sign?

 

GDX & GDXJ actually rallied and managed to finish +ve.

 

Great Point !

 

I am watching THIS chart - GLD and the 326week MA (a Fibo number btw):

 

 

GLD versus CRB ... update

 

g9e.gif

 

Falling CRB = Impact of lower Oil prices ?

Link to comment
Share on other sites

http://gold.approximity.com/gold_charts.html

 

Chart of the month (November 2013)
For a long time our Gold-Silver-Watch page has featured two charts of the Dow-Jones-to-Gold- Ratio: our own, and DrBubb's (a.k.a. Michael Hampton). With the Dow making new highs, it is time to review them again. DrBubb's target area had been hit in 2011 with a low below 6:1, and the DJIA:Gold-ratio has since almost returned to the grey trend line Bubb suggested. This was a fairly precise call, to say the least. So, will it move beyond, and then make new highs? Over the medium term, we don't think so. While Bubb's call was precise until now, we expect history to repeat itself, at least we expect it to rhyme. As in 1976, we might cross the grey trend line, but a swift crash could follow due, pushing the ratio towards our own target are at or below the 1:1-level. As always in finance, there is no guarantee for anything, but is the American economy really in such great shape? We doubt it, and we think that gold's great revival could arrive in the not too distant future.

DJIA-Gold-Ratio_LOG_DrBubb_131511.png

Link to comment
Share on other sites

Yeah - looks interesting, GF.

 

Either forecast should mean big drops once the present rally is complete (next Spring maybe?)

Link to comment
Share on other sites

 

SPDR Gold holdings are still declining too.

 

Americans seem to care little for Gold, while the Chinese keep buying

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...