Posted on 10/30/2014 9:49:57 AM PDT by MeneMeneTekelUpharsin
Yamana Gold dropped 15% in one day after news of a charge taken for Brazilian operations.
(Excerpt) Read more at finance.yahoo.com ...
Did you foresee the Brazilian problems?
Gold and gold stocks are getting poleaxed, it’s not AUY specific. Almost all gold stocks are down ~~10% today.
AEM
ABX
GG
How about ABX Barrick? Trading at a 22+ year low, trading at a level not seen since gold < $300. ABX was 12.x in 1992.
I remember buying GG for my folks circa 2001 at $18. and selling it in the mid-30’s. Today: 19.x
These could be OK contrarian plays, but you better have massive, multi-year patience.
Personally, I think they go big fat nowhere for a long time, which matches my opinion of PMs and I own reasonable amounts of PMs. if you want to bet on crushed commodities you’d be better off betting on oil. But I also believe oil will trade “indifferently” until the end of the year. All of these beating victims will, IMO, be tossed out until the end of the year. If you like oil, wait, minimally, until the end of the month (= manana)
Free advice.
Why should gold drop today if it’s more expensive to mine gold because of increased Chilean taxes on mining?
Mining might go down, but less gold would be produced.
Above ground gold amounts are much larger than annual production. So incremental hits to supply costs don’t affect price much.
The gold producers (and I own a couple as a hedge against the rest of the world going to crap) are very leveraged to the price of gold and the cost of mining it. If gold increases above their cost threshold, they become immensely profitable; if not, they hang on, waiting and losing money in the meantime.
Gold reacted badly to the Federal Reserve announcement yesterday, although there was nothing unexpected.
And worse today.
Spot gold has dropped below 1200 this morning. And the HUI:GLD ratio reveals that the precious metal stocks have done worse than the metal.
http://stockcharts.com/h-sc/ui?s=$HUI:GLD&p=D&yr=0&mn=4&dy=0&id=p24903662436&cmd=print
In the last 3 years alone, ABX has issued $3b in stock and $6b in debt. The Pascua-Lama project in Chile over which they hocked the family jewels, to the tune of ~$10b, is at a standstill. Basically, the CEO screwed the pooch, and ABX's shareholders are paying the price.
“The cost to get it above ground is running $23/oz.”
Please allow me express a contrary opinion, take a deep breath, and you take it for what it’s worth.
The cost to get silver above ground is
ZERO
There is no such thing as a silver mine. All silver is mined as a byproduct of zinc and tin mining.
The cost to isolate, purify & assay & ingotize or coin silver forms is no more than mid single digits.
I can entertain a discussion with one who thinks silver is a $10-12 item. But it ain’t $23, no way, no how, never was.
Is Putin selling to fund his Crimean adventures?
Many like myself were wrong. The ending of QE should have sent the equity markets plunging, because I, like others believed the only reason markets were rising was due to QE. Didn’t happen. DOW way up today and gold smashed. WTF does the market know I just am not getting? It seems to be able to hold itself on its own legs, just as the US an Europe are being economically hollowed out.
Vlad and I haven't corresponded much of late.
It’s a Happy Day for anybody who was brave enough to maintain a Margin Account for Gold. Get your Bear Put-Spreads in order,
chop, chop!
The Fed's continued adherence to ZIRP remains a bright spot for gold prices. A significant rise in interest rates would have tanked the price of gold.
Couple of thoughts
1: Although QE may be ending, ZIRP is most certainly not. I believe (that being meaningless) that we have very low rates (measured against historical stds) for a long time. A very long time.
2: This again is weakish reasoning, but there really is no other place to put money, and there are plenty of Europeans chasing both the rising US market *and* the strengthening USD. You can get 2-3-4% in US stocks which, yes, have price risk, but are the best damned companies on the face of the earth. They just are. They are not junk! You get their management, their infrastructure. Their market share. (Do not mistake me for a permabull!) There is no other place to go.
3: And now, if rates are scheduled to rise, that should be the nail in the coffin for bond investors, no? Incidentally, bond shorts have been destroyed 15 times over during the last 4 years.
4: IMO the influence of QE was absolutely foundational to the performance of the stk market over the past few years, and thus the thought the removal of same would knock the stuffing out of the market is perhaps logical. But the same people who have been the prime beneficiaries of Fed largesse understand VERY WELL that if things get stinky, the Fed will be RIGHT BACK.
Did we not just see that? We had a 10% pullback and the market recovered in TWO WEEKS??
Why, that’s perfectly normal, isn’t it? /s
With a mind uncluttered by the facts and completely unburdened by relevant, useful or meaningful experience let me give you a prediction. Within five years gold will stabilize at $1000/oz and silver at $50/oz. I see a long-term ration of 20-1 for gold vs. silver.
That free advice is guaranteed to be worth every penny you paid for it
Is the red phone broken?
We were pen pals, back in the day.
My family mined lead and silver in Wales before my great grandfather emigrated to the US in 1863. The young Welsh boys worked the mines from age 5 to 11. When that typical teen growth spurt arrived, they were too big to work. Herding sheep and making shoes for the miners was the principal family business. The mine at Ysbty Ystwyth is closed now.
Gold stocks just brutalized. Not just bad earns, but a severe drop in spot.
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