Gartman 'quietly' turns bullish on gold price |
- Gartman 'quietly' turns bullish on gold price
- Weak Chinese factory data dents copper price
- Centerra Gold 4Q highlights
- Woman dressed as bat hangs from coal loader
- Two 'outright' bears have second thoughts on 2014 gold price
- Pan American Silver takes impairment charge on Dolores Mine, increases proven and probable reserves
| Gartman 'quietly' turns bullish on gold price Posted: 20 Feb 2014 04:24 PM PST After falling to a session low of $1,307 shortly after the open on Thursday, the price of gold came back in late trade at just a shade under $1,325. Earlier in the day traders made the most of gold's recent strong to book profits on news of a drop in weekly jobless claims and a jump in manufacturing activity to an almost four-year high in the US. Gold has been receiving a boost from some unfamiliar quarters recently. Noted investor and a closely followed newsletter writer for the past 20 years, Dennis Gartman told Hard Assets Investor he does not consider himself a gold bug, but that he has "quietly turned bullish on gold for a few reasons: Firstly, beginning five and six weeks ago we started to see a lot of the mining companies— even the largest gold mining companies— begin to curtail production. That's always a sign of an end of a bear market. When senior management at the largest gold mining firms throw their hands up in dismay and begin curtailing production, usually within weeks the lows are going to be found. Decision by committee is always that way. It's slow; it takes time; and it's always late. Two, I don't see any major reduction in accommodation that the Fed is pushing into the system. We are far from tightening; we are still aggressively easing, with $65 billion still going into the system between each FOMC meeting. Yes, that's down from $85 billion, but still, those are massive injections of reserves into the system. The Bank of Japan is doing even more than the Fed. Thirdly, supplies are tight. The fact that gold futures moved to a very modest backwardation indicates how tight deliverable supplies of gold are. And finally, when you go and speak at "gold bug" conferences, the populations are down by 40%. That tells you something. Throw all those things into the pot, stir them around a little bit, and it tells me it's time to be bullish. Gold prices have gone down, and the market has beaten prices up about as much as they can. Bad news came out several times; you've had gold being downgraded by multiple brokerage firms, and it didn't break. On Thursday Edel Tully, precious metals strategist at Swiss investment and London bullion bank UBS, said she is moving from "outright bearish" to "neutral/slightly positive" and upping the bank's forecast of the average 2014 price by a full $100 an ounce. After a dismal 2013 that saw gold lose 28% in value and suffer the worst price performance in 32 years, the yellow metal has surprised a few pundits, gaining 9.6% year to date. Read the full Gartman interview here.  |
| Weak Chinese factory data dents copper price Posted: 20 Feb 2014 12:40 PM PST After a strong performance in February so far the copper price retreated on Thursday after disappointing manufacturing data in China gave pause to bulls. In afternoon New York trade March copper – the most active futures contract – changed hands at just under $3.28 a pound, down on the day, but recovering from lows of $3.25 struck in early morning trade. China is responsible for 42% of total global copper demand of some 21 million tonnes and the country's preliminary or 'flash' manufacturing purchasing managers' index (PMI) released Thursday showed domestic conditions continue to deteriorate. The overall reading of the HSBC/Markit index fell to 48.3 in for February, the sixth month in a row of declines and the lowest level since July. A reading above 50 indicates expansion. A sharp drop in new orders and employment were the main reason for the decline which came in well below expectations of an increase to 49.5 even after accounting for seasonal factors like the Chinese new year holidays. Hongbin Qu, chief economist for HSBC in China said February's slowdown reflects "renewed destocking activities" and "the building-up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening": "We believe Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year." Other analysts do not agree that the People's Bank have much room to stimulate the economy and see no signs of a shift towards loosening policy. Independent research house Capital Economics believes Beijing "made clear in its latest quarterly monetary policy report that it is still not comfortable with the pace of credit growth.": "As a result, we expect credit growth to slow further. That will help to contain China's medium term credit risks, but it will also continue to weigh on the performance of the manufacturing sector." Given its widespread use in transportation, manufacturing and construction any economic slowdown would have a significantly negative impact on copper usage. But today the copper price held up well, considering how weak the Chinese numbers were. The economic data is also at odds with China's surging imports of the red metal. The 536,000 tonnes of refined copper imported in January constituted a 53% jump over last year's tally and 21% more than in December. What accounts for the discrepancy is that the copper is not being put to industrial use, but because of tight credit conditions inside China stockpiles are being used as collateral for trade financing. While China's record imports have provided a floor for the copper price, these imbalances in the market are likely to correct itself in the future. |
| Posted: 20 Feb 2014 11:23 AM PST Centerra Gold was up 4.38% to $5.01 after announcing net earnings of $106.6 million or $0.45 per common share in the fourth quarter of 2013. Fourth quarter highlights were the following:
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| Woman dressed as bat hangs from coal loader Posted: 20 Feb 2014 10:50 AM PST  Protester hangs from Idemitsu's Boggabri coal loader in western New South Wales. Image from Front Line Action on Coal. Two protesters dressed as bats hung upside down from Idemistu's Boggabri coal loader in New South Wales. The activists claim the mine, located in western New South Wales, is harming the nearby Leard forest. "Idemitsu's expansion will destroy 1385 hectares of forest, of which 624 is critically endangered box gum habitat," wrote the activists on a news release. "The forest is home to 31 endangered and vulnerable species, including the Greater Long-eared bat, the Barking Owl and the Turquoise parrot." Operations were halted for nine hours while police removed the protesters. Activists hung a banner from Boggabri Mine's coal loader. Image from Leard State Forest. The Boggabri Coal Mine is about 15km north-east of the township of Boggabri in north-western New South Wales within the Leard State Forest. The mine employs about 150 contractors and employees. The mine, which is 100%-owned by Idemitsu Australia Resources, produces thermal, PCI and semi-soft coking coal. In 2009 the mine exported 1.55 million tonnes of coal. Idemitsu's Boggabri open-cut coal mine produces metallurgical and high-grade coal. |
| Two 'outright' bears have second thoughts on 2014 gold price Posted: 20 Feb 2014 10:47 AM PST After a dismal 2013 that saw gold lose 28% in value and suffer the worst price performance in 32 years, few predict a big upswing this year. The median forecast for the fourth quarter 2014 of the nine gold analysts tracked by Bloomberg is for an average $1,165 an ounce gold price. And historically the most accurate among them see gold sub-$1,050. Gold averaged $1,411 in 2013. But gold's fight back this year – the spot price has gained 9.6% so far this year seems to have surprised a number of forecasters. Edel Tully, precious metals strategist at Swiss investment and London bullion bank UBS, tells Platts she is moving from "outright bearish" to "neutral/slightly positive". Not exactly a ringing endorsement for the metal, but Tully nevertheless sees a "journey down to $1,280 as a buying opportunity." "[Further out] we see gold moving towards $1,350 in three months, up from $1,100 previously, as the underlying improvement in sentiment takes further hold among investors, and as gold is increasingly used as a tail-risk hedge. Although we feel gold isn't deserving of a price tag north of $1,400, a price sub $1,200 seems similarly undeserved." Tully also raised the bank's 2014 average gold price to $1,300 from $1,200 previously with the biggest driver for the more positive outlook "the large investor sentiment shift that is currently taking place." However, she cautions "this shift is occurring amongst investors with a short-term horizon, and not among the more strategic, long-term players". Some evidence of this view can be seen in the recent sharp increase in bullish futures bets placed by hedge funds, with net long positions jumping 17%. The Economist Intelligence Unit is also having a rethink of its bearish predictions for 2014, commodities analyst Edward Bell tells FastMarkets: "We will have to take another look at our price forecast – we were anticipating that it was going to fall to average $1,245 per ounce this year, but we will probably have to revise that up based on what we think the first quarter number is going to be," Bell said. The EIU's fresh prediction? An average of $1,260 for the whole of 2014. That's hardly earth-shattering good news for gold bulls, but at least in the words of Tully gold is no longer "the favourite asset to short or ignore completely". Earlier this week investment guru and closely followed newsletter writer Dennis Gartman said he has quietly turned bullish on gold's prospects. Gartman, who says he is not a gold bug, lays out three reasons for his change of heart; chief among them the fact that producers are cutting back on production: "Beginning five and six weeks ago we started to see a lot of the mining companies— even the largest gold mining companies— begin to curtail production. That's always a sign of an end of a bear market. "When senior management at the largest gold mining firms throw their hands up in dismay and begin curtailing production, usually within weeks the lows are going to be found. Decision by committee is always that way. It's slow; it takes time; and it's always late." Image by LEOL30 |
| Pan American Silver takes impairment charge on Dolores Mine, increases proven and probable reserves Posted: 20 Feb 2014 09:48 AM PST Pan American Silver (TSX:PAA) posted a net loss of $293.1 million mostly due to an impairment charge on its Dolores Mine resulting from lower long-term metal prices and increased taxes in Mexico, but the company also announced an increase in proven and probable reserves. The company was up 4.07% to $14.59 a share. In its 2013 full year financial results the company said that "Dolores was primarily driven by lower long-term precious metals price assumptions of $22 per ounce of silver and $1,300 per ounce of gold used in the impairment test." Today's spot price for silver is $21.71 per ounce. The company is also expecting a $86.8 million charge due to Mexican tax reforms that included new taxes and changes to income tax rates. In a separate announcement, the company announced that it increased its silver mineral reserves by 2% to a 323.5 million ounces. Pan American's 2013 silver production was 26 million ounces and gold production was 149,800 ounces. The outlook for 2014 is near the same. "In 2014, Pan American expects to produce 25.75 to 26.75 million ounces of silver and 155,000 to 165,000 ounces of gold at consolidated cash costs of between $11.70 and $12.70 per ounce of silver, net of by-product credits. The company also expects to produce 39,500 to 42,500 tonnes of zinc, 12,700 to 13,700 tonnes of lead and 5,200 to 5,700 tonnes of copper." Here are the company's 2013 financial highlights.
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