The <b>Gold Price</b> Added $3.60 Today for a Comex Close at $1284.20 |
- The <b>Gold Price</b> Added $3.60 Today for a Comex Close at $1284.20
- ABG delivers higher Q1 gold output, lower <b>gold price</b> drags revenue <b>...</b>
- The <b>Gold</b>/Silver <b>Price</b> Ratio is Out of Whack — What's Next? | Silver <b>...</b>
| The <b>Gold Price</b> Added $3.60 Today for a Comex Close at $1284.20 Posted: 23 Apr 2014 04:17 PM PDT
The GOLD PRICE added $3.60 today for a Comex close at $1,284.20. Silver closed Comex up 7.9 cents to 1943c. Ranges today were tiny, the GOLD PRICE range was $8.70 and the SILVER PRICE range was 17 cents, but their gains bring little comfort. The overlapping trading simply doesn't depict a rally, but correction without much conviction or direction. I'm still guessing that the downside risk for the gold price probably isn't more than $14 from here. Silver on 15 April made a low at 1922c, and another on 21 April at 1923c. That might have fulfilled the downside thrust, but we might still witness a V-move to 1900c. In any event, all that is my anticipating, since neither market has yet flashed a signal it is turning up. Be patient here, but don't go to sleep. I bought a good bit today to balance my own position. I don't think there's too much downside risk here, and I certainly don't want to be short. Markets are drifting, without much conviction one way or the other. Like a torpid snake, though, that can change any time. On narrow ranges today stocks turned down, slightly. Dow abdicated 12.72 (0.08%) to a 16,501.65 close. S&P500 dropped 4.16 (0.22%) to close at 1,875.39. Since markets don't make triple tops (or bottoms) but usually break through that barrier to continue higher, we can probably expect a higher top in stocks. However, the charts don't speak unequivocally. As they rise in seniority from Nasdaq Comp to S&P500 to the Dow, they look better. First two are in downtrends, Dow has moved sideways, yet the overall uptrend says they will move yet higher, unless a breakdown is confirmed. That would require universal closes below the 200 day moving averages. Dow in gold inched down 0.19% to 12.85 oz (G$265.63 gold dollars). Dow in Silver hooked down 0.232% to 848.94 oz (S$1,098.91 silver dollars). That probably does not mark the top, although yesterdays 851.70 oz was awfully close to the 853.66 oz (S$1,103.72) December 2013 high. Yet the high lieth not far away. US DOLLAR INDEX fell 4 basis points, nothing really, but it has been repulsed trying to climb above the 20 and 50 day moving averages, to its shame revealing its weakness. One of these days the dollar will do something, but probably not tomorrow. Drifting sideways. Euro rose a little today, 0.8% to $1.3817, but not enough to break above its downtrend line. Not enough to sneeze at, in fact. Yen is tippy-toeing back and over its 50 DMA. Rose 0.1% to 97.57 cents per Y100, going nowhere. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.  | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| ABG delivers higher Q1 gold output, lower <b>gold price</b> drags revenue <b>...</b> Posted: 24 Apr 2014 12:43 AM PDT JOHANNESBURG (miningweekly.com) – London-listed gold producer African Barrick Gold (ABG) says it has started the new financial year stronger, with the first quarter of 2014 delivering higher production and lower all-in sustaining costs. The Tanzania-focused group on Thursday reported gold output of 168 375 oz during the quarter under review – an 18% rise on the first quarter of 2013. The achieved all-in sustaining costs of $1 131/oz during the quarter was 3% lower than the fourth quarter of 2013 and 28% lower than the first quarter of 2013. "We have delivered another strong set of results … [and] remain on track to achieve our guidance of [between] 650 000 oz [and] 690 000 oz of gold production at all-in sustaining costs an ounce of between $1 100 and $1 175," ABG CEO Brad Gordon said. However, while the 159 384 oz of gold sold during the period was 10% higher than the corresponding quarter last year, a 19% lower average realised gold price of $1 303/oz resulted in a 12% drop in revenue to $216-million and a 21% decline in earnings before interest, tax, depreciation and amortisation (Ebitda) to $65-million. Net earnings for the first quarter increased 8% to $22.4-million, or 5.5c a share, compared with the first quarter of 2013, and after sustaining capital, ABG generated cash flow from operations of $13.3-million. ABG also cut total capital expenditure 47% to $55.7-million during the three months to March 2014. "As a result of our continued cost discipline, we generated positive cash from the operations during the quarter and continue to expect to be cash-flow positive for the full year," Gordon said. The group ended the quarter with a cash position of $254-million. "We remain committed and on track to deliver against the $185-million cost-saving target as previously set out and reflected in our all-in sustaining cost guidance," Gordon added. Further, he pointed out that ABG was progressing the ongoing review of its core mining areas, which was expected to deliver further efficiencies and cost savings "throughout 2014 and beyond". Meanwhile, the gold producer on Thursday approved the next step in optimising production levels at its Bulyanhulu operation, in Tanzania, through the acceleration of mining from the Upper East zone. "One of our key aims for this year is to demonstrate the potential that exists at Bulyanhulu and to ensure that the production base is more representative of the scale of the reserve base," Gordon said. The company would inject about $15-million to deliver initial production from the zone within three months. Gordon noted that the zone would produce 1.7-million ounces of gold – averaging 60 000 oz/y – over 25 years at all-in sustaining costs of $900/oz. The first phase of development comprised the ordering and mobilisation of the equipment required for the underground development to start in the first half of 2014, with first ore expected to be mined soon thereafter. The second phase, expected to kick off in 2015, would see the start of a $20-million process plant expansion to increase plant capacity from 1.1-million tonnes a year to 1.3-million tonnes a year by 2016. Further, ABG would, in 2017, embark on the two-year construction of a box cut over the shallower portion of the Upper East zone. "The box cut will be the location [of] a second decline [and] will be developed to open up the shallower reserves on Reefs 1 and 2," explained Gordon. ABG would also continue, throughout the second quarter of 2014, commissioning the carbon-in-leach expansion at the mine, which, together with the acceleration of the Upper East zone and the mined grade improvement, would provide "a clear path" to increase output from Bulyanhulu to over 350 000 oz/y by 2015. Edited by: Creamer Media Reporter To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The <b>Gold</b>/Silver <b>Price</b> Ratio is Out of Whack — What's Next? | Silver <b>...</b> Posted: 24 Apr 2014 04:15 AM PDT Articles Return to Article Directory Last month, Silver Investing News (SIN) received an enthusiastic response to the question, "do you think silver is headed for a supply shortage?" Of over 1,000 participants, 81 percent said they believe a silver shortfall is in the works, reinforcing the idea that while silver prices are down, they're likely not out. Despite that overwhelmingly affirmative response, the article raised a number of good questions amongst readers. To address some of them, SIN got back in touch with Andrew Chanin, co-founder of the PureFunds ISE Junior Silver ETF (ARCA:SILJ), whose comments sparked the original article. To start off with, Chanin addressed the nature of the shortage — in other words, whether we're looking at a silver supply shortage in that silver in the ground is actually running low, or in the sense that at current prices miners simply aren't able to produce enough of it. The simple answer is that though the amount of high-grade deposits around the world is falling, at the moment the latter issue is the bigger concern; however, Chanin gave a much more detailed response, explaining why that's the case. For one thing, he said, "about two-thirds of all mined annual silver comes as a by-product, and much of that is from base-metals mining." That's a problem because many people are calling for a slowdown in emerging markets, which could keep prices for base metals depressed. If that happens, he said, "it might actually make sense to put such mines on hold temporarily." Ultimately, that means "a significant area of silver supply … could get taken offline." Another factor, Chanin noted, is that low silver prices are hurting producing companies' exploration efforts. Sure, he said, silver priced at $16 per ounce, or even $10 an ounce is possible, but "it would be extremely, extremely difficult for silver-mining companies to produce silver at those levels, [and] difficult, if not impossible, for them to do it profitably." That's because $20 per ounce — about the price silver has sat at thus far this year — "is a very key level" for many companies that are both producing and exploring. "If silver is below $20, one of the first things that these companies shut down is their exploration. Where will this future supply of silver come from if you have companies shutting down exploration?" Chanin questioned. Given those issues, he believes "it almost seems wild for people to think that there's a huge downside left for silver." Of course, that statement raises the question of why exactly silver sells for so much less than other precious metals. Responding to that question, Chanin said, "yes, silver is more abundant, it is less rare. There's more silver in the ground than there is gold, as well as platinum, palladium, rhodium." However, though gold and silver trade at a 65:1 ratio, in recent years, the annual ratio of ounces of silver mined versus gold has been closer to 8:1. On top of that, most of the gold that gets taken out of the ground "is turned into jewelry or bars and gets worn or put in vaults" — meaning that it can be used for investment purposes — while 40 percent of annual silver supply goes towards industrial purposes. The lack of silver available for investors to buy is an issue because over the last decade silver has seen an "immense, six-fold increase in investment demand" that does not seem to be letting up. Chanin commented, "I think there's so much money and capital directed to gold that people are really starting to want to better diversify themselves. Silver could be a really interesting option, especially if there's scarcity in gold." It might, he said, even be a good metal for central banks stock up on "because it does have great industrial uses." Given those factors, Chanin said he believes "the 65:1 price of gold to silver ratio is out of whack due to the ratio it is being mined." He continued, stating, "if I had to guess where that ratio might be closer to in the future, I think 20:1 might be a lot more reasonable. We haven't seen something like that in years. I think there's just an overall dislocation of the price that I don't believe really reflects the true scarcity of silver." A positive first quarter Chanin also touched on how silver juniors did in 2014's first quarter. His response was encouraging. "Q1 showed a very strong reversal in mining stocks from the trend we saw last year," when precious metals "were one of the most punished sectors," said Chanin. More specifically, "when silver popped up over $20 earlier this year … a lot of people looked at that as an opportunity for these companies to see better margins for each ounce they pull out of the ground." He believes that "if silver prices are able to maintain a higher price and go to where they were this time last year, which was around $28 or so, some of these companies could become very profitable." And which companies might those be? Chanin identified some familiar qualities that contribute to success, including management with "a proven track record" as well as "a good vision for the project that it has, especially [management] that is responsible with its costs." Management "that has strong relations with the jurisdictions its properties are in" is also a plus, he said. Chanin also recommended that investors consider the countries a company's projects are in. "It helps if a company has properties in multiple countries or safe jurisdictions as opposed to one mine in a semi-risky country," he explained. That, of course, is something his ETF can help with. "The beauty of having a portfolio of a bunch of companies is that you can spread out that risk," he noted. But what about prices? For many investors, the real question is what all this information means for silver prices. Though Chanin didn't offer a specific price prediction for silver, his comments about the metal's price dislocation bring to mind a February interview with Sprott's John Embry. Like Chanin, Embry notes that the price ratio of gold to silver is currently over 60:1; however, he continues on to state that the ratio "has fallen precipitously in raging bull markets for the metals, going as low as 12:1." That, he believes, means "the silver price could have an upwards move at four times the rate of any gold price increase." Putting that in numerical terms, Embry said, "[m]y colleague Eric Sprott and I think that within a reasonable timeframe silver will probably trade over 100 dollars — a big move from its current price of 20 dollars an ounce." If he's correct, silver bugs certainly have a lot to look forward to. Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. Editorial Disclosure: The PureFunds ISE Junior Silver ETF is a client of the Investing News Network. This article is not paid-for content. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence. Related reading: Survey: Is a Silver Supply Shortage on the Horizon? PureFunds ISE Junior Silver ETF: Exposure to Silver Explorers and Junior Producers Return to Article Directory Read next article What Brought Silver to $50 in 2011? Read more articles by Charlotte McLeod |
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