Tag: gold miner’s

Precious Metals: Risk Management to Opportunity

Posted on by The INO.com Team

What Has Been

A solid 2.5 years of risk management (to varying degrees) has been required of precious metals investors.  It was most intensely required after the announcement of QE3, when the net commercial short position in silver began a relentless march toward a very bearish alignment in late 2012 and then the HUI Gold Bugs index lost an important support level at around 460.  Here is the chart of silver with a heavy commercial net short position from NFTRH 215, dated 12.2.12:

si.cot

As for the HUI, NFTRH 215 also noted this on 12.2.12: Continue reading "Precious Metals: Risk Management to Opportunity" →

'Mexico Mike' Kachanovsky Believes the Best Cure for Low Prices Is Low Prices

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The Gold Report: Mike, the prevailing wisdom in the market favors producers over explorers in the precious metals equities. The thinking seems to be why buy the pasture when entire farms are selling at nearly the same price? What do you think of that strategy?

Mike Kachanovsky: That is a good summary of current affairs. Market values for the entire sector have been trimmed dramatically; even many of the highest rated stocks are down 50% to 60%. From a value perspective, it makes sense to buy higher up the food chain when you have the opportunity, to buy more established companies that offer legitimate earnings and established infrastructure.

TGR: Kenneth Hoffman of Bloomberg Research notes that production from the world's biggest gold mines has dropped 17% since early 2011. He predicts that gold mines, especially high-cost mines in Africa, will start to close as gold hovers around $1,200/ounce ($1,200/oz). Is there a bullish medium-term case to be made for gold given the shrinking supply?

MK: We have been through similar severe price corrections before. At the beginning of this century, gold's market value was below what it cost to produce it. Mines closed and companies went out of business. That scenario evolved into the bull market we have today and the achievement of all-time high metals prices.

TGR: But this is not a bull market. Continue reading "'Mexico Mike' Kachanovsky Believes the Best Cure for Low Prices Is Low Prices" →

Follow the Smart Money to Undervalued Miners

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The Gold Report: Gold recently witnessed some upside price support after the Cypriot parliament proposed taking money from private bank accounts to raise the 5.8 billion needed to qualify for an international bailout. What was your first reaction to that news?

Jeb Handwerger: Any confiscation of bank accounts would just highlight what I have been saying for a long timesavers are losing money in their banks. Bank deposits are supposed to be a safe haven. Investors are going to seek out alternative hedges against the deterioration of currency and financial repression worldwide. This isn't just happening in Cyprus, but all over the world where there are citizens losing money in their banks and are experiencing negative real rates. Investors need to look for the assets that will protect and grow their wealth in case public policies continue to destroy wealth and savings.

TGR: How does this differ from what happened in Greece? Continue reading "Follow the Smart Money to Undervalued Miners" →

Gold Miners vs. the S&P - Surprising Conclusions

Posted on by The INO.com Team

We often hear the claim that gold producers have not met investors' expectations for the past couple years. While there are many potential reasons for this, one explanation for their underperformance lies in the fact that producers diluted their share structures, leaving shareholders with smaller gains than they would have otherwise harvested.

To show how this dilution has impacted the industry, let's first review how gold miners performed last year compared to the S&P 500. Continue reading "Gold Miners vs. the S&P - Surprising Conclusions" →

How Green Are Gold's Blue-Chip Mining Stocks?

Posted on by The INO.com Team

Disenchanted with gold's lackadaisical performance over the last year, some investors are losing interest in the equities that are supposed to provide leverage to the metal's price movements. The press has added fuel to the fire by increasingly attacking gold-mining CEOs for rising production costs and weak stock prices. This has driven some investors to pursue ETFs or other vehicles as a replacement for gold stocks, while others have simply thrown their hands up and left the precious-metals space. Is this overreaction or rational decision-making?

We set out to objectively evaluate how gold-mining majors have been performing operationally in the current commodity bull market that started roughly at the beginning of 2002. We compare them against the S&P 500 – the mainstream "blue chip" index – to see if gold miners deserve the beating they've received. We also look at what may lie ahead for one of our favorite subsectors of the gold universe. Continue reading "How Green Are Gold's Blue-Chip Mining Stocks?" →