Tag: the gold report

Keeping Stakes Small: How Some Companies Are Navigating the Gold Market

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The Gold Report: Coeur d'Alene Mines Corp. (CDM:TSX; CDE:NYSE) recently acquired Orko SilverCorp. for cash and shares. What should investors pay attention to in that deal?

Keith Phillips: The deal involved La Preciosa, a silver asset controlled by Orko, in an attractive jurisdiction in Mexico. From an investment banking perspective, seeing two different, quality companies competing for a junior mining asset in an environment where people thought the merger and acquisition (MA) business was dead was encouraging. First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) made an initial bid for Orko, and Coeur d'Alene was the successful bidder.

TGR: Are high-quality silver assets more likely to be targets than similarly valued gold assets in this market? Continue reading "Keeping Stakes Small: How Some Companies Are Navigating the Gold Market" →

Has the Gold Bull Market Hit a Snag?

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The Gold Report: What do you think will happen to interest rates and how will that affect gold?

Tobias Tretter: I don't see interest rates increasing at all right now. The Federal Reserve is giving banks money for 0.25%. The European Central Bank (ECB) has interest rates at 0.75%. That isn't an environment with increasing interest rates. The 10-year U.S. Treasuries are at 1.85%, which is up from 1.4%, but even in 2011 we were above 3%. We are still at the lowest possible levels and I can't imagine how countries, even relatively strong ones like Germany or the United States, will thrive in an environment with increasing interest rates. It would prove too challenging and cause too much pain; therefore, interest rates will be low for a long time.

I do not believe that the end of the gold bull market is here. I agree with former Fed Chairman Alan Greenspan that deficit spending is a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious progress, he said. It stands as a protector of property rights. As long as the Fed and the ECB are printing money and as long as things like the recent Cyprus bailout continue to happen, there's absolutely no way for gold to go down for very long. Continue reading "Has the Gold Bull Market Hit a Snag?" →

Gold and Bitcoin: Currencies of the Future - James Turk

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The Gold Report: James, from your perspective in Europe, is the region in as bad a financial crisis as it appears in the headlines here in the U.S.?

James Turk: Yes, it really is. However, Europe is a big place, and you have to look at the individual countries one by one to understand the situation. Generally speaking, the Mediterranean countries are in the worst shape. Germany has been in the best shape, although recent economic data indicate it may be falling into a recession again. France is not quite as bad as the Mediterranean countries, but in economic activity, it is worse off than Germany and the rest of Northern Europe.

TGR: What role does the euro play in all this, and where might the next crisis take place? Continue reading "Gold and Bitcoin: Currencies of the Future - James Turk" →

How to Stress Test Gold Equities: Joe Mazumdar

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The Gold Report: Where can long-term gold investors look for safety during times of market turbulence?

Joe Mazumdar: Is there safety in the gold market? The short answer is no. Both the equity and gold market have been volatile, lately more the latter. Gold stocks have a good correlation, a beta, to gold, and if the price of gold is volatile, the stocks will be volatile. This leverage to the gold price cuts both ways for gold equities. Year to date, gold is down 1015% as it has underperformed most commodities including copper, oil and natural gas, while the SP/TSX Global Gold index is down almost 3035%.

Other reasons why the gold equities have disappointed investors includes the failure to achieve benchmarks or guidance on costs, both operating and capital, and timelines, among others. The overriding financing risk, especially for the juniors, has continued to weigh on their performance.

Major gold producers provide liquidity, but are not necessarily a safe bet. Over the last few years, the large gold companies have not shown growth at a reasonable price. The amount of reserve repletion they require is their Achilles heel such that they have focused on dividends. This is nothing new, as the project requirements tend to create significant footprints and attract the attention of other stakeholders who want to slow down or cancel mining development. This issue is affecting Newmont Mining Corp.'s (NEM:NYSE) Conga project, Pascua Lama with Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and El Morro with Goldcorp Inc. (G:TSX; GG:NYSE) and New Gold Inc. (NGD:TSX; NGD:NYSE.MKT). If a major's growth is linked to this type of project, it is not necessarily a safe place to invest. Continue reading "How to Stress Test Gold Equities: Joe Mazumdar" →

Gold's Plunge Ultimately Healthy for the Sector: Michael Gray

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The Gold Report: On April 15, gold dropped to a two-year low as panic selling set in across many mined commodities. Was this the larger players showing the retail market who is in control or was it inevitable?

Michael Gray: Several firms have been predicting a mid-cycle correction for gold; it just happened faster and with more volatility than expected. It also seems to be a very well-timed short-selling trade, especially on the back of the positive gold price correlation with quantitative easing (QE) breaking down and reversing post-QE3. In addition, there was no response in the gold price to the debt crisis in Cyprus or political concerns with North Korea. This was an opportunistic time for the shorts to come in, and they did, forcefully.

TGR: Does this indicate that investors prefer equities to gold? Continue reading "Gold's Plunge Ultimately Healthy for the Sector: Michael Gray" →