Tag: the gold report

Goldman Sachs' Ian Preston Surveys the Gold ETF vs Equity Battleground

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The Gold Report: Your recent commodity price research shows a gold price of around $1,811/ounce (oz) for 2013. Could you talk with us about how some of the macroeconomic issues influence that forecast?

Ian Preston: When we look at gold, we don't have in mind a specific supply/demand balance going forward. It's easy enough to see the supply side. In trying to forecast a price for gold, we tend to run out a 4% per annum contango from the current gold price until we think U.S. interest rate policy will reverse and rates will start to climb. That stage just keeps on moving outas it has with Quantitative Easing (QE) 3.

"If accommodative fiscal policies continue globally, gold could go significantly higher."

We look at the gold price to forecast earnings, and over the next 6 to 12 months, we'd expect $1,650/oz at the lower end and, if it breaks through, $1,8501,900/oz at the upper end. If accommodative fiscal policies continue globally, it could go significantly higher. But bear in mind that as equity analysts we're trying to forecast earnings, and to do so we want to be as close as possible to where the gold price will be for the next three to six months, even if the range is quite broad. Continue reading "Goldman Sachs' Ian Preston Surveys the Gold ETF vs Equity Battleground" →

Brent Cook and Quinton Hennigh Use Geology to Find Winners

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The Gold Report: Brent, Quinton recently joined Exploration Insights. What does Quinton bring to the publication?

Brent Cook: Quinton is a geologist who can see the big picture. He focuses on how a mineral deposit forms and assesses if it is economic. His contributions allow us to cover a lot more ground in the same time and our discussions often refine and improve the final investment decisions. It's a whole aspect to the business that's going to help me make Exploration Insights better. Given the state of the junior mining sector, this is the time to be picking up the deposits and companies that are undervalued or that show potential value based on a real economic evaluation.

"Because this is such a high-risk game, we're mostly looking for homeruns."

Quinton came out of Newmont Mining Corp. (NEM:NYSE) and Newcrest Mining Ltd. (NCM:ASX). He knows how the big companies work and what their investment criteria are. Ultimately, our goal at Exploration Insights is to identify deposits that are going to have high enough margins and be large enough to attract a buyout or purchase from a major mining company. Quinton did that at Newmont. Continue reading "Brent Cook and Quinton Hennigh Use Geology to Find Winners" →

When Greg McCoach Picks Mining Stocks, It's Location, Location, Location

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The Gold Report: When we last spoke in February, you were predicting a new round of quantitative easing (QE), which we've been seeing the last few weeks. Where do you think this is all going to end up?

Greg McCoach: The latest QE3 is open-ended, allowing the Federal Reserve to create money every month, indefinitely. QE3 was announced just a few weeks ago and already there is talk about QE4. So, in my opinion, this is the death spiral of the U.S. dollar.

The same thing is going on in Europe and Japan. It's very troubling and, in my opinion, totally unsustainable. But, trying to predict a timeline for the ultimate demise is almost impossible. This stuff could last another couple of years. Adding in the derivative problems on top of all this debt, it's just sheer insanity. So, where is gold going? It's going way higher because this is the ultimate dynamic that will guide the investment world for the coming years.

TGR: Is there any realistic solution, or are they just getting us deeper into the hole, and ultimately everything is just going to cave in on top of us?

"At some point I know gold and silver prices are going to go way higher than where they are now."

GM: The days of being able to fix this are long past. I had a chance conversation with a U.S. senator and, when I asked him about the debts and deficit spending, he admitted that everybody in Washington and New York knows that there's no possible way to pay this back. So, essentially all the politicians are hoping it doesn't blow up on their watch. Continue reading "When Greg McCoach Picks Mining Stocks, It's Location, Location, Location" →

John Williams on Lies, Damned Lies and the 7.8% Unemployment Rate

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The Gold Report: John, as Mark Twain famously quipped, "There are three kinds of lies: lies, damned lies and statistics." The Bureau of Labor Statistics (BLS) just came out with new jobs numbers that show the country added 114,000 jobs since September and the unemployment rate dropped to 7.8%, down from 8.1% in August. On Shadowstats.com, you argue that the numbers are wrong and pointed to politics as a possible reason for the incorrect figures. Are unemployment statistics being manipulated and if so how?

John Williams: I normally put out a commentary on the numbers, and, in this one, I raised the possibility of politics as a factor. The problem is very serious misreporting of the numbers and the result is what appears to be a bogus unemployment rate. The BLS reported a drop in the unemployment rate from 8.1% to 7.8%, three-tenths of a percentage point, which runs counter to what is being experienced in the marketplace.

What few people realize is that the headline unemployment rate is calculated each month using a unique set of seasonal adjustments. The August unemployment rate, which was 8.1%, was calculated using what BLS calls a "concurrent seasonal factor adjustment." Each month the agency recalculates the series to adjust for regular seasonal patterns tied to the school year or holiday shopping season or whatever is considered relevant. The next month, it does the same thing using another set of seasonal factors. Rather than publish a number that's consistent with the prior month's estimate, it recalculates everything, including the previous month, but it doesn't publish the revised number from the previous month. Continue reading "John Williams on Lies, Damned Lies and the 7.8% Unemployment Rate" →

Brock Salier Unlocks the Secrets of Gold Miner Valuations

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The Gold Report: Brock, your research suggests that the production margins of gold companies are near all-time highs. Why has that not translated to share price appreciation?

Brock Salier: The weak equity markets play a role in the disconnect between gold prices and gold equities, but a lot has to do with maturing gold assets.

A lot of gold mines were funded between 2007 and 2009 and commissioned between 2008 and 2010. Most companies typically mine above their reserve grade for the first one to three years to speed capital and debt repayments. But, if they have not found an expansion and completed a feasibility study, or if they lack a new mine to develop, that grade has to fall. As production falls, cost rises and share prices legitimately fall along with profits.

TGR: Can you go into a bit more detail about that concept, which is known as "high grading?" Continue reading "Brock Salier Unlocks the Secrets of Gold Miner Valuations" →